13th MP Poised To Deliver Inclusive Growth And Future-Proof Economy

BusinessToday

6 days ago

As the government prepares to table the 13th Malaysia Plan (13MP) in Parliament tomorrow, expectations are high for a blueprint that will deliver sustainable economic growth, equitable income distribution, and a higher quality of life for Malaysians. Anchored around three core themes—Quality and Sustainable Living, High and Equitable Income, and a Sustainable Environment—the plan is expected to build on the momentum of its predecessor while addressing emerging structural challenges.
Building on 12MP: Steady Growth Amid External Headwinds
Between 2021 and 2025, Malaysia recorded an average GDP growth of 5.1%, at the lower end of the 12MP's target. While recovery from the pandemic initially spurred strong activity, global trade volatility and weaker exports pulled down overall growth. Sectors like construction (+19.7%) and agriculture (+4.0%) outperformed, but mining contracted (-4.5%), while manufacturing and services fell short of targets.
Still, strong labour market dynamics helped maintain momentum. Employment rose to nearly 17 million workers, and household spending has become a key growth driver, now accounting for over 60% of GDP—a significant jump from 45% in the mid-2000s.
13MP Outlook: Keeping Growth Above 4%
Looking ahead, MBSB Research expects 13MP to target GDP growth of 4.0% to 5.0% over the next five years, supported by:
Infrastructure projects like MRT3 and the Johor-Singapore Special Economic Zone (JS-SEZ),
Higher public development spending (estimated at RM80 billion annually),
Private sector investments and strategic FDIs.
The government's commitment to long-term policy continuity is also clear. Flagship blueprints such as the New Industrial Master Plan (NIMP) 2030, National Energy Transition Roadmap (NETR), and National Semiconductor Strategy (NSS) are set to play central roles.
Wage Growth, Productivity, and Labour Market Reforms
A core pillar of 13MP is expected to be labour market transformation, with emphasis on raising the Compensation of Employees (COE) to 40% of GDP. In 2023, COE rose to 33.1% (from 32.2% during the pandemic slump), supported by robust job growth and wage policies like:
Living wage initiatives by GLCs (setting minimum monthly pay at RM3,100),
The Progressive Wage Policy (PWP) to drive corporate wage reforms.
However, underemployment and skill mismatch remain challenges. As of Q1 2025, 1.95 million Malaysians were underemployed in skill-related jobs. While skilled employment reached 30.2%, the government aims to hit 35% by 2025, aligned with national productivity goals under NIMP.
Regional Growth, Aging Population, and the Silver Economy
A clear regional shift is underway. East Malaysia is gaining ground through new infrastructure and energy transition projects, while southern Johor stands to benefit from cross-border trade via the JS-SEZ and the RTS link.
At the same time, Malaysia's aging population is becoming an economic focus. The 13MP is expected to advance the silver economy, promoting growth in long-term care, retirement housing, medical tourism, and age-related financial services. This transition is critical as Malaysia heads toward becoming an aged nation by 2030, with the total fertility rate now at 1.6.
Strategic Focus on Food Security and Export Diversification
Food security will be a strategic thrust, with emphasis on: Smart farming and agri-tech to boost domestic crop yields,
Reducing import dependence,
Engaging youth in agriculture entrepreneurship.
Export diversification is also expected to feature prominently in the plan, as Malaysia seeks to reduce reliance on traditional markets. Penetrating ASEAN, the Middle East, and Africa—especially for halal products—will be vital to future-proof trade resilience.
Fiscal Reform and Responsible Spending
Despite external uncertainties, the government is expected to maintain development spending around RM80 billion annually—roughly 3.3% of GDP—without aggressive austerity measures. The Fiscal Responsibility Act 2023 (FRA2023) will guide commitments to: Reduce fiscal deficit to -3% of GDP by 2030,
Keep government debt below 60% of GDP,
Optimise public-private partnerships (PPP) to ease fiscal pressure.
Bottom Line:
The 13MP marks a crucial opportunity for Malaysia to recalibrate its economy for long-term resilience. With strategic interventions across labour reform, regional development, digital transformation, and fiscal sustainability, the plan could usher in a new chapter of inclusive and future-ready growth for the nation. Related