Malaysian PM Najib Sees Early Achievement of Mahathir Vision: Southeast Asia

Najib Sees Early Achievement of Mahathir Vision: Southeast Asia

Malaysian Prime Minister Najib Razak said the nation may reach high-income status two years ahead of target, as he seeks to convince voters of his economic achievements before elections due within weeks.

Gross national income could rise to $15,000 per capita in 2018, earlier than a target of 2020, Najib said in a televised speech late yesterday. The measure has increased 49 percent since 2009, to $9,970 last year, the government estimates. Najib also pledged to give annual cash handouts to low-wage earners.

“The time has come for Malaysians to make a decision and I hope you make the right choice,” said Najib, 59, without indicating when the election will be held. He must dissolve parliament by April 28 and hold a vote by the end of June.

Najib, who inherited a country in recession when he replaced Abdullah Ahmad Badawi as leader in 2009, is focusing voters on his efforts to boost investment and improve incomes as he seeks a popular mandate for the first time. The ruling National Front coalition won the last election in 2008 by its narrowest margin in more than five decades, prompting Abdullah to hand over the leadership mid-term.

A nation is considered high income when GNI per capita meets or exceeds $12,476, according to the World Bank. In 1991, former premier Mahathir Mahathir laid out a 30-year plan known as Vision 2020 aimed at earning Malaysia high-income status by the end of the current decade.

Investment Rises

Malaysia’s total investment grew 19.9 percent in 2012 compared with 6.5 percent in 2011, accounting for 26.7 percent of gross domestic product, according to a report on the nation’s so-called Economic Transformation Program released by the prime minister yesterday. Private investment climbed 22 percent to 139.5 billion ringgit ($45 billion) in 2012, driven by spending on manufacturing, services and mining, according to the report.

“Najib’s comparative advantage is to try to portray himself as an economist and an economic success, which may hit home in middle-class areas,” Bridget Welsh, associate professor of political science at Singapore Management University, said by phone. “He’s mostly concerned about a public relations image. The opposition tends to focus on ordinary people and micro issues, like wages and the cost of living.”

Infineon Technologies AG (IFX), Europe’s second-largest maker of semiconductors, said in May it will spend 4 billion ringgit over 10 years to expand its wafer-fabrication facilities in Malaysia’s north. Germany’s Evonik Industries AG plans to start a specialty chemicals manufacturing venture with Petroliam Nasional Bhd. within a $20 billion refining and petrochemicals complex in southern Johor state.

‘Track Record’

Najib can use the economic program to argue that “the current administration has got a track record in organizing big public projects and getting the private sector involved,” said Gerald Ambrose, who oversees the equivalent of $1.7 billion as managing director of Aberdeen Asset Management Sdn. in Kuala Lumpur.

Since taking charge, Najib has streamlined bureaucracy and opened up more industries to foreign investors. His government identified $444 billion of private-sector-led projects to help champion in the current decade, ranging from oil storage to a mass railway, under the economic plan.

Malaysia’s economy grew at the fastest pace in 2 1/2 years last quarter as Najib boosted spending ahead of the election that will test his grip on power. GDP rose 6.4 percent in the three months through December from a year earlier, after a revised 5.3 percent gain in the previous quarter.

Poverty, Education

“We must not rest on our laurels,” Najib said in the report. “Malaysia must continue to address issues such as poverty, labor productivity, environment sustainability and education, while factors in the external economy are likely to remain demanding in the foreseeable future.”

The architecture, engineering and quantity-surveying services sub-sectors are expected to be ready for liberalisation exercise this year, Bernama reported, citing Pemandu’s report.

Southeast Asian nations from Indonesia to the Philippines have shown resilience to the faltering global economy as local demand rises. Najib has increased government expenditure, extending cash handouts to low-income families and raising civil servants’ salaries in the lead-up to voting.

Government revenue was the highest on record last year at an estimated 207 billion ringgit, enabling the government to afford socio-economic programs and give money to the poor, according to the report by the government’s Performance Management and Delivery Unit, or Pemandu.

The budget deficit narrowed from 6.6 percent of GDP in 2009 to 4.5 percent last year and is expected to shrink to 4 percent this year as the government seeks to balance the budget by 2020, according to the report.

Resurgent Opposition

Najib’s National Front coalition is facing a resurgent opposition led by Anwar Ibrahim, which currently holds 75 seats in Malaysia’s 222-member parliament. The prospect of an even closer election result has helped make the FTSE Bursa Malaysia KLCI Index the worst performing Asian benchmark this year, Citigroup Inc. said in a report this month.

The benchmark stock index has dropped 4.1 percent since closing at a record on Jan. 7. It ended 0.3 percent higher yesterday before the report. The ringgit climbed 0.2 percent to 3.1255 per dollar. Its 2.2 percent drop this year makes it Asia’s fifth-worst performing currency among 11 tracked by Bloomberg.

Najib is more popular than his government, according to the Merdeka Center for Opinion Research. His approval rating slipped to 61 percent last month from 63 percent in December, according to a survey of 1,021 voters conducted Jan. 23 to Feb. 6 on the country’s peninsula. By contrast, 48 percent of respondents said they were “happy” with the government, according to the poll published Feb. 26.

To contact the reporter on this story: Barry Porter in Kuala Lumpur at

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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