Mahathir Charts Next Course to Tackle Malaysia Wealth-Gap Worries

(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.

A year before it’s due to become a developed nation, Malaysia is switching gears to focus on addressing a growing income inequality while seeking new sources of revenue for its oil-reliant economy.

In a 10-year blueprint launched Saturday, Prime Minister Mahathir Mohamad pledged to improve the standard of living for all Malaysians, ensure wages keep up with productivity and rely less on foreign workers. The plan is a departure from the vision he laid out during his first stint as premier, when he promised to transform Malaysia into a high-income nation by 2020.

The Southeast Asian economy is focusing on redistributing wealth after decades of rapid growth and a raft of policies failed to narrow the income gap. The divide between the nation’s wealthiest 20% and poorest 40% widened five-fold from 1989 through 2016, according to the government report.

Inclusive development is a key focus for Mahathir’s administration, which is facing its stiffest test since coming to power last year. A slump in exports and rising frustration about the cost of living threaten to erode the government’s popularity just as public revenues are coming under pressure due to volatile oil prices.

Here are the key strategies from the Shared Prosperity Vision 2030 report:

• On business ecosystem: Target to have small and medium enterprises contribute 50% of GDP, with Malay-owned SMEs accounting for 581 billion ringgit ($139 billion)
• Main economic growth: Boost high-technology contribution to 50% in manufacturing sector and 30% in services, while developing new sectors including Islamic finance, renewable energy, green economy and commodities
• On human capital: Ensure that university programs are aligned with industry needs and target to have 35% of high-skilled workers in labor force
• On labor market: Ensure wages rise every year in line with productivity value, reduce reliance on foreign workers, and prohibit discrimination on the basis of age, gender, ethnicity and religion
• On regional inclusivity: Integrate public transport system between urban and rural areas, target 10 public-listed companies in every developing state and cut wage discrepancies between states by half
• On social capital: Develop indexes to measure unity, integrity and anti-corruption, public health, climate and environmental change
• On social well-being: Measure poverty on relative terms

To contact the reporter on this story: Anisah Shukry in Kuala Lumpur at ashukry2@bloomberg.net

To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, ;Nasreen Seria at nseria@bloomberg.net, Yudith Ho, Liau Y-Sing

©2019 Bloomberg L.P.