Malaysia’s Madani Economy: budget 2024 and 12th Malaysia plan mid-term review

In July 2023, less than a year after becoming Malaysia’s Prime Minister, Anwar Ibrahim launched the Madani Economy: Empowering the Rakyat (People) Framework as the foundation and guiding principles to the country’s economic and development plans. The Madani framework replaces the Shared Prosperity Vision, which was launched in 2019 by former PM Mahathir, and which formed the basis of the 12th Malaysia Plan (2021-25), with the recent Mid-term Review of the 12th Malaysia Plan (MTR) now realigned to Madani. 

The Madani framework largely sets out the values and high-level targets for Malaysia to achieve its goal of becoming a leading Asian nation known for humane economic development, or growth that upholds the values of humanity and social justice.¹ Some of these targets are for Malaysia to rank amongst the top 30 largest economies in the world, top 25 least corrupted countries according to the Corruptions Perceptions Index, top 12 in the Global Competitiveness Index and top 25 in the Human Development Index. Malaysia also aims to raise its female labour force participation rate to 60 per cent and to lower its fiscal deficit to three per cent and lower. These targets are ambitious though exciting for Malaysia if met. Malaysia currently ranks 61st on the Corruptions Perception Index, 27th on the Global Competitiveness Index and 62nd on the Human Development Index – so a leap of some 15-35 places in ten years can be quite a tall order. It is imperative, therefore, that PM Anwar succeeds in his reform agenda in weeding out corruption and instilling good governance as well as boosting foreign and domestic direct investment and raising wages if these targets are to be met. 

For the Madani framework to become a reality, resources and on-the-ground targets need to be sufficiently aligned to it. In the recent Budget 2024, the Ministry of Education received the largest allocation of MYR58.7 billion (£10.1 billion), a 6.3 per cent increase from 2023’s allocation, while the Ministry of Higher Education (MOHE) received an allocation of MYR16.3 billion (£2.8 billion) for 2024, also up 6.5 per cent from 2023’s allocation. Another MYR6.8 billion (£1.2 billion) was allocated for TVET, with incentives to spur collaboration between industries and public TVET institutions. The fact that education remains at the forefront is a good start, as implicit in the framework is the need to develop human talent and for them to be ready and equipped to navigate through an increasingly digitalised and technologically advanced world. 

The benefits to the UK sector in the near to medium term, however, are expected to remain limited – there have been no indications of increased scholarships to study abroad in English-speaking countries but the priority remains on sponsoring students domestically, and if abroad, to Japan, Korea, Germany and France as well as to the top 20 universities (by field) in Australia, the UK and USA according to QS rankings. And although the MTR targets to increase gross expenditure to R&D to 2.5 per cent in 2025 from 0.95 percent in 2021, and the number of researchers to 130 from 33, the 19 per cent increase to MYR510 million (£87.8 million) in the government’s 2024 allocation for research and development may be insufficient for such a jump, more so in the absence of other tax incentives to boost R&D.

Beyond this, a closer look at some of the data in the MTR also reveals education trends post-Covid which could indicate continued pressure on international student mobility from Malaysia to the UK and even to UK TNE. First, private upper secondary school enrolments have been falling since 2021 and in 2022 was 14.5 per cent lower than in 2020. A high percentage of these students typically go on to further their studies abroad, in major-English speaking countries, or at least move on to a TNE programme at HE level, so an overall decline in enrolment here would impact the sector negatively. Meanwhile, enrolments into private higher education institutions are also on a similar downtrend, and in 2022 was 4.4 per cent lower than in 2020 with much of the decline seen at bachelor’s degree level. In terms of field of study, there has been a sharp decline in the study of engineering, manufacturing and construction (across all public and private HEIs) against a significant increase in the study of science, maths and computing. 

In sum, Malaysia’s aspirations are on the right track, and a Madani Malaysia in which more of its wealth is enjoyed equitably by its people will surely be positive for the UK sector. However, in the journey of getting there, the UK will need to continue to invest in Malaysia and seek to remain at the forefront of the country’s talent development amid increasing regionalisation and competition. Course and programme offerings will need to be critically reviewed to ensure that the UK is meeting the skills-in-demand, particularly as there are plans in the MTR to harmonise the ecosystems of public and private HEIs in terms of new programme offerings, research focus and digitalisation plans, as well as to align the programmes offered by all HEIs to national aspirations.

¹In essence, Madani is the Malay acronym for a set of values that is envisioned to embody Malaysia’s economic growth and development for the next ten years - sustainability, courtesy, respect, innovation, prosperity and trust or the acronym ‘SCRIPT’ in English.