Bangladesh can learn from Malaysian development model

From Malaysia, Bangladesh must learn that it needs long term political and social harmony to develop.   Lack of political and social harmony causes state institutions not to function properly , writes Minhazur Rahman Rezvi for South Asia Monitor
Aug 10, 2018
By Minhazur Rahman Rezvi
Malaysia is probably the most developed country in Southeast Asia, after Singapore. According to the World Bank in 2016, the per capita GDP of Malaysia is US$9,502. Soon after independence in 1957, Malaysia’s GDP per capita was US$234.92.
According to UNDP, Malaysia has a high human development index (HDI) score of 0.789, with the lowest poverty rate in Southeast Asia which, according to the World Bank in 2016, was 0.4 percent. The success of its poverty eradication programme is evident from figures; in 1960, Malaysia’s poverty rate was a huge 60 percent. The New Economic Policy (NEP) has been the main driver of Malaysia’s development and economic growth. A 20-year plan, the main objectives of NEP were; to achieve national unity among ethnic groups, poverty eradication and restructuring society.
The poverty eradication and restructuring society policies led to reduced unemployment and helped reduce urban and rural disparity and increased income parity within ethnic groups. The NEP also led to increased employment and established a market economy, helping to maintain stable economic growth in country.
Currently, the GDP of Malaysia is around US$300 billion, while the GDP of Bangladesh is only around US$30 billion. Bangladesh became independent from Pakistan in 1971, but has not achieved socio-economic development even slightly comparable with Malaysia.
According to the National Budget 2018-2019, per capita GDP of Bangladesh is US$1750, while the country’s poverty rate is a high 24.3 percent, and the extreme poverty rate is 12.9 percent. Income disparity among citizens is very high in Bangladesh. According to UNDP, Bangladesh has a HDI score of 0.579.
Only economic growth is not enough for development of a county. Political and social harmony is very important. The key to Malaysian development is political and social harmony. But in Bangladesh, political stability and social harmony has been vulnerable since its birth. Although Bangladesh is not a multi-ethnic country like Malaysia, internal income disparity is very high.
From Malaysia, Bangladesh must learn that it needs long term political and social harmony to develop. Lack of political and social harmony causes state institutions not to function properly. As a consequence, good governance has not been established. Corruption has increased in every sector of government and non- development expenditure has increased, thereby decreasing the government’s public investment needed to develop the economy.
Secondly, Bangladesh must focus more on eradication of poverty, which causes slow economic growth and also decreased human development. Structural transformation is essential to reduce poverty in the country. Structural transformation means the transition of the economy from an agricultural to an industrial economy and movement from rural to the urban sector. Malaysia has succeeded in eradicating poverty by moving poor rural households to modern sectors. Promotion of the industrial economy helps to decrease unemployment and reduce disparity between urban and rural sectors.
Thirdly, government must move towards a real open market economy. Bangladesh is considered to be an open market economy, but there are still high government controls on the market. The government has to reduce market intervention. Malaysia is a proper example of rapid economic growth created by privatization of markets. Privatization also attracts foreign investors to invest in the country, saving huge amount of state revenues, which can be used in public investment.
Finally, the Bangladesh government has to give priority to human development and fairer distribution of income within the country. Less income inequality in the economy leads to higher human development. The 2016 HDI index of Bangladesh is .0579, which is not enough. In 2015, the GINI coefficient score was 0.39. GINI coefficient is a measure of income inequality. According to the GINI coefficient, income inequality is high in Bangladesh.
Bangladesh has just graduated from a low-income country to a low middle-income country. It should learn from the Malaysian economic model to successfully graduate to a middle-income country.
(The author is a student of Development Studies at Dhaka University. He can be contacted at

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