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2019 OECD Economic Surveys: Malaysia 2019

image of OECD Economic Surveys: Malaysia 2019

Malaysia’s economy is doing well, but social and governance challenges must be addressed. The new government prioritises inclusive growth and improving trust in public institutions. Further progress towards the planned target of high-income country status by 2024 will also require focusing on productivity growth with structural reforms to move up the value chain and improve skills. Ensuring environmental protection will improve the quality of growth.

Growth is set to moderate in the near term, mainly due to slowing global trade. The rising cost of living has been a source of concern for large segments of the population. Progress could be made by providing a more targeted support, boosting entrepreneurship, improving productivity and employability among the low-income households.

Fiscal policy needs reform. Building up fiscal space and ensuring medium-term sustainability will require increasing the low level of tax revenue. Improving budget process transparency and strengthening public debt management are key to fiscal accountability.

Human capital development is needed to boost productivity and promote inclusive growth. Labour market imbalances hinder productivity and make it more difficult to climb up the value chain. Investment in education and training would help under-qualified workers. Policies to stimulate the demand for high-level skills would support those who are over-qualified.

SPECIAL FEATURE: REDUCING SKILLS IMBALANCES TO FOSTER PRODUCTIVITY GROWTH

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Basic statistics of Malaysia, 2018

(Numbers in parentheses refer to the OECD average)*

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.

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