I haven’t really been following on the news lately, and when I read this article. It’s kinda made me wonder how Malaysia would be like if he was the Prime Minister 20 years ago. Anyway, here are some of his speech I extracted from his website. And oh yeah, I became one of his fans on facebook as well currently following him on twitter. And I have a feeling he’s playing Mafia Wars too.. Lol.. But anyway, I wouldn’t know until he add me as a friend on Facebook! Lol.
Revisiting the middle income trap
I would like to revisit the argument of that speech to develop it further.
We are stagnating. The signs of a low growth economy are all around us. Wages are stagnant and the cost of living is rising.
We have not made much progress in becoming a knowledge and services based economy.
According to the World Bank, Malaysia’s share of GDP contributed by services was 46.2% in 1987. Ten years later, that share had grown by a mere 0.2%
Between 1994 and 2007, real wages grew by 2.6% in the domestic sector and by 2.8% in the export sector, which is to say, they were flat over that thirteen year period.
Meanwhile our talent scenario is an example of perverse selection at its most ruinous. We are failing to retain our own young talent, people like yourselves, let alone attract international talent to relocate here, while we have had a massive influx of unskilled foreign labour. They now make up 30-40% of our workforce. Meanwhile, alone in East Asia, the number of expatriate professionals here has decreased. Alone in East Asia, private sector wage increases follow government sector increases, instead of the other way around. We are losing doctors and scientists and have become Southeast Asia’s haven for low cost labour.
I said that we are in a middle income trap, stuck in the pattern of easy growth from low-value-added manufacture and component assembly and unable to make the leap to a knowledge-intensive economy. Regional competitors with larger, cheaper and dare I say, hungrier labour forces have emerged. China and India have risen as both lower cost and higher technology producers, and with giant domestic markets.The manufacturing sector which propelled the growth we enjoyed in the nineties is being hollowed out. There is no going back, there is no staying where we are, and we do not have a map for the way forward.