PM’s plan for escaping middle-income trap old fashioned, say economists

[superadmin]

PETALING JAYA: Two economists have scoffed at Prime Minister Muhyiddin Yassin’s ideas for springing Malaysia out of the middle-income trap, saying they reflect a mindset that is too traditional.

The project required fresher ideas, said Geoffrey Williams of Malaysia University of Science and Technology (MUST) and Mohamed Aslam Haneef of International Islamic University Malaysia (IIUM).

Muhyiddin said at a recent economic forum that Malaysia needed to become a global export player producing new, sophisticated and high-value products.

He also said Malaysia needed to develop home-bred multinational companies because the payoff in economic growth would be “very high”.

Williams told FMT he felt that the attachment to manufacturing, in a world in which the services sector was becoming more dominant, reflected an old-fashioned mindset.

“The middle-income trap happens if countries can’t produce high-value-added products and have lost their competitive advantage from low-wages, usually in manufacturing,” he said.

“It causes slower growth, lower investment and difficulty in keeping up with advanced lifestyles.

“Malaysia cannot rely on low-wage competition, especially since this now relies on foreign workers who are suffering terribly, as the human resources minister has said.


- More -