CHARTING THE ECONOMY: REVISITING THE INDUSTRIAL POLICY EXPERIENCE OF MALAYSIA

Abstract

The much-maligned industrial policy approach by mainstream economists got a major push when the United States and European Union began introducing subsidies to support the import-substitution development of micro-chips to offset shortages caused by a fall in imports from China triggered by geopolitical developments since the turn of the millennium. Consequently, it opened the floodgates for the introduction of more assertive interventions through industrial policies. This paper revisits Malaysia’s historical experience with industrial policies, and examines its impact on industrialization and the Malaysian economy. In doing so the paper critically assesses the capacity and effectiveness of the New Industrial Policy 4 (NIMP4) in successfully transforming the Malaysian economy from low- and medium-value-added economic activities in 2023 to high value-added economic activities in 2030, so as to support the achievement of progressive wages from a median of RM2,600 in 2023 to RM4,500 in 2030