With factors such as a creeping debt service cost and tepid investors, can Malaysia achieve Vision 2020 at the end of the 11th Malaysia Plan?
The 11th Malaysia Plan (11MP) is the last five-year development strategy for Malaysia to achieve developed country status by 2020. It projects a GDP growth rate of five per cent to six per cent over the next five years, which is somewhat better compared to the annual growth rate of 5.3% under the 10th Malaysia Plan.
The direction of the stock and currency markets sends a strong signal as to whether the 11MP is good and transformative to the country, since smart money and investors vote with their feet. Since the tabling of the Plan, the FBMKLCI index and the Ringgit have fallen. While this may be due to other factors (e.g. the possibility of rising interest rates in the US, the issues surrounding 1MDB and others), 11MP has not provided strong enough reasons to lessen investor concerns. Indeed, economists from various research houses have provided a cautiously optimistic opinion on the 11MP.
Investors have not been excited by the 11MP for many reasons, one of which could be that the government is going to play a larger role in the economy. Government services took up 7.8% of GDP in 2010, but this is projected to grow to nine per cent of GDP by 2020 – a 6.3% average annual growth between 2016 and 2020.
