Malaysia economic monitor : unlocking women's potential

FIGURE 73922 MALAYSIA ECONOMIC MONITOR NOVEMBER 2012 UNLOCKING WOMEN’S POTENTIAL World Bank Office—Bangkok Country Director: Annette Dixon Chief Economist: Bert Hofman Comments to: Mathew A. Verghis mverghis@worldbank.org Frederico Gil Sander fgilsander@worldbank.org 30th Floor, Siam Tower 989 Rama I Road, Pathumwan Bangkok 10330, Thailand +66 (0) 2 686-8300 www.worldbank.org/my Acknowledgements The Malaysia Economic Monitor was prepared by Frederico Gil Sander (task team leader), Intan Nadia Jalil, Ximena del Carpio and Katherine Sarah Patrick, with substantive contributions from Reena Badiani and Yuki Ikeda and further inputs from Hamid Alavi, under the overall guidance of Annette Dixon, Sudhir Shetty and Mathew Verghis. Contributions from the Economics Department of Bank Negara Malaysia (BNM) are gratefully acknowledged. The team wishes to thank Shubham Chaudhuri, Annette Dixon, Andrew Mason, Sudhir Shetty and Mathew Verghis for helpful comments, suggestions and guidance. This report benefited from fruitful discussions, comments, and information from the Economic Planning Unit, BNM, Department of Statistics, Ministry of Finance, Ministry of Women, Families and Community Development, PEMANDU, TalentCorp, Ministry of Human Resources, Ministry of Trade and Industry and numerous other Government ministries and agencies. We also thank representatives from PETRONAS, the Federation of Malaysian Manufacturers, the American Malaysian Chamber of Commerce, the United Nations Development Programme, and academics from the Institute of Strategic and International Studies, Singapore Management University, and analysts at several financial and rating institutions for helpful discussions.We are indebted to the Economic Planning Unit for their collaboration with the World Bank and in particular their assistance in the launch of this report. Thanks are also due to Datin Dr. Rehana Kassim from the National Association of Women Entrepreneurs Malaysia (NAWEM), Dr. Rashila Ramli and Dr. Madeline Berma from the National Council of Women's Organisations (NCWO), and Puan Norjanah Hj Razali from Biro Wanita Sarawak for helping organize focus group discussions. The team also thanks forucs group participants in in Kuala Lumpur and Kuching for their insights. Sofia Busch, Anna Elicaño and Trinn Suwannapha provided excellent assistance in external relations and web production, Indra Irnawan designed the cover, and Noppakwan Inthapan, Angkanee Luangpenthong and Ornsaran Manuamornprovided extensive support. Cover photos by Bazuki Muhammad/Reuters (three women), Megat Firdaus Megat Ahmed (Malaysia's 55th National Day Celebrations), Mark Edwards (factory worker), C.C Yong/New Straits Times (doctor), and Sobri Sudin/New Straits Times (staff of Malaysian Meteorological Department). The findings, interpretations, and conclusions expressed herein do not necessarily reflect the views of the World Bank’s Executive Directors, or the governments they represent. The report is based on information current as of November 19, 2012. i  ABBREVIATIONS AFC Asian Financial Crisis ASEAN Association of Southeast Asian Nations AUD Australian dollar BETP Bumiputera Economic Transformation Programme BNM Bank Negara Malaysia BR1M Bantuan Rakyat 1Malaysia (1Malaysia People's Assistance) CA Current account CAGR Compound Annual Growth Rate CCI Communications and Content Infrastructure CEDAW United Nations Convention on the Elimination of all Discrimination Against Women CEIC CEIC Macroeconomics Database COL Cost of Living CPI Consumer Price Index DOS Department of Statistics E&E Electrical and Electronic E&O Errors and Omissions EAP East Asia and the Pacific EDU Education Delivery Unit EIU Economist Intelligence Unit EPF Employees Provident Fund EPP Entry Point Project EPU Economic Planning Unit ETP Economic Transformation Programme EU European Union FAOstat Food and Agriculture Organization Statistics FDI Foreign Direct Investment FLFP Female Labor Force Participation FWA Flexible Work Arrangements G&S Goods and services G20 Group of 20 emerging economies G3 Group of 3 advanced economies GDP Gross Domestic Product GEM Gender Equity Model GFCF Gross Fixed Capital Formation GFS Government Finance Statistics GLCs Government Linked Companies GST Goods and Services Tax GTP Government Transformation Programme HIP High Impact Programmes HPS High Performing Schools IFS International Financial Statistics IHH Integrated Healthcare Holdings ILO International Labour Organization IMF International Monetary Fund IPI Industrial Production Index IPO Initial Public Offering JKM Social Welfare Department JPN State Education Department JUSA Civil Service Premier Post KAR1SMA 1Malaysia People’s Welfare Programme KK1M 1Malaysia People’s Textiles Shop KL Kuala Lumpur KLCC Kuala Lumpur City Centre KOILAF Korea International Labor Foundation KPI Key Performance Indicator KR1M Kedai Rakyat 1Malaysia (1Malaysia People’s Shop) KTM Malaysian Railways KV Klang Valley LFP Labor Force Participation LINUS Literacy and Numeracy Screening LNG Liquefied Natural Gas LRT Light Rail Transit MA Moving Average MACC Malaysia Anti-Corruption Commission MEM Malaysia Economic Monitor MENA Middle East and North Africa ii MGS Malaysia Government Securities MIER Malaysian Institute of Economic Research MNCs Multi-National Corporations MOF Ministry of Finance MOH Ministry of Health MOHR Ministry of Human Resources MRT Mass Rapid Transit MWFCD Ministry of Women, Families and Community Development NEM New Economic Model NFP Network Facilities Providers NGO Non-Governmental Organizations NHRC National Human Resources Centre NKEA New Key Economic Area NKRA National Key Results Areas NSP Network Services Providers NTEP National Talent Enhancement Programme NWCC National Wages Consultative Council O&G Oil and Gas OECD Organisation for Economic Co-operation and Development OMT Outright Monetary Transactions OPR Overnight policy rate PCE Private Consumption Expenditure PDRM Royal Malaysian Police PEMANDU Performance Management and Delivery Unit PEMUDAH The Special Taskforce to Facilitate Business PICS Productivity and Investment Climate Survey PISA Programme for International Student Assessment PMI Purchasing Managers Index PPD District Education Department PPI Producer Price Index PPP Public-Private Partnerships PR1MA 1Malaysia People’s Housing PSD Public Service Department Q/q Quarter-on-quarter RAPID Refinery and Petrochemical Integrated Development REER Real effective exchange rate RM Ringgit Malaysia SA Seasonally-Adjusted SAAR Seasonally-Adjusted Annualized Rate SBPA New Civil Service Remuneration Scheme SCWO Singaporean Council of Women's Organisations SIP School Improvement Programme SISC School Improvement Specialist Coaches SME Small and Medium Enterprise SOCSO Social Security Organization SPM Sijil Pelajaran Malaysia SPNB Syarikat Perumahan Nasional Berhad SRI Strategic Reform Initiative SSM Malaysian Remuneration Scheme STPM Sijil Tinggi Persekolahan Malaysia TERAJU Bumiputera Agenda Steering Unit TERAS Program Syarikat Bumiputera Berprestasi Tinggi TFP Total factor productivity TIMSS Trends in International Mathematics and Science Study TVET Technical and Vocational Education and Training UIS Unemployment Insurance Scheme UK United Kingdom UNDP United Nations Development Programme UNESCO United Nations Educational, Scientific and Cultural Organization UNHCR United Nations High Commissioner for Refugees UNICEF United Nations Children’s Fund UPT Urban Public Transport US United States USD United States Dollar WB World Bank WDR World Development Report Y/y Year-on-year YTD Year-to-date iii TABLE OF CONTENTS Executive Summary ................................................................................................................................................................... 1 The Malaysian Economy in Pictures ......................................................................................................................................... 3 Unlocking Women’s Potential in Pictures ................................................................................................................................. 4 1. Recent Economic Developments ....................................................................................................................................... 5 Strong growth despite weakening external environment .................................................................................................... 5 Exports slowed further as the global economy provided a challenging backdrop ...................................................7 A boom in investments propelled domestic demand ......................................................................................................9 Labor markets remained tight, and wages showed signs of a pick-up ........................................................................... 10 Inflation has been on a declining trend ................................................................................................................................. 10 Fiscal and monetary policies balance restraint and stimulus ............................................................................................ 11 Despite higher expenditures, deficit target likely to be met in 2012.............................................................................11 Monetary policy pulled in two directions; stands still .......................................................................................................13 Domestic credit conditions remained supportive of economic activity ......................................................................... 14 Malaysia’s external position narrowed ................................................................................................................................... 15 High-frequency indicators point to a slower but still robust fourth quarter ...................................................................... 17 2. Economic Outlook .............................................................................................................................................................. 18 Momentum in domestic demand to be sustained in the near term absent a global shock ....................................... 18 Global environment still weak, but tail risks decline .........................................................................................................18 The Malaysian economy is likely to maintain its momentum .........................................................................................19 Inflation to pick up modestly from low levels ....................................................................................................................22 Higher investment and sluggish exports will shrink the current account ......................................................................22 Fiscal and monetary policies supportive of growth .........................................................................................................23 Risks to the outlook center on the global environment ..................................................................................................26 Strengthening the structural reform agenda is key for Malaysia’s medium–term outlook ........................................... 29 The Government Transformation Programme moves on to the next stage ................................................................31 Implementation of ETP investments has stepped up, but structural reforms have yet to pick up pace ...............34 3. Unlocking Women’s Potential............................................................................................................................................ 41 Unlocking women’s potential is smart economics ............................................................................................................... 41 Why is gender equality critical to Malaysia’s high income agenda? .............................................................................. 43 Gender gaps in education have been largely closed and often reversed ................................................................... 45 More women are enrolled in secondary and tertiary education than men ..............................................................45 A reverse gender gap is also evident in test scores .........................................................................................................47 Raising labor force participation is the key challenge ........................................................................................................ 47 Current participation levels are low....................................................................................................................................47 Trends have been positive, but gaps persist .....................................................................................................................51 Are the data reliable? ...........................................................................................................................................................52 Married women have the lowest levels of participation ................................................................................................53 Higher levels of education are strongly associated with labor force participation...................................................57 Participation among older women is particularly low.....................................................................................................58 Women in urban areas are more likely to be married – and to work...........................................................................59 Sorting on the basis of gender, rather than talent, leads to inefficiency ......................................................................... 61 Girls concentrate in “female