Malaysia is striving to have the “right ingredients” to eventually achieve “Asian Tiger” status, but must avoid the pitfalls of widening inequality seen elsewhere.
Abdul Rasheed Ghaffour, the governor of Malaysia’s central bank, said he believed the Southeast Asian country must avoid “the boom-bust cycles that have happened before”.
During the boom years of the 1990s, Malaysia’s growing economic power put the country on track to transform into an “Asian Tiger”, joining the informal club of Asia’s four largest economic powers and achieving astonishing growth; Hong Kong, Singapore, Taiwan and South Korea .
The country has long been considered fifth. But this did not materialize, largely due to the 1997 Asian financial crisis. But with economic growth this year better than expected, it’s better late than never.
“We initially expected growth of 4% to 5%,” Ghafoor told CNBC’s Karen Tso at the International Monetary Fund’s annual meeting in Washington, D.C. this week. He said that in the first three quarters of this year, Malaysia’s gross domestic product Growth of 5.1% exceeded expectations, and the central bank now expects growth for all of 2024 to be between 4.8% and 5.5%.
Ghafoor is both “ambitious” and “cautious” about his newfound confidence.
“It’s more about the sustainable growth that we want, the high-quality growth that we want. And in terms of growth that reduces inequality. So those are the things that we want to have, so you have the right ingredients to Take us and we will become the Four Asian Tigers,” he told CNBC.
A look at the inequality rates among the four Asian tigers illustrates his concerns.
according to a Oxfam research Data released last year showed that the income of Hong Kong’s poorest people was 57.7 times lower than that of the richest. More than 1.36 million people live in poverty, accounting for 20% of Hong Kong’s population.
published figures Taiwan Accounting General Administration Figures from April showed that the difference in net wealth between the richest and poorest 20% of households had quadrupled over 30 years.
At the same time, it is reported that due to the more even distribution of national income growth in the 1980s, South Korea has a “relatively low level of income equality” compared with other East Asian countries. “However, income inequality has worsened over the past three decades,” the report said. World Inequality Database.
Semiconductor success
Malaysia’s semiconductor industry, centered in the state of Penang and its surrounding areas, is experiencing some success. European and U.S. companies are building new facilities or expanding existing ones with the aim of creating resilient global supply chains for these vital parts.
tech giants Intel Already made one Committed to spending US$7 billion to open a new factory in Penang.
according to world economic forumLast year, the Malaysian hub attracted US$12.8 billion in foreign direct investment, more than in the previous seven years combined.
The governor of Bank Negara Malaysia said that the success story of Malaysian chips has been deeply integrated into the global semiconductor supply chain, exporting 7% of the world’s semiconductor chips.
However, the global supply chain is dominated by Taiwan, where most of the advanced chips in circulation are made.
Ghafoor said Malaysia is moving towards producing logic chips – more advanced chips often called the brains of electronic devices.
He also saw new opportunities in electric vehicle production and artificial intelligence, providing “high-value jobs” and cited similar ambitions in ASEAN neighbors Thailand and Indonesia.
U.S. election cautious
Gafoor believes Malaysia’s economic diversification can serve as a “shield” to absorb any shock from the upcoming US presidential election in November, as well as a potential electoral victory of former President Donald Trump, which could bring in tax revenues , tariffs and shifts in immigration policy.
“We need to make sure we’re prepared. We need to make sure we have all the buffers we need to deal with this changing environment,” he warned, wary of endorsing the Republican candidate or his Democratic challenger, Kamala Harris. .
He told CNBC that the current policy is just “campaign rhetoric.” “We are paying close attention to this matter.”
