Is Malaysia in middle-income trap? BY CECILIA KOK

by **Cals** Mon 13 Jan 2014, 01:57

Published: Saturday January 11, 2014 MYT 12:00:00 AM
Updated: Saturday January 11, 2014 MYT 8:19:01 AM
Is Malaysia in middle-income trap?
BY CECILIA KOK
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Esteemed panel: (from left) Herizal Hazri, Dr Vijayakumari, Chulalongkorn University Prof Pasuk Phongpaichit (economics), Thammasat University Prof Pornthep Benyaapikul (economics) at the launch of ‘The Middle- Income Trap - Economic Myth, Political Reality: Case Studies of Malaysia and Thailand’ in KL.

THE next six years will be a crucial period for Malaysia, as it strives to break out of the middle-income rank to become what World Bank would categorise as a “high-income nation”.
Indeed, with a gross national income (GNI) per capita of US$9,820 (RM32,235) in 2012, Malaysia is already on the cusp of graduating from an upper-middle income to a high-income economy, which, according to World Bank’s definition in 2012, is one with a GNI per capita of more than US$12,615.
Yet, economists continue to propound that being a developed nation is not just about meeting the numbers set by the intergovernmental organisation, but it is also about achieving quality, equitable and sustainable growth for the long term.
As independent consultant and economist Dr Vijayakumari Kanapathy puts it, “reaching the target (as set by World Bank) does not really make one a high-income nation... for the country can always fall back (to its previous level) if its economic fundamentals are not strong”.
In the case of Malaysia, which aims to achieve the high-income status as defined byWorld Bank by 2020, Vijayakumari says how the country manages the process towards that goal is even more crucial than merely meeting the requirements to be in the club of high-income nation six years down the road.
“What we need is to achieve a ‘steady-state’ growth, which we have yet to do so,” Vijayakumari points out as she presents the findings of a case study on Malaysia’s economy over the week.