Malaysia has fallen behind in the circle of Asian countries that continue to grow economically despite the global slowdown. Economic experts pointed out that the reason behind the country's struggles could be traced back to the imbalance in spending power between state and federal governments.
Professor of Economics at the University of California, Woo Wing Thye, explained in his entry for the Khmer Times that Malaysia needs to de-concentrate centralized government structures if the country wants to reinvigorate its economy.
Woo further noted that government-linked corporations (GLCs) are largely commanding market capitalization in Malaysia. He said reforms that target decentralized decision-making in authority are vital to the country's goals of propelling Malaysia towards a better economic state.
For Woo, effective decision-making in economic discussions may be held up by the imbalanced distribution of power, especially in the levels of authority given to federal governments. "The federal government is much larger and more cumbersome than state governments and has disproportionate power," he noted.
To achieve economic growth, Woo recommended that state governments should be encouraged to come up with their own strategies and models for development. Instead of centralizing most shares of tax revenue to federal governments, Malaysia should allocate more of these shares to state agencies.
Furthermore, Woo believes that state governments should also be allowed to borrow money for the purpose of funding infrastructure projects. Malaysia should consider allocating more responsibilities from federal ministries to state governing bodies, he recommended.
On Tuesday, a new report suggested that Malaysia may not do better in 2019 than it did last year. The Star reported that economists are concerned about the country's current performance. One of the issues that economists are concerned about is the leading index (LI) that has not moved from its negative standing.
An unnamed economist who works for a local bank reportedly said figures from the composite of LI indicated that Malaysia is "entering a recessionary phase." The Malaysian government has yet to respond to these comments.
Meanwhile, some economic analysts suggested that Malaysia still has a long road to travel in its efforts to achieve prosperity following its successful dethronement of the previous administration. Analysts said struggles with economic growth could be attributed to the new administration's inexperience and the hostile global market.
On the other hand, most experts believe that putting a stop to state monopolies will help spur effective governance that is gravely needed to build up Malaysia's economy. While the government has acknowledged the need for reform, action towards the issue has yet to be displayed.
