Countries and Regions

	Table of Contents
p. 6 of 18 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Malaysia

---

II. Country Operational Strategy

A. Malaysia's Medium-term Development Strategy

26. Since the adoption of the New Development Policy in 1991, growth has been the Government’s primary strategic economic objective. In the 7MP which was approved in May 1996, the Government’s growth strategy was based on capital intensive investment, aimed at supporting improvement of labor productivity and income growth. The privatization of public services and infrastructure will continue as a means of improving efficiency and reducing the burden on the budget. Skills upgrading and technology development would support the productivity-oriented strategy. In this context, human resource development is a key component of 7MP. Other strategic objectives are poverty reduction, improvement in quality of life and sustainable development. An Industrial Master Plan (IMP) launched in November 1996 and defining the course of industrial development, addressed issues to sustain and enhance growth in the manufacturing sector. In addition, the Third National Agricultural Policy, which succeeded the Second National Agriculture Policy (1992-97), sets out the strategic directions for agricultural and forestry development for the period 1998-2010. 27. The economy was thrown off course by the regional crisis, seriously threatening the objectives of 7MP. The Government established the National Economic Action Council (NEAC) in January 1998 to manage the impact of the crisis. In August 1998, NEAC published the NERP which defined a short-term crisis management strategy. Overall, NERP aims to restore economic development by stimulating domestic demand, maintaining progress in the social sectors and protecting the poor.⁷

B. ADB’s Operational Strategy

28. The objectives of ADB’s current Country Operational Strategy (COS) (finalized in December 1997), reflect the 7MP strategic objectives. The objectives of COS are to (i) support human development; (ii) reduce socioeconomic disparity between the more highly developed western corridor of the Peninsula and other regions of the country; (iii) promote sustainable environment management; and (iv) support capacity building in selected areas of high priority. While these objectives are still relevant for the medium to long term development of Malaysia, they do not fully reflect the priorities to be addressed in the short term for the management of the crisis. Two key priorities in this regard are restructuring the financial sector and strengthening the social safety net. The ADB and the Government are discussing the future role of ADB in Malaysia. Once this role is determined, ADB’s operational strategy could be revised.

____________________

Back D. Implementation Assessment	Next III. Sector Strategies