Malaysia to allocate US$19.26 billion annually for next two years to stimulate economy

MALAYSIA: Malaysia’s Prime Minister Anwar Ibrahim unveiled a commitment to allocate at least RM90 billion (approximately US$19.26 billion) annually from 2023 to 2025 to boost the nation’s economy and achieve high-income status by 2025.

This announcement came during the presentation of the mid-term review (MTR) of the 12th Malaysia Plan (12MP) in Parliament.

With the revised allocation, the government’s commitment has increased to RM415 billion, from RM400 billion.

The 12MP MTR introduced 17 measures and 71 strategies to drive socio-economic development, emphasising technology adoption, talent development, and high-value industries.

Anwar said the review of 12MP will expedite economic structure reform and enhance competitiveness, making Malaysia a preferred investment destination.

Implemented in 2021, the 12MP is a five-year development plan from 2021 to 2025 aimed at driving the country to become a developed and inclusive nation.

In the first two years, Malaysia recorded an average gross domestic product (GDP) growth of 5.9 per cent per annum and the average monthly household income increased to RM8,479 in 2022, from RM7,901 in 2019.

The MTR came into place to reassess the economic condition and re-prioritise the country’s needs after the COVID-19 pandemic.

Parliament will have a six-day special sitting to discuss and debate the initiatives under the 12MP MTR.

New initiatives under the 12MP MTR include an RM1.5 billion allocation to raise low-income earners’ salaries, promote advanced technology, and advance skilled talent.

The review will also focus on five areas: energy transition, technology and digital, electrical and electronics, agricultural and agro-based, and rare earth.

Bolstering the electrical and electronics industry’s value chain and refining intellectual property policies

Anwar said past efforts have shown foreign investors have regained their confidence in Malaysia’s technological capabilities, as global semiconductor players are entering the country or increasing their investment to expand their facilities in Malaysia.

These investors include German semiconductor company Infineon Technologies, which announced an additional RM25 billion investment in Malaysia in August. Tesla and Samsung Engineering have also said they will invest more in the country.

To encourage commercialisation and innovation activities, the government will review the policy on intellectual property to proliferate technology ownership, adoption and transfer.

On the rare earth business, the government is considering a new policy called the National Mineral Policy to ban the export of rare earth raw materials to prevent exploitation and loss of resources.

“The rare earth industry will emerge as a new growth resource. The sustainable and environmentally friendly non-radioactive rare earth elements are crucial in manufacturing batteries, super magnets and electronic devices,” he added.

He noted that the rare earth industry is expected to contribute up to RM9.5 billion to Malaysia’s GDP by 2025 and create 7,000 job opportunities.

Meanwhile, on infrastructure development, 10 new transportation projects are shortlisted under the 12MP, including the Penang Light Rail transit, Penang International Airport expansion, and Subang Airport regeneration.

In addition, the government targets leadership in the global halal market, seeking an export value of RM63.1 billion by 2025.

“We will focus on products such as pharmaceuticals, medical devices and Muslim fashion with high-added value. This will also create more high-income job opportunities for Malaysians,” he added.

Industrial production rebounds

The industrial production index (IPI) rebounded by 0.7% year on year (y-o-y) in July, attributed to growth in the mining and electricity sectors, reversing a June decline of 2.2% and surpassing economists’ expectations.

It was also higher than the 0.2% forecasts by 11 economists in a recent Reuters poll.

In July, the output from the mining and electricity sector increased by 4.2% and 1.5% y-o-y, respectively, while the manufacturing sector declined by 0.2%.

From January to July, the country’s IPI expanded 1.2% as compared to the same period last year.