KUALA LUMPUR: Malaysia is the only country in the world to self-impose limitations when it comes to not borrowing more than 55 per cent of the country’s Gross Domestic Products (GDP).
This, according to Performance Management and Delivery Unit (Pemandu) chief executive officer Datuk Sri Idris Jala, has helped the country maintain its manageable debt levels.
“We have a self-imposed limitation, and we are the only government in the world to do this, that we do not borrow more than 55 per cent of the GDP,” he said at the Global Transformation Forum 2017 (GTF2017) today.
“If the whole world has that law, we would not have had the situation in Greece,” said Idris, referring to the European country’s high sovereign debt, which in 2015 had ballooned to 176 per cent in ratio to its GDP.
This eventually triggered a major debt crisis that is still ongoing in Europe.
Idris said for a country’s economy to grow, the growth has to also come from the private sector and not just from the government.
“Before the National Transformation Programme (NTP), which was Pemandu’s first mandate, the compound annual growth rate (CAGR) of private investment was 5.5 per cent,” he said.
“After the NTP however, the CAGR of private investment more than doubled; that is a phenomenal growth. The trick to grow the economy therefore is to allow the private sector to invest in the economy and that’s what happening in Malaysia right now.”
Since the start of the NTP, Malaysia has successfully grown its gross national income (GNI) per capita from US$8,280 in 2010 to US$10,570 in 2015, narrowing the gap to high-income status, a reduction from 33 per cent in 2010 to just 15 per cent in 2015.
Held for the second time and themed “Driving Transformation”, GTF2017 will play host to over 3,000 delegates from 76 countries across two days.-NST