KUALA LUMPUR: After nearly a decade, Malaysia is still unable to escape the middle-income trap, and with this in mind, Tan Sri Muhyiddin Yassin has laid out several "tests" Malaysians need to overcome to get out of the dilemma.
A decade before the 1998 Asian Financial Crisis (AFC), the Prime Minister said Malaysia's cumulative annual gross domestic product (GDP) growth was 8.4 per cent annually but fell to 4.6 per cent in the following two decades.
With the current stagnant productivity growth, he said the country's annual per-capita income has stalled at about USD10,000 for almost a decade which suggests that Malaysia is snared in the middle-income trap.
To exit the middle-income trap, Muhyiddin said the country must first be transformed into a global exporting player.
"Countries historically grew rich by learning to produce new, higher-value products to export. Hence entrepreneurs with global ambitions will be critical in driving growth," he said in his speech at the Youth Economic Forum 2021 today, organised by Perdana Fellows Alumni Association.
The second litmus test needed, according to Muhyiddin, is for Malaysia to have better manufacturing capabilities to make increasingly complex and sophisticated products.
"Based on the Economic Complexity Index, even a standard deviation increase, can elevate GDP growth in Malaysia by between 0.7 percent and 1.6 percent a year."
As for the third test, the Prime Minister said Malaysia needs to create its own home-bred Multi-National Companies (MNCs), as the pay-off for economic growth is very high.
"For example, it is reported that global giants Samsung and Hyundai collectively at one-point drove 30 per cent of South Korean GDP.
"In a nutshell, Malaysia needs to pursue a 'moon-shot' approach in which the objective is to create competitive domestic firms in frontier technologies.
"This is where the young intelligent participants of this Forum play a critical role."
As such, Muhyiddin called on the younger generation to be bold and build the next generation of innovative enterprises so Malaysia could stand tall like the rest of the world.
"The start-ups you build today, could and should be the next Amazon... or Apple or Tesla.
"As the Malaysians founders behind existing and potential unicorns like Grab and Aerodyne will testify, it is really up to you to show the world what Malaysians can achieve."