KUALA LUMPUR, Dec 8 — Malaysia is at a crossroads and needs to make significant progress in terms of reforms within the next few years to escape the middle-income trap, said an economist from Nomura International yesterday.Nomura economist for Southeast Asia Euben Paracuelles said the outlook for Malaysia was less positive due to its relatively weak public finances which could be boosted via cuts to its onerous subsidy programmes.
He also said that reforms to the country’s affirmative action programmes did not appear to be making headway and that the government seemed “to have forgotten about it.”
“It (reforms) have to be within the next couple of years,” he told reporters here yesterday following a briefing on the outlook for Asia ex-Japan. “Why we are less positive on Malaysia is because of public finances; they need to cut back on subsidies which will provide room.”
He noted however that making progress on reforms to the country’s controversial affirmative action programmes would be “politically difficult”.
Paraceulles said Malaysia should look at how Singapore moved quickly into high-value economic activities.
Since taking office in 2009, Datuk Seri Najib Razak has initiated a reform agenda which included a government and economic transformation programme to be driven by the special purpose performance management unit Pemandu.
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