12MP’s mid-term review critical in view of evolving economic challenges

The 12MP mid-term review, tabled by Prime Minister Anwar Ibrahim in the Dewan Rakyat on Sept 11, brings its total allocation to RM415 billion. (Bernama pic)

PETALING JAYA: Volatile growth, high inflation, and changes in global markets and supply chains have shifted the economic foundations of the 12th Malaysia Plan (12MP), making its mid-term review all the more critical, says an economist.

Geoffrey Williams of the Malaysia University of Science and Technology noted that under the two previous administrations, the economy also went through high unemployment, labour force disruptions, and a hit to pensions.

“There has been a structural shift in the economic scenario (since the 12MP was first tabled). The original version was also delivered late and was itself a pared-down version of what was intended, so it was unsatisfactory from the outset,” Williams said.

“In addition, the new priorities of the Madani economic policy, including seven new targets, are different from the original 12MP, so they render the original version redundant.”

The 12MP was tabled by then prime minister Ismail Sabri Yaakob on Sept 27, 2021, with an estimated development allocation of RM400 billion.

Tabling the 12MP mid-term review in the Dewan Rakyat on Sept 11, Prime Minister Anwar Ibrahim announced a RM15 billion increase in the plan’s expenditure ceiling, bringing its total allocation to RM415 billion.

Geoffrey Williams.

Anwar stated that the increase was necessary to enhance management quality and reallocate subsidies to cover basic needs. He said the 12MP will be realigned with the Madani economic policy, which aims to empower and accelerate the country’s economy for a 10-year period.

Williams, who noted that the extra RM15 billion is only 3.8% of the original allocation of RM400 billion, said the sum has more to do with higher inflation than extra spending.

“This means that most of the changes are about reforms of the system, including the cancellation of projects, changes in subsidies, and emphasis on existing industrial strengths,” he said.

“These are properly focused reforms, rather than extra spending disguised as reforms, as we have had in the past.”

The 12MP mid-term review has three main focus areas; strengthening sustainability, building a prosperous society, and achieving a high-income nation status.

The mid-term review notes that the country’s energy transition presents significant opportunities to unlock the green growth potential, with this transition including transformation towards high growth high-value industries and a national energy transition roadmap to accelerate the development of renewable energy sources.

Universiti Malaya senior economics lecturer Goh Lim Thye said the focus areas highlight various current socio-economic challenges; set ambitious long-term goals; and emphasise the significance of global competitiveness, innovation, inclusivity, investor confidence, and sustainability.

Goh Lim Thye.

Goh hailed the mid-term review’s importance in assessing progress made in achieving the 12MP’s goals, offering insights into both successes and failures, which enable informed decision-making.

Crucially, he said, the review also allows for necessary course corrections, ensuring that the 12MP remains relevant by adapting strategies in response to challenges or slower progress.

“This enhances efficiency by identifying resource inefficiencies, leading to improved resource allocation and implementation,” he said.

“Additionally, the review helps in addressing new challenges and opportunities, making it easier to adapt to changing circumstances.

“Lastly, it promotes transparency and accountability through public evaluation, which fosters trust in the government’s ability to fulfil its promises.” - FMT