1 ECONOMIC MANAGEMENT AND PROSPECTS

1 1 ECONOMIC MANAGEMENT . AND PROSPECTS . Overview Performance Review 2017. Information Box - National Transformation 2050. Updates on the 2017 Budget Information Box - MyBeautiful New Home Information Box - Digital Free Trade Zone Feature Article - Enhancing Mobility through Rail Connectivity Feature Article - The Sharing Economy: Driving ECONOMIC and Social Empowerment through Digital Platforms Information Box - Coding@Schools ECONOMIC MANAGEMENT 2018. Strategic Initiatives 2018 Budget PROSPECTS for 2018. Chapter 1 10/20/17 9:43 PM. Chapter 2 10/20/17 9:43 PM. ECONOMIC REPORT 2017/18 3. 1 ECONOMIC MANAGEMENT AND. PROSPECTS . Overview environment for the youth to emerge as well- balanced citizens. Finally, the Social Transformation R ising above expectations, Malaysia leveraged Programme (STP) continues to strengthen core values, its strong ECONOMIC fundamentals to record work culture and attitudes among Malaysians.

2 In a robust growth in the first six months of 2017. addition, the establishment of the Cultural Economy Despite increasing protectionist threats, policy Development Agency (Cendana) on 6 September uncertainties in developed countries and geopolitical 2017 will further promote a sustainable, inclusive, tensions, the domestic economy expanded vibrant and ambitious cultural economy. during the period. The expansion is a testament to the Government's concerted efforts in implementing In tandem with the NTP, the 2017 Budget introduced various reforms under the National Transformation various programmes to enhance ECONOMIC growth. Policy (NTP). The NTP, comprising several high- Furthermore, efforts were intensified to strengthen impact and innovative programmes, was introduced human capital, improve the education system in 2009 to uplift the economy from the middle- and create ample opportunities for the rakyat to income trap towards a high-income and advanced increase their income.

3 At the same time, several nation by 2020. initiatives to enhance public service delivery were implemented to ensure the best outcomes for the Towards uniting all Malaysians, the 1 Malaysia, rakyat. Collectively, these efforts have strengthened People First, Performance Now principle is the the nation's ECONOMIC fundamentals. Given these overarching paradigm that permeates across all developments, the economy is expected to grow development plans and programmes, benefitting all between in 2017. With more pro- segments of the society. Through the Government growth and rakyat-centric programmes and projects Transformation Programme (GTP), public service in the 2018 Budget, the economy will remain delivery was strengthened to facilitate businesses on its growth trajectory, expanding between 5%. and enhance the wellbeing of the rakyat. Meanwhile, in 2018. Moving forward, the National the ECONOMIC Transformation Programme (ETP) Transformation 2050 (TN50), introduced in the enabled the private sector to undertake several 2017 Budget, aspires to elevate Malaysia as among high-impact projects which in turn, increased the top 20 nations, ranked by ECONOMIC and social private investment in the economy.

4 Development, in 2050. Amid threats of global terrorism, the Political Transformation Programme (PTP) ensued stability Performance Review 2017. in the country by balancing the nation's security needs and individual freedom. Furthermore, to The Global Economy leverage digital technology, an essential enabler for the country's transformation, the Digital The global economy is expected to expand Transformation Programme (DTP) continues to in 2017 (2016: ). The expansion is attributed create an ecosystem which promotes the pervasive to the improved growth of (2016: ) in use of digital technology in all aspects of the advanced economies and (2016: ) in economy. Meanwhile, the Community Transformation the emerging market and developing economies. Programme (CTP) reached out to the rakyat and Among the advanced countries, the US and the enabled all communities to benefit fully from the euro area are projected to record higher growth urban and rural transformation centres.

5 At the driven by steady expansion in investment and same time, the Fiscal Transformation Programme consumption activities. Japan is anticipated to record (FTP), further strengthened Government finances a stronger-than-expected growth contributed by and supported macroeconomic stability. higher investment and robust exports. Meanwhile, the UK's economy is forecast to sustain growth To meet the current and future needs of the industry, amid slower consumer spending following post- the Vocational and Technical Transformation Brexit uncertainties. Programme (VTTP) was introduced to revamp the technical and vocational education and training Growth in the emerging market and developing programmes. At the same time, the National Youth economies is expected to expand supported by high Transformation Programme (NYTP) provides an global demand and investment. China is projected Chapter 3 10/20/17 9:43 PM.

6 4 ECONOMIC REPORT 2017/18. to record a stable growth, supported by effective Likewise, most major ASEAN economies, namely macro-policy mix, strengthening external demand Indonesia, Malaysia, the Philippines, Thailand and and progress in domestic reforms. In addition, Viet Nam, are expected to register steady growth India's growth is expected to remain robust driven contributed by strong domestic and external by strong private consumption and services sector. demand. Information Box National Transformation 2050. Introduction The Malaysian economy has made significant strides since independence as reflected by its remarkable growth, driven by a series of structural reforms that began in the 1970s. The launching of the New ECONOMIC Policy (NEP) in 1971 was a turning point in the history of the Malaysian economy. The overarching goal of NEP was national unity achieved through poverty eradication and societal restructuring.

7 In 1991, the country embarked on Vision 2020 to continue its journey to reach the status of an advanced and high-income nation by 2020, moulded according to its own features. To accelerate the progress, the Government introduced the National Transformation Policy in 2010. Figure Malaysia Towards National Transformation 2050. Figure Malaysia Towards National Transformation 2050. Malaysia to achieve a prestigious Vision TN50 Economy and trade value Malaysia to achieve and renowned a and status, prestigious to be was firstVision TN50 during the introduced Economy and trade (in current prices) value and renowned among the topstatus, and to be 20 advanced was first introduced tabling during the of 2017 Budget to(in current reach RM2 prices). trillion among the top countries 20world in the advanced tabling of 2017 Budget to reach RM2 trillion countries in the world 2016 2020 2025 2030 2050.

8 2016 2020 2025 2030 2050. High-income advanced economy Industrial Revolution begin High-income advanced economy to createRevolution Industrial impact begin Source: Falsafah Asas TN50. to create significant impact Source: Falsafah Asas TN50. What is National Transformation 2050? In 2016, the Government announced the National Transformation 2050 (TN50) to propel the country for the next 30-years. TN50 serves as a national discourse geared towards charting the nation's direction via a new canvas. Spanning three decades, TN50 will transform the country to be a calibre state with par excellent mindset. The overriding goal of the TN50 is for Malaysia to become the top 20 countries in ECONOMIC development, social advancement and innovation by 2050. TN50 is formulated by the people for the people. It adopts a bottom-up approach to ensure that the TN50. is inclusive, comprehensive and incorporates aspirations from all segments of the society.

9 In this regard, the Government started engaging the youths since early 2017 before extending it to other levels of the community. Why National Transformation 2050? TN50 will prepare the nation for the next 30 years to withstand the challenges ahead to remain relevant and competitive in the fast-evolving world. These include geopolitical shift; rising era of digitalisation and breakthrough technologies; rapid urbanisation and climate change; and ageing population. TN50 is formulated through new formats, involving various engagements ranging from town hall dialogues to online To date, more than one million youths provided about 50,000. aspirations. 1. ECONOMIC Planning Unit (2017). Chapter 4 10/20/17 9:43 PM. ECONOMIC REPORT 2017/18 5. Geopolitical Shift The E72 economies are projected to drive the world economy between 2014 and 2050, expanding at an average rate of per annum.

10 Meanwhile, the G73 group is expected to grow at a more moderate pace of per annum over the same period. Notably, China and India are projected to be the largest economies in the world by Towards this end, TN50 will focus on leveraging our strengths and comparative advantage amid the changing global order. Other measures include strategic investment and trade activities to benefit from the shift in global ECONOMIC power. Digitalisation and Breakthrough Technologies The rise of digitalisation stemming from Industrial Revolution is supplanting many jobs in sectors that were previously labour-intensive. Among the skills required globally by 2020 are complex problem solving; critical thinking; creativity; and people Lack of these skills raises the concerns as most of the employment in the country has been concentrating on the low- and semi-skilled jobs. Therefore, TN50 will include policies to attract high-end investments to generate modern occupation and ensure employability of workers through upskilling, reskilling and life-long learning.