Page 47 - Forbes - Asia (March 2020)

cation to 41% from 8%, according to World class: private consumption now accounts
Bank data. However, educational quality is
more nuanced and uneven. According to
the OECD’s latest Program for Internation-
al Student Assessment, Malaysian students
of equivalent education levels perform only
about 85% as well as their OECD peers in
reading, 88% in math and 84% in science.
They score even lower relative to students
from urban China and Singapore, which
rank first and second, respectively.
OECD research found that Malaysia
also suffers a shortage of university gradu-
ates with the technical training required
to fill medium- and high-skilled occupa-
tions. And while countries everywhere face
a shortage of highly skilled workers, Ma-
laysia’s is especially severe: the OECD es-
timates that about a third of the country’s
jobs are filled by workers without the req-
uisite skills. This situation seriously hinders
productivity growth, making it tougher for
Malaysia to climb the value chain.
It’s better on the demand side, where pri-
vate consumption has withstood slowing
global trade and rising economic uncer-
tainty. In the first half of 2019, private con- Prime Minister Mahathir increased politi-
sumption grew by 7.7% year on year—not
far off 2018’s 8% growth—despite falling in-
vestment and slowing export growth. Con-
sumption’s resilience is testimony to how
Malaysia’s efforts to industrialize and devel-
op exports have produced a robust middle
Malaysia boasts one of the best-educated
populations in emerging Asia.
NICOLAS MCCOMBER/GETTY IMAGES Yuwa Hedrick-Wong is Chief Economics Commentator for Forbes Asia. He is also a visiting scholar at
the Lee Kuan Yew School of Public Policy, National University of Singapore. Having worked as an econo-
mist across the Asia-Pacific, Europe, the Middle East and Africa in the past 25 years, he regularly writes
columns about the global economy for Forbes Asia. Views expressed are his own. He can be reached at
yuwa@forbesasia.com.
MAR CH 2020
for more than half of Malaysian GDP, ac-
cording to central bank data, and has done
for the past decade.
Going forward, however, growing middle
class and household incomes will depend 35. AZMAN HASHIM
on the service sector. Malaysia needs to
make labor productivity and growth in con- $410 MILLION
sumption mutually reinforcing. To boost AMMB HOLDINGS 45
AGE: 80
labor productivity, it needs to improve both
the quality of workers and their market
mobility. A more productive labor force will 36. MOHD ABDUL KARIM
translate into higher household incomes, BIN ABDULLAH MALA Y
which will further stimulate private con-
$405 MILLION
sumption. More consumption will encour-
SERBA DINAMIK HOLDINGS
age greater investment in services. And AGE: 54
stronger investment, especially in entrepre-
neurial startups, will make services a more 37. ONG LEONG HUAT SIA ’S 50 RICHES
powerful engine of employment growth.
Unfortunately, Malaysia’s investment is $365 MILLION
missing in action. Investment as a percent- OSK HOLDINGS
AGE: 75 T
age of GDP has drifted lower in recent years,
to an estimated 23% in 2019 from around
26% in 2017, according to the central 38. ABDUL KADIER SAHIB
bank—the opposite of what Malaysia needs.
$360 MILLION
In late February, the abrupt resignation of SERBA DINAMIK HOLDINGS
AGE: 71
cal uncertainty, which will further dampen
investor confidence. If this trend continues, 39. LOH KIAN CHONG
it could jeopardize Malaysia’s becoming a
more developed economy. $355 MILLION
Reviving investment in services would ORIENTAL HOLDINGS
AGE: 43
come with a bonus: accelerating the evolu-
tion of Malaysia’s digital economy. Malay-
sia already has the conditions for its digital 40. WONG THEAN SOON
economy to take off. More
$340 MILLION
than 80% of Malaysians, for MY E.G. SERVICES
example, already regularly AGE: 48
use the internet. But Malay-
sian companies, according to 41. TONY FERNANDES
the Digital Adoption Index,
lag their regional peers in $335 MILLION
adopting digital technology AIRASIA
AGE: 55
to drive their own develop-
ment. Malaysia’s score in
the Digital Adoption Index 42. WEN CHIU CHI
is 0.55, below Korea’s 0.62, $325 MILLION
Japan’s 0.68 and Singapore’s SELANGOR PROPERTIES
0.81. This is the new frontier AGE: 63
CHANGE IN WEALTH KEY:
for Malaysia’s service sector.
Getting there will ready Ma-
laysia for the prime time.
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