KUALA LUMPUR: The New Industrial Master Plan (NIMP) 2030 has the potential to propel Malaysia and its manufacturing sector to its next stage of development.
RAM Ratings noted the plan is complemented by the recently tabled mid-term review (MTR) of the Twelfth Malaysia Plan (12MP) 2021-2025, which realigned the near-term action plans and key targets with the vision of the Madani Economy up to 2025.
"While the political will is strong, the administrative arm of the government must have the capacity and autonomy to implement these plans. "Malaysia has had no issues developing good master plans but for various reasons in the past, had lacked the tenacity to stick to agreed paths. "Therefore, it is commendable that the government has established a dedicated Delivery Management Unit (DMU), championed by MITI for integrated implementation," it said.
RAM Ratings said a NIMP 2030 digital dashboard that will be developed is also positive towards increasing transparency, particularly for disbursements involving public funds and grants.
"The reporting should be timely and to be credible, published data should stay up to date with sufficient details available to the public. "Active monitoring will also enable timely alteration of plans to address gaps, if any, through constant assessment and feedback loop and will be more effective than a major review after an extended period."
It noted the key distinction of the NIMP 2030 is its mission-based approach, unlike previous masterplans' sectoral-based approach.
The strategies presented in the plan are viewed as a "sink or swim" push towards an accelerated trajectory for the country especially in the current increasing complexity of world trade and evolving global investment trends.
"The current plan's focus is very targeted and driven by a few core technologies to achieve integration and allow the target sectors to move up the manufacturing value chain.
"This is important considering that the manufacturing sector is the only main sector where both backward and forward linkage value is more than one.
"This means investments in the manufacturing sector will have a higher multiplier effect in driving growth, relative to other sectors.
As such, there is a need to build up the whole supply chain and ecosystem, both vertically and horizontally, to drive meaningful industrial transformations," it added.
It also said the plan's focus on high-tech and high-value-added industries is particularly critical as Malaysia has not made significant progress in recent years.
The push for decarbonisation is also recognised as another critical mission and ties in with the development of renewables and other nature-based industry sectors, said the firm.
"Failure to adapt and transition into a low-carbon economy will have a detrimental bearing, not just on physical risks, but on Malaysia's competitiveness in trade, exports and investments," it said. As for the mid-term measures under 12MP, the firm noted it cover various facets of the economy to provide the foundation to achieve and sustain its long-term vision and targets.
However, the tight fiscal space remains a key impediment to achieving ambitious goals, further exacerbated by the government's intention to pursue fiscal consolidation.
This is as the government targets a somewhat steep fall in fiscal deficit to between 3.0 per cent and 3.5 per cent by end-2025.
"Assuming no substantial increase in revenue or fall in spending, should development expenditure still be steady at around RM90 billion in 2025, the fiscal deficit is likely to hover at circa 4.0 per cent in 2025, by our estimate.
"To achieve its deficit target, it is imperative for the government to institute bolder tax reforms and not just rationalise subsidies," it added. -end-