The World Bank has lowered its 2012 growth forecast for Malaysia to 4.6% compared with its earlier forecast of 4.9%, citing the current global economic weakness as the potential dampener to the country's external trade performance.
Nevertheless, the bank, in assuming that the global economic recovery would pick up in the following year, said Malaysia's gross domestic product (GDP) growth would likely strengthen to 5.1% in 2013.
“People have been too pessimistic over recent months. We think our assessment will be able to provide a more realistic picture,” World Bank senior economist for Malaysia Frederico Gil Sander said at a presentation during the launch of the bank's sixth issue of the Malaysia Economic Monitor report.
The Malaysia Economic Monitor: Modern Jobs noted that domestic demand was expected to continue supporting the country's growth in 2012, with the outlook for investments becoming more favourable compared with the preceding year.
“We expect to see investments accelerating this year in line with the progress of the country's Economic Transformation Programme (ETP),” Gil Sander said.
He said private investments would likely be driven by the commodity sector, especially oil and gas, while public investments would be driven by the construction sector, with the Mass Rapid Transit project gaining pace.
The World Bank report noted that while there was momentum in Malaysia's reform agenda, structural reforms needed to turn the country into a high-income economy could be further accelerated.
“The challenge now is to go beyond quick wins and accelerate the implementation of more difficult, but critical, structural reforms that lie at the core of transforming the economy into a high-income one,” the report said, while highlighting educational reform, subsidy rationalisation and the broadening of tax base as among the key areas that needed structural reforms.
According to Gil Sander, Malaysia at present is still seen as a “low-skill, low-wage” investment destination. For the country to move to a high-income economy, he said, Malaysia's source of competitiveness needed to shift to skills and productivity away from cost-competitiveness.
World Bank, in its report, said that Malaysia needed to create more modern jobs, which it defined as those that command higher wages and yield higher productivity, in order to become a high-income nation.
Structural reforms were still needed to transform the country's labour force from one that is “traditional” to one that is “modern.
As Datuk Dr Rahamat Bivi Yusoff, director-general of the Economic Planning Unit (EPU) in the Prime Minister's Department, saw it, “the next structural evolution will happen to the labour force”.
“We hope it will happen in a meaningful and orderly way to benefit our economy and the wealth of our nation,” she said.
Rahamat Bivi concurred that in moving Malaysia up to a high-income economy, transformation of the types of jobs available from “traditional” to “modern” was necessary for the country.
“By introducing the right interventions and programmes, and with more involvement of the private sector, we are confident that the share of skilled workers will increase to one-third of total labour force by 2015 and 50% by 2020, which will be at par with that of OECD (Organisation for Economic Cooperation and Development) countries,” she said.
Meanwhile, Rahamat Bivi also said the EPU was currently studying the possibility of having unemployment insurance scheme to provide better social safety net for workers. The study, she said, was expected to be completed by next year.
She also said that Prime Minister Datuk Seri Najib Tun Razak would announce the minimum wage policy for the country next month.