Malaysia 2.0 Needs More Than a Booming Economy

Southeast Asia’s boom years may be behind it, but the region is steadily becoming more prosperous. Few places exemplify those go-go times with their achievement, and excess, like Malaysia. Now the federation is on the cusp of being admitted to a club dominated by the advanced economies whose material wealth it has long aspired to emulate.

As that moment draws closer, the contortions of a new era are readily visible, and they aren’t comforting. In Kuala Lumpur, a new skyscraper resembles a hangover from a prior generation of policymaking by boondoggle. The swelling ranks of elderly fret the country isn’t prepared for a looming demographic cliff, while a vital export industry worries a flight of talent will mean key opportunities are forfeited. The challenges represented here point to long-term issues that require tackling. Getting this right is way more important than the technical markers beloved by past leaders, like gross domestic product doing better this quarter than the 5.6% growth between January and March. Or whether the new central bank chief needs to squeeze inflation a bit harder in coming months.