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Malaysia Economic Monitor, December 2013: High-Performing Education

By: Frederico Gil Sander, Intan Nadia Jalil, Rabia Ali, Dilaka Lathapipat, Theepakorn Jithitikulchai, Daria Taglioni

Key Findings

Economic outlook

  • Malaysia’s 2013 GDP growth is expected to moderate from 5.6% (2012) to 4.5% (2013).

  • Malaysia’s economy will benefit from firmer global growth in 2014 and 2015. GDP is expected to grow by 4.8% (2014) and 4.9% (2015).

  • Domestic demand will be subject to headwinds from: (a) subsidy cuts and tax hikes and (b) a combination of weaker exchange rates and higher interest rates.

  • Employment growth has been rapid outside the manufacturing sector and wages have moved higher.

  • Building human capital, by improving the quality of education, will allow future investments to leverage on human assets as well as natural resources.

  • Malaysia’s education system has achieved extensive coverage and nearly all children under 17-years-old are in school.

  • However, education quality hasn’t kept pace. Among East Asian countries that participate in the Programme for International Student Assessment (PISA), which compares the math, reading and science skills of secondary school students around the world, Malaysian students only outperformed their Indonesian peers in 2012. Malaysia even lagged behind lower-income countries like Vietnam.

  • Not only is performance below expectations, but most evidence suggests it has not been improving. For example, reading scores in the PISA fell in 2012 compared to 2010.

  • Raising education quality will be critical for Malaysia to achieve a high-performing education system that builds the human capital required for an innovation-led, high-income economy.

  • The Government's Education Blueprint charts the transformation of the Malaysian education system through 2025. It is a candid assessment and contains many helpful initiatives. By focusing on institutional reforms and stepping up the pace of their implementation, Malaysia can accelerate this transformation.

  • Institutional reforms include: (1) improving incentives and recruitment of teachers; (2) moving decision-making closer to schools and parents; and (3) providing more information to parents and communities so they can better demand a quality education for their children.