The recently launched New Industrial Master Plan (NIMP) 2030 is aiming for holistic and broad-based growth. -Bernama file pic
The recently launched New Industrial Master Plan (NIMP) 2030 is aiming for holistic and broad-based growth.
Malaysia has been facing a number of challenges that restrict growth potential. It is dependent on migrant labour, free-trade agreements are underutilised by local companies, there’s been progressive deindustrialisation and participation in the global value chain (GVC) is limited.
Participation in GVCs is of two types. We can have high- quality, high value-added participation or the participation can be high in terms of quantity.
High value-added contributions would require more sophisticated means of production. On the other hand, we could handle large production volumes at the lower end of the curve.
NIMP is geared towards high-tech production. This is clear from its goals. The strategic framework has several missions that include advancing economic complexity and teching up.
The economic complexity approach is innovative and has not been used before. It takes into account a country’s productive sophistication.
A country with a high level of economic complexity possesses the technological sophistication to make a diverse range of productive goods.
Malaysia has been suffering from premature deindustrialisation. The NIMP is a response to this and Malaysia’s inadequate participation in GVCs.
The idea is to shift production up the value chain, moving away from low value-added processes.
We increase economic complexity by producing goods that that are more sophisticated. This reverses deindustrialisation, increases exports and perhaps will even get Malaysia out of the middle-income trap.
Malaysia has to move towards the production of goods that offer it a niche in global markets. It has to be able to produce in markets where there are few competitors. The goods have to be complex, ones that few are able to produce or that have high entry costs.
The NIMP 2030 is a clear framework for Malaysia to move up the value chain, escape the middle-income trap and achieve developed country status.
The emphasis on technology, including artificial intelligence and machine learning, is apt. These elements alone make the document stand out.
Interestingly, technology and economic complexity capture the spirit of Madani.
The government and the contributors to the plan should congratulate themselves for the work that has gone into the document. All that is left to see is the actualisation of the plan.
* The writer is a senior research fellow at the Malaysian Institute of Economic Research. He is author of the recently published book, ‘Regaining Control: Malaysian Economic Policy During Covid and Beyond’.
The article was originally published at
https://www.nst.com.my/opinion/columnists/2023/09/956913/nimp-2030-clear-framework-malaysia-move-value-chain
