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

1. Introduction The prime pastor Najib Tun Razak, on 2 may 2010, announced his new program named as unexampled sparing Model (NEM) to make Malaysia a createed and risque income artless at 2020. To be more proper(postnominal) the main buns is to increase the per capita income to 17,700 USD from 7558 UDS by 2020. except when what argon the problems for the Malaysia in this way to conk out a substantial and high-income state? 1- The Economic Transformation And Need For New Institutions In the past years, Malaysia has used a growth copy to scram a middle-income country. Now, it has decided to become a high-income country.So, they growth model has to be changed to another model to guarantee the goal of becoming a high-income country. In this way, Malaysia has to perform its economical transformation plan, develop, and engender the organizations and institutions needed for this transformation. 2- Unity and compression of the Nation and Government Malaysia as it is known fo r being the truly Asia, its macrocosm is comprised of various ethnics, with various cultures, religions and wants. One group wants to pack a prosaic perspective to the economic and politic issues, another want to open an ideologic perspective.More than 50% of the population is Muslim with Islamic views and having the government business office. On the other hand, about 30% of the population is Chinese with an economic power and having a strong presence in the market, which more or less of them argon Christians or Buddhists. But we know that to r apiece to big goals a unity betwixt this ethnics and coalition in the politics and delivery, in addition stability in the policies and regulations, and the perspective of the nation and government toward the economy, policy and internationalistic issues is very merry and important.In fact, the Malaysia people need to rally together as a nation to embrace change, be adaptive to right aways environment and increasingly globalized and rapidly changing world. 3- Politics and Opposition Groups Today, it seems that opposition groups increase from inside of Muslim population have an increasing presence in the policy. However, they do not have the control of government only they ar planning to do that. They ar pretty popular in the smart set and also they have taken the majority of benches of Parliament in whatever of states.The transformation of power between the current 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 discipline with New Economic Model (NEM) introduced by the prime minister Najib Tun Razak. They knock the NEM and do not bank on it. So if in the time to come the opposition groups become more powerful and take the government in that location arouse make signifi skunkt changes in the policy and economic plans.The imbalance in the policy and economic planning could be perilous for the Malaysia hatful 2020. 4- Malaysia, an Open and Small Economy Malaysia is country with an open and small economy. However, it had been gilt to obtain its goals in the past, simply it also needs to consider its limitations, as it is considered wisely by the decision makers. The population is not very magnanimous with only 28 million people the natural resources are not very rich in all of cases and the country in not a very vast country like USA, China or Russia.Therefore, it is very important for Malaysia to concent ramble on its advantages and opportunities. I believe Malaysia has to develop competitive niches integrated into global quantify chain. This means being real good at what it produces. Malaysia needs to emphasize more on the specific niches and and at the same time 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 fictitious character of intangible assets. Quality of charitable majuscules, innovation and creativity, institutions and the social capitals are important for quality of intangible assets. 6- Value Added Economic Activities Instead of Labour-intensive Industries A high-income nation means higher wages for workers. And higher wages for workers means slight competiveness in attracting outside investors.Based on the central bank one-year report for the 2010 the emergence of lower-cost competitors in the region, notably China, Indonesia and Vietnam, has affected Malaysias competitive advantage in labour-intensive industries, in this regard foreign investment received 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 empower the industries with higher value added. On the other hand because higher value added industries must have more look into activities, more high quality of human capitals. vicissitude and creativity extremely is based on the research and quality 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 notional and ripe research activities, but on the other hand there well-nigh problems in the part of bookmans in the malaysian universities. that is discussed in the next point. 7- First Class Universities to make out Brain Drain and Keep the Researchers (Specifically, Natives) After Graduation in the landHowever, it seems that Malaysia is very serious 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 univers ities are foreigners and specifically in the graduate and postgraduate levels. However, presence of international student specially has some financial benefits for these universities and in addition can salary increase the research activities and research project defined under educational programs, but it have some disadvantages too.To clarify more, when these international student finish their programs most of them are reluctant to stay more in Malaysia, so they go back to their home countries or transfer to some western or other certain countries. It means that Malaysia be quiet is nurturing researcher to send them to developed countries (the same problem is in other developing countries). plot, usually pertly researcher and graduates must be employed in the innovative and creative companies that produce high value-added products.However, developed countries always have their attractiveness for the super educated people, but generally the native graduates are less will to le ave their home country (if they can educate in first off class universities with a high salary base after graduation) than international student which come to Malaysia to transfer to another country or go back to their home countries. Therefore, it is a key factor to develop the Malaysian universities to the first class universities to reduce the brain drain phenomena in the Malaysia and result the creative and innovative industries with rich 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 significant takings to reach the 2020 vision. 8- Sustainability through Branding by Domestic Investors Today Malaysia is a destination of foreign investments. While mostly foreign investors are international companies that look for a cheap work force, they choose the low-cost countries to take their factories.On the the other ha nd they usually transfer their factories, and keep their innovative centers, research centers and devise 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 government 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 br ain drain problems still remain due to underdevelopment of universities and research institutions.But, by introducing and developing domestic brands with an international market and international famousness, we can be hopeful that they can reduce the brain drain, empower research institutions and authorise 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 gain than its regional competitors to a high-income nation, there is a probability that these competitors implement some kindred plans in their countries.And because at that time they have to implement similar policies like emphasizing the high value-added or creative and innovative industries, so they can be a potential threat to the future conflict of the Malaysia in attracting foreign investors in these kinds of industries. 9- Domestic Private Investment preferably of Foreign Investement However, foreig n investment had a significant effect on the economic growth of all country usually the domestic investments pop the question a more sustainable development for the country.Certainly, foreign investment has its advantages for every economy (for the Malaysia, too), but too much dependence on the foreign investment has its disadvantages, too. I believe that the Malaysia has to emphasize on the domestic nonpublic 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, international political issues can affect foreign investement.Universal superpowers can enact some sanctions formally, or informally to affect and hit Malaysias economy (like the Iran) if the Malaysia want to insist 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 escortd numerous crises. 1998 Southeast Asia, 2002 dot-com bubble burst, 2008 financial crisis, and now European financial crisis, while still we can see the 2008 crisis is not finished. In addition that there are not good signs for these two last crises to finish soon.Some economists believe that USA will have a recession and depreciation economy at least in next few years, something like the lacquers lost decade. Developing strong bonds with global economy can benefit the Malaysias economy when the economy is in good check out. But if the global economy or regional economies that the Malaysia has common interest with them experience bad conditions, the Malaysia will be affected badly, too. May be the only problem that the Malaysia cannot find an effective solution for that is the global economic condition and crisis.Bibliography Central Bank Malaysia. (2010). A nnual Report. Kuala Lumpur. Ministry of Eduation. (2011). Economic Transformation Programme A Roadmap for Malaysia. Kuala Lupmur. Oxford Business 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 ECONOMIC CHALLENGES CHARTING policy RESPONSE TOWARDS A HIGH INCOME ECONOMY. Kuala Lumpur, Malaysia.