MALAYSIA needs to move its economy from a middle-income to a high-income model by focusing on domestic consumption and diversifying exports to leverage on the growth of China, India and Middle East.
In stating this today, minister in the prime minister’s Department Tan Sri Nor Mohamed Yakcop said there is an increasingly ambitious target to sustain economic growth of 7.5 percent and this is only possible if the economy is re-energised towards higher income and growth trajectory.
“We need a model which is more relevant to current times. To move to a higher income-based economy, we have to move towards a knowledge- and innovation-based economy where skilled labour is needed,” he said during a brainstorming session with a World Bank experts team to develop strategies towards higher growth and income.
“We are trapped in a middle-income gap,” Nor Mohamed said.
He said the new economic model based on higher growth and income will be ready and implemented when announced by prime minister Datuk Seri Najib Tun Razak.
Arizona State University’s economics professor, Edward C. Prescott, said to move the economy to a higher growth and income model, Malaysia needed the commitment of the people.
“However, there may be some resistance to change,” he told reporters after the brainstorming session.
Prescott, a Nobel Prize winner in economics, is a member of the World Bank experts team.
Another member, Brookings Institution’s Wolfensohn Centre for Development, Global Economy and Development’s senior fellow, Homi Kharas, said there is an impetus for change and rethinking on policies and strategies in Malaysia every 10 years based on economic developments.