Challenges Faced by Malaysia in Its Journey Towards a High Income Nation at 2020

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1. Introduction The prime minister Najib Tun Razak, on 2 may 2010, announced his new program named as New Economic Model (NEM) to make Malaysia a “developed” and “high income” country at 2020. To be more specific the main target is to increase the per capita income to 17,700 USD from 7558 UDS by 2020. But what are the problems for the Malaysia in this way to become a developed and high-income nation? 1- The Economic Transformation And Need For New Institutions: In the past years, Malaysia has used a growth model to become a middle-income country. Now, it has decided to become a high-income country. So, they growth model has to be changed to another model to guarantee the goal of becoming a high-income country. In this way, Malaysia…show more content…
6- Value Added Economic Activities Instead of Labour-intensive Industries: A higher-income nation means higher wages for workers. And higher wages for workers means less competiveness in attracting foreign investors. Based on the central bank annual report for the 2010 “the emergence of lower-cost competitors in the region, notably China, Indonesia and Vietnam, has affected Malaysia’s competitive advantage in labour-intensive industries, in this regard foreign investment received in recent years have shifted towards higher value-added economic activities”. So, it seems that the only way for the Malaysia is to do more efforts to empower the industries with higher value added. On the other hand because higher value added industries must have more research activities, more high quality of human capitals. Innovation and creativity extremely is based on the research and quality of human capital. And the human capital and research are products of high quality universities. in my opinion malaysia in on the right track to develop research universities which are more envolved in the creative and innovative research activities, but on the other hand there some problems in the composition of students in the malaysian universities. that is discussed in the next point. 7- First Class Universities to Reduce Brain Drain and Keep the Researchers (Specifically, Natives) After

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