Malaysia

Over the past ten years economic growth in Asia has contributed to a reduction of poverty as well as fertility rates, and greater prosperity has contributed to gains in life expectancy. However, at present many workers still work in informal employment, frequently for long hours at little pay and without social protection coverage. A growing demand for social support, extending the coverage of social protection benefits and improving the job quality of workers will be among Asia’s major challenges in future. This report considers these challenges, providing policy examples from countries to illustrate good practice, including Bangladesh, Indonesia, Japan, Korea, Malaysia, Pakistan, Singapore and Viet Nam.

1991: Employees Provident Fund Act; allows pension plans/provident funds established prior to this Act to have approved fund status if they provide benefits at least as good as those of the mandatory Employees Provident Fund (EPF) and to be exempt from paying contributions to the EPF.

This review assesses the investment climate in Malaysia, including both the institutional and legislative framework for investment and also a broad range of policies in other areas. It documents the reforms implemented by successive government administrations to improve the investment climate, describes the remaining challenges faced by Malaysia in moving towards becoming a high-income economy and discusses what further measures might help to revive both foreign and domestic investment. A good investment climate concerns more than just the rules and regulations faced by investors; it results from complementary policies across almost all of government. Equally importantly, a good investment climate is not static; it requires that governments and firms become more nimble in order to respond to new challenges and opportunities as they arise.

This first OECD Economic Assessment of Malaysia was prepared by Hidekatsu Asada, Stewart Nixon and Thomas Chalaux, under the supervision of Vincent Koen. It benefited from contributions at various stages by Mohamed Rizwan Habeeb Rahuman, Abu Zeid Mohd Arif, Faisal Naru, Lynn Robertson, Ruben Maximiano, Massimo Geloso Grosso, Kazuhiro Sugie, Gernot Hutschenreiter and Philippe Larrue. Administrative assistance was provided by Mercedes Burgos and Sisse Nielsen.The draft report was discussed at a meeting of the Economic and Development Review Committee on 19 July 2016, with participation by representatives of the Malaysian authorities. The draft was then revised in the light of the discussions. The cut-off date for data and information used in the Economic Assessment is 31 August 2016.The Economic Assessment is published under the responsibility of the Secretary-General of the OECD.Support from the governments of Japan, Australia and Malaysia is gratefully acknowledged.

The 2019 OECD Economic Survey of Malaysia was prepared by Hidekatsu Asada, Tan Kay Kiang, Ricardo Espinoza and Marieke Vandeweyer under the supervision of Patrick Lenain. It benefitted from contributions at various stages by Adam Bogiatzis, Andrew Bell, Bert Brys, Matthieu Cahen, Janos Ferencz, Alessandro Goglio, Robert Grundke, Andrés Fuentes Hutfilter, Katsuya Iino, Chris James, Korin Kane, Eija Kiiskinen, Britta Labuhn, Tadashi Matsumoto, Michael Mullan, Laura Reznikova, Mohamed Rizwan Habeeb Rahuman, Inese Rozensteine and Abu Zeid Mohd Arif. Isabelle Luong provided statistical assistance and Stephanie Henry provided editorial support. The draft report was discussed at a meeting of the Economic and Development Review Committee on 24 April 2019, with participation of representatives of the Malaysian authorities. The cut-off date for data and information used in the Economic Survey is 25 June 2019. The previous Economic Assessment of Malaysia was issued in November 2016. The Economic Survey is published under the responsibility of the Secretary-General of the OECD.Support from the governments of Japan and Malaysia is gratefully acknowledged.

In order to attain its objective of becoming a high-income economy by 2020, Malaysia is engaged in efforts to enhance the performance of its innovation system. A range of challenges need to be addressed and different policy tools can help in this respect. For this purpose the national intellectual property (IP) system can play a pivotal role. This review assesses how Malaysian's national IP system promotes innovation and offers recommendations to improve the design of the system. It does so by analysing the organisation and governance of Malaysia's IP system as well as opportunities and challenges for different local users - ranging from small businesses to frontier companies and public research institutions. Moreover, the review discusses the state of IP markets in Malaysia and related policies and provides a comprehensive set of statistics describing the use of IP in Malaysia in recent years.

Productivity growth is essential to providing sustainable increases in living standards. Malaysia has reached a development stage where growth needs to be driven more by productivity gains than the sheer accumulation of capital and labour inputs. The 11th Malaysia Plan (2016-20) sets an ambitious labour productivity growth target of 3.7% per year, well above than the 2% average growth recorded from 2011 to 2015. Co-ordinated structural reforms will be necessary to achieve the productivity improvements needed to attain high-income country status. Areas where reforms would deliver the greatest boost to productivity include increasing the quality of education and skills training, spurring innovation, adopting information technology more widely, fostering a well-functioning competition policy framework, improving the functioning of the labour market and the regulatory framework for small and medium-sized enterprises, fostering regional integration and raising public sector productivity.

Productivity growth is essential to providing sustainable increases in living standards. Malaysia has reached a development stage where growth needs to be driven more by productivity gains than the sheer accumulation of capital and labour inputs. The 11th Malaysia Plan (2016-20) sets an ambitious labour productivity growth target of 3.7% per year, well above the 2% average growth recorded from 2011 to 2015. Co-ordinated structural reforms will be necessary to achieve the productivity improvements needed to attain high-income country status. Areas where reforms would deliver the greatest boost to productivity include increasing the quality of education and skills training, spurring innovation, adopting information technology more widely, fostering a well-functioning competition policy framework, improving the functioning of the labour market and the regulatory framework for small and medium-sized enterprises, fostering regional integration and raising public sector productivity.

Regulatory impacts analysis (RIA) is a systemic tool for improving regulatory quality. It requires well-structured processes of managing the obligations effectively to be successful. This chapter assesses the development of Malaysia Productivity Corporation’s (MPC) systems to assess the adequacy of regulatory impact statements (RIS) and support regulator’s compliance with the National Policy on the Development and Implementation of Regulations (NPDIR). This includes evaluating the quality of RIS, developing guidance, institutionalising compliance and ensuring the provision of capacity building activities, including by the National Institute of Public Administration (INTAN).