MALAYSIA-ECONOMY: Potholes on the Development Track

KUALA LUMPUR, Dic 16 (IPS) - Malaysia's economy continues to speed along the development track, but warning lights are signalling problems that could choke its growth engine in the years ahead.

Signs of the country's wealth are easy to spot. Shopping centres and cavernous malls are filled with people and even more cavernous malls are changing the Malaysia's urban landscape. In bustling Kuala Lumpur, the world's highest office tower is rising above highways crammed with brand new cars.

The statistics also reflect Malaysia's boom. The economy has been growing by eight percent annually for the last seven years and is projected to grow by 8.6 percent in 1994. It is expected to grow by 8.4 percent next year and by 8.2 percent in 1996.

Despite rivalry from Asia's new favourites like China and Vietnam, foreign investments in Malaysia rose by nearly 200 percent in the first nine months of 1994 compared to last year. Malaysian firms are themselves investing abroad.

The country also reached full employment in 1992 -- eight years ahead of the date targetted by government planners.

"Actually we can give ourselves a pat on the back," Malaysian Prime Minister Mahathir Mohamad last month told the United Malays National Organisation (UMNO), the lead party in the ruling National Front coalition.

"Today Malaysia is seen as a model country," he said, because it has moved from a producer of raw materials to one where manufactured goods make up 78 percent of its industry exports.

When Deputy Premier and Finance Minister Anwar Ibrahim presented the 1995 budget in October, he submitted one that contained tax breaks and a bonus for civil servants and security forces because the government was expecting a 252.8 million dollar federal budget surplus.

But despite this optimism, experts say it is time to address deeper ills that may threaten the country's ability to sustain its impressive growth for the long haul.

"The Malaysian economy began to show signs of overheating after a period of rapid expansion since 1987," says Muthi Samudram of the Malaysian Institute of Economic Research (MIER), an independent think tank, in a study submitted to the Asian Development Bank (AsDB).

© Inter Press Service (2014) — All Rights Reserved. Original source: Inter Press Service