China has announced that its economy grew 10.3 per cent in 2010, marking the fastest annual growth since the onset of the global financial crisis, and underlining the country's growing economic clout.
The GDP figure, up from a revised 9.2 per cent growth in 2009, highlighted China's powerful performance in a year when it overtook Japan to become the world's second-largest economy behind the US.
"Currently the economy is in a critical period of transforming from recovery to stable growth," Ma Jiantang, commissioner of the National Bureau of Statistics, said on Thurday.
Ma said China would step up efforts to transform the country's "economic growth pattern" - referring to the government's aim to boost domestic consumption and reduce its reliance on exports and investment.
His comments were echoed by Hu Jintao, the president, who told US business leaders during a visit to Washington on Wednesday that China would boost interior demand and consumer spending.
The country's consumer price index, the main guage of inflation, rose by 4.6 per cent year-on-year in December compared with 5.1 per cent in November, which was the fastest pace in more than two years.
The index rose 3.3 per cent for all of 2010 exceeding the government's full-year target of three per cent as food costs soared.
Inflation still high
Analysts said the still-high inflation figure in December supported the case for further interest-rate increases and bank-lending restrictions.
Output from the country's millions of factories and workshops rose 15.7 per cent for all of 2010, faster than in 2009 as manufacturers cranked up activity to meet growing demand for Chinese-made goods.
Urban fixed asset investment, a measure of government spending on infrastructure, rose 24.5 per cent over the 12 months - slower than in the previous year as Beijing started to wind back crisis-stimulus measures.
Retail sales, an important indicator of consumer spending, rose 18.4 per cent in 2010.
As the US and Europe struggle to spur growth, Beijing has been trying to slow its economy and halt a flood of liquidity that is fanning inflation and driving up property prices, straining household budgets.
Last week, the central bank again ordered banks to increase the amount of money they keep in reserve, effectively putting a cap on lending, after raising interest rates twice in the fourth quarter.
KUALA LUMPUR: Prime Minister Datuk Seri Najib Tun Razak today unveiled the much-awaited New Economic Model (NEM) which will transform the nation into a highincome economy that is sustainable and inclusive and will position the nation on the right path towards attaining developed nation status by 2020.
The NEM would make Malaysia more competitive regionally and globally with benefits accruing to all Malaysians, with their per capita income increasing to US$15,000 (RM48,900) by the end of the decade from US$7,000 (RM22,820) currently, said Najib, who is also Finance Minister.
"It will be no easy task, but the rewards will be great if we make this transformation. The challenge is how we will do it. This means building upon existing sectors and maximizing the potential of new ones through innovation," he said.
Under the NEM, the Government would no longer tolerate practices that support the behaviours of rentseeking and patronage, which have long tarnished the altruisic aims of the New Economic Policy (NEP).
The NEM wil be "inclusive" with all Malaysians contributing and benefiting from economic growth a fundamental element of any new economic approach, he said in his speech at "Invest Malaysia 2010" conference.
Among highlights of the NEM are:
● Employees Provident Fund (EPF) will be allowed to invest more in overseas assets;
● Malaysian Industrial Development Authority (MIDA) will be corporatised and renamed as Malaysian Investment Development Authority to make it more effective as an investment promotion agency;
● Government and EPF to form a joint venture to promote the development of 1,200 hectares of land (3,000 acres) in Sungai Buloh into a new hub for Klang Valley;
● Several parcels of land in Jalan Stonor, Jalan Ampang and Jalan Lidcol in Kuala Lumpur will be tendered out and developed by private sector, failing which it will be wasteful if the assets were not developed as the government will incur cost of maintaining them;
● The land development in Sungai Buloh and development of parcels of land in the city centre is expected to generate new investments worth over RM5 billion;
● The Ministry of Finance Inc companies such as Percetakan Nasional Malaysia, CTRM Aero Composites Sdn Bhd, Nine Bio Sdn Bhd and Innobio may be privatised;
● Petronas has identified two sizeable subsidiaries with good track record to be listed this year on Bursa Malaysia, a move that will reduce government's presence in business and enhance private sector's role;
● Khazanah Nasional Bhd will divest its 32 per cent stake in Pos Malaysia Bhd through a two-stage strategic divestment process;
Najib said there will be a renewed affirmative action policy in the NEM, with a focus on raising income levels of all disadvantaged groups.
He said these include long house dwellers in Sabah and Sarawak and poor rural households in Peninsular Malaysia, who often feel disconnected from the mainstream economic activity.
"Fishermen, petty traders and small farmers also fall under this category . Not forgetting the Orang Asli and low income urban dwellers, eking out a livelihood in tough economic circumstances. The proposal in the NEAC report suggests a focus on the bottom 40 percent of Malaysia’s income strata — both individually and regionally.
"These are the disadvantaged groups where special attention is still required."
Najib also said the government will reassess the subsidy system and broaden revenue-raising base through proposed Goods and Services Tax (GST).
This will place Malaysia in line with international norms and reduce unsustainable reliance on a small number of industries, business and taxpayers.
He also said Malaysia should rise out of the "middle-income trap" that will be a precarious position for any nation in the new global economy, which means pursuing economic policies in knowledge industries of the future with high-wage jobs and prosperity that can be shared by all.
The Prime Minister said the NEM, formulated by the independent National Economic Advisory Council (NEAC), will be integrated into the 10th Malaysia Plan with a longer term vision that will be delivered through the 11th Malaysia Plan.
"These can transform the economy to become one with high incomes and quality growth over the next decade," he said.
Initiatives to boost GNP growth
Currently almost four per cent of all Malaysians and over seven per cent of rural Malaysians live below the poverty line.
The poorest 40 per cent of Malaysian households earn incomes, on average, barely one-seventh that of the richest 20 per cent.
For millions of ordinary Malaysians, life is far worse than even the USD7,600 annual Gross National Product (GNP) figure suggests.
Thirty years after the National Economic Policy and 10 years before 2020, these figures show how far Malaysia still has to go before it becomes an advanced, high income economy.
In order to achieve this, National Economic Advisory Council's (NEAC) recommendations will be anchored by eight Strategic Reform Initiatives (SRIs).
These SRIs will incentivise economic players to make decisions in ways that will increase private investment and increase productivity which will result in real GNP growth at an average annual pace of 6.5 per cent or higher from now until 2020.
In a high income economy, the rakyat can expect:
• More choices and higher purchasing power. An upward spiral of consumption and high income career choices.
• Better quality of life. Not only higher incomes, but quality healthcare and social support, accessible to all rakyat and income groups.
• Opportunities for upward mobility. Readily available skills development programmes. Access to resources, jobs, contracts and licences based on merit and effort.
• Reward for innovation and creativity. A more developed, specialised, innovative, technology driven and knowledge based economic structure.
• Greater confidence in the robustness of the economy. Sustained high private investment rates on the back of high savings, foreign capital and globally mobile talent.
by Marhalim Abbas credit to Malay Mail source --- http://www.mmail.com.my/content/31837-nem-make-malaysia-more-competitive-globally
I`m studying this New Economic Model, i`ll write about the review later...will be updated soon :-) (Mlmah Nad)
Review (Part One)
Pros
If this NEM be implemented and eventually success, the pros will be:
1. Economy - Malaysia will be an economically high-income country and also spur greater economic development through FDI (Foreign Direct Investment). Malaysia will compete with other economic outstanding with larger population countries (China, India, Vietnam and Indonesia). If we stay with the current economic policy, the country will be left behind by the neighbouring countries and other Asian countries. I think FDI will contribute more to the country`s income in the future. Last year, the government approved 766 manufacturing investments worth RM32.6 billion where foreign investments accounted for 67.8 per cent or RM22.1 billion. - The economic growth will lead to higher Gross Domestic Product (GDP)among Malaysians. Currently, our GDP has been extremely low compared to other developing Asian countries (South Korea’s GDP per capita is US$16,450, Singapore US$34,346 and Hong Kong US$29,559 while Malaysia is still at US$7,469.) - NEM recognises needs as a basis of distribution of the country`s wealth, so this will eradicate the poverty gap among Malaysians. - There will be more chances for Malaysians to start small businesses to achieve the high income nation status and not fully depending on salaries (as most Malaysians do). This will generate more income to Malaysians and the country.
2. Education - Malaysia is losing its skilled talent - as many are leaving to seek better opportunities to overseas countries, according to Ministry of Human Resources, the NEAC says in 2008 some 350,000 Malaysians were working abroad, over half of which had tertiary education. If the country manage to improve its economic growth, more Professional Malaysians will choose to stay in Malaysia and contribute to the country.
