COMMENT | 12MP: In search of a realistic new socio-economic strategy

COMMENT | The 12th Malaysia Plan (12MP) as unveiled by the Ismail Sabri Yaakob government is a re-affirmation of the New Economic Policy (NEP) and continuation of the existing approach to both macro-economic management and intervention in the economy.

The great significance of the Pandora Papers is that it is another sign that the NEP has skewed wealth creation towards an elite group within society.

Since the formulation of the NEP, economic regulation has focused on redistributing wealth rather than creating it. This was well hidden during the high GDP growth years but has become much more apparent during the slower growth rates of the last decade.

The 12MP target offers no improvement in the GINI index. While mean monthly income has increased from 2016 to 2019, the overall GINI coefficient has actually increased from 0.399 to 0.407, pointing to a widening of income inequality. This is at a time where Malaysia’s GINI ranking is at the top of Asian inequality.

The issue that needs to be addressed is that the B20, or bottom 20 percent of income earners, share comes to only 5.9 percent of the national income, while the T10, or top 10 percent of income earners, share is 30.7 per cent of national income.

The 12MP will do nothing to reverse this situation.

The incidence of relative poverty has increased from 15.6 percent in 2016 to 17 percent in 2019, and is continuing to increase rapidly. Economic statistics are lagging...