PP 7767/09/2010(025354)

Malaysia
Economic Highlights
•MARKET DATELINE

22 September 2010

Economic Transformation Programme To Chart The

Country’s Development Ahead

◆ The Performance Management and Delivery Unit (Pemandu) headed by Minister in the Prime Minister’s Department,
Datuk Seri Idris Jala, organised an open day on 21 September to gather public’s feedback on the Economic
Transformation Programme (ETP), as mentioned in the New Economic Model (NEM). The full and final report
of the ETP will be released by the Prime Minister on 26 October. The ETP will be driven by the 12 National Key
Economic Areas (NKEA) and supported by the eight strategic reform initiatives (SRIs) as highlighted in the NEM.
The eight SRIs are:

i. Reenergising the private sector to drive growth;

ii. Developing quality workforce and reducing dependency on foreign labour;
iii. Creating competitive domestic economy;
iv. Strengthening of the public sector;
v. Transparent and market friendly Affirmative Action;
vi. Building the knowledge base infrastructure;
vii. Enhancing the sources of growth; and
viii. Ensuring sustainability of growth.

◆ Through a series of brainstorming sessions (workshops and labs), Pemandu expects the ETP via projects identified
under the 12 NKEAs to grow the country’s gross national income (GNI) by an average of 6.0% during
the period 2011-2020. This will propel the nation’s GNI to US$523bn by 2020, from US$188bn in 2009 and to
transform the nation into a high income economy with GNI per capita reaching US$15,000 in 2020, up
from around US$7,000 in 2009. The ETP is projected to create some 3.3 million of new jobs.

◆ The 12 NKEA labs have identified 133 Entry

Table 1: Projected Private Investment For The NKEAs
Point Projects (EPPs) and 60 Business
Opportunities (BOs) that required total NKEAs Projected Private Investment
RMbn
investment of about US$444bn (RM1.3 trn)
Oil, gas & energy 216.9
over the next 10 years. Of which, 92% of the
Financial Services 202.0
investment is expected to be funded by the
Palm oil 121.7
private sector (see Table 1). The EPPs and
Wholesale & retail trade 254.0
BOs are projected to generate US$138bn and
Tourism 199.9
US$112bn GNI, respectively, in 2011-2010. By
Business Services 38.0
the year 2020, the 12 NKEAs are projected to
Electrical & electronic 69.0
account for 73% or US$380bn of the country’s
Communications 27.7
gross national income (GNI) (see Table 2), up Healthcare services 22.9
from 64% or US$121bn in 2009. Education 9.6
Agriculture 8.9
Greater KL 113.5
1284.1
Source: Pemandu

Peck Boon Soon

Please read important disclosures at the end of this report. (603) 9280 2163
bspeck@rhb.com.my

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 22 September 2010

Table 2: NKEAs Share of GNI And Its Impact By 2020

NKEAs 2009 2020 Total expected

US$bn % share US$bn % share Incremental GNI
impact
US$bn

Oil, gas & energy 26 14 72 14 46

Financial Services 13 7 55 10 42
Palm oil 15 8 54 10 39
Wholesale & retail trade 16 8 50 10 34
Tourism 10 5 31 6 21
Business Services 6 3 24 5 18
Electrical & electronic 10 5 27 5 17
Communications 6 3 18 3 12
Healthcare services 7 4 18 3 11
Education 5 2 15 3 10
Agriculture 6 3 15 3 9
Greater KL - - - - -
120 64 379 73 259

Source: Pemandu
Note: Greater KL is not included in calculating the overall GNI impact to avoid double-counting

◆ While the NKEA labs have put up comprehensive and detail proposals to help the country to transform its economy
into a high income economy, it remains to be seen how effective these initiatives will eventually be
implemented. We believe the challenge remains in how well these proposals are being cascaded down
through the government’s delivery system. Also, it depends on whether there is a strong political will for
the Government to implement the changes. Based on the feedbacks we gather from the open day, the initiatives
proposed will still have to fall within the national policies which are currently in place.

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