OECD Economic Survey of Malaysia 2021 - Presentation

2021 OECD ECONOMIC SURVEY OF MALAYSIA

Strengthening the Recovery 12 August 2021

@OECDeconomy @OECD

http://www.oecd.org/economy/malaysia-economic-snapshot/

The COVID-19 crisis hit the economy hard

Source: OECD, Economic Outlook database.

The unemployment rate remains high

Source: CEIC.

Exports have rebounded strongly

Source: CEIC and Bank Negara Malaysia.

The fiscal policy response has been swift and bold

Source: Ministry of Finance, Fiscal Outlook and Federal Government Revenue Estimates, Fiscal Updates 2020.

Vaccination should remain the priority

Source: WHO; https://ourworldindata.org/covid-vaccinations.

Growth is projected to recover steadily 2020

2021

2022

-5.6

4.3

6.1

Private consumption

-4.3

3.3

7.5

Exports

-8.9

10.4

3.5

Imports

-8.4

10.3

3.3

Inflation (CPI)

-1.2

2.7

1.2

Federal government fiscal balance*

-6.2

-6.4

-4.7

Federal government gross debt*

62.1

63.4

63.5

Real GDP

Note: * denotes the series are expressed as a percentage of GDP. Source: DOSM, MOF and OECD calculations.

Tax revenues are low

Source: OECD, Tax Revenue Statistics database.

Public debt will rise due to ageing

Source: OECD calculations.

Women’s labour participation is rising but remains low

Source: DOSM, Labour Force Surveys; OECD, Labour Force Statistics database; ILO; and CEIC.

Key OECD recommendations to ensure a green and inclusive recovery • Prepare a post-COVID-19 integrated medium-term fiscal strategy to reduce public debt and contingent liabilities.

• Consider re-introducing the Goods and Services Tax as part of the medium-term fiscal strategy.

• Expand the coverage of employment injury insurance for the self-employed to more sectors.

• Include dependent self-employed workers, in particular platform workers, in the pension scheme under the Employees Provident Fund.

• Introduce a carbon tax and gradually increase its rate over time, while mitigating its impacts on vulnerable households.

UNLEASHING BUSINESS DYNAMISM FOR THE POST-COVID-19 RECOVERY

Productivity growth needs to be boosted

Source: Asian Productivity Organisation, APO Productivity database 2020.

Starting a business is easier than in other emerging market economies

Note: Information used to calculate the 2018 PMR indicators is based on laws and regulation in place on 1 January 2018 or a later year (1 January 2020 for Malaysia). SMEs refer to limited liability companies and personally-owned enterprises.

Source: OECD, Product Market Regulation database and OECD-WBG, Product Market Regulation database.

Regulatory management reforms are more advanced than in peer countries

Note: Information used to calculate the 2018 PMR indicators is based on laws and regulation in place on 1 January 2018 or a later year (1 January 2020 for Malaysia).

Source: OECD, Product Market Regulation database and OECD-WBG, Product Market Regulation database.

Competition needs to be enhanced in some sectors

Note: Information used to calculate the 2018 PMR indicators is based on laws and regulations in place on 1 January 2018 or a later year (1 January 2020 for Malaysia). Best OECD/worst OECD represents the OECD best/worst performing country, while maximum corresponds to the most restrictive country among those in the PMR database. For electricity, natural gas and mobile communications, the OECD best scores are zero.

Source: OECD, Product Market Regulation database and OECD-WBG, Product Market Regulation database.

Access to some professions is strict

Note: Information used to calculate the 2018 PMR indicators is based on laws and regulations in place on 1 January 2018 or a later year (1 January 2020 for Malaysia). Best OECD/worst OECD represents the OECD best/worst performing country, while maximum corresponds to the most restrictive country among those in the PMR database. Except for lawyers, the OECD best scores are zero. Notaries are not included as it is not recognised as a separate profession in Malaysia.

Source: OECD, Product Market Regulation database and OECD-WBG, Product Market Regulation database.

Greater digital investment is needed

Source: International Telecommunication Union.

Malaysians are positive about teleworking

Note: Percentage of respondents replying to a question on telework experience during the pandemic from the perspective of "overall performance of the company" for managers and "work-life balance and wellbeing" for workers.

Source: OECD, Telework Survey, presentation at the 2021 Annual Conference of the Global Forum on Productivity, https://www.oecd.org/global-forum-productivity/researchandimpact/human-side-of-productivity/.

Key OECD recommendations for a dynamic business sector • Provide support programmes to promote the uptake of digital tools, including basic ones, such as computers and the Internet, particularly targeting older SMEs. • Strengthen basic digital skills training programmes for employers and employees, particularly those in micro- and small-sized enterprises with less than ten workers.

• Implement the Malaysia Digital Economy Blueprint as planned by reviewing, improving and streamlining all relevant state legislation and regulations related to digital infrastructure development.

• Revise the Competition Act and the Competition Commission Act to provide the competition authorities with oversight of mergers and acquisitions.

For more information Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

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