Highlights of the Twelfth Malaysia Plan

The Twelfth Malaysia Plan 2021 to 2025 (‘12MP’) was launched by the Prime Minister of Malaysia, Dato’ Sri Ismail Sabri Yaacob, on 27 September 2021. The 12MP is a medium-term plan with the objective of ‘A Prosperous, Inclusive, Sustainable Malaysia’ and represents the start of a new phase in Malaysia’s journey of development – the Shared Prosperity Vision 2030 (‘SPV2030’).
Whilst it builds on the previous plans, the 12MP injects fundamental reforms in realising the spirit of Keluarga Malaysia which will truly transform the development trajectory to achieve a prosperous, inclusive and sustainable Malaysia.
Furthermore, and in light of the Coronavirus disease 2019 (COVID-19) pandemic, the 12MP has taken into account the 6R approach (Resolve, Resilient, Restart, Recovery, Revitalise and Reform) and the phased transition under the National Recovery Plan (NRP).
Policies under the 12MP are structured to achieve sustainable economic growth, with a focus on equitable distribution of wealth, the well-being of the rakyat and environmental sustainability. According to the Minister in the Prime Minister’s Department (Economy), Dato’ Sri Mustapa bin Mohamed, the 12MP introduces a new transformative approach and is based on three themes, four catalytic policy enablers and 14 game changers.
The 12MP is anchored on three key themes:
  • resetting the economy;
  • strengthening security, wellbeing and inclusivity; and
  • advancing sustainability. 
The three key themes of the 12MP are underpinned by four catalytic policy enablers:
  • developing future talent;
  • accelerating technology adoption and innovation;
  • enhancing connectivity and transport infrastructure; and
  • strengthening the public service. 
According to the 12MP, these four policy enablers will form the foundation and building blocks of Malaysia’s development over the next five years and beyond.
As part of the transformative approach, the 12MP will have 14 game changers that represent bold and innovative actions to shift mindsets and change the approach to national development.
The 14 game changers are as follows:
Game Changer I: Imperatives for Reform and Transformation
The 12MP will incorporate a rakyat-first policy, whole-of-nation approach and political buy-in, to ensure the successful implementation of the SPV2030.
Targets: The following are some of the targets that have been set as a benchmark of success under Game Changer I:
  • Achievement of the SPV2030;
  • A prosperous, high income, inclusive, low carbon, high-tech and sustainable nation;
  • Globally competitive; and
  • United, harmonious and dignified nation. 
Game Changer II: Catalysing Strategic and High Impact Industries to Boost Economic Growth
To reset the economy to address current and future economic challenges, eight strategic and high impact industries and activities have been identified, namely electrical and electronics, global service, aerospace, creative, tourism, halal, smart farming and biomass to catalyse economic growth. The 12MP will focus on accelerating these industries to be more sophisticated by producing high value-added activities and products, attracting quality investments and expanding exports as well as contributing to the green economy agenda.
Targets: The following targets have been set as a benchmark of success under Game Changer II:
  • Electrical and electronics to contribute RM120 billion to Gross Domestic Product (‘GDP’);
  • Creative industry to contribute RM31.9 billion to GDP;
  • Halal exports of RM56 billion;
  • Aerospace industry revenue of RM30 billion;
  • Global service to have a total investment of RM89 billion;
  • Biomass industry to have a total investment of RM10 billion; and
  • Total inbound tourist expenditure of RM73 billion. 
Game Changer III: Transforming Micro, Small and Medium Enterprises as the New Driver of Growth
The 12MP will prioritise the adoption of digitalisation among micro, small and medium enterprises (‘MSMEs’) as a national agenda to enable MSMEs to transform, compete and penetrate global markets. MSMEs will be equipped with skills to enable them to digitalise their business process by the year 2025. MSMEs will also be assisted to produce products and services on par with international standards.
Targets: The following targets have been set as a benchmark of success under Game Changer III:
  • Increase in MSMEs’ contribution to GDP to 45%;
  • Increase in MSMEs’ contribution to total exports to 25%;
  • Average annual growth of labour productivity for MSMEs of 3.5%;
  • 90% of MSMEs to digitalise their business operations; and
  • MSMEs that are globally competitive. 
Game Changer IV: Enhancing National Security and Unity for Nation-Building
A holistic plan will be implemented to curb illegal activities at the border and a new National Defence and Security Industry Policy will be introduced to ensure sustainable defence and security capability. Adoption of advanced technology and greater involvement by the community will facilitate the whole-of-nation approach to combat crimes.
Targets: The following are some of the targets that have been set as a benchmark of success under Game Changer IV:
  • Top 10 in the Global Peace Index;
  • A conducive environment for economic activities and safe living;
  • Sustainable defence and security capabilities;
  • Harmonious and peaceful nation; and
  • More responsible use of social media. 
Game Changer V: Revitalising the Healthcare System in Ensuring a Healthy and Productive Nation
Lessons learnt from managing the Covid-19 pandemic will be leveraged to revitalise healthcare services. Resources and responsibilities will be consolidated and healthcare services will be redesigned through collaboration between the public and private sectors and civil society organisations. A more sustainable health financing model will be introduced under the 12MP.
Targets: The following targets have been set as a benchmark of success under Game Changer V:
  • Optimisation of financial and human resources;
  • Improvement of quality of healthcare at affordable prices; and
  • Enhancement of healthcare preparedness in managing infectious diseases and health crises. 
Game Changer VI: Transforming the Approach in Eradicating Hardcore Poverty
To address hardcore poverty, support will be given to all poor Malaysians regardless of gender, ethnicity, socioeconomic status and location. Initiatives on a needs basis will be introduced to support the hardcore poor and poor among the bottom 10% household income group. The possibility of introducing a dedicated tax to finance poverty alleviation programmes will be explored.
Targets: The following targets have been set as a benchmark of success under Game Changer VI:
  • Zero hardcore poverty by 2025;
  • Decent standard of living for all Malaysians regardless of gender, ethnicity and location; and
  • Reduced inequalities among the rakyat, including the Bumiputera who constitute the majority of the poorest group. 
Game Changer VII: Multiplying Growth of Less Developed States to Reduce Development Gap
To accelerate growth in less developed areas and to ensure more balanced development and greater inclusion, Kedah, Kelantan, Perlis, Sabah, Sarawak and Terengganu, will be allocated at least 50% of the Total Basic Development Expenditure for projects such as construction of schools, hospitals, roads, industrial areas and poverty eradication programmes. The development of these states will be driven by key growth nodes and hotspot areas as hubs for economic activities. Rural areas will be further developed by intensifying industrialisation and diversifying economic activities through smart and cluster farming. In addition, cross-border economic activities will be promoted to accelerate border development.
Targets: The following are some of the targets that have been set as a benchmark of success under Game Changer VII:
  • Improvement in rural-urban income ratio from 0.58:1 in 2019 to 0.67:1 by 2025;
  • Accelerated GDP growth of the six less developed states; and
  • Lower incidence of poverty from 5.6% in 2019 to 3.7% in 2025. 
Game Changer VIII: Embracing the Circular Economy
The circular economy model will be adopted to address the challenge of balancing socioeconomic development and environmental sustainability. Both the public and private sectors will be encouraged to adopt and integrate sustainable development goals (SDGs) and environmental, social and governance (ESG) principles in their decision-making. To expedite the transition, an enabling ecosystem will be put in place, whilst more sharing economy models will be promoted. The use of recycled materials and recycling of production waste will be increased, whilst the responsibility of producers in managing their end-of-life products will be extended.
Targets: The following are some of the targets that have been set as a benchmark of success under Game Changer VIII:
  • Sustainable, low-carbon and resilient nation;
  • Reduced greenhouse gas (GHG) emissions intensity to GDP of up to 45% by 2030 based on emissions intensity in 2005;
  • Increased recycling rate of household waste by 40% and scheduled waste by 35%;
  • Reduced incidence of pollution;
  • Reduced dependency on natural resources and maintaining at least 50% forest cover;
  • Increased share of government green procurement to 25%; and
  • Increased green financing, investments, businesses and jobs. 
Game Changer IX: Accelerating Adoption of Integrated Water Resources Management
The 12MP will lay the foundation for a comprehensive water transformation agenda by accelerating the adoption of integrated water resources management (IWRM). The whole-of-nation approach involving all stakeholders will be adopted to instil a sense of ownership and responsibility in protecting and conserving water resources.
Targets: The following are some of the targets that have been set as a benchmark of success under Game Changer IX:
  • Coverage of access to clean and safe water in rural area increased to 98%;
  • Non-revenue water level reduced to 25%;
  • More clean rivers; and
  • Reduced disruptions in water supply and water-related disasters. 
Game Changer X: Improving TVET Ecosystem to Produce Future-Ready Talent
To prepare graduates from technical and vocational education and training (‘TVET’) institutions to become future-ready talent, the 12MP will seek to reduce the gaps in the existing TVET ecosystem. To achieve this, the attractiveness and the quality of delivery and training of TVET will be enhanced through improvements in accreditation, recognition and certification. A ranking system for TVET institutions will also be introduced whereby the allocation of funds will be based on a number of components including employability, wage levels of graduates, industrial engagement and the implementation of social initiatives in the rural areas.
Targets: The following targets have been set as a benchmark of success under Game Changer X:
  • TVET graduates who meet industry demands;
  • More collaborative initiatives with key industries;
  • Increase in programme intake of high-school leavers to 55% and offering more Fourth Industrial Revolution (4IR) related courses;
  • Qualified TVET graduates recognised as professionals by the Malaysia Board of Technologists (MBOT);
  • More new jobs created through entrepreneurship;
  • Dependency on foreign workers reduced; and
  • Higher compensation of employees. 
Game Changer XI: Enhancing Digital Connectivity for Inclusive Development
By making telecommunication services a public utility, internet connectivity will be enhanced and enable the rakyat to have equitable access to more affordable, reliable and quality broadband services. The Government will also ensure that students and vulnerable groups have access to digital devices. The implementation of the Pelan Jalinan Digital Negara (JENDELA) will enhance digital connectivity and achieve full 4G coverage in populated areas, as well as enable 100% households’ subscription to the internet. The establishment of Digital Nasional Berhad (DNB) will accelerate the provision of 5G coverage for a better user experience.
Targets: The following targets have been set as a benchmark of success under Game Changer XI:
  • 100% 4G coverage in populated areas;
  • Wider 5G coverage;
  • Mobile broadband speed of more than 100Mbps;
  • 100% of households subscribing to the internet;
  • Nine million premises passed for fixed broadband service; and
  • All students have internet connectivity and access to digital devices. 
Game Changer XII: Aligning Research and Development towards Commercialisation, Wealth Generation and Economic Growth
Fifty per cent of all Government research funding will be focused on encouraging experimental development with the potential for high commercialisation. This will be coordinated by the newly established Research Management Unit (RMU), under the Economic Planning Unit of the Prime Minister’s Department.  
Targets: The following targets have been set as a benchmark of success under Game Changer XI:
  • 2.5% gross expenditure on research and development (GERD) to GDP; and
  • Top 20 ranking in the Global Innovation Index. 
Game Changer XIII: Transforming the Logistics Ecosystem for Greater Efficiency
Under the 12MP, the Government will transform logistics services by centralising the planning and development of logistics hubs, accelerating digital adoption and encouraging mergers and acquisitions among industry players. A single border agency for trade facilitation will be created, whilst a national regulatory framework for warehousing and the maritime economy will be formulated. These initiatives will create resilient and competitive logistics service providers, enhance international trade competitiveness and improve their governance structure.
Targets: The following are some of the targets that have been set as a benchmark of success under Game Changer XIII:
  • Improved import and export clearance efficiency, timeliness, tracking and tracing;
  • Top 30 in the World Logistics Performance Index from 41st place in 2018;
  • Transportation and storage subsector contribution to GDP to reach RM54.8 billion;
  • Resilient and competitive logistics service providers;
  • Increased international trade competitiveness; and
  • Improved and coordinated governance structure. 
Game Changer XIV: Transforming the Public Service through the Whole-of-Government Approach
The structures and functions of ministries and agencies will be reviewed and streamlined under the 12MP to establish a flatter organisation, thus reducing bureaucracy, increasing transparency and optimising the use of resources. Integrity, accountability and transparency across the civil service will also be enhanced. New legislation will be introduced to reinforce the principle of separation of powers between the executive, legislative and judicial branches.
The Government will enhance the performance-driven culture in the civil service and strengthen the mechanism for the selection of key leaders. The mechanism for recruitment of the professional and managerial officers will also be improved to attract the best talent.
Targets: The following targets have been set as a benchmark of success under Game Changer XIV:
  • Top 30 in the Corruption Perceptions Index;
  • Top nine in the Government Efficiency sub-index of the Institute for Management Development World Competitiveness Yearbook;
  • 80% end-to-end online Federal Government services;
  • Clear demarcation of powers between the executive, legislative and judicial branches;
  • An efficient, accountable and apolitical public service; and
  • Optimisation of existing resources and preservation of rights and obligations of civil servants. 
It is envisioned by the Government that the above-referred themes, enablers and game changers will cumulatively enable Malaysia to attain its objective of becoming a high-income nation.
As always, the success of any endeavour lies in its execution. Time will tell whether the objectives of the 12MP will be successfully implemented.
Article by Kok Chee Kheong (Partner), Sheba Gumis (Partner) and Francine Ariel Paul (Associate) of the Corporate Practice of Skrine.

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