Najib Sees Early Achievement of Mahathir Vision: Southeast AsiaBarry Porter
Malaysian Prime Minister Najib Razak said the nation may reach high-income status two years ahead of target, as he seeks to convince voters of his economic achievements before elections due within weeks.
Gross national income could rise to $15,000 per capita in 2018, earlier than a target of 2020, Najib said in a televised speech late yesterday. The measure has increased 49 percent since 2009, to $9,970 last year, the government estimates. Najib also pledged to give annual cash handouts to low-wage earners.
“The time has come for Malaysians to make a decision and I hope you make the right choice,” said Najib, 59, without indicating when the election will be held. He must dissolve parliament by April 28 and hold a vote by the end of June.
Najib, who inherited a country in recession when he replaced Abdullah Ahmad Badawi as leader in 2009, is focusing voters on his efforts to boost investment and improve incomes as he seeks a popular mandate for the first time. The ruling National Front coalition won the last election in 2008 by its narrowest margin in more than five decades, prompting Abdullah to hand over the leadership mid-term.
A nation is considered high income when GNI per capita meets or exceeds $12,476, according to the World Bank. In 1991, former premier Mahathir Mohamad laid out a 30-year plan known as Vision 2020 aimed at earning Malaysia high-income status by the end of the current decade.
Malaysia’s total investment grew 19.9 percent in 2012 compared with 6.5 percent in 2011, accounting for 26.7 percent of gross domestic product, according to a report on the nation’s so-called Economic Transformation Program released by the prime minister yesterday. Private investment climbed 22 percent to 139.5 billion ringgit ($45 billion) in 2012, driven by spending on manufacturing, services and mining, according to the report.
“Najib’s comparative advantage is to try to portray himself as an economist and an economic success, which may hit home in middle-class areas,” Bridget Welsh, associate professor of political science at Singapore Management University, said by phone. “He’s mostly concerned about a public relations image. The opposition tends to focus on ordinary people and micro issues, like wages and the cost of living.”
Infineon Technologies AG, Europe’s second-largest maker of semiconductors, said in May it will spend 4 billion ringgit over 10 years to expand its wafer-fabrication facilities in Malaysia’s north. Germany’s Evonik Industries AG plans to start a specialty chemicals manufacturing venture with Petroliam Nasional Bhd. within a $20 billion refining and petrochemicals complex in southern Johor state.
Najib can use the economic program to argue that “the current administration has got a track record in organizing big public projects and getting the private sector involved,” said Gerald Ambrose, who oversees the equivalent of $1.7 billion as managing director of Aberdeen Asset Management Sdn. in Kuala Lumpur.
Since taking charge, Najib has streamlined bureaucracy and opened up more industries to foreign investors. His government identified $444 billion of private-sector-led projects to help champion in the current decade, ranging from oil storage to a mass railway, under the economic plan.
Malaysia’s economy grew at the fastest pace in 2 1/2 years last quarter as Najib boosted spending ahead of the election that will test his grip on power. GDP rose 6.4 percent in the three months through December from a year earlier, after a revised 5.3 percent gain in the previous quarter.
“We must not rest on our laurels,” Najib said in the report. “Malaysia must continue to address issues such as poverty, labor productivity, environment sustainability and education, while factors in the external economy are likely to remain demanding in the foreseeable future.”
The architecture, engineering and quantity-surveying services sub-sectors are expected to be ready for liberalisation exercise this year, Bernama reported, citing Pemandu’s report.
Southeast Asian nations from Indonesia to the Philippines have shown resilience to the faltering global economy as local demand rises. Najib has increased government expenditure, extending cash handouts to low-income families and raising civil servants’ salaries in the lead-up to voting.
Government revenue was the highest on record last year at an estimated 207 billion ringgit, enabling the government to afford socio-economic programs and give money to the poor, according to the report by the government’s Performance Management and Delivery Unit, or Pemandu.
The budget deficit narrowed from 6.6 percent of GDP in 2009 to 4.5 percent last year and is expected to shrink to 4 percent this year as the government seeks to balance the budget by 2020, according to the report.
Najib’s National Front coalition is facing a resurgent opposition led by Anwar Ibrahim, which currently holds 75 seats in Malaysia’s 222-member parliament. The prospect of an even closer election result has helped make the FTSE Bursa Malaysia KLCI Index the worst performing Asian benchmark this year, Citigroup Inc. said in a report this month.
The benchmark stock index has dropped 4.1 percent since closing at a record on Jan. 7. It was little changed at 10.07 a.m. today after the report. The ringgit fell 0.2 percent to 3.1293 per dollar. Its 2.3 percent drop this year makes it Asia’s fifth-worst performing currency among 11 tracked by Bloomberg.
Najib is more popular than his government, according to the Merdeka Center for Opinion Research. His approval rating slipped to 61 percent last month from 63 percent in December, according to a survey of 1,021 voters conducted Jan. 23 to Feb. 6 on the country’s peninsula. By contrast, 48 percent of respondents said they were “happy” with the government, according to the poll published Feb. 26.