The Cost Of Living Is Increasing Economics Essay

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Economic Tranformation Programme is focused on action not concepts. The ETP has divided into two parts which are the Strategic Reform Initiatives of the NEM and the National Key Economic Areas (NKEAs). NKEAs will be guided by foundational measures (SRIs) recommended by the NEAC. SRIs has eight strategic to propel transformation and growth in the Malaysian economy. The eight SRIs which are re-energising the private sector; developing a quality workforce and reducing dependency on foreign labour; creating a competitive domestic economy; strengthening of the public sector; transparent and market friendly affirmative action; building the knowledge base infrastructure; enhancing the sources of growth and ensuring sustainability of growth.

12 NKEAs were announced in the Tenth Malaysia Plan and all of these have the potential to directly contribute a significant amount of economic growth to the country. NKEAs is a core of the ETP. The NKEAs consists of 11 industry sectors that have potentical contribute to high income which are oil, gas and energy, palm oil, financial services, tourism, business services, improving electronics and electrical, wholesale and retail, education, healthcare, communications content and infrastructure, agriculture and another one is greater Kuala Lumpur or Klang Valley. Malaysia government also develop the sectors in the effort allocate some funds.

Oil, gas and energy is a one of the largest National Key Economic Areas (NKEAs). Malaysia will have more diversified this sector that remains essential to our development by 2020. The key thrust will be to heighten exploration and increase production from domestic reserves. In this sector, it developed strong regional oil field service and equipment hubs and have a stronger presence in the regional midstream logistics and downstream markets. The NKEA target for oil, gas and energy is to increase total GNI contribution from RM110 billion in 2009 to RM241 billion in 2020. A funding of RM 218 billion will be required to achieve this NKEA target, which is less than one percent, will be from the public sector. That means all of the funding is from private sector.

Besides this, Malaysia aims to develop gradually in financial services sector and provide the needs of businesses and consumers in a high income economy. The targets of NKEAs are to increase total GNI contribution by RM121 billion to reach RM 180 billion by 2020. It can be created 275,000 jobs and 56 percent of which will offer an average income of RM4,000 per month. The sector will encourage financial institutions to go on the offensive and tap external markets for their continued growth to achieve this vision.

Wholesale and retail also aims by Malaysia to increase the importance of retail as a driver of domestic consumption by targeting to more than double its GNI contributions by 2020. The target of retail NKEA is to increase GNI contribution by RM 108 billion to reach a total contribution of RM 165 billion per annum by 2020. Furthermore, it will create about 370,000 new jobs over 10 years which including 7,800 senior management posts, 11,600 managerial, 19,000 professional and technical, 19,000 executive, 37,000 supervisory, 18,000 clerical and the rest being operational posts. Business opportunities also create about 225,000 jobs. The total funding requirement for the retail NKEA will amount to RM 225 billion which almost 100% will be funded by the private sector.

Malaysia remains a major contributor to the Malaysia economy over the next 10 years is palm oil. The palm oil NKEA targets to raise total GNI contribution by RM 125 billion to reach RM 178 billion by 2020. An additional 41,000 jobs will be created, 40 percent will be high skilled jobs from 41,000 jobs with an average monthly income of RM 6,000 to achieve this target. Therefore, funding of RM124 billion over 10 years to achieve the palm oil NKEA target. There are 98 percent come from private sector. The total public funding for capital expenditure is expected to be RM2.9 billion, with an additional RM2.7 billion in the form of tax incentives, soft loans and cash incentives to promote private sector development in the downstream sector.

Malaysia plans also to strengthen the Electronics and Electrical (E&E). The E&E focus will be attract more leading multinational companies to operate in Malaysia and to create more Malaysian champions. The E&E has focus five target sub-sectors which are semiconductors, solar, light emitting diodes, industrial electronics and electrical home appliances. It is expected to raise GBI by RM53 billion to reach RM 90 billion by 2020 and provide an additional 157,000 high and medium skilled. The total cumulative funding requirement from 2010 to 2020 is Rm78 billion with 12 percent is coming from the public sector and the rest is coming from the private sector.

Another sector of NKEAs plans is communications content and infrastructure (CCI). Purpose of CCI is continued high growth in communications and enabling the paradigm shift from infrastructure to applications and contents. Malaysia expects to raise GNI contribution by RM 36 billion in 2009 to reach RM58 billion by 2020.It also requires RM51 billion in funding over the next 10 years to achieve this NKEA aspiration. The funding expected only 2 percent comes from the public sector.

Agriculture will have been transformed into agribusiness by 2020. It is moving towards a model that is inclusive but simultaneously anchored in market needs, scale economies and value chain integration. Besides this, Malaysia will focus on large global markets with high growth potential. For example, government is maintaining a strong presence in strategic sub - sectors such as paddy and livestock to ensure food security. The target of agriculture NKEA is to increase total GNI contributions by RM34 billion to reach RM49 billion by 2020. To achieve the agriculture NKEA's aspirations, it requires cumulative funding of RM 22 billion over the next 10 years. The funding also comes from the private sector.

Education sector also plays an important role in NKEA. It act an economic driver and a catalyst for growth in Malaysia. The focus of the education NKEA will strengthens the private education services sector by increasing private consumption and investments and expanding education exports. The target is to raise total GNI contribution by RM34 billion to reach RM61 billion by 2020. The goal required the private education sector to grow six fold when public sector growth was expected to be limited. It requires RM20 billion in funding over 10 years to achieve the NKEA's aspiration.

In addition, health care also plays an important role in NKEAs. It aims to grow three sub-sectors within health care which are pharmaceuticals, health travel and medical technology. There is significant opportunity to move from being a net importer to being a significant player in the RM422 billion prescriptions and pharmaceutical drug industry. Malaysia will also develop the more profitable medical sub-sectors such as medical devices, diagnostic equipment and healthcare information technology. The target is to raise total GNI contribution by RM35 billion to reach RM 50 billion by 2020. It also plans to welcome one million health travellers and conduct 1,000 clinical trials. It is expected about 181,000 new jobs will be created. The healthcare sector will require RM23 billion cumulatively from 2011 to 2020. There are only percent will be from public funds while the rest 99 percent will be from the private sector.

Another NKEAs sector that increases the national income is tourism sector. It is targeted to raise total GNI contribution by RM67 billion to reach RM104 billion by 2020. That means it will require the sector to triple the RM37 billion in 2009. To achieves the tourism NKEAs aspiration, it will require RM204 billion in funding over the next 10 years of which only 2% is expected to come from the public sector. The NKEAs has also determined four sector-wide enablers which are rising and focusing marketing in priority markets, reintroducing selective visa on arrival, promoting adequate supply of qualified human capital and improving tourism environment by improving offerings and accessibility.

By 2020, Malaysia have moved closer to the benchmark of developed markets like the United Kingdom where the business services sector contributes about 20% of both GDP and employment and 14% of exports. Furthermore, Malaysia aims to grow GNI contribution of the business services sector by RM59 billion to reach RM79 billion in 2020. In this NKEA, it will require RM41 billion in funding over the next 10 years, only 9% of which is expected to come from the public sector to achieve the NKEA target.

The last of the NKEAs are Greater Kuala Lumpur area. Kuala Lumpur currently accounts for about one third of Malaysia's GDP. It significant derivers of growth in economy. Its economic aspiration is to grow GNI contributions from about RM258 billion to RM650 billion per year. This should move GNI share from about 30% of the nation's GNI to about 40%. Additional aspirations include increasing per capita GNI from RM40,000 to RM70,000 per year. It will also focus on growing its foreign talent base from 9% to 20% of the population. Greater KL/KV also require a cumulative funding of RM172 billion from 2010 to 2020, of which 34% is expected to come from the public sector.

In general, increase level of GNI per capital would raise Malaysia's economic status to match other high-income nations. The overall effect of Economic Transformation Programme will be a significant create higher paying job, a wide variety of employment opportunities for Malaysians, improved transportation link, enhanced education outcomes, more choices of high quality goods and services as well as strengthening of the skills base. To ensure rapid and effective delivery of the ETP, the Government has committed to a specific and actionable promise to the Private Sector to play an effective facilitation role to ensure private sector ownership, transparent funding; brought together all of Government to work in partnership with the private sector, with each agencyhaving clear roles and responsibilities, to ensure coordinated implementation of EPPs and enablers and built a process to allocate public funding to the highest impact areas in terms of GNI, and in a transparent manner.