Quora Answer: Will Malaysia Go Back to Being an Economic Powerhouse with its Original Ruling Party Back in Power?

The following is my answer to a Quora question: “Will Malaysia go back to being an economic powerhouse now that its original ruling party is back in power?” 

Malaysia was never an economic powerhouse.  From data easily available online, when we consider per capita GDP since independence, Malaysia’s per capita income is higher than that of all other ASEAN members except Singapore.  However, in terms of growth rates Malaysia’s performance is similar to Indonesia but lower than Thailand over the period from 1960 to 2010.  The primary reason why Malaysia had a higher per capita income than Thailand and Indonesia in that period despite similar growth rates, is thanks to the British.  Unlike the Dutch, the British actually left Malaya with significant infrastructure development, and a sound administration system.  Malaysia started, after independence, from a higher per capita income base than Thailand and Indonesia.  So, in comparison of the leading economies of Southeast Asia, barring Singapore, Malaysia began with a significant advantage, and then lost it.  Any comparison with Singapore would be embarrassing for Malaysia. 

Now, when we compare it to Northeast Asian, with the other three Asian Tigers, and Japan, they perform at the same growth levels as Singapore, which can be seen in their level of development today.  Hong Kong is now part of China, and its growth is expected to diminish in the face of competition from the Pearl Delta cities, especially Shanghai.  Taiwan has started to lag behind due to short-termism by its government.  South Korea and Japan are economic giants.  China based its economic growth on the Singapore system of marrying capitalism with authoritarianism, and is now the largest economy in the world by adjusted purchasing power. 

Compared to the leading economies of the period, who have all achieved developed status, or near developed, in the case of China, Malaysia is still mired in mediocrity.  In fact, over the last few years, things have only gotten worse as the rest of ASEAN have caught up, and will eventually bypass Malaysia.  Malaysia is barely keeping pace with Indonesia, Thailand and Vietnam, let alone making any claim to be an economic powerhouse.  Malaysia can make no such claim when the government is broke, and their sovereign bonds are almost junk status.