Malaysia: a case study in how to stay stuck in middle-income trap
Malaysia is breaking free of the middle-income trap and becoming a high-income country, claim many observers.
They base their prognosis on improved Gross National Income (GNI), fiscal deficit position and falling government debt.
“Malaysia’s GNI at US$10,570 [Bt365,000] per capita is only 15 per cent away from the high-income benchmark of $12,475,” the government reports.
However, there is a fly in this ointment of optimism. The macro-economic figures might look great on paper, but everyday life in Malaysia is governed by microeconomics that tell a very different story.
For example, the health of our economy cannot be judged by palatial homes in urban areas and swanky Kuala Lumpur condominiums. That affluence should be weighed in balance with the daily struggle of millions in poverty-stricken Keningau, Beaufort and Nabawan in Sabah, Sri Aman, Mulu and Mukah in Sarawak and the rural areas of peninsular Malaysia.
Their quality of life has been eroded by a dramatic rise in prices of basic essentials caused by the increase in cost of raw materials and compounded by the falling ringgit, the imposition of the Goods and Services Tax and withdrawal of state subsidies.
So are we really out of the middle-income trap, or are we descending towards the lower-income abyss?
The benchmark of a good economy is strong purchasing power, aided by subsidies and other relevant elements targeted to allow the lowest level of poverty-stricken citizens to lead a respectable life without having to forage or steal to make ends meet.
What we need are long-term solutions to empower these bottom-rung millions to generate economic activities that are self-sustaining and not overly dependent on the government.
Mohamad Ghouse Nasuruddin
University of Science, Malaysia
(From the Star/ANN)
