By Ida Nadirah Ibrahim
SELANGOR, Malaysia’s thriving economic powerhouse, has achieved remarkable success in recent years. The prosperous state has capitalised on its strategic location, robust infrastructure, and favourable business climate to attract substantial foreign investments and foster a dynamic local economy.
Following the five-year leadership of Menteri Besar Dato’ Seri Amirudin Shari from 2018 to 2023, the Pakatan Harapan (PH)-held state government on July 13 unveiled its progress report.
The 161-page document detailed the state’s numerous people-oriented schemes and initiatives, in particular, what the Harapan-led administration has done to spur the economy after the pandemic.
The report also included the state’s comprehensive five-year development blueprint, the First Selangor Plan (RS-1), which aims to accelerate the post-pandemic economic recovery, promote inclusive growth, and enhance the quality of life for the people of Selangor.
To further complement the state’s ongoing determination to develop progressive and inclusive policies and planning, Selangor in 2022 recorded an impressive economic success when its contribution to Malaysia’s gross domestic product (GDP) exceeded one-quarter of that of the country, at 25.5 per cent. The figure also represented a 0.7 per cent increase from its contribution to the national GDP in 2021.
According to the Department of Statistics Malaysia, Selangor also recorded an economic growth of 11.9 per cent in 2022, surpassing the national growth rate of 8.7 per cent. For 2022, Selangor also recorded a significant jump in revenue, with a total of RM2,532.86 million.
Bank Muamalat chief economist Mohd Afzanizam Abdul Rashid commended Selangor’s track record, stating that as one would expect, the numbers have projected continuous growth for the Golden State and were able to catch the attention of investors to bring their business over.
“Looking at their numbers, I have noticed that Selangor’s GDP has been growing above trend. For instance, last year, Selangor was growing at 11.9 per cent whereas our national GDP was growing at a rate of 8.7 per cent. This has been the case in the past decade where the Selangor economy has always been accelerating much faster than the Malaysian economy.
“For the past 10 years, Selangor’s GDP growth continuously outperformed the nation’s growth, which says much about the state’s potential.
If I were an investor, I would want to be in Selangor because I know the appreciation of my investment values is much faster than if I invest elsewhere.
“There must be something good from their state government policies that resulted in such a strong economic momentum, and if you look at Selangor’s economic structure, you can see that it is the main hub for logistics whereby you have KLIA (Kuala Lumpur International Airport) and Port Klang,” he said during the ‘Lunch On Us!’ talk show on SelangorTV on August 3.
Afzanizam said apart from being a logistics hub, Selangor is an education centre as many major universities are located in the state. He said although Selangor’s location could be a contributing factor, the good planning by its administration in regard to the resources and expenditure available cannot be downplayed.
“Of course, the proximity to the capital city of Kuala Lumpur also helps to some degree. Therefore, all of these factors play a role in contributing to Selangor’s economic performance, and I believe it has been doing really well.
“Location is something that you can’t control. But what you can do is plan what to do with your available resources. You have your tax revenue, you have your plans in terms of expenditure. This is in the context of the fiscal position of the Selangor economy.
“Certainly, the planning side plays a major role in terms of charting the economic trajectory. Otherwise, if you are endowed with so many resources, but you don’t know what to do with them, definitely you won’t be able to produce that kind of growth miracle, so to speak,” he said.
Importance of branding
Similar to the country’s five-year Malaysia Plan, which has entered its 12th edition, The RS-1 is a development plan that caters to the needs of the Selangor people.
No other state in the country has introduced something similar.
“Usually when the Federal government tables its five-year plan, it’s always about development expenditure, what it is they plan to do and what the key areas are to focus on.
“Similar steps are being taken under the RS-1. One of the key sectors the state would talk about is aerospace, something that can command good salaries,” he said.
Afzanizam said many people do not realise the power of branding, something Selangor has used to its benefit with RS-1. He said the economic blueprint was able to lay out in detail the administration’s plans and what it aims to achieve within a certain time frame, and this is what would attract investors.
“From the perspective of investors, this would help them when they do their due diligence. Because every time they come and invest, due diligence is a must thing to do.
“So, this plan would help to clear a lot of things. To a large degree, it is this branding which helps to make the state stand out from the rest. I suppose moving forward, there would be other states that will try to copy this strategy.”
Afzanizam also stated that RS-1 reflects the continuous improvement in the initiatives and programmes that have been introduced by the state administration.
“We’ve been talking about Industrial Revolution 4.0 and how technological advancements can shape the economy and affect the employment market.
“The focus on digitalisation is the right thing to do, and the fact that it is embedded in the RS-1 shows a (commitment to) continuous improvement.”
Stability fuels the economy
On June 28, the Selangor state assembly was dissolved to pave the way for the state elections that will be held concurrently with five other states, namely Penang, Negeri Sembilan, Kedah, Kelantan and Terengganu.
Following the results of the 15th general elections (GE15) last November, the country saw Perikatan Nasional’s component party PAS capturing a number of seats that were previously held by Harapan and Barisan Nasional (BN), including in Selangor.
Out of the 22 parliament seats, six were won by PAS in GE15.
This leads to the question of whether PAS’ significant victory in the general polls would translate to a similar outcome in the six states. In the case of Selangor, analysts have projected that while Harapan is expected to lose several seats, it would retain its hold on the administration for the coming term.
In terms of the economy, Afzanizam said stability in the government plays an important factor as it would affect various economic components, such as investor confidence. “What we want to see is stability in terms of the implementation of economic policies. Of course, the ones who drive the policies are the politicians. Therefore, any changes (in representation) can have a direct impact on investor confidence. Investors are very mindful of that.
“I would say there would be major reactions (if there is a change in administration) because whatever investments have been approved by the state government, the investors would try to reevaluate them or at least keep the status quo.
“I believe there would be a wait-and-see approach and that’s quite common,” he added. Moving forward, Afzanizam expressed hope that the electorate would make their decisions based on economic performance.
“From my observation, the arguments raised in the state elections are quite mixed. There is some sensitive stuff, (while) some are objective … but I really hope our society will be able to graduate (from sensitive issues) and start to look at economic policies when heading out to vote.”
