Transforming Malaysia into a fully developed and high-income nation by 2020 is the main objective of the Vision 2020. In order to realize the Vision 2020, Malaysia has introduced 1Malaysia "People First, Performance Now", Government Transformation Programme (GTP), Economic Transformation Programme (ETP) and 10th Malaysia Plan. The key players -every Malaysian- should contribute to support the transformation of the country into a high-income nation.
Malaysia experienced strong GDP growth in the past, but its momentum of growth has obviously slowed down. As shown in the chart below, Malaysia lost growth momentum since the Asian financial crisis.
The GDP growth of Malaysia was the second highest among Asian countries, which is 9.2% from year 1991 to 1997. However, it experienced a slow momentum of GDP growth, 4.3% from year 2001 to 2009 due to the Asian financial crisis.
Private sectors are the engine of growth in Malaysia. Malaysia needs to achieve double digit growth in private investments in order to achieve high-income status. The Government will act as a facilitator of private investment to create an enabling infrastructure and environment. It will support the private sector activities through facilitating available fund, particularly in terms of supporting microenterprises, venture capital for innovation and export capital for innovation and export related financing (Tenth Plan, 2010). There are RM 20 billion of Facilitation Fund to help the private investors to do investment nationally. Government will also provide infrastructure and assistance such as grants and agreement. The regulatory flexibility would be granted to companies with 5 or less employees. Besides, Government provides facilitation support, for instance transportation and National Key Economic Areas (NKEAs) sectors such as tourism, education and healthcare, to the private sectors. During Tenth Plan period, government will also try to raise the Research and Development (R&D) expenditure for the private sector R&D. Given the facility support, fund assistance and regulatory flexibility, private sectors would find that it is easier to invest, or start up a business, in Malaysia. Hence, the domestic private investment would increase.
According to Tenth Plan (2010), the Government encourages the collaboration between public and private sector, particularly between Government-linked Companies (GLCs) and the private sector. They are also encouraged to work out on new market area where risks are higher and maturity period is longer. The Government stimulates the economy by promoting the public-private partnership (PPP) which would boost RM 62.7 billion (Tenth Plan, 2010). PPP, therefore, would implement some large projects including "7 toll highways, 5 Universiti Teknologi MARA (UiTM) branch campuses, redevelopment of Angkasapuri Complex Kuala Lumpur as Media City, Integrated Transport Terminal in Gombak and privatisation of Penang Port Sdn. Bhd.". The Government also promotes the partnership between Bumiputera and non-Bumiputera businesses. Furthermore, the fund innovation will be provided by the Government. The Government will offer tax deduction for R&D and provides matching grants to promote private sector funding of R&D and commercialization (Tenth Plan, 2010).
As the chart shown, the growth in private investment and consumption will be much faster than during Ninth Plan period. The annual growth rate of private investment and consumption during Ninth Plan period are 2.0 and 6.5 respectively. When it comes to Tenth Plan period, the Government stresses on the expansion of private sector. The annual growth of private investment and consumption are projected to rise by 12.8% and 7.7%.
Moreover, the Economic Transformation Programme (ETP) focuses on 12 National Key Economic Areas (NKEAs) which have great potential to generate high income for Malaysia. The 12 NKEAs are oil, gas and energy, palm oil, financial services, tourism, business services, improving electronics and electrical, wholesale and retail, education, healthcare, communications content and infrastructure, agriculture, Greater Kuala Lumpur / Klang Valley (Pemandu, 2010).
Under ETP, Malaysia takes the initiative to make the Greater KL region as a world class city. Greater KL was developed to be the hub for top 100 global and regional multi-national companies (MNCs) headquarters. If there are more MNCs headquarters invest in our county, our foreign direct investment (FDI) will increase.
According to (Boo, 2010; Jala, 2010), "Malaysia was "addicted" to FDI and depended too much on low labour cost to pull in investments". Now, we need to look at the FDI's quality and accept only quality FDI. In order to achieve Vision 2020, we should not only look at the FDI, but also the domestic private investment.
Under the implementation of ETP, Greater KL would become a leading global city that attracts million of people. Infrastructure connectivity should be improved to make it easier for others to come and visit it. Greater KL was connected to Singapore via a high speed rail system. It creates a seamless and faster journey which takes 2 hours only. Besides, Mass Rapid Transit (MRT) was also one of the physical means for others to move within the city. Private sector has been given chance to initiate proposal on the high speed rail system and MRT system for Greater KL.
In addition, a comprehensive and sheltered pedestrian network within the city centre will be created. Dewan Bandaraya Kuala Lumpur (DBKL) and private investors will be working out together to construct the 45 kilometres of sheltered pedestrian walkway (Pemandu, 2010). The well-structured infrastructure connectivity will attract million of people to visit Greater KL and boost the tourism sector in Malaysia. When tourism sector is expanding, there are more tourists visiting our country, their spending in Malaysia will go up, and the consumption will increase. As the economy was stimulated, it will also create new job opportunity and lower the unemployment rate. The citizens have more money to consume. Then, the private investors find that it is more profitable to do investment when the citizens are willing to spend.
Next, the human capital contributes to the growth of economic performance. In the effort towards shift to knowledge- based economy. Malaysia should have the responsibility to sure that development of human and intellectual capital to produce satisfy supply of intellectual assets to support and contain a flexible, sensitive, and mobile workforce with relevant knowledge and skills. Malaysia needs to work hard to ensure that the nation's human capital through a process through out learning. Workers must maintain and make sure the attitude of life long leaning to improve and upgrade their level of knowledge and skills, especially through individual-learning and indivisual improvement system. At the same time, employer must stop corporate investment in human capital into their strategic.
The Government expenditure on education and training as a human capital is definitely related to economic growth. From the previous research, the total of the Federal Government development expenditure by sector during the Seventh Malaysia plan had increase during eight Malaysia plan. Besides that, in the past decades, them expanded the total number of population to all education. The total employment at the third level in local public education institutions has twice from the past few years. The expanded total in tertiary enrolment was reliable with all of employment which registered highest average annual growth rates for administrative and managerial categories. It is followed by that professional and technical category that suggested a strong demand from manpower with skills and tertiary education. The critical role of human capital development requires firm for more commitments, fully support and direction from the government. It also can support learning through out enabling active rendezvous in construction of knowledge.
