Private sector must drive Malaysia’s bid for high-income status, says minister

10-Oct-2018 Intellasia | Malay Mail | 6:00 AM Print This Post

The private sector must take the lead in growing the economy so Malaysia can be a high-income nation, Finance minister Lim Guan Eng said today.

Lim stressed that the government could no longer be the main driver of economic growth, as public coffers were affected by alleged excesses of the previous Barisan Nasional (BN) administration.

“Only a private sector-led growth can allow Malaysia to become a high-income economy.

“The days of the government leading us to this promised land, I think, cannot be sustained, especially when we face these fiscal challenges,” he said in his luncheon address at the Khazanah Megatrends Forum 2018 here.

But Lim also said that the federal government would play a supportive role to help private companies drive the growth of Malaysia’s economy.

“Amid challenges to public finance, this government believes that the private sector must take the lead in steering the economy forward.

“However that does not mean the government cannot play a role. The government is committed to creating an environment where the private sector can thrive,” he said.

Lim said the federal government would support the private sector when it needs to innovate to diversify their business such as moving to different products, or going into a different place or industry.

“This needs to be a collaborative process. If there are ways in which the government can help either minimise the risks of innovation or improve the general business ecosystem in Malaysia, we will do it,” he said.

Using a term coined by UK-based economist Mariana Mazzucato, Lim said the private sector tends to make investments after an “entrepreneurial state” has made the initial high-risk investments.

Lim also cited University of Cambridge economist Ha-Joon Chang’s work which showed a history of government-led initiatives in developed nations to boost their countries’ economic diversity such as Nokia in Finland, cars in Japan, electronics in Korea and the internet and GPS in the US.

Despite the willingness to invest, Lim said the government will focus on industries that are high value-added and that will push companies to be globally competitive, besides being in line with future megatrends such as those related to climate change and Industry 4.0.

“We will not simply support a new industry just because it is new. While we do need to pursue economic diversification, not all diversification makes sense.

“We will support a new industry only if it benefits Malaysia’s economic future. Only then can we really move up the value chain and move towards a higher-income, higher-wage economy,” he said.


Category: Malaysia

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