Challenges Faced by Malaysia in Its Journey Towards a High Income Nation at 2020

1. entering The rush minister Najib Tun Razak, on 2 may 2010, announced his new course named as new-fangled sparing perplex (NEM) to make Malaysia a unquestionable and mel baseborn income field at 2020. To be more than than specific the main target is to maturation the per capita income to 17,700 USD from 7558 UDS by 2020. hardly what atomic number 18 the hassles for the Malaysia in this manner to pay off a developed and gritty school-income state? 1- The scotch Transformation And rent For New Institutions In the onetime(prenominal) years, Malaysia has apply a conjure upth model to become a middle-income country. Now, it has decided to become a high-income country.So, they ontogenesis model has to be changed to more or less other(prenominal) model to guarantee the goal of bonny a high-income country. In this way, Malaysia has to perform its economical transmuteation plan, develop, and engender the organizations and institutions needed for this trans formation. 2- consent and Coalition of the Nation and Government Malaysia as it is known for being the truly Asia, its universe is comprised of various ethnics, with various cultures, religions and involves. One convocation wants to bind a pragmatic aspect to the economic and politic issues, another want to hold up an ideological perspective.More than 50% of the existence is Muslim with Islamic views and having the presidency reason. On the other overhaul, about 30% of the cosmos is Chinese with an economic power and having a strong presence in the market place, which most of them atomic number 18 Christians or Buddhists. But we know that to r severally to big goals a unity amongst this ethnics and coalition in the politics and thrift, in addition stableness in the policies and regulations, and the perspective of the nation and judicature toward the economy, policy and multinational issues is genuinely life-sustaining and important.In fact, the Malaysia people nee d to lift together as a nation to embrace change, be adaptive to nows environment and increasingly globoseized and chop-chop changing world. 3- Politics and Opposition hosts forthwith, it seems that resistance groups raised from inside of Muslim population keep an increasing presence in the policy. However, they do not have the get word of government nevertheless they be supply to do that. They are pretty general in the society and also they have taken the majority of benches of Parliament in or so of states.The transformation of power between the circulating(prenominal) politicians and the oppositions is not problematic itself, just the problems are due to that the oppositions groups, and specifically their leader Dato Seri Anwar Ibrahim are not agree with New Economic Model (NEM) introduced by the prime minister Najib Tun Razak. They criticize the NEM and do not believe on it. So if in the future the opposition groups become more powerful and take the government there depose make signifi burn downt changes in the policy and economic plans.The inst capacity in the policy and economic planning could be perilous for the Malaysia Vision 2020. 4- Malaysia, an Open and venial Economy Malaysia is country with an open and tiny economy. However, it had been prosperous to obtain its goals in the past, only when it also needs to consider its limitations, as it is considered wisely by the decision makers. The population is not very spacious with just 28 million people the graphic resources are not very overflowing in all of cases and the country in not a very massive country equivalent ground forces, China or Russia.Therefore, it is very important for Malaysia to concentrate on its advantages and opportunities. I believe Malaysia has to develop warlike niches integrated into global value chain. This office being really good at what it produces. Malaysia needs to emphasize more on the specific niches and and at the same term be a part of a bigger value chain. 5- Development of Malaysias Intangible Assets Both the NEM and 10 MP (10th Malaysia plan), emphasize on the development of impalpable assets.The Schumpeterian economic model that Malaysia has targeted on to transform from a middle-income to high-income nation rests on the whole step of intangible assets. Quality of human corkings, transformation and yeasty thinking, institutions and the social jackets are important for forest of intangible assets. 6- Value Added Economic Activities quite of Labour-intensive Industries A higher(prenominal)-income nation meat higher wages for endureers. And higher wages for workers means less competiveness in attracting orthogonal investors.Based on the central savings bank annual report for the 2010 the emergence of lower-cost competitors in the region, notably China, Indonesia and Vietnam, has affected Malaysias private-enterprise(a) advantage in labour-intensive industries, in this regard unusual investiture ha ve in recent years have shifted towards higher value-added economic activities. So, it seems that the only way for the Malaysia is to do more efforts to dower the industries with higher value added. On the other hand because higher value added industries must have more inquiry activities, more high tone of human capitals.Innovation and creativity extremely is based on the explore and timbre of human capital. And the human capital and research are products of high quality universities. in my opinion malaysia in on the right track to develop research universities which are more envolved in the original and forward-looking research activities, but on the other hand there near problems in the composition of savants in the Malayan universities. that is discussed in the next point. 7- First course of instruction Universities to Reduce forefront Drain and advance the Researchers (Specifically, Natives) After Graduation in the clownishHowever, it seems that Malaysia is very s erious in developing the research universities, but today Malaysia is a destination for students of other developing countries, specifically Muslim countries. Though a large number of students in the high quality universities are foreigners and specifically in the refine and postgraduate levels. However, presence of globalist student specially has some monetary benefits for these universities and in addition nooky boost the research activities and research project defined infra educational programs, but it have some disadvantages too.To clarify more, when these world(prenominal) student destination their programs most of them are reluctant to bank check more in Malaysia, so they go back up to their shoes countries or graft to some western or other developed countries. It means that Malaysia nevertheless is nurturing research worker to send them to developed countries (the same problem is in other developing countries). opus, ordinarily fresh researcher and graduates must be employed in the modernistic and creative companies that produce high value-added products.However, developed countries ever have their attractiveness for the highly ameliorate people, but generally the native graduates are less giveing to leave their domicil country (if they can educate in first family universities with a high salary base after graduation) than international student which come to Malaysia to air to another country or go back to their home countries. Therefore, it is a key fixings to develop the Malaysian universities to the first class universities to reduce the brain drain phenomena in the Malaysia and provide the creative and innovative industries with generous resources of high-quality human capitals.In fact, the human capital is the backbone for each creative and innovative firm and without that, they can do nothing. We can deduce Malaysian universities performance has a solid effect to reach the 2020 vision. 8- Sustainability through with(pr edicate) Branding by internal Investors Today Malaysia is a destination of foreign investments. While for the most part foreign investors are international companies that look for a cheap work force, they choose the low-cost countries to establish their factories.On the the other hand they usually transfer their factories, and keep their innovative centers, research centers and digit offices in the home countries, which are mostly developed countries. Therefor they have the ability and authority to easily transfer their factories to each other country that suggests them more advantages than the current country (Malaysia). It means that however, have had precious and substantial developments in the past years, but these development could not be considered as sustainable developments.If fact economic growth, low unemployment rate and foreign investement and labour-intensive industries are in contradiction with the vision of 2020, outwardly. That is wherefore the Malaysian governme nt knows that it has to emphasize more on the niche industries, with higher value-added and a bigger value chain. In addition, because international companies keep their design offices on their homelands they do not help the research activities to grow in the Malaysia. Though, the brain drain problems still remain due to underdevelopment of universities and research institutions.But, by introducing and developing house servant brands with an international market and international famousness, we can be lustrous that they can reduce the brain drain, empower research institutions and gift the Malaysia a sustainable growth and development. Another reason that can be mentioned for developing original Malaysian brand is that however, the Malaysia it going going come along than its regional competitors to a high-income nation, there is a probability that these competitors implement some alike(p) plans in their countries.And because at that time they have to implement similar policies li ke emphasise the high value-added or creative and innovative industries, so they can be a potential threat to the future scrap of the Malaysia in attracting foreign investors in these kinds of industries. 9- house servant Private Investment instead of exotic Investement However, foreign investment had a significant effect on the economic growth of both country usually the domestic investments provide a more sustainable development for the country.Certainly, foreign investment has its advantages for every economy (for the Malaysia, too), but too ofttimes dependence on the foreign investment has its disadvantages, too. I believe that the Malaysia has to emphasize on the domestic private investement, beside foreign investement. Domestic investors have religion, historical, national, and patriotic loyalty to their home country. While foreign investors are very sensitive and spiky. They will leave the country soon after than they find a better place for investment. In addition, inte rnational political issues can affect foreign investement.Universal superpowers can enact some sanctions formally, or informally to affect and flash Malaysias economy (like the Iran) if the Malaysia want to importune on its national interests or beliefs which are in conflict with those superpowers interests. 10- Global Economic Conditions and Crises As we know in the past decade, the global economy has experienced many crises. 1998 Southeast Asia, 2002 dot-com bubble burst, 2008 financial crisis, and now European financial crisis, dapple still we can see the 2008 crisis is not finished. In addition that there are not good signs for these two uttermost(a) crises to finish soon.Some economists believe that USA will have a nook and depreciation economy at least in next few years, something like the Japans lost decade. develop strong bonds with global economy can benefit the Malaysias economy when the economy is in good modify. But if the global economy or regional economies that the Malaysia has unwashed interest with them experience bad conditions, the Malaysia will be affected badly, too. May be the only problem that the Malaysia cannot find an rough-and-ready solution for that is the global economic condition and crisis.Bibliography Central Bank Malaysia. (2010). Annual Report. Kuala Lumpur. Ministry of Eduation. (2011). Economic Transformation Programme A Roadmap for Malaysia. Kuala Lupmur. Oxford line of descent Group. (2011). The Report Malaysia 2011. London Oxford Business Group publication. World Bank. (2011). Malaysia Economic Monitor Brain Drain. Bangkok World Bank. YAKCOP, T. S. (2011, July 26). MALAYSIAS stinting CHALLENGES CHARTING POLICY RESPONSE TOWARDS A in high spirits INCOME ECONOMY. Kuala Lumpur, Malaysia.