The global scenery has evolved dramatically pace over the past decade, the economies are grappling to find elusive way to renascent or even prosper. As an instance, in Malaysia; they attempted some principles such as capital control to rise from financial crisis. However, this formula used to drive Malaysia’s success in the past no longer applies in today’s environment. The increasing competitiveness of neighboring ASEAN countries and globalization made Malaysia needs to step up to next stage, thus the development of the country to be able to move ahead of the competition.

In order to overcome this situation, Prime Minister Najib asked the National Economic Advisory Council (NEAC) to come up with the new strategy called New Economic Model for the country. This strategy has come up with the intention to provide an independent perspective in transforming Malaysia from a middle income economy to a high income economy by 2020, bridging the gap between public and private sectors, create a new public-private partnership, intensify regional cooperation and increase global competitiveness. In this strategy, Prime Minister Najib introduced this strategy as a clarion call: “1Malaysia, People First, Performance Now”. The goal of the New Economy Model, according to Najib, is to “transform the Malaysian economy to become one with high incomes and quality growth” by 2020. Afterwards, the first part of overall framework of New Economic Model was unveiled on 30 March 2010 by Prime Minister Najib. The keys to the plan as described by Najib are “high income, sustainability and inclusiveness”. Besides, the second part of the report will be presented together with 10th Malaysia Plan & Malaysian Government Budget Proposal in October 2010. (tambahin intro bagian diaz)

Overall framework of the New Economic Model (NEM)

Malaysia has reached a defining moment in its development path. Vision 2020 is not possible without all of economic, social and government transformation. To move the country forward, the government has amended a framework comprising four pillars to drive change; whereas the New Economic Model is one of the pillars. The NEM is suggested by Prime Minister Najib and was welcomed by the MCA as guidance to transform Malaysia from middle income to an advanced income nation by 2020. It was developed by the National Economic Advisory Council (NEAC) through a series of meetings from beginning of 2009 and consultations with stakeholders in the business sector, government, labor unions, academia and others. The NEM would be achieved through an Economic Transformation Program (ETP) which constitutes a key pillar which will drive Malaysia to be an advanced country with inclusiveness and sustainability in line with the goals set forth in Vision 2020. Besides, Government believed that The NEM would expect to be the basis on the values of: innovation, creativity, high value of sources of growth, modern services sector and lastly skilled manpowered.

According to NEAC (2010), the recommendations will be attached to the following eight Strategic Reform Initiatives (SRIs). The eight Strategic Reform Initiatives (SRIs) are: re-energizing the private sector, developing a quality workforce and reducing dependency on foreign work labour, creating a competitive domestic economy, strengthening the public sector, transparent and market-friendly affirmative action, building the knowledge base and infrastructure, enhancing the sources of growth, and ensuring the sustainability of growth.

Setting the principles should guide the nation’s thinking and the development of The New Economic Model (NEM). (Najib, 2010) The principles are:

High income

Sustainability

Inclusiveness

Market friendly

Merit based

Transparent

Need based

However, there are only three of them that government focus on; they are high income, sustainability and inclusiveness. NEAC believed these three principles will make Malaysia’s economic progress and become a fully developed country; a competitive economy strategically positioned in the regional and global economic landscape and environmentally sustainable