NATIONAL CONFERENCE ON INTEGRATED SOCIAL POLICIES 7-8 FEBRUARY 2007, CAIRO, EGYPT SOCIAL POLICY FORMULATION AND IMPLEMENTATION IN MALAYSIA RAJA ZAHARATON RAJA ZAINAL ABIDIN

BRIEFING OUTLINE 1.Background on Malaysia 2.Development Philosophy and Planning Machinery 3.Major Policy Evolution 4.Socio Economic Dimensions 5.Development Record and Prospects

FIGURE 1 PARLIAMENT PARAMOUNT RULER CABINET MINISTRIESCENTRAL AGENCIES DEPARTMENT & AUTHORITIES MEDIAPOLITICAL PARTIES STATE ADMINISTRATIONS NGOs &INTEREST GROUPS INDIVIDUALS COUNCIL OF RULERS

Major improvements based on key economic indicators... GNP per capita RM USD USD (in PPP) Unemployment (%) Inflation (%) Fed. Govt. account (% to GDP) Current a/c of BOP (% to GNP) ,299 2,329 5, ,333 3,509 8, , , ,737 1,717 4, ,682 4,690 10, F ,235 11,

POPULATION SIZE AND STRUCTURE, 2000 and 2010 Total Population (million persons) Bumiputera Chinese Indian Age Structure (years) 0 – – Dependency Ratio (%) Median age (years) 2000 % to Total 2010 % to Total % growth

through a MIXED ECONOMIC SYSTEM of free enterprise but with active government support and direction The GOVERNMENT provides the broad thrusts and sets direction for the whole economy, and ensures the achievements of socio-economic goals The PRIVATE SECTOR is free to operate and given appropriate policy, institutional and infrastructural support. DEVELOPMENT PHILOSOPHY

Inter Agency Planning Groups (IAPGs) Consultations with the private sector Through Government - private sector dialogues ï EPU dialogue ï MOF budget dialogue ï Bank Negara dialogue ï MITI dialogue CONSULTATIVE PROCESS Consultations with Civil Society MOF Budget Dialogue Technical Working Groups (TWGs) Inter Agency Planning Groups (IAPGs)

PLANNING PROCESS TREASURY TREASURY ECONOMIC PLANNING UNITCENTRALBANKDEPARTMENT OF STATISTICS INTER AGENCY PLANNING GROUP (IAPG) ECONOMIC PLANNING UNIT MINISTRIESOTHERAGENCIESSTATEGOVERNMENT ADJUSTMENT AND MATCHING NATIONALDEVELOPMENTPLANNINGCOMMITTEE CABINET PRIVATE SECTOR PROGRAMME AND PROJECTS PLANNING FROM THE TOP PLANNING FROM BELOW

PLANNING HORIZON 1. OUTLINE PERSPECTIVE PLAN (Long term plan) * OPP1 ( ) * OPP2 ( ) 2. FIVE-YEAR PLAN ( Medium term ) 3. MID-TERM REVIEW ( MTR ) OF THE FIVE-YEAR PLAN 4. ANNUAL BUDGET ( Short term ) * OPP3 ( )

Major Economic Policies Laissez-faire / export-oriented Economic and rural development Growth with Equity : To eradicate poverty & restructure of society Total Development Balanced Development : To establish a more united & just society Building a Resilient & Competitive Nation : To raise quality of development & generate high sustainable growth Post- independence New Economic Policy (NEP) National Development Policy (NDP) National Vision Policy (NVP) Vision 2020 OPP1 ( ) OPP2 ( ) OPP3 ( ) 10 THE NATIONAL MISSION Enhancing Nation’s Capability ~ c ompetitiveness, unity, distribution & quality of life

 To integrate the population into the modern economy  To redistribute the wealth of the nation  To improve the quality of life of the people, especially those in the rural areas Social Development Programmes

3MP '76-'80 4MP '80-'85 5MP '86-'90 6MP '91-'95 7MP '96-'00 2MP '71-' MP '01-' Development Expenditure Gives Priority To Economic And Social Sectors... (% to Total) Economic Agriculture Industry Infrastructure Utilities Social Education Health Housing Security Administration TOTAL RM billion Sector 12 9MP '06-‘

Malaysia had achieved most of the UN Millennium Development Goals  Eradicate poverty & hunger  Achieve universal primary education  Promote gender equality & empower women  Reduce child mortality  Improve maternal health  Combat HIV/AIDS, malaria & other diseases  Ensure environment sustainability  Develop a global partnership for development Socio-economic dimensions...

Major Success to Eradicate Poverty (% total households) Note : a/ Poverty Line Income (PLI) revised methodolody for 2004 was RM661 per month in Peninsular Malaysia (household size 4.4); RM888 in Sabah (household size 5.2); & RM765 in Sarawak (household size 4.6). Hardcore poverty is estimated using half of PLI a

 Focused on human resource development and quality of life improvements  Emphasize income-generating projects and not on welfare handouts  Major programmes :  Rural development – New land and in-situ development – Drainage and irrigation – Agriculture support services – Village/small industries – Upgrade rural infrastructure - roads, electricity, water – Upgrade schools & health facilities  Other programmes (hard-core poor) – Direct assistance ~ old folks home / the aged, the handicapped – food supplements and scholarships – interest free loans Poverty Eradication Programmes... DISTRIBUTION AGENDA

Better Quality of Life... Malaysian Quality of Life Index... Working life Culture & leisure Housing Transport & comm. Health Education Income & distribution Social participation Family life Environment Public safety MQLI Area % Change 1990/ The Malaysian Quality of Life Index (MQLI) is an aggregate measure of the quality of life using forty-two indicators, representing eleven components of life 16

Selected Indicators Of Quality Of Life... reaching the level enjoyed in advanced economies , Life expectancy (in years) : Male Female Infant mortality rate / 1000 Population / Doctor ratio Literacy rate (%) Telephones / 1000 population 1 Utilities : Pipe water (% of population) Electricity (% of households) , , Note : 1/ Include mobile phones 2/ Universal coverage in urban areas

Real GDP Growth... Average Average Average Average e 2006 F 2007 F 7.5 % 5.8 % 7.1 % 4.5 % 8.9 % 0.3 % 4.4 % 5.5 % 7.2 % 5.2 % 5.8 % 6.0 %

Transformation From an Agro-based to an Industrial-based Economy... RM billion % 31.9 % 8.9 % 46.8 % 24.6 % 16.3 %26.7 % 37.5 % 12.2 % 43.1 % 17.2 % 21.0 % 58.2 % 31.6 % 8.2 % (GDP in RM billion at 1987 prices / Percentage to Total in italics) % 57.6 % 30.8 % 19

Diversification of exports products... (% to Total Exports) Manufactures 11.9 Palm Oil 5.1 Others 9.8 Rubber 33.4 Tin 19.6 Forestry 16.3 Oil & gas RM 533,790 million (USD141,588 million) Manufactures 80.5 Palm Oil 3.6 Others 2.7 Rubber 1.1 Tin 0.2 Forestry 1.3 Oil & gas RM 5,163 million (USD2,065 million) 20

Implementing Pragmatic Fiscal Policy... The Federal Government Accounts, (RM billion) Revenue must cover operating expenditure and development expenditure must be financed through non-inflationary methods Revenue RM120.6 bn (2006) Operating Expenditure RM105.4 bn (2006) Development Expenditure RM34.5 bn (2006) Deficit RM19.3 bn / -3.5% of GDP (2006) 21

Real GDP growth (% p.a.) Per capita GNP (RM) * Per capita GNP (US$)* PPP Per capita GNP (US$)* Inflation (% p.a.) Unemployment rate (%) * Current a/c of BOP (% GNP)* Fed. Govt. account (RM bil.)* % of GDP Pub. Sector account (RM bil.)* % of GDP External reserve (months of retained imports)* * End of period Prospects During The 9 th Malaysia Plan, MP Target ,573 6,273 13,878 low … 22

Gross Domestic Product, (% per annum) GDP (real) Agriculture Mining Manufacturing Construction Services  Govt. Services  Bus. & Non-Govt. Svs. Utilities Transport etc Trade etc Finance etc Other Services % of GDP % growth per annum Achieved 8MP Target 9MP

 Political stability and harmonious society  Efficient government with pro-business policies  Getting fundamental policy framework right  Macroeconomic management  High savings rate  Industrialization strategy & Competitive investment incentives  Productive agriculture  Human resource development  High-quality infrastructure & social services Key Factors For Success... Conclusion

 Political environment  Administrative competence and technical expertise  Involvement of private sector and NGOs FACTORS AFFECTING THE SOCIAL POLICY PROCESS

Thank You