By Yasmin Ramlan
SHAH ALAM, Aug 8 — Selangor must take measures so it can maintain its recently awarded high-income status, economists said, highlighting the need to address serious challenges involving sustainable economic transformation.
They said this is necessary if the state wants to experience a sustained rise in its gross national income (GNI) per capita.
Asia-Europe Institute’s Prof Datuk Rajah Rasiah said a key assessment is whether the state can ensure higher income despite its manufacturing base not yet reaching the technological frontier or transitioning from low- and medium- to high-value added activities.
“The state, through coordination with the federal government, must also give serious focus on upgrading the quality of education and human capital, which is central to building developed economies.
“Selangor should then do enough to stimulate upgrades in the services sector, to be driven by knowledge-based activities, including the expansion of Industrial Revolution (IR) 4.0 technologies,” he told Selangor Journal recently.
Rajah said the state must advance its agriculture sector to enable significant absorption of digital and IR 4.0 technologies.
Previously, it was reported Selangor had achieved high-income status, according to official data from the World Bank, after it surpassed the US$14,005 minimum GNI benchmark for the recognition.
According to World Bank Malaysia lead economist Apurva Singh, the data indicated Selangor’s 2023 GNI per capita was reported at US$14,291. Four other states to exceed the minimum threshold were Kuala Lumpur (US$29,967), Labuan (US$19,117), Penang (US$16,600), and Sarawak (US$16,560).
Kelantan, Perlis, and Kedah remained in the bottom three with GNIs per capita of US$3,850, US$5,490, and US$6,027, respectively.
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Visitors at the Selangor International Business Summit 2023 in Kuala Lumpur on October 22, 2023. — Picture by AHMAD ZAKKI JILAN/MEDIA SELANGOR[/caption]
Focusing on poverty
Lauding Selangor’s effort to end absolute poverty, Rajah said it is pertinent that the state government seek more effective measurement methods to classify the poor, focusing on important criteria such as household size, human development index, and multidimensional poverty index.
These, he said, are crucial to provide a clearer picture of Selangor residents’ livelihoods and ensure more targeted assistance, subsequently ensuring the state maintains its high-income status.
“In addition, strategies to prevent the poor from falling into the vicious poverty cycle must include practical education and contemporary Technical And Vocational Training, particularly programmes that enhance digital competence and familiarity with IR 4.0 technologies,” he said.
Rajah cited the dual training system in Germany — a well-established vocational education model that integrates theoretical education with practical training — as an example.
Another example, he said, is Japan’s Kosen system: a five-year vocational education programme that produces skilled engineers through a curriculum that integrates theoretical learning and extensive practical training.
Rajah pointed out that both systems are accompanied by stringent reviews and strategic calibration to minimise errors.
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Visitors look at helicopters and aeroplanes on display at the Selangor Aviation Show at SkyPark Regional Aviation Centre, Shah Alam, on September 9, 2022. — Picture by REMY ARIFIN/MEDIA SELANGOR[/caption]
Sustaining GDP growth
Meanwhile, economist Prof Emeritus Datuk Zakariah Abdul Rashid said there is a crucial need for Selangor to sustain its gross domestic growth (GDP) by increasing productivity.
“Since Selangor’s GNI per capita is just slightly above the World Bank’s threshold for a high-income economy, the biggest challenge in maintaining this status is to achieve fairly rapid GDP growth.
“This can be achieved through economic activities that boost productivity,” he said, adding that Selangor’s high-income status means its economy should be able to attract value-added and more advanced technology investments.
Last year, Selangor contributed RM406.1 billion to the national economy, accounting for 25.9 per cent of the overall GDP. The state also recorded a 5.4 per cent economic growth, the highest among all states.
On eradicating poverty, Zakariah said Selangor does not have a serious problem, with very low incidence of absolute poverty and no cases of hardcore poverty.
However, he said there is a likelihood that certain portions of Selangor’s population could face multidimensional poverty, which would require policies that address issues such housing, health, education and social amenities.
“Since a high-income economy doesn’t necessarily correlate to poverty, the real challenge facing Selangor is to improve the economy by reducing the number of people living in low-income households.
“Since the state economy has, in the past few decades, been growing at a faster rate than the national economy, its urban population is not only proportionately larger than the national average, but the number of households in the B40 and M40 categories are also higher.
“Their income is generally lower than the living standard,” he said, pointing out that these groups are facing high living costs due to their low incomes.
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Civil servants look at a First Selangor Plan exhibit detailing the Integrated Development Region in South Selangor initiative, at the State Secretariat building, Shah Alam, on August 2, 2022. — Picture by FIKRI YUSOF/MEDIA SELANGOR[/caption]
