Economic View

On social, economic and human development

Which main structural challenges to the Malaysian economy are being addressed by the government’s Shared Prosperity Vision 2030?

MAHATHIR MOHAMAD: We need an effective policy to promote inclusive and sustainable growth. As long as economic disparities exist in the country, some people will feel unhappy and may even reject the government. We are doing our best to reduce inequality, particularly between urban and rural populations, and between people of different races. It is important for us to address these issues in order to reduce the disparity between wealth and opportunity.

What role can foreign direct investment (FDI) play in helping Malaysia transition towards an advanced digital economy?

MAHATHIR: FDI has made a significant contribution to the country’s development over the years. Now, with the emergence of the digital economy, it is likely to contribute even more. We hope to encourage companies that are advanced in terms of their digital transformation to establish themselves in Malaysia, introduce their systems and make use of our workforce, which is being trained to meet the needs of the digital economy.

How might an escalation of tensions in the South China Sea impact trade flows in South-east Asia?

MAHATHIR: The claim made by China in relation to the nine-dash line has not been accepted by ASEAN. As long as there is freedom of navigation, trade flows should not be affected. It is vital that ships can continue to pass through the South China Sea without being boarded and examined by Chinese forces. So far, China has not imposed any sanctions on ships – including warships – or prevented them from passing through the South China Sea. Provided China does not obstruct ships from entering the area, the situation should remain manageable.

As the US-China trade dispute continues to disrupt the global economy, how have the emerging economies of ASEAN been affected? 

MAHATHIR: China is a major market for ASEAN countries, especially Malaysia. Therefore, it is important that China continues to expand so that its demand for imports from South-east Asian countries also increases. China’s economic growth has been constrained, as it is no longer able to export easily to the US, which had been a major part of its export market for many years.

ASEAN countries are likely to be affected if China’s economy is prevented from expanding. However, there is a possibility that, because of trade sanctions imposed by the US, many companies operating within China will look to move overseas. If this is the case, they may consider South-east Asian countries. Some companies are already doing so, with Vietnam in particular benefitting, and Malaysia seen as a promising choice. 

Malaysia has always promoted FDI and treats its external partners with hospitality, making it an ideal destination for companies looking to relocate from China in the coming years. We hope to continue to extend privileges such as tax exemptions in order to encourage international firms to work with us.

In what ways can Malaysia enhance its engagement with other Muslim nations?

MAHATHIR: Although Malaysia has a large number of non-Muslims, it is still regarded as a Muslim country, and people in the wider Muslim world look to Malaysia as an example of economic development and political stability. Malaysia can therefore serve as a growth model for these countries.
At the same time, there have been attempts by some countries to encourage Malaysia to get involved in resolving certain issues in Muslim nations. Malaysia is considered very pragmatic; we are a Muslim country, but there is nothing that prevents us from expanding and catching up with developed non-Muslim countries. 

As a result, many Muslim nations are able to learn from us, and some have sent their people to Malaysia for this reason. 

Where do you identify growth potential for Malaysia’s halal economy and trade with Muslim countries?

MAHATHIR: The halal business is set to expand, and Malaysia has played a key role in its development from the beginning. We consider ourselves a global leader in the halal industry. 

However, in order to see further growth, we need Muslim countries to ease restrictions so that trade can be more open and transparent. It is important that the halal economy is able to expand so that Muslims can access halal foods in every country that they visit. Malaysia is even helping non-Muslim countries to cater for halal businesses. For example, Japan will host the 2020 Olympic Games, and a large number of Muslim visitors are expected. They are therefore looking to Malaysia to provide for this demographic.