The Economy of Malaysia
The Middle-Income Trap and Reform
Malaysia has struggled to move into high-income status, with debates on productivity, skills, subsidies and inequality.
Growth has slowed relative to earlier decades.
The trap
Countries can find it hard to shift from cheap manufacturing to innovation-led growth.
Labour
Dependence on low-skilled foreign workers may hold down wages and productivity.
Subsidies
Fuel and food subsidies are costly and being reformed.
Policy
Efforts include digital investment, green industry and tax reform.
A skills gap
Firms complain of a shortage of engineers, while many graduates struggle to find suitable jobs.
Assuming growth continues automatically
Escaping the trap takes reform.
Key takeaways
- Middle-income status can stall.
- Low-skilled labour reliance holds back productivity.
- Subsidy reform is ongoing.
- New industries are targeted.
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