KUALA LUMPUR: Malaysia needs to accelerate private investment to achieve higher productivity and add more value to products and services in order to lift the income level of the people, especially the Bottom 40 per cent of households (B40) group.
Sunway University Business School’s Professor of Economics Prof Yeah Kim Leng said Malaysia needed to gear itself towards a high-income economy in order to lift the income level, driven by high-value activities, so that the people would not be distressed by rising cost of living.
“The income level is too low. The median monthly income of the B40 group is about RM3,000, while the average expenditure for a family is around RM4,000 and they are barely able to cope (with rising cost of living) as there is a gap.
“Our industry has to maintain this continuous process of upgrading (towards high-value activities) and be competitive in terms of exports,” he told Bernama in an interview recently.
Yeah emphasised that the industry has to move quickly to address structural issues such as low wages and high dependence on foreign labour to move up the value chain.
“By using more capital and technology, factories and businesses have to automate and use the latest technology.
“Because of improving global environment, Malaysia’s economy, being export oriented, will generally do well.
“However, it needs to use this window of opportunity to address the structural problems facing the economy,” he remarked.
Yeah said there was a need to accelerate private investment, particularly in new growth areas spanning technology, productivity enhancement and business processes. The adoption of new technology and productivity enhancement, driven by Industry 4.0 helps boost export competitiveness of exports and spur economic growth, he added.
“What is important is to produce a conducive investment climate and environment for domestic and foreign investors,” he noted.
To achieve this, Yeah said, there must be political stability, as well as market and business-friendly environment to stimulate confidence among investors.
Yeah said it was also vital to provide the necessary support for investors by offering the lowest cost and highest ease of doing business in Malaysia.
“This will enable them to leverage their competencies to produce high-value added goods and services at the lowest possible cost,” he said.
In order to sustain competitiveness, Yeah said continuous improvement in the investment climate, which entailed legal and regulatory environment and government support, would be required to upgrade and deploy technologies.
In this context, he said a highly-skilled and knowledge workforce would be required to facilitate the demand of industrial upgrading.
“It is critical to ensure that fiscal deficit is not too big and to maintain macroeconomic balance as financial instability will have the knock-on effect or negative effect on the economy.
“It is important to control debt from rising further or being overly indebted, as this would affect the financial market and frighten away investors and risk downgrading by rating agencies,” he concurred.
Yeah said it was important to ensure that the projects implemented were economically viable to generate enough revenue to repay borrowings or else government would be burdened by infrastructure costs and loans.
The underlying principle on government spending is for infrastructure projects to generate economic activities to repay borrowings, he added. — Bernama