WE have just ushered in 2018, with several resolutions, as usual. Certainly, 2017 had its ups and downs. However, one thing is sure: the nation’s macroeconomy has done rather well, with the possibility of attaining 5.5 per cent growth for the year as a whole. This good momentum is expected to continue this year.
In a way, this means that the macroeconomic policies, covering fiscal and monetary measures, are on track to promote growth and relative price stability, amid low unemployment. It is also accompanied by a stronger ringgit, which moves largely as a reflection of its fundamental value.
Despite these performances, many complain of several issues, such as difficulties in getting jobs and the high cost of foodstuff. In a way, these are valid complaints.
There may be a disconnect between economic growth and the distribution of the benefits of such growth. There may also be significant changes in our production structure brought about by increasing e-commerce and the prevalence of IT, making other economic activities grow, such as delivery and distribution, and impacting the traditional retail trade. Both assertions need further analysis.
Be that as it may, I think our statistical system may not have adjusted fast enough to capture newly-created economic activities brought about by the changes in business models and processes. As we know, the marketplace is very dynamic, with changes and adjustments leading to innovations that can deliver profit or reduce costs or save the use of labour.
Given the diversified economy, the potential of generating new business activities is promising with the advent of IT and the digital economy. In fact, the greater the diversity in our production system, the higher the likelihood of stronger economic growth in the future.
Traditionally, economic diversity can be facilitated by the processes of industrial concentration and agglomeration, especially in an urban setting. However, in this era of the increasing digital economy, where disruption and destruction, together with innovation and creativity, is taking place side by side, we may have to redo or reconstruct many production matrixes to examine the emerging dynamics in the marketplace.
Perhaps, a thorough re-examination of recent production structures and the intersectoral linkages between them need to be done soon to enable us to achieve our 2020 targets and to help us prepare new objectives and strategies to become a high-income nation as well as our new Transformasi Nasional 2050 target.
These analyses, combined with employment and labour force statistics, as well as income distribution or inequality numbers, will be a good political and economic platform for the administration to prepare for the future economic and social development of the nation.
As a nation, we are committed to developing rapidly in order to generate the wherewithal for sustainable development, improvements in quality of life and significant reductions in social inequality.
Given our social diversity, such objectives must be pursued as a basis for attaining greater national unity and social cohesion to which our forefathers have always aspired.
These social demands can be challenging given the international economic and political scenario that is continuously in crisis.
These noble objectives must be pursued with comprehensive, thoughtful planning and cannot be waylaid by social bickering and squabbling.
The younger generations deserve to inherit a united nation with a sustainable environment, an education system that prepares them to face the different kinds of globalisation and geopolitics, and an economic structure that is fuelled by creativity and innovation.
That said, 2018 should be a year that begins all efforts to review the attainment of national long-term targets set for Vision 2020, including the progress in eliminating poverty.
The year should also see initiatives to examine the long-term structural issues of the economy and what needs to be done immediately, such as in the areas of the labour market, productivity, technology and production, and creativity and innovation, so that we do not promote any more labour-intensive production and large use of foreign labour, which has delayed our comprehensive entry into the high-skill, high-technology production system. The digital economy is one such area that we should accelerate as many of our graduates are quite ready to participate in it.
These concerns may have to be given more thought, especially by the civil service and academics who, I believe, possess sound analytical skills and expertise to guide such exercises. Depending on foreign consultants and expertise in these areas may not provide the direction and advice we need, in the context of our social and political economy.
Let me wish Happy New Year to all, and may 2018 be a good year for us.
he writer, Tan Sri Dr Sulaiman Mahbob is the chairman of the Malaysian Institute of Economic Research (MIER). He can be reached via sulaimanbmahbob@gmail.com