ANOTHER exciting future for Malaysia was set during the Global Transformation Forum (GTF) 2017 recently, with the launch of the Digital Free Trade Zone (DFTZ), the world’s first digital global trade platform outside China.
Jointly created by China’s Alibaba Group and the Malaysia Digital Economy Corporation (MDEC), it will be a future one-stop digital hub of logistics, payment gateway, clearance and data standardisation.
DFTZ is another manifestation of the core characteristics of the National Transformation Programme (NTP), outlined in 2010, which is knowledge-driven, innovation-led and freedom-centred.
In less than eight years of its implementation, NTP has shown results which can be regarded as nothing short of transformational. In his speech at the forum, Prime Minister Datuk Seri Najib Razak showcased how NTP had successfully maintained a sustainable and inclusive growth trajectory for the economy, enhanced the wellbeing and happiness of the people, and more crucially, well on its way to transform the country into a developed and high-income nation by 2020.
This transformational journey is still ongoing and has a few more years before its completion, but the social and economic achievements have exceeded targets amidst global economic uncertainties. The achievements are well recognised by many authoritative institutions worldwide, private think tanks and rating agencies of global standards.
The 2015 NTP Annual Report highlighted these facts and figures, where the key performance indicators (KPIs) of the Government Transformation Programme’s (GTP) National Key Result Areas (NKRAs) have registered 99 per cent achievement, and the Economic Transformation Programme’s (ETP) National Key Economic Areas (NKEAs) and Strategic Reform Initiatives (SRIs) have exceeded their targets by 111 per cent and 108 per cent respectively.
NTP involves politically risky structural reforms, which the government needs to undertake to rejuvenate the economy in the aftermath of the 1997/98 Asian financial crisis and the 2008/09 global financial crisis.
Examples of such reforms are the introduction of the Goods and Services Tax (GST), the rationalisation of subsidies, the implementation of the minimum wage policy, the introduction of Competition Act 2010, and the introduction of the 1Malaysia People’s Aid (BR1M) programme.
Under NTP, instead of the economy being stuck in the middle income category and unable to grow at its potential level, the economy expanded at an average growth rate of 5.6 per cent from 2010 and 2015, deficit has been reduced from 6.7 per cent in 2009 to three per cent now, gross national income (GNI) per capita has been growing by almost 50 per cent, private investment growth rate has been in the uptrend at an average rate of 13.9 per cent, plus consistent and stable inflation and low unemployment rates. Furthermore, the economy is more resilient, with a source of revenue which no longer relies on oil and gas of unsustainable and narrow-based at the level of 41 per cent in 2009, to now at merely 14 per cent. Subsidies have been rationalised.
For so long, Malaysians have been deluded into believing that general prices never fluctuate and remain steady at low levels due to the practice of the bulk subsidy system in the past. This has caused wastages to the
government’s coffers, which
have reached RM25 billion by 2012 and retarded the growth of productivity and wages in the economy.
What do these macroeconomic numbers mean to the people? So far, 1.8 million jobs have been created, poverty level has almost been wiped out at 0.6 per cent, household income has increased, and more importantly, its distribution is fairer. Based on the Khazanah Research Institute (KRI) report, income distribution has improved significantly, where the bottom 40 per cent (B40) of the income category has recorded faster growth than the middle 40 per cent (M40) and the top 20 per cent (T20). Even if we are looking in terms of equality of opportunity, again, to cite another publication by KRI, it has shown that ours is as good as Canada and, in fact, even better than Sweden or Germany.
And now, the Digital Free Trade Zone, which is expected to further spur the economy to greater heights beyond 2020. Digital economy is the future economy. DFTZ will make sure that no Malaysians will be left behind as it is both sustainable and inclusive. Sustainable, because it is a new source of growth, and with less impact to the environment; and, inclusive as it focuses primarily on the small- and medium-sized enterprises (SMEs) and our young.
Based on Alibaba founder Jack Ma’s e-hub concept, DFTZ will provide SMEs and young entrepreneurs with the necessary infrastructure to start their career pursuits and progress through new technology. The digital trade platform will also enable Malaysian businesses to “buy and sell globally”. It is also estimated to support US$65 billion (RM287.9 billion) worth of goods moving through DFTZ. Additionally, DFTZ is expected to create 60,000 jobs by 2025.
No doubt, there are challenges ahead, as the details of DFTZ have yet to be revealed. But, we have to be prepared for this digital economy, which is based on “creative disruptions”.
The writer is the director of the Asian Research Institute of Banking and Finance (ARIBF), Universiti Utara Malaysia.