The special edition of Perspective + Outlook 2026 (a collaboration between The Edge and Financial Times, complimentary with the Jan 26, 2026 issue of The Edge) contains many excellent articles, including those by Andrew Sheng and Tengku Datuk Seri Zafrul Abdul Aziz. They provide a good lead to a series of articles we have been preparing on what will drive the Malaysian economy going forward. Not so much the “political GDP” but what really matters to the people — jobs, wages and cost of living. Their articles, and others, were based on the 13th Malaysia Plan (13MP) covering the period from 2026 to 2030. The 13MP focuses on building economic resilience and improving quality of life based on tech-led growth, digitalisation, artificial intelligence (AI) and social equity. Of raising the top and raising the bottom. The key thrusts include high-quality investments to diversify the economic base into electrical and electronics (E&E), auto components, aerospace and green tech — the reindustrialisation of Malaysia that aims to deepen local participation, tech upgrading, innovation to high-value added (for small and medium enterprises, or SMEs), and improve education and technical training, infrastructure, logistics and digitalisation.
But these broad ideas have always been the same in previous Malaysia Plans — education, innovation, upskilling, improving productivity and value added. Yet, Malaysia’s manufacturing share of GDP has declined, from a peak of 31% in 1999 to 23% in 2024 (see Chart 1). As has our total factor productivity (see Chart 2) and growth in labour productivity over the last decade. The quality of education has deteriorated. Job creation is dominated by the low-skill segment, jobs that we fill with cheap foreign labour. Malaysians are underemployed for their education and skillsets due to lack of opportunities. There is clearly a huge and sustained brain drain — just look at the composition of the Singapore labour force. Corporate earnings are not rising, leaving Bursa Malaysia ineffective in capital raising (see Chart 3).
