The Malaysian story involves a farsighted leadership that has mobilized the considerable assets of a resource-rich country to translate a long-term vision of nation building into action and transformational results.
... See More + This report analyzes what Malaysia did to achieve transformative results in agriculture. It focuses on four main areas in which the Malaysian experience is distinctive and which have been critical to its success, as follows: (1) The role of the public sector, encompassing national leadership, vision, and government action; (2) The main drivers of transformation and inclusive growth; (3) The role of value chains; (4) The inclusiveness of Malaysia's agricultural transformation.
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The World Bank Group Global Knowledge and Research Hub in Malaysia is experiencing a year of transitions: firstly, moving into our next phase of operations, beginning July 1, 2020; and second, undergoing an internal transition in the institutional leadership of the World Bank Group (WBG).
... See More + This shift in emphasis towards intensifying WBG efforts to support the goals of all countries to achieve greater development progress reflects and reinforces the Hub’s direction in the next phase of its work in Malaysia. While we continue our efforts in sharing Malaysia’s development experiences and innovations with other countries through South-South knowledge exchanges and analytical products and vice versa sharing this global experience with Malaysia, the Hub will also be paying greater attention to the policy-relevant and country-level dimensions of its work towards influencing the realization of better country outcomes.
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Many emerging economies have skills shortages but fail to effectively deploy students andjob seekers towards filling those shortages. In emerging economies, new technologies,digitization, automation, and other trends like Industry 4.0 result in a constantly changing demandfor sophisticated skills.
... See More + In this environment, there are often students and job seekers who couldpotentially fill skills gaps but face significant challenges in identifying job opportunities andthe skills needed to obtain them. The schools, training centers, and public service providers thatare responsible for preparing the workforce to fill skills gaps often face similar challenges in terms of deploying attention and resources towards filling those gaps. In Malaysia, the Critical Skills Monitoring Committee (CSC) is charged with producing a Critical Occupations List to serve as a platform for coordinating human capital development policies. The CSC is a specialized interagency body that was established as part of the Eleventh Malaysia Plan to monitor skills imbalances in Malaysia. To do so, the CSC created an annual Critical Occupations List (COL) of occupations that are middle- or highskilled, sought-after, and strategic. The COL has evolved during the last several years to become a best-practice tool for monitoring skills. The COL is updated regularly and improved continually, is based on rigorous evidence, and is widely circulated. The production of the list is undertaken by the CSC and incorporates a wide range of input from both the public and private sector.
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The promotion of economic opportunities for women is one of the most promising avenues for Malaysia's future development. Closing gaps between men's and women's economic opportunities could boost Malaysia's income per capita by 26.2 percent.
... See More + Against this backdrop, the report relies on a comprehensive mixed-methods approach to investigate constraints on improving women's economic opportunities. It finds that Malaysia's female labor force participation rate has risen significantly in recent years but is still low compared to other countries in ASEAN. In addition, there are wide gender gap in access to jobs that pay well and offer benefits, social protection, and career prospects. Policy directions for improving the economic opportunities for women in Malaysia should include: (1) expand the availability, quality and affordability of child and elder care to enable more women to stay in the labor market and to work in more productive jobs; (2) strengthen the protection of informal workers and the productivity of workers and business owners to harness women's full economic potential; (3) pursue planned reforms of the legal environment and strengthen the implementation, monitoring and enforcement of laws and regulations, (4) improve support for parents, in line with international legal norms and (5) address gender norms and attitudes in education and among the wider population.
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Malaysia has focused on civil service reforms to improve the efficiency of public service delivery. This Research and Policy Brief argues that this method needs to be supplemented with an approach that makes officials more directly accountable to citizens.
... See More + Improving governance by engaging citizens and strengthening local institutions is a policy implication that has lessons not only for Malaysia, but also for other countries around the world.
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Brief 138279 JUN 01, 2019
Abdul Kader,Shahridan Faiez Bin Mohideen; Rao,VijayendraDisclosed
Growth moderated in Q1 2019, owing to weaker investment growth and inventory drawdowns.Domestically, an easing of export growth, together with a decline in investment, has resulted in Malaysia's economic growth becoming more dependent on consumption.
... See More + In 2019, Malaysia's economy is expected to expand at a relatively moderate rate, with risks tilted towards the downside. The GDP growth rate is projected to reach 4.6 percent in 2019, 0.1 percentage points lower than in the previous forecast, reflecting weaker-than-expected investment and export activity observed in Q1 2019. Potential risks to growth include those related to escalating trade tensions, a sharper than-expected slowdown in major economies, as well as volatility in financial and commodity markets. Relatively high levels of private and public debt also pose risks to growth. In the short term, policies should focus on boosting resilience and protecting the vulnerable. In an environment of growing uncertainty, it is particularly important to rebuild fiscal policy buffers, to facilitate private investment, and to ensure adequate social protection for low-income and vulnerable households. In the medium term, bold reforms will be needed to boost human capital and to raise productivity. As Malaysia proceeds on its transition to a high-income and developed economy, incremental growth in incomes will be increasingly dependent on improvements in human capital and productivity. In turn, this will require a multi-year reform agenda to improve the quality of workforce skills and learning outcomes from the education system. The Malaysia Economic Monitor (MEM) consists of two parts. Part 1 presents a review of recent economic developments and a macroeconomic outlook. Part 2 focuses on a selected special topic that is key to Malaysia's medium-term development prospects and the achievement of shared prosperity. In this edition, the focus of the special topic is on re-energizing the public service to better enable it to facilitate Malaysia's future development.
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Economic Updates and Modeling 138390 JUN 01, 2019
Record,Richard James Lowden; Chong,Yew Keat; Teh Sharifuddin,Shakira Binti; Bajpai,Rajni; Govindasamy,JeevakumarDisclosed
Good Regulatory Practices (GRP) are a systematic application of tools, institutions, and procedures that governments can mobilize to ensure that regulatory outcomes are effective, transparent, inclusive, and sustained.
... See More + Other terms used for GRP include ‘regulatory governance’ and ‘better regulation.’ Among the most common GRP tools used by governments are: public consultation, ex ante regulatory impact analysis (RIA), ex post review of existing regulations, administrative simplification, access to laws and regulations, forward regulatory planning, and regulatory oversight functions. This report focuses on GRP because by improving the regulatory environment, they can boost conditions for sustainable growth and investment. This is evidenced, among others, in the World Bank Group’s Global Investment Competitiveness Report 2017-2018, which surveyed 750 investors in developing and transition economies. The report found that next to ‘political stability and security’, the ‘legal and regulatory environment’ was the most important consideration of senior executives when making investment decisions (WBG, 2018). Similarly, evidence shows a positive relationship between the improvement of the regulatory environment and aggregate investment (and economic growth), suggesting that countries stand to gain from a broad push for streamlining regulations and procedures affecting business (Eifert, 2009). The report reflects on Malaysia’s formal experience with GRP because, although launched only relatively recently, results have been remarkable. Malaysia has demonstrated that more business-friendly regulations and a more favorable regulatory environment can contribute to economic growth and investment. Moreover, Malaysia’s regulatory reform success has been reflected in many international indicators, such as the Global Indicators of Regulatory Governance, Worldwide Governance Indicators, Doing Business, (all produced by the WBG) and those from the World Economic Forum that measure the burden of government regulations and transparency of the policymaking process. International indicators measuring GRP performance show that Malaysia is converging with high-income OECD countries.
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Waqf is a potent tool for mobilizing resources to meet societal needs by the self-sustaining contributions of private donors rather than by governmental borrowing or spending of tax money.
... See More + Despite their social and economic importance, the potential of waqf remains largely unrealized because of the critical challenges of liquidity management and the shortage of viable investment opportunities. This report, which is jointly produced by the World Bank Group, International Centre of Education in Islamic Finance (INCEIF) and International Shari’ah Research Academy for Islamic Finance (ISRA), highlights the importance of waqf in mobilizing and maximizing resources to meet societal needs. The report also emphasizes the legal and regulatory frameworks that enable the implementation of waqf in selected countries. The report is expected to raise awareness on the importance of waqf and its huge potential for public good.
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The Country Opinion Survey in Malaysia assists the World Bank Group (WBG) in gaining a better understanding of how stakeholders in Malaysia perceive the WBG.
... See More + It provides the WBG with systematic feedback from national and local governments, multilateral/bilateral agencies, media, academia, the private sector, and civil society in Malaysia on 1) their views regarding the general environment in Malaysia; 2) their overall attitudes toward the WBG in Malaysia; 3) overall impressions of the WBG’s effectiveness and results, knowledge work and activities, and communication and information sharing in Malaysia; and 4) their perceptions of the WBG’s future role in Malaysia.
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Malaysia has experienced a rise in foreign labor inflows in response to steady economic expansion and demographic changes. The foreign workforce has been hovering around 15 percent of the total labor force in recent years according to labor force surveys by the Department of Statistics Malaysia (DOSM).
... See More + Foreign labor is concentrated in low-skilled occupations, and in Malaysia the term foreign worker specifically implies a foreigner doing low-skilled work. Foreign labor makes important contributions to the labor market and economic growth. Yet, concerns over irregular foreign workers have been growing. Heated discussions have taken place on the number of irregular foreign workers in Malaysia as there is no definitive estimate of the number of irregular foreign workers. To illustrate the magnitude, the Ministry of Home Affairs (MOHA) reported that four out of ten foreign workers are irregular, based on its enforcement and amnesty program operations, suggesting the number of irregular foreign workers be about 1.2 million in 2017 and the total foreign worker population of about 3 million. This report attempts to estimate the number of irregular foreign workers in Malaysia. Its contributions to this field are the following: first, it develops a conceptual framework that lays out potential entry points of irregular foreign workers. Second, it identifies alternative administrative data sources that can help estimate the magnitude of irregular foreign workers at each entry point. Third, it identifies methods that can be employed to measure irregular foreign workers with the current data availability and outlines what can be carried out further in the future using immigration department’s microdata.
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Report AUS0000681 MAR 28, 2019
Yi,Soonhwa; Tan Wei,Kershia; Loh,Wei San; Simler,KennethDisclosed
This paper sheds light on key innovation patterns and constraints within a selected set of developing East Asian countries (Cambodia, China, Indonesia, the Lao People’s Democratic Republic, Malaysia, Myanmar, the Philippines, Thailand, and Vietnam).
... See More + It follows a comprehensive approach about national innovation systems while highlighting the supply and demand dimensions of innovation as well as the markets where firms make accumulation decisions for different forms of capital (knowledge capital, human capital. and physical capital). The paper presents a set of empirical exercises drawing from various data sets. The results corroborate the idea of the importance of adopting a broad view of innovation policy and investing in missing complementary factors. Although investment in research and development is key to boost innovation, it is also crucial to have business and regulatory environments that are conducive to overall firm performance and capital accumulation (not only knowledge capital), as they are expected to improve innovation returns. In addition, the results suggest that other innovation inputs aside from research and development matter for innovation activities, such as training for innovative activities, acquisition/licensing of technology, and managerial practices.
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Policy Research Working Paper WPS8706 JAN 17, 2019
Firm-level survey data on registered private firms reveal that firms in Malaysia have much lower labor productivity than their counterparts in 43 upper-middle-income and 14 high-income countries.
... See More + It will be difficult for Malaysia to achieve the high-income status without a significant improvement in labor productivity of the private sector firms. The lower productivity of Malaysian firms is pervasive and holds across sectors and firm-sizes. Drivers of productivity such as outward orientation of the firms, innovation, training of workers and top manager’s experience are all lagging in Malaysia compared to the high-income and upper-middle-income groups. Malaysia does outperform in terms of low regulatory burden on the firms and better quality of power supply. However, corruption and crime are worse in Malaysia than in the high-income and even upper-middle-income countries.
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Growing risks weigh on the economic outlook. On the external front, a slowing global economy, rising concerns regarding the impact of US-China trade tensions and increased volatility in financial and commodity markets all weigh on the prospects for Malaysia’s economy.
... See More + On the domestic side, increased reliance on oil-related revenue amid heightened uncertainty around the commodity price forecasts and relatively high levels of private and public debt pose risks to growth. Efforts to sustain growth in the near term have to be carefully balanced with the need to restore fiscal buffers. In the short term, fiscal consolidation efforts are expected to be driven primarily by measures to reduce expenditure. However, efforts to broaden the tax base, to diversify revenues away from unstable oil and gas revenues, and to introduce greater progressivity, will require a multi-year reform agenda. Restoring fiscal buffers will be necessary to ensure that Malaysia is better prepared to respond to future macroeconomic shocks. The Mid-term Review of the 11th Malaysia Plan and the 2019 budget outline the Pakatan Harapan government’s new priorities, with an emphasis on strengthening governance and improving accountability. The government has also expressed a commitment to reform the role of the state in business to level the playing field and to unlock future productivity growth. Reforms to increase the effectiveness of pro-inclusion expenditure programs have the potential to achieve greater impact with lesser public resources. The Malaysia Economic Monitor consists of two parts. In this edition, the focus of the special topic is on realizing human potential. Accelerating human capital development will be critical for enabling Malaysia’s successful transition to a high-income and developed nation. With the advent of digital and other disruptive technologies, there has been a significant changein the nature of jobs, with an increasing premium on higher-order cognitive skills, such as complex problem solving, socio-behavioral skills, reasoning and self-efficacy. Building these skills requires a transformation in the way that Malaysia nurtures, invests and protectsits human capital. According to the World Bank’s new Human Capital Index, Malaysia ranks 55th out of 157 countries. While Malaysia performs well in some components of the index, it does less well in others. To fully realize its human potential, Malaysia will need to make further advances in education, health and nutrition, and social protection outcomes. Key priority areas include enhancing the quality of schooling to improve learning outcomes, rethinking nutritional interventions to reduce childhood stunting, and providing adequate social welfare systems to enable households to invest in human capital formation.
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Economic Updates and Modeling 132903 DEC 13, 2018
Record,Richard James Lowden; Chong,Yew Keat; Teh Sharifuddin,Shakira Binti; Aturupane,Harsha; Teo,Hui Sin; Schmillen,Achim Daniel; Moroz,Harry EdmundDisclosed
Effective fiscal policy depends on the amount of budget resources available to raise spending or lower taxes without jeopardizing fiscal sustainability.
... See More + This resource availability is often called fiscal space. Since the global financial crisis, fiscal space in emerging market and developingeconomies has narrowed. This makes these economies more vulnerable to sudden spikes in financing costs and limits their ability to counteract adverse shocks.
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Sixteenth in a series of annual reports comparing business regulation in 190 economies, Doing Business 2019 covers 11 areas of business regulation.
... See More + Ten of these areas - starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency - are included in the ease of doing business score and ease of doing business ranking. Doing Business also measures features of labor market regulation, which is not included in these two measures. Doing Business provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. This economy profile presents indicators for Malaysia; for 2019 Malaysia ranks 15
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This paper documents the best practices and practical lessons learned from Malaysia’s largest mandatory public provident fund, the Employees Provident Fund (EPF).
... See More + The objective of this paper is to increase the knowledge base of efficient pension funds for developing countries, drawing from Malaysia’s experiences. Findings include key critical factors that contributed to the successof the EPF, from a small pension fund set up in 1949, to become one of the largest pension fund among developing countries and the 15th largest in the world. This paper summarizes the EPF’s key strategies in corporate governance, investment, and operational strategies, as well as policies deployed by the EPF in managing its assets. The lessons from the EPF come from three main factors. Firstly, the EPF has developed a strong governance structure which discourages external politicalmeddling and encourages transparency and accountability. Secondly, the EPF’s investments strategy, guided by its Strategic Asset Allocation, including diversifying to foreign markets and new asset classes, has enabled the Fund to produce enhanced returns. Thirdly, the EPF’s operational effectiveness which is driven by the professionalism of their employees and their continuous improvement for members’ benefit. Nonetheless, several challenges remain in the present and in the future. The first challenge involves demographic changes as Malaysia is ageing more rapidlythan other countries and even now a sizable number of workers do not have the recommended minimum savings level needed for retirement. A revamp of the current model is needed to ensure that members will be financially independent post-retirement. The second challenge is lack of coverage: only half of those in the labour force are contributing to the EPF, which leaves the other half without oldage pension coverage. A reform agenda needs to expand coverage particularly for the self-employed. The final challenges are maintaining public trust and staying relevant, especially in the age of the fourth industrial revolution and the emerging gig economy that has different needs and demands. This case study will hopefully be of benefit to both policy makers andpractitioners, particularly in the developing world. It could help play an important part in designing a successful provident fund to contribute to a comprehensive social safety net for citizens.
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Working Paper 131289 OCT 01, 2018
Price,William Joseph; Khalif,Muhammed Abdul; De Luna-Martinez,Jose; Zhang,Wei; Arshad,Ashraf BinDisclosed
This report is an inaugural issue in a new series that aims to offer a fresh look at how developing countries are overcoming persistent problems in public sector management.
... See More + Significant improvements in public sector performance are being evidenced across the developing world today, as government officials and political leaders find new and innovative ways to tackle long-standing challenges. Part I of this report demonstrates that public sector performance is being pursued diligently and successfully across a variety of country contexts, including in low-income environments. Through surveying its governance specialists from around the globe, the World Bank has assembled a collection of 15 cases that showcase how lessons from global experience are being adapted and applied in practice. The report also explores common success drivers that appear in each of the cases. Part II focuses on a special, cross-cutting topic that is critical to public sector performance -- policy and inter-agency coordination. As the responsibilities of government have grown in volume and complexity, policy and program coordination has become ever more challenging, and the stakes have never been higher. Enhancing coordination will depend not only on the adopted formal institutional mechanisms, but also on their interplay with the broader institutional environment and with other processes that influence coordination.
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This report is an inaugural issue in a new series that aims to offer a fresh look at how developing countries are overcoming persistent problems in public sector management.
... See More + Significant improvements in public sector performance are being evidenced across the developing world today, as government officials and political leaders find new and innovative ways to tackle long-standing challenges. Part I of this report demonstrates that public sector performance is being pursued diligently and successfully across a variety of country contexts, including in low-income environments. Through surveying its governance specialists from around the globe, the World Bank has assembled a collection of 15 cases that showcase how lessons from global experience are being adapted and applied in practice. The report also explores common success drivers that appear in each of the cases. Part II focuses on a special, cross-cutting topic that is critical to public sector performance -- policy and inter-agency coordination. As the responsibilities of government have grown in volume and complexity, policy and program coordination has become ever more challenging, and the stakes have never been higher. Enhancing coordination will depend not only on the adopted formal institutional mechanisms, but also on their interplay with the broader institutional environment and with other processes that influence coordination.
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The fifth edition of the Development Digest begins with an article on why it’s important to look beyond averages when it comes to the country’s development, followed by a look at the region’s success in the face of global uncertainty.
... See More + The Digest also touches on how inclusiveness can come about in a new Malaysia, the role of the digital economy as a new driver of development, and the future of work with automation on the horizon. Other articles include the issue of financial integration in the region, the use of Islamic finance toward sustainability, development financial institutions, budgeting for performance in Malaysia, and fighting HIV through harm reduction programs in the country.
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Malaysia’s remarkable transition from low-income to upper middle-income status has occurred in parallel to the microelectronics revolution. Most of Malaysia’s citizens are connected to the internet, and there is more than one mobile cellular subscription for each individual.
... See More + Malaysia needs to create a dynamic ecosystem for its digital economy that embodies changes to its infrastructure, regulations, skills, and public finance. This report examines three interrelated issues of digital connectivity, digital entrepreneurship, and taxation of digital platforms that are closely aligned with Malaysia’s goal of becoming the e-commerce hub of the region. Following an overview of the report in Chapter 1, Chapter 2 details digital adoption in Malaysia, with an emphasis on how businesses are using but failing to fully exploit digital technologies to communicate with customers, market goods, and meet other core business functions. Chapter 3 discusses the information and communications technology (ICT) infrastructure on which the digital economy is built, including persistent challenges related to the affordability and quality of fixed internet access that arise from high prices, market concentration, and an underperforming regulatory regime. Chapter 4 looks at the promise and challenges of digital entrepreneurship in Malaysia, highlighting the central role of government initiatives to date and what is required to fully empower the private sector. Chapter 5 explores options for taxing Malaysia’s digital economy, including the impact of recent reforms to international standards. Finally, Chapter 6 presents a summary of key policy recommendations. The report covers an important, but by no means exhaustive, set of issues that Malaysia will need to address in order to maximize the opportunities provided by the advent of digital technologies and should be seen as the starting point in these endeavors.
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Working Paper 129777 SEP 01, 2018
Record,Richard James Lowden; Larson,Bradley Robert; Teh Sharifuddin,Shakira Binti; Chong,Yew KeatDisclosed
