20100331 1057 Malaysian Economic News.

The New Economic Model (NEM) will be realised through an Economic Transformation Programme (ETP), one of the four pillars to propel Malaysia to being a sustainable and inclusive high-income economy and developed nation status by 2020. Three principles of the NEM are high income, sustainability and inclusiveness. Eight strategic reform initiatives are set out to achieve this transformation.

• Economic reforms can boost average annual growth to 6.5% in the 2011-2020 period and per capita gross national product (GNP) will rise to about US$17,700 by 2020 (vs. current US$7,558). Private consumption will rise and increase its share of GDP. On the supply side, the share of agriculture and manufacturing to GDP will continue to slide while services’ share of GDP will increase from almost 59% in 2010 to slightly above 67%by 2020. 
• The government will revise its affirmative action policies, which would be built on four principles: market friendly, merit based, transparent and needs based. The strategies will focus on the bottom 40% of households by income, as the country must reduce income gaps in all races, he said.
• The NEM calls for a further reduction in the fiscal deficit with the easing and exit from fiscal stimulus to a near-balance by 2020. In the 2011-2020 period, it envisages a slight dip in the total national debt to just under 30% of GDP by 2020.
• The NEM will be integrated into the 10th Malaysia Plan (10MP) while the details of the new economic policy will be unveiled in 3Q. (Bloomberg, Bernama) Please see our Economic Focus for further details

The Malaysian Industrial Development Authority (MIDA), which will be renamed as the Malaysian Investment Development Authority is expected to be fully corporatized by August. MIDA is looking at liberalising some services sub-sectors this year to attract more foreign investments, according to its director-general Datuk Jalilah Baba. She said there was interest by foreign companies to participate in these sub-sectors but it was hampered by several issues (i.e. equity conditions). Among the sub-sectors likely to be selected are renewable energy and energy conservation, medical tourism, and private education, which did not have many local players. Investments in services could go up to RM48bn, surpassing the Industrial Master Plan average of RM45bn, bolstered by the liberalisation process, she added. (Bloomberg)

The Ministry of Science, Technology and Innovation is seeking more than RM4bn to be utilised for research and development funding under the 10th Malaysia Plan (10MP) (vs. RM2.9bn in 9MP). Its minister, Datuk Seri Dr. Maximus Ongkili said the government expenditure for research and development is only 0.64% of gross domestic product (GDP). (Bernama)

Malaysia remains China's largest trading partner within Asean with total trade amounting to US$10.02bn Jan-Feb this year. The trade volume represents about a quarter of China's total trade with Asean countries during the period under review, said the Chinese Ministry of Commerce. (Bernama)