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Koh Jun Lin
Malaysia’s productivity is decades behind that of neighbouring Singapore and other advanced Asian economies, data show.
Malaysian International Chamber of Commerce and Industry (MICCI) executive director Stewart Forbes said that on average, a worker in Malaysia in 2013 is as productive as a worker in Singapore 35 years prior.
Gross domestic product per worker in Malaysia last year is also equal to that of a Japanese worker in 1972, Hong Kong in 1982, Taiwan in 1990 and South Korea in 1995.
Forbes (right) told the audience of about 80 that Malaysia’s productivity growth rate has been an “unimpressive” two to three percent per year.
While Malaysia will still be on track to achieving high-income nation and developed nation status by 2020 despite the poor productivity, Forbes questioned whether that growth can be sustained.
“Does the (2015) Budget gives us the mechanism to do that?
“I think that the Budget falls short in some respects of the fundamental targets that would allow us to sustain beyond 2020,” he said.
He added that at the current growth rate of 3.1 percent per annum, it will take Malaysia 19 years to catch up with where South Korea is now.
“We must have labour productivity, we must use our capital efficiently, and at the end of day that would lead to an effective economy,” he said.
Forbes was speaking at a roundtable discussion on the 2015 budget in Kuala Lumpur today, which was organised by the Asian Strategy and Leadership Institute (CPPS).
‘Hand-up not hand-out’
He said his figures were prepared by a think tank, and presented to MICCI by the Economic Planning Unit (EPU).
Forbes also lamented the government’s emphasis on hand-outs, warning that it could over time become an entitlement without fixing the causes of an imbalanced society.
“Get them out of the lower income group to a middle income group. That is a better solution than continuously giving them cash,” he said.
Meanwhile, Ministry of Finance undersecretary for fiscal and economics division Mohd Esa Abd Manaf (left) said the private sector is unsupportive of government efforts to develop the economy.
This is unlike the government’s drive for industrialisation in the 1950’s, 1960’s, and 1970’s where everybody is on board, he said.
“Now we have to go towards the services and knowledge-based economy, and of course along that line, the industry also needs to change.
“We applied certain policies but there’s missing piece. People are not responding,” he said.
He was replying to the moderator’s question on what had gone wrong in Malaysia after enjoying a good start in the nation’s infancy.
Can Malaysia handle inheritance tax?
On a separate matter, fellow speaker PricewaterhouseCoopers Taxation Services Sdn Bhd executive director Pauline Lum (below) touched on a proposal of inheritance tax made by Pakatan Rakyat in its alternative budget.
She said that the implementation of tax in Australia, the United Kingdom and Singapore has been “messy”, calling to question Malaysia’s ability to implement it.
“Inheritance tax tends to be quite messy in the way it is executed. The mechanism is not very clear.
“If we are not so clear on the goods and services tax’s mechanism, how clear will we be in terms of the execution of inheritance tax? That is the question that I would like to pose to all of you,” she said.
Pakatan had proposed introducing a capital gains tax and an inheritance tax in its alternative budget, instead of the GST which it argues is a regressive tax.
Source: Malaysiakini
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