A new study of eight Asian countries found Malaysia to be a standout amongst its neighbours for achieving high employment growth. The report, commissioned by the United Nations Development Programme (UNDP) and the International Labour Organisation (ILO) showed Malaysia is on track both in terms of creating enough jobs and sustaining economic growth.
The analysis, Asian experience on growth, employment and poverty, focuses on the links between employment intensity and economic growth and how they relate to poverty reduction. Included in the research were India, China, Philippines, Sri Lanka, Thailand, Indonesia and Cambodia. All, except Malaysia, have experienced low employment growth despite their fast-growing economies. Meanwhile, Malaysia's unemployment rate has fallen significantly from 9.3% in 1970 to 3.5% in 2005.
According to the report, the annual growth of labour force in Malaysia has averaged 3.16% for the past 34 years, with employment growth exceeding the rise in numbers of the labour force.
During the recent festive Chinese New Year celebrations, Prime Minister Abdullah Ahmad Badawi praised Malaysia's economic success in 2006. He also took the opportunity to deny speculation there would be an early general election after recent figures revealed Malaysia's buoyant economy.
The prime minister said, "This is the perfect chance for us to grow further." This year will see the implementation of various projects and developments under the Ninth Malaysia Plan. This four-year plan outlines the allocation of the national budget into different sectors and is expected to increase investment and promote stable economic growth.
Abdullah's focus on sustained economic development comes shortly after the government released figures highlighting Malaysia's fast-moving economy. Last year saw an increase in foreign and domestic investments with total trade as well as a rising stock market index, strengthening of the ringgit, and a higher than expected GDP growth forecast of 5.2%.
"Economic indicators such as the nation's 2006 trade figure surpassing one trillion ringgit ($286bn), and the rise in the stock market index shows the economy is progressing," said Abdullah.
A free trade agreement (FTA) between the US and Malaysia, which is the US's 10th- largest trading partner with $44bn in bilateral trade in 2005, could facilitate Malaysia's access to the international marketplace, improve efficiency and sustain productivity growth. This in turn could help redistribute wealth and lead to diminishing poverty, according to the UNDP report.
However, after 8 months of talks, a successful conclusion is far from certain. The key obstacle is an affirmative action program that favours ethnic Malay-owned companies over Chinese ones. The US government has balked at this and talks have stalled.
Nonetheless, Rafidah Aziz, the minister of international trade and industry, said at a recent press conference that a failure to reach a FTA with the US would have no impact on investments.
"The Americans have been here long before we talked about an FTA. The FTA is just another bonus if it happens,'' Rafidah told OBG.
After fraying racial tensions in 2006 between the Malay and Chinese population and the potential threat to carefully crafted race-relations policies, the prime minister has reiterated his commitment to achieving social cohesion and to precluding racial tension in the year ahead.
As the Chinese New Year is predominantly celebrated by the minority ethnic Chinese, Abdullah also called for renewed unity and cooperation amongst its diverse citizens. According to Malaysia's department of statistics, the country's population of 26m represents 65% Malays, 25% Chinese and 7% Indians.
Abdullah also stated in his New Year speech on Sunday, "We should be proud of the uniqueness of our country, which has many races, cultures and religions. In Malaysia, we celebrate these differences and see it as our strength,"
With Malaysia coming out of a financially successful year, the government's hopes are pinned on continued development both in terms of national industrial progression and international trade and relations.