Malaysian Model and Integrated Lessons and Policy Options for Pakistan

by Sami Burgaz

Time and again, Prime Minister Imran Khan desired to “replicate” Malaysia’s model in the country which is based on a “diversified” economic structure, a strong external position, robust institutions, and significant natural resources and human capital endowments.

Malaysia was once an agricultural country but with its “holistic” socio-economic policies it has now become one of the most advanced “industrialized” countries in the region and beyond. Society has been nurtured through the help of strategic vision of “equitable” social development by implementing the concept of “shared prosperity”. Regional development has been “consolidated” due to which widening gap between rural and urban poverty is continuously on the decline.

Provision of basic necessities of life has been protected through “constitutional guarantee”. A new social contract was signed to cater the needs of common people. Last but not least, “consistency” of economic policy has never been “hostage” to any political divide, social unrest, discomfort or administrative hurdle since its independence. Thus caravans of socio-economic development have been on the right path to achieve immense socio-economic prosperity in Malaysia.      

Historically, Pakistan and Malaysia reflect longstanding and substantial economic, commercial, and investment ties. Both sides desire to intensify cooperation in diverse sector of economy, trade, investment, education, tourism culture, culture and people-to-people cooperation.

In this connection, both brotherly countries uphold their shared desire to strengthen bilateral economic ties, expand trade and investment, create favourable conditions for commerce and business in both countries, particularly in palm oil, agri products, food retail, halal products, automotive parts, energy, science and technology, and telecommunication. Interestingly, it seems that Malaysian, Tenaga Nasional Berhad has keen interest to explore business opportunities in Pakistan including in renewable energy.

Both sides reiterate the “re-functionality” of Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA) which was signed on 8 November 2007 in Kuala Lumpur. In this regard, Malaysia and Pakistan agree to develop a mechanism of holding sessions to strengthen the trade relationship in key sectors and addressing bilateral trade imbalance.

Both countries appreciate ongoing efforts to further enhance bilateral economic relations. In this regard, both sides look forward to a possible MPCEPA Joint Committee Meeting in the near future with the intention to enhance further economic partnership.

The Inter-Governmental Agreement on Liquefied Natural Gas (LNG) between Malaysia and Pakistan was signed in November 2017 Prime Minister Tun Dr. Mahathir Mohamad upheld Malaysia’s commitment to assist Pakistan in addressing its energy shortfall. In this connection, Prime Minister Imran Khan welcomed Malaysia’s cooperation in LNG and other energy sectors including hydroelectric and renewable resources.

Pakistan highlights its intention to explore greater collaboration between high-tech industries with Malaysia. Malaysia invite Pakistani companies to invest in Malaysia in both manufacturing and services sectors where the companies are able to leverage Malaysia’s strategic location in expanding their investments into ASEAN and the Asia Pacific regions.

On its part, Pakistan invite potential Malaysian companies to explore the possibility of investing in Special Economic Zones to take advantage of Pakistan’s strategic location at the crossroads of Central, South and West Asia. Moreover, CPEC also provide “befitting proposition” to both the countries.

During Imran Khan Visit to Malaysia it was mutually agreed to enhance investment cooperation in sectors such as energy, science and technology, and telecommunication.  Furthermore, both sides reaffirm the importance of the Memorandum of Understanding on Defence Cooperation and look forward to the 13th Joint Committee on Defence Cooperation (JCDC).

For the further strengthening of bilateral trade & commerce activities both sides signed the Partial Visa Abolishment Agreement (PVAA) which will reinforce the positive momentum in the bilateral relationship by broadening contact at the officials’ level between the two countries.

Contrary to high level of political consultation, close economic ties, having a free trade agreement between the two countries and the Malaysia-Pakistan Closer Economic Partnership Agreement, trade volumes remain low. During the 2018-2019 Pakistan exports were $153 million while imports from Malaysia stood at $942 million with balance of trade in favour of Malaysia.

There are bright prospects of joint ventures in areas such as livestock and dairy, food processing, energy, chemicals, halal products, and light engineering between the two countries which may create a win-win scenario for businessmen of both the countries. Interestingly, Malaysian FDI has been on the rise it was at $155 million during the 2018-2019. Moreover, working remittance from Malaysia was over $1.5 billion in remittances during 2018. Chances are high that after the inclusion of Pakistani workers in the Malaysian services sector it may further increase.

Bilateral defence cooperation has been on the rise. Both sides agreed to work closely at the Langkawi International Maritime and Aerospace Exhibition (LIMA) and Defence Expo IDEAS2018. More avenues of cooperation are expected.

Pakistan may learn mechanism of “institutional reforms” from Malaysia which may be replicated in civil service reform effort. The “Spatial Planning System (SPS)” of Malaysia is another area from which Pakistan can be benefited. Actually, it has revolutionized the concept of regional economic development through federal, state and local administrative tiers. It has been instrumental for creating jobs, mitigating inequalities and ensuring basic public services in regions which are economically slow.

Pakistan also needs to learn how, through a system of “robust monitoring” and evaluation; Malaysia ensures that medium-term development plans get implemented in a timely and cost-efficient manner.

Easy and smooth institutionalization of “technological development” and its transfer has been the secret of Malaysian rapid growth towards innovation, Artificial Intelligence, digitalization and ICT. In this regard, Pakistan could certainly learn how Malaysia successfully put in place and practiced policies which could ensure technology transfer in high-end industrial manufacturing activities. A large segment of the country’s electronics industry developed from policies by Malaysia’s Ministry of International Trade and Investment. 

Malaysia has rich and unique model for the Revival of Sick Units (RSUs) which may be learnt by policy makers of Pakistan. Although Pakistan has now approved the establishment of a state-owned supra enterprise ‘Sarmaya Pakistan Company’ to revive 193 loss-making public sector entities. However, tips may be sought from Malaysian “Khazanah Nasional Berhad” a strategic state investment fund which was established to manage the government’s commercial assets and to undertake investments on its behalf.

Malaysia offers a key lesson in the development of “tourism” too. During the initial phases of tourism development it is the diaspora who can most easily be attracted to explore their roots. The long-term development of tourist resorts requires detailed planning which can be easily learnt and followed from Malaysia.

On political side, the government of Pakistan and its political parties can learn the real lessons of “survival’. Despite political differences and chaos since its independence, Malaysian economy has never been hostage to political compulsions. Its macro-economy has been nurtured to achieve a project-led growth to promote export led policies, massive industrialization, human capital, education, health, and housing etc. The economic rise of Malaysia has never been prey to its democratic creed and greed.

Social development is another area where Pakistan may learn valuable lessons from Malaysia. There is an urgent need to marginalise extremism from our society, focus on high-quality education and health for the population, and work on long-term economic priorities in order to chart a transformative path forward.

In order to improve foreign reserve account Pakistan needs more diversity and vibrancy in export sector coupled with value addition, technological and product up-gradation. In Malaysia the successful development of the electronics and electrical (E&E) industry is particularly noteworthy from the perspective of diversification given its minimal links to resource-based industries.

E&E exports are presently Malaysia’s largest exported component, accounting for more than 45 percent of total exports. Pakistan also needs to focus on technological and product up-gradation towards medium value added and high valued exports. While capitalizing on textile, leather and other products with competitive advantage it needs to build its capacity in energy production and local manufacturing industries to support CPEC initiatives.

Development of “qualitative human capital” is another area of interest to Pakistan. Malaysia’s education policy has long focused on inclusiveness, and access to education has improved vastly in recent years.  In line with the Millennium Development Goals, it has reached near-universal levels, with primary education enrolment at around 98 percent and secondary education enrolment more than 95 percent respectively.

The quality of education has critically boosted human capital development and workforce productivity in Malaysia. It has increased the availability of skilled workers and improving Malaysia’s attractiveness to investment in higher value-added activities.

Ambitious reforms have been implemented to improve collaboration between industry and tertiary educators to align curricula to industry specifications and internationally recognized qualifications, while also increasing opportunities for job placements during and after the completion of studies. The Malaysian Education Blueprint (2013-2025) provides the overarching framework for reforms to basic education. Reforms have also been introduced for more holistic examinations and student benchmarking, a comprehensive framework for teacher evaluation, training and career development.

Being prominent regional expert of Malaysia & ASEAN I submit that visit of Imran Khan to Malaysia has already formed a “bench-mark” for the further strengthening of bilateral relations which should be accelerated to achieve the optimal level of bilateral trade volumes, inflows of FDIs, joint ventures and close cooperation in military production, joint drilling, education, culture, industrialization and last but not least, energy and automobile.

Pakistan signed five MOUs in the areas of telecommunication, information technology, and power generation, while also desired to have close cooperation in agriculture, banking, and energy sectors. Malaysia redoubled its interest in acquiring JF-17 Thunder jets from Pakistan. Malaysian automobile company Proton also agreed to set up its first South Asian power plant near Karachi.

Ours is the age of revival of meaningful regionalism, immense socio-economic integration, greater regional connectivity and PTAs and FTAs. Pakistan’s Look East Asia Policy has been “dormant” which should be converted into “development orientation” as soon as possible.

Pakistan should encourage Malaysian companies to target investment possibilities in Pakistan’s Special Economic Zones (SEZs). These geographical units operate with lax industrial regulations, adequate infrastructure, and alternate power supplies and now CPEC has further added numerous value-additions which may provide a win-win situation for both the countries and private sectors to invest in these SEZs. In this regard, time and again, China has been supporting Pakistan’s efforts to seek more and more FDIs from other regional countries in the ongoing mega projects of CPEC in the country. Thus prospects are high and bright to attract more and more Malaysian investments in the country.

I am personally of the view that a pivot toward East Asia could also “diversify” Pakistan’s Middle East-focused, Sino-centric foreign policy, to further enhance its exports. In this regard, Pakistan’s journey from “geopolitics” to “geo-economy” would provide a road map of Pak-Malaysia trade & commerce development.

There is an urgent need for increasing bilateral cooperation between Pakistan and Malaysia in the areas of trade, culture and technology for the mutual benefits of two brotherly countries. Fortunately, a joint venture between Pakistan’s Al-Haj Automotive and Malaysia’s Proton Holdings has been successfully negotiated aimed at accelerating vehicular supplies to Pakistan’s lucrative domestic automotive market.

I suggest that both governments should create awareness about “Malaysia Pakistan Close Economic Partnership Agreement (MPCEPA)” through series of workshops, seminars, conferences and webinars as well as to review the agreement, and use it as a platform for making practical steps to facilitate and grow bilateral trade and investment. In this regard, The Center for Global & Strategic Studies (CGSS) may provide an “ideal platform” for regular business-to-business and people-to-people meetings.

It has rich expertise and intellectual diversity to disseminate real potential of both countries through qualitative articles, interviews, feasibility reports, documentaries and research based publications on trade, commerce, business opportunities, prospects of cultural and education cooperation. The CGSS has already floated the idea of “ASEAN Center” in University of Punjab with the collaboration of Regional Integration Center (RIC) which would a value-addition in the revival of Pak-ASEAN relations in the days to come.

The CGSS has been “pursuing” a holistic approach for the further strengthening of bilateral relations between Pakistan and ASEAN for the last two years. In this regard first round of “Strategic Expert Dialogue” has been convened during which CGSS prominent experts presented their papers and chalked out strategies to enhance bilateral relations between Pakistan and ASEAN Countries.

Malaysia is increasingly important to Pakistan economically and that both countries find a lot of commonality on issues of regional and global importance. Pakistan appreciated Malaysian supports on the issue of Kashmir and FATF.  

Close spirits of cooperation, coordination and collaboration with government agencies of Malaysia and Pakistan should be further promoted to facilitate trade and investment opportunities. In this regard formation of joint “Pak-Malaysian Chamber of Commerce” would be a doable proposition. There is an urgent need to form various sub-committees, business development and strategy, information technology (IT) and digital, textile and apparels, travel and tourism, import and export under the umbrella of MPCEPA in which the CGSS may play a ‘decisive role”. 

Pakistan has now adopted zero tolerance corruption policy. In this regard, successful experience of Malaysian government against corruption may be a value-addition. 

Social unity, harmony and national integrity have been salient feature of success government of Malaysia since its independence. It was the result of the inclusive policies of Mahathir’s vision 2020 that all ethnicities and nationalities in Malaysia’s population which comprises Malays (68 percent), Chinese (23.2 percent), Indians (7 percent) and other groups (one percent) are living peacefully.

The followers of Islam (61 percent), Buddhism (19.8 percent), Christianity (9 percent), Hinduism (6.3 percent) and others find state policies conducive enough for them to live a life which is ranked as “very high” on the Human Development Index (HDI).

Education promotes civic decency and supports prosperity too. It provides bases of a national skilled human capital. Malaysia is one of the few countries where education and healthcare are heavily subsidised. Malaysian citizens are entitled to free public education up to the secondary level and public tertiary education fees for them are subsidised by up to 90 percent. According to UNESCO (2019-2020) Malaysia has an adult literacy rate of 93.12 percent; male literacy rate is 95.43 percent while for females it is 90.75 percent. The policy makers of Pakistan should seek guidance from the Malaysian education system to replicate the same in the country.

Moreover, throughout Malaysia basic healthcare services at government clinics available with prescription cost only one Malaysian ringgit 1 ($0.25). Disabled persons, senior citizens and public-school students are entitled to free healthcare. The UNDP (2020) termed the Malaysian healthcare system “a model to other regional countries”. Pakistan has been striving hard to achieve this goal of Free National Health Facilities through distributions of health cards however, valuable lessons may also be learnt from Malaysia. 

In 1991, Malaysia adopted an export-oriented economic strategy. Under this strategy, the country pursued a policy of industrialisation to increase the productivity and quality of its exports. It also pursued policies of privatisation and corporatization which may also be replicated in our own country.

To conclude there is an urgent need to critically examine the numerous challenges faced by Malaysia in its early years of independence. Creation of a “united Malaysia”, “free society” “develop a stable democratic society” formation of a moral and ethical society” “a liberal and tolerant society” “a scientific and progressive society” “a caring society and caring culture” “a just society through equal distribution of income” and last but not least “a prosperous society’ that had a competitive, dynamic and stable economy.

The Malaysian model upholds that formation of a vibrant and progressive society has direct correlation with economic development, stability and sustainability. Nations are built through “strategic visions” and sincere “leadership qualities” because shady characters always achieve nothing but promote corruption and injustice in the societies. Societies are built through their moral, ethical, and tolerant values and Malaysia exemplifies it.  

Malaysia has a labor force of 15.9 million people out of a 32.5 million population in 2020. Agriculture employed 10.1 percent of Malaysians in 2020 and contributed to 7.3 percent of GDP. Malaysia is the second main producer of palm oil and tropical wood, and the fifth largest exporter of rubber. It has successfully developed its economy based on raw materials and has significant reserves of oil, gas, copper and bauxite.

Industry contributes to around 37.4 percent of GDP and employed 26.8 percent of the active population in 2020. Malaysia is one of the world’s largest exporters of semi-conductor devices, electrical goods and appliances, and the government has ambitious plans to make the country a key producer and developer of high-tech products, including software. It is a major outsourcing destination for components manufacturing, after China and India. It has attracted significant foreign investment, which has played a major role in the transformation of its economy.

Malaysian service sector employs the majority of the population 63.1 percent in 2020 and accounts for 54.2 percent of GDP which is due mainly to healthcare services, transport, distributive trade and tourism. Tourism was the third biggest contributor to Malaysia’s GDP, after manufacturing and commodities, with over 7 percent of GDP and 26.1 million foreign tourists in 2019, according to Tourism Malaysia.

Malaysia unfolds unlimited “hidden” natural treasures and golden lessons of unity, integrity, harmony, stability, sustainability, progress, prosperity, production, competitiveness, smart economy, green energy, industrialization, human capital, education, health, affordable housing, eco-policies, control of climate change, administrative measures of anti-corruption, accountability, transparency, national cause and continuation of economic policies despite of political divide and social chaos for all the regional countries and especially Pakistan.

Survival is a complex and complicated “attribute” of human development. Societies could not be developed through “automated” philosophies of hatred, prejudice, discrimination and ethnic divide and political cosmetic orientations. The Malaysian Model underpin the importance of sincere leadership who can guide the nation through all ups & downs and pull it from all shores of uncertainties to the banks of national harmony, unity and productivity.

By: Dr. Mehmood Ul Hassan Khan

Opinions expressed in this article are the author’s own and do not necessarily reflect the editorial policy of The Asia Today.


This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept