The “Madani Economy” narrative launched on 27 July hopes to project a stronger public image of Prime and Finance Minister Anwar Ibrahim’s economic leadership. It should be seen as an interim economic policy framework of the Unity government inspired by the Madani concept.
Since Malaysia’s general election of November 2022, economic issues have been at the forefront of public concerns. In an effort to capture the public imagination, Prime Minister Anwar Ibrahim – also the country’s finance minister – announced in June 2023 that he would unveil his economic narrative in August. With the state elections looming on 12 August, Anwar launched the “Madani Economy” narrative on 27 July. The timing was not accidental, as the official state elections campaigning began on 29 July.
Anwar and the Unity government he helms clearly hope to project a stronger public image of his economic leadership which, if successful, is expected to increase public approval and enhance electoral performance. This is evidenced by the numerous goodies announced in the Madani Economy speech, including an e-cash credit payment of RM100 to citizens earning RM100,000 or below annually, RM300 to 1.3 million civil servants of all ranks except top management, and RM200 to one million government retirees. The Anwar administration clearly regards these cash transfers as important, given that it has presided over an economy with a mixed performance in the past six months. Even though the economy has been growing by more than five per cent since the second quarter of 2022, it has been slowing down due to a weak export sector and lingering food inflation.
A deeper understanding of the Madani Economy narrative is important as it has been crafted to explain the government’s economic policy framework based on the concept of “Malaysia Madani”, first introduced by Anwar in January 2023. The vision underlying Malaysia Madani is a society that is civilised, skilled, and inclusive and based on six core pillars: sustainability, prosperity, innovation, respect, trust and compassion. The Madani Economy narrative is an attempt to provide a framework for economic policies for Malaysia Madani.
The latest is not Anwar’s first attempt at formulating a policy framework for Malaysia Madani. In an essay published in 2020, Professor Khoo Boo Teik chronicled how Anwar had sought to incorporate moral dimensions into Malaysia’s federal budget from 1992 to 1996 when he was then Finance Minister. This included the concept of “Masyarakat Madani” (Madani Society), which appeared in the Supply Bill of 1995. Eighteen years later, just a month before Anwar finally became prime minister, he published a book outlining a broad policy framework for Madani based on analyses of each of the pillars across eight dimensions: economic/financial, legal, institutional, educational, social, cultural, urban, and rural.
The task of systematically drawing up specific economic policies corresponding to each of the six pillars proved challenging especially for those that are essentially moral values, such as compassion, respect, and trust. Consequently, the Madani concept has been used in a very broad sense and applied to many areas. Thus, unsurprisingly, the term “Madani” has been loosely appended to numerous government initiatives under the Unity government, including the Madani Budget 2023, Digital Madani Programme, Madani Hawker Centre, and Bitara Madani Project for improving public service delivery. Such broad applications of the Madani term can lead to it becoming a mere label for initiatives of the Unity government — akin to former Prime Minister Najib Razak’s 1Malaysia slogan used from 2009-2018 — without a deeper understanding of what the term means.
Given the past difficulties in crafting a policy narrative based on Madani, what can we make of the Madani Economy as an economic narrative? Anwar’s Madani Economy speech began with a brief diagnosis of the economic challenges facing Malaysia. The challenges in the short term (the next one year) include the high cost of living and hardcore poverty. For the medium-term (the next ten years), the economic policy narrative is structured around two focus areas, strengthening the national economy (to establish Malaysia as a Leading Asian Economy) and elevating the quality of life of the people (Figure 1). The key economic challenges for the national economy are slower economic growth, declining investment, and lack of competitiveness. The two medium-term economic focus areas encapsulate two intertwined elements of the Madani concept: enlarging economic wealth while ensuring an equitable distribution of benefits. Complementing these two focus areas are two types of medium-term reforms related to governance and fiscal matters.
The narrative presents a useful vision and roadmap even though it may not strengthen Anwar Ibrahim’s economic leadership by leaps and bounds.
One distinctive feature of the Madani Economy narrative is the mapping of the medium-term challenges to seven aspirational quantitative targets (Figure 1). This strategy of setting quantitative KPIs has its merits but carries risks as well. They can help measure progress achieved over time but the specific way in which some of the indices are constructed could induce implementing agencies to prioritise narrow pursuits with performance yardsticks instead of the broad and systemic reforms. Furthermore, the targeted ascension up the world rankings by the Human Development Index and Corruption Perceptions Index is exceedingly ambitious.
The final feature of Madani Economy narrative is the listing of various policies and actions meant to achieve Malaysia’s short- and medium-term goals and targets. The list is by no means exhaustive and should be read as samples of key broad and specific policy agendas of the Unity government. This is not necessarily a bad thing, as an economic policy narrative should not bogged down with too many policy details. Moreover, policy prescriptions are bound to evolve over the next decade; indeed, detailed industrial and sectoral economic plans (such as the new industrial master plan and the Mid-Term Review of the 12th Malaysia Plan) are presently being formulated.
Overall, the Madani Economy narrative should be seen as part of an evolving economic policy framework of the Unity government, anchored by the Madani concept. The narrative presents a useful vision and roadmap even though it may not strengthen Anwar Ibrahim’s economic leadership by leaps and bounds. This narrative will continue to evolve and should gain greater clarity in the future as the Anwar-led government learns how to balance the various needs of Malaysian society.
Cassey Lee is a Senior Fellow and Coordinator of the Regional Economic Studies Programme, ISEAS – Yusof Ishak Institute.