Economy Ministry outlines key hurdles like slow productivity and low innovation, with a roadmap under the MADANI Economy and 13MP to achieve high-income status by 2030.

KUALA LUMPUR: Malaysia must address several deep-seated structural challenges to successfully escape the middle-income trap, according to the Economy Ministry.

The ministry highlighted slow productivity growth, insufficient innovation and technology investment, regional development disparities, and limited government fiscal space as key hurdles.

“Addressing these issues consistently and in an integrated manner is an important prerequisite to ensure that structural economic transformation can be achieved sustainably and inclusively,” the ministry stated in a parliamentary reply.

This response was to a query from Senator Datuk Rosni Sohar on economic changes needed to avoid stagnation as regional peers advance.

The ministry pointed to the MADANI Economy framework and the 13th Malaysia Plan (13MP) as the comprehensive approach to tackle these challenges.

This strategy emphasises boosting productivity and economic diversification through high-value “Made by Malaysia” products in strategic sectors.

The focus includes driving growth in industries like AI technology, semiconductor reform, and the clean energy transition.

Labour market reforms are also central, involving periodic minimum wage reviews and implementing a Progressive Wage Policy.

“This step is important to ensure workers earn sufficient income to cope with the cost of living,” the ministry added.

Concurrently, human capital development is being strengthened via improved technical education and digital skills training.

“Increasing labour productivity is central to the strategy to accelerate Malaysia’s transition to a high-income nation,” it said.

As of 2026, Malaysia remains an upper middle-income nation with a gross national income (GNI) per capita of RM57,070.

The World Bank’s 2024 high-income threshold is above USD13,935, approximately RM60,000.

Malaysia shares its income category with Indonesia and Thailand, while other ASEAN nations, except Singapore and Brunei, are lower middle-income.

The Economy Ministry projects the country’s GNI per capita will rise to RM77,200 by 2030, achieving high-income status.

This achievement depends on sustained economic growth of 4.5% to 5.5% annually, a stronger currency, and favourable strategic investment.

 The Sun Malaysia