The eighth edition of the Development Digest on ‘Navigating the New Normal’ begins with a somber outlook of the economy as the COVID-19 crisis poses threats to both public health and economic growth. We go on to address the core concerns of the pandemic with an article on smart containment and mitigation measures, policies to help Malaysians navigate the cost of living challenge, how SMEs can use knowledge to their benefit, and expanding old-age income protection to informal workers. We then move into a commemoration of the 10th year anniversary of the Malaysian Economic Monitor, speaking to the economists who have led the production of the Hub’s flagship report throughout the decade. This edition also covers a range of key development issues in Malaysia including millennial debt, the country’s Doing Business rankings, Islamic finance as an alternative for financing sustainable development, estimating the number of foreign workers, the role of communications in ensuring policy success as well as how Sabah can catch up in terms of growth and development. We also take a global perspective on development challenges such as corruption, using big data to expand financial services and the future of poverty reduction. Finally, we recount the Hub’s engagement with youth groups throughout the year as a means of empowerment in the public policy field for young Malaysians.
- Foreword - Two Crises and a Transition by Firas Raad
- Malaysia in 2020: Navigating Overlapping Shocks
Malaysia is no stranger to external shocks affecting its macroeconomy. Over the past two decades, it was buffeted by the 1997 Asian Financial Crisis (AFC), the 2001 global slowdown after 9/11, and the 2008 Global Financial Crisis, each shock affecting the Malaysian economy in different ways.
Author: Firas Raad
- Smart Containment and Mitigation Measures to Confront the COVID-19 Pandemic
In the World Development Report 2014 - Risk and Opportunity, we put a spotlight on pandemics. There, we warned that most countries and the international community were unprepared for a risk of this nature. Many months into the COVID-19 pandemic and it is now clear that we are facing an acute public health, economic, and humanitarian crisis.
Author: Norman Loayza - The Right Policy Mix Can Help Malaysians Make Ends Meet
For economists who study Malaysia, one of the most striking aspects they notice is the disconnect between two perspectives. On the surface, this country is by all means, an impressive economic story with high rates of growth, rapid poverty reduction, low and stable inflation, and is on the cusp of achieving high-income status. On the other hand, there are persistent and growing concerns about the quality of growth and its inclusiveness.
Authors: Richard Record - In the New Economy, Knowledge is King
Shifts in global trade patterns, coupled with rapid technological changes are presenting challenges to sustaining growth. Therefore, a transition to a more knowledge-based growth model is now ever more urgent in the current uncertain global context.
Author: Smita Kuriakose - Expanding Old-age Income Protection to Informal Workers
The “standard” employment relationship worldwide is defined by long-term wage employment for a single employer. It forms the basis for risk-sharing policies related to income security during old age. However, the changing nature of work worldwide – and in Malaysia –challenges the effectiveness of risk-sharing policies based on this model. As populations around the world age ever more rapidly, it becomes more important to deepen financial protection for those who already make their own pension contributions, while expanding the coverage of risk-sharing policies to workers currently outside the pension net, including informal and gig economy workers.
Authors: Amanina Abdur Rahman, Mark Dorfman, Achim Schmillen - Celebrating 10 Years of the Malaysia Economic Monitor
Over the past decade, the Malaysia Economic Monitor (MEM) has provided an analytical perspective on the policy challenges facing the country as it set its sights on becoming a high-income and developed economy. With over 21 reports published, the MEM has grown to become an important asset informing the country’s growth and development.
Authors: Min Hui Lee - Millennial Money Matters
The phrase ‘young and broke’ is a term that millennials cannot seem to shake off. Having often been criticized for living beyond their means, millennials have had to grapple with numerous stereotypes. Their incomes aren’t growing, many spend beyond what they can afford, and are unable to save enough.
Authors: Zainab Ali Ahmad and Kenneth Simler - Malaysia Doing Business 2020: Pursuing Reforms at the Top
Slowly but surely, we are seeing more developing countries catching up in the ease of doing business. This is a signal for the world’s top performers that in order to remain competitive, they need to sustain the best possible pace of reforms, and as of now, the potential for these economies remains largely unexploited.
Author: Varun Eknath - Waqf: Providing Alternative Finance for Sustainable Development
In the global community’s run towards facilitating sustainable development, financing such initiatives remains a core concern for all leaders. Today, Islamic finance provides an alternative solution to the conventional modes of financing we see. With the rise of Islamic social finance tools such as waqf (Islamic endowments), more contributions can be made towards the objectives of ending extreme poverty and promoting shared prosperity – the World Bank’s twin goals – in a sustainable way.
Authors: Mohamed Rozani Osman and Ahmad Hafiz Abdul Aziz - Becoming More Equal in East Asia Pacific by Reducing the Trade-offs Between Work and Home
No country can achieve its full potential without the equal participation of women and men. Yet worldwide, women still have only 75% of the legal rights of men. Holding back employment and entrepreneurship opportunities for half the population in this way limits the potential for economic growth and development.
Author: Victoria Kwakwa - Who is Keeping Score? Estimating the Number of Foreign Workers in Malaysia
When it comes to taking up 3D jobs – dirty, difficult, and dangerous – foreign workers are at the forefront. In Malaysia, they fill labor shortages in low-skilled, labor-intensive sectors, and in turn, help create higher-skilled jobs for local workers as well as enabling Malaysians to specialize in higher-skilled jobs.
Authors: Soonhwa Yi, Kenneth Simler, Wei San Loh, and Zainab Ali Ahmad - Communications is Key to Policy Success
Public policies are not created and adapted in a vacuum. Some are created out of demand while others are delivered out of necessity even if they don’t enjoy public support. Tough reforms are necessary to realize long-term gains, but gaining public support and effective implementation requires clear, concerted, and careful stakeholder management. This is where communications can be a useful tool to facilitate a country’s reform efforts.
Authors: Joshua Foong and Clarissa David - Do More Rules Lead to More Corruption? Evidence Using Firm-level Survey Data for Developing Countries
We hear all too often that regulation creates opportunities for corruption. If true, a practical way to fight corruption and its harmful effects would simply be to deregulate. However, is it in fact the case that more regulation increases corruption?
Authors: Yew Chong Soh and Mohammad Amin - Playing Catch-up: Growth and Development in Sabah
Reflecting on Sabah’s current levels of development, many locals tend to bring up stories of the state’s glory days, reminiscing a time when the economy was among the best performers in Malaysia. However, recent economic data paints a different picture: in 2018, the state recorded the fourth-lowest GDP per capita, the highest poverty rate and the second-highest unemployment rate in the country.
Authors: Mahama Samir Bandaogo and Alyssia Thien Nga Maluda - The Fight Against Corruption: Taming Tigers and Swatting Flies
Corruption robs the public of precious resources, distorts incentives to engage in productive activities, destroys confidence in public institutions, and spurs political instability. It disproportionately harms the poor and vulnerable. Corruption is the result of perverse incentives, concentration of power, and lack of accountability. Countries are not condemned to suffer from corruption. They can break the vicious cycle with a comprehensive approach that tackles country-specific governance gaps. This approach should include streamlining rules and regulations; building a meritocratic and well-paid civil service; promoting transparency in public employment, procurement, and services; enabling citizen voice and government accountability; and enforcing anti-corruption laws and penalties.
Authors: Lay Lian Chuah, Norman Loayza, and Bernard Myers - Using Big Data to Expand Financial Services: Benefits and Risks
Advances in data analytics and computational power allow both existing and new financial firms to exploit data in an easier, faster, and more reliable manner, and at a larger scale to provide better financial services. Governments are also exploring ways to use big data more systematically to get a better, bigger picture of the financial system and the overall economy. Despite its benefits, the wider use of big data has raised concerns related to consumer privacy, data security, discrimination, data accuracy, and competition. Hence, policymakers have started to regulate and monitor the use of big data by financial institutions, and to think about how to use big data for the benefit of all.
Authors: Facundo Abraham, Sergio Schmukler, and José Tessada - Uncertainty in Ending Extreme Poverty
Whereas sustained economic growth is considered the primary driver of poverty alleviation, the different ways in which growth interacts with changes in income inequality mean that the future of poverty reduction is highly uncertain.
Author: Fabian Mendez Ramos - Public Policy for Youth
The youth have always been a force to be reckoned with. As more and more of today’s young people find their footing in the online sphere and lend their collective voices to social movements, so have a powerful group of agents of change been cultivated. Policies impacting their lives are a shared concern here – and social media platforms provide a space to exercise individual voices on these matters. At the World Bank Group Global Knowledge and Research Hub in Malaysia, we recognize the role of the youth in driving change. Each year, we embark on youth engagement initiatives to educate and empower the youth in public policy-related issues and development challenges from around the world.
Author: Min Hui Lee