MALAYSIA : THE WAY FORWARD TO HIGH INCOME NATION

Higher Income Nation, where refers to the Vision of 2020 of our master plan to become developed nation by the year 2020 and it was introduced by the former Prime Minister of Malaysia, Mahathir bin Mohamad in the Sixth Malaysia Plan, 1991.  The vision calls for the nation to achieve self-sufficient industrialized nation by the year 2020, encompasses all aspects of life, from economic prosperity, social well-being, educational world class, political stability, as well as psychological balance. But, what it is exactly a high income nation? Why should it be a matter? Does it mean you will have higher income? Does it mean the cost of good will arise? Does it mean we all can retire in 2020 with the good lives? Yeah the appearance of this vision pretty good actually. Anyway, “do you know what high income nation is”?

First, let us get theoretical stuff far away. Currently the World Bank defined high income nation as the one with the per capita of Gross National Income (GNI) of USD 12,476.00 or higher and by 2020 this figure is projected to be USD 15,000.00 in the year 2020. That is the target of our government is set when dealing on this. Wait a minute! What is GNI? Well in case you missed it, why don’t you continue your reading with mini explanations on GNI and GDP concept of national income in order to further understanding in this reading. The Gross national income (GNI) consists of: the personal consumption expenditure, the gross private investment, the government consumption expenditures, the net income from assets abroad (net income receipts), and the gross exports of goods and services, after deducting two components: the gross imports of goods and services, and the indirect business taxes. The formula for GNP is:

Consumption + Government Expenditures + Investments + Exports + Foreign Production by U.S. Companies – Domestic Production by Foreign Companies = Gross National Product

While for Gross Domestic Product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. GDP per capita is often considered an indicator of a country's standard of living; GDP per capita is not a measure of personal income.

In the 60^th, 70th and 80^th we were extensive developing economy, our labour cost were low and attracted foreign company to set up operation here (Malaysia). As industries always to minimize their cost, by placing their operating company in Malaysia may generate higher profit. But Malaysia should not depend on providing cheap labour. In fact, Malaysians nowadays are more desire a better life and we are no longer want to take on the lowest cost job, just look on any Mamak stall or café, you hardly find Malaysians working in there. On the other side it can be positive, where we inspiring towards a better paying job. But, how do we ensure the inclusiveness, that all of us can take part in high income economy? Well we have to look at ways in moving up the value chains to increase profitability.

We moved up the value chain by increasing the quality of our product and services, by being able to attract high wages, which in turns lead to higher GNI. The company like Intel, Western Digital and Strand Aerospace are no longer looking at Malaysia mainly to set up cost    effective’s assembly. They hiring Malaysians for their research and development (R&D) and engineering operation, it is example of successfully moving up the value chains by reaping the benefits that would contribute to citizen, would this Malaysians in turns, earning high salary and increasing local knowledge.

Another issue that we constantly hear is our purchasing power that is simply how much we can stretch out dollar or ringgit. Well maybe it is good to look on Big Mac index, it is simply an informal way of measuring purchasing-power parity between two currencies. It is based on the theory of purchasing-power parity (PPP), in the long run; exchange rates should adjust to equal the price of a basket of goods and services in different countries. This particular basket compare the price of Big Mac around the world and the basket consists of one McDonald’s Big Mac by compared it with the average price in America, $4.20. According to burgernomics, The Swiss franc is 62% overvalued: the exchange rate that would equalize the price of a Swiss Big Mac with an American one is only 0.96. The cheapest burger is found in India, where it cost jus  t $1.62 by taken the price of Maharaja Mac, made with Chicken instead of beef. According to The Economist, Malaysian Big Mac index’s was 40% undervalued against the dollar. On the other hand, we are overvalued country in the world after India, Ukraine, and Hong Kong. And that was supersizing us a lot.

But let’s come close to home, Singapore. It’s a developed nation now, moved from developing nation just like us. They manage to move up the manufactories and technology value chains head the many Southeast Asian country. There were also major leaders in financial services. But, Singapore is associated with the high cost of living. Thus, doesn't that mean we will have to deal with the higher cost in order to become high income nation? well ‘yes and no’. Certain thing will definitely cause more, if move up the values chain, but the certain basic necessities would still be subsidies by government to keep is affordable and we were always to desire cheaper cars and that is sure. But the main push towards high income nation is the ultimately to improve out quality of life, better health care, better education and even a better job.

What won’t changes though, is our need to continue to work hard, because the developed nations grower much slower pays dues to smaller margin of gains. But we could all be rich, that is gold worth working for. Thus, in achieving the Vision 2020 we all need to put our effort together by contributing to the nation in various aspects whether in politically, economically, technologically and so forth. So that, our desire for better lives in future will be guaranteed and our next generation will be in better lives.