1.0 Introduction
In 21st century, Malaysia’s economy has changed into knowledge-based economy since the announcement of long term project which called Vision 2020. Vision 2020 was a plan that launched by Tun Dr Mahathir Muhammad in 1991 in order to transform Malaysia into a knowledge-based society and fully-developed country through the development of ICT sector.
Malaysia’s vision is to create a vibrant and competitive, strong and resilient economy which is driven by the development of new knowledge-intensive industries and dramatic increase in the application of knowledge to production. Therefore, in order to achieve this vision, Malaysia is required to grow faster than 7 per cent in the remaining years of the first decade, as the growth is expected to the second decade due to the development of economy
National Vision Policy is an extension of National Development Policy (1991-2000) which covers the 8th and 9th Malaysia Plan. It is also the second phase of Vision 2020 to transform Malaysia into a fully developed country. In addition, it is a ten year policy that established during 2001and ended by 2010 to fulfil the OPP3 which refers to Third Outline Perspective Plan of Malaysia. This policy aims to build a prosperous, progressive and united Bangsa Malaysia that engages in fair and full partnership and lives in harmony. Besides that, with the major objective of National Unity, national vision policy strives to build a competitive and resilient nation, and equitable society.
In addition to this, National Vision Policy has seven crucial thrusts which include building a resilient nation, promoting an equitable society, sustaining high economic growth, enhancing competitiveness, developing a knowledge-based economy, strengthening human resource development and pursuing environmentally sustainable development.
The implementation of National Vision Policy was not only contributed to the rapid development of technology especially for ICT which refers to information and communication technology, it was also enabled Malaysia’s economy to face the challenges of globalization and liberalisation. Furthermore, the purpose of National Vision Policy was to strengthen economic resilience and to enhance the competitiveness of economy by develop a knowledge-based economy and improve the total factor productivity in Malaysia.
2.0 Description of k-based economy
An economy in which knowledge, innovation and creativity plays a major role in generates and sustains the growth is called knowledge-based economy. Knowledge is considered as the most important and crucial factor of production in knowledge-based economy since it has become the important producer of wealth than the other traditional factors such as capitals, labors and lands. However, compared to the production-based economy, knowledge plays the less important role on it. In addition to this, the accumulation of traditional factors in production has largely driven the growth in the production-based economy.
Besides that, the precious assets such as human capitals or human resources which are skilled and educated have emerged in knowledge-based economy Moreover, a high scale of GDP derives from knowledge-based and knowledge-enabling industries such as teaching profession, high and medium technology industries, other business services or financial industries in knowledge-based economy. Furthermore, the strength in innovation, high literacy, high investment in Research and Development, good technology-related skills and capability, high internet usage and ICT penetration, and high tertiary education enrolments has characterize the knowledge-based economy.
In order to achieve the knowledge-based economy, a country is required to intensify efforts in demand-driven Social & Technology and Research & Development initiatives. The country needs to expand the development of info structure to facilitate the development of the knowledge-based economy. Furthermore, knowledge-based economy is also based on financial system which is with the development of knowledge-based activities. It is also raising the knowledge content in agriculture, manufacturing and services sectors in a country.
The key problem of knowledge-based economy is a vague definition of knowledge, which is a rather relative concept. For instance, it is not proper to consider information society as interchangeable with knowledge society. The information is usually not equivalent to knowledge.
3.0 Why k-based economy
There are several reasons that affect Malaysia to undertake the development of knowledge-based economy. The erosion of Malaysia’s global competitiveness has made Malaysia to develop knowledge-based economy. Malaysia has slipped in the world competitiveness ranking in June 1, 2017, based on the Sun daily. Malaysia’s ranking slipped in all four factors, include the dipping in economic performance, government efficiency, infrastructure and business efficiency.
Besides that, the increase on foreign competition has made Malaysia to change its behaviour on development. Malaysia, as a developing country, has been gone through a lot of development activities in this century. These development activities have positively influence the economic growth of Malaysia. For instance, globalization and liberalization have emerged in the economic growth of Malaysia by bringing in foreign direct investment especially for the construction industry. Furthermore, the taking part of globalization and liberalization in the economy growth of Malaysia has motivated it to prospect for the new products or services that will be highly competitive in the global market.
In addition, Malaysia should develop knowledge-based economy since there is a need for it to move into wealth-generating and more advantageous stages of production and to seek the higher value added, partly to offset higher costs. For example, Malaysia is seeking for more investments from China in higher value sector even though China is currently Malaysia’s biggest investor.
Apart from this, since there is a need for Malaysia to meet the challenges of improving total factor productivity, therefore it is required to undertake the development of knowledge-based economy. For instance, World Bank’s Malaysia Economy Monitor, which launched in 2016, noted that the risks that stemming from external developments have faced by Malaysian economy. Thus, Malaysia has highly focused on the rising on total productivity which will become the major engine of economic growth in Malaysia. Moreover, since new sources of growth are required for Malaysia, therefore it should undertake the knowledge-based environment.
Based on above, there are a lot of strong push factors and pull factors that make Malaysia initiates to become a knowledge-based economy. Basically, this transformation will help Malaysia to enhance its competitiveness in global economy while allowing it to maintain the rapid economic growth which has become the symbol of its development since the Seventies.
4.0 Factors of k-based economy
Besides the overall political, culture, social and security environment factors that contributed to the prosperity of knowledge-based economy, some certain factors can be identified as crucial to the development of knowledge-based economy as well as the strengths and weaknesses of a country in that aspect.
The factors includes: –
4.1 Quality of human resource
The quality of human resources will become the major factor that determines the success of transition and pace toward the knowledge-based economy. There are three ways to improve the quality of human resources. The first way, which is sustaining and long term, is to foster an intellectual and cultural infrastructure to support the lifelong learning and to improve the quality of education in primary, secondary and tertiary levels. The second way, which is flexible and medium-term, is to foster the training and retraining for the workers and managers. The purpose here is to upgrade the skill and knowledge to cope with the new demands of markets and technology. In the initial phases, much of these types of training is to focus on wide-spread organizational changes demanded by knowledge-based economy. The third way is to recruit the talents of foreigners. This is an effective approach, which can be used in meeting the urgent shortages of manpower, but it cannot be used as long term solution.
4.2 Research and Development
“R&D is the purposeful and systematic use of scientific knowledge to improve man’s lots even though some of its manifestations do not meet with universal approval.” (Twiss,1992). It aims to create new idea and technology that can make the development of the products or services become more efficient. For Malaysia to survive in knowledge-based economy, it is imperative that commercialization of R&D products and R&D are the national agenda of the country. Since R&D is the national agenda that drive the knowledge-based economy in Malaysia, therefore the government has provided a lot of national grants to promote R&D. Besides that, the Innovation funds and Techno funds have been provided by the government in order to promote the commercialization of R&D products in Malaysia. The development of R&D includes personnel in R&D, patents filed, scientists and engineers in R&D, public and private sector in R&D.
4.3 Infostructure
Infostructure is defined as the design of information resource, such as website so it can be used efficiently. Besides that, the technical infrastructure which is used to support an information system is called infostructure. Infostructure comprises the networks, legislation and appliances that provide the necessary conduit and enabling environment for seamless flow of information for learning and advancement at the personal, organizational and national levels. There are some examples of infostructure such as televisions, costs of international telephone calls, telephone mainlines, radios, availability of information and newspapers.
4.4 Infrastructure
The permanent installations required for military purpose is called infrastructure. Besides that, it is also defined as the resources required for an activity, the systems of public works in a state or country and a basic framework. The examples of infrastructure are investment in ICT infrastructure, personal computers, internet usage, internet hosts, electricity and internet subscribers.
4.5 Economy
Economy is a system of institutions and organizations that plays the major role in the production and distribution of products or services in a society. The example of economy includes entrepreneurship, e-commerce, knowledge embodied in work processes and products, knowledge-based industries, knowledge workers, venture capital, knowledge-based services, high technology exports , tacits and codified knowledge.
5.0 Conclusion
From the above, we have more understanding about what knowledge is and the importance of knowledge contributed to the economy growth. We have also discovered how Malaysia started to change towards knowledge-based economy.
The challenge of globalization and liberalization has made it crucial for Malaysia to move towards knowledge-based economy, Knowledge-based economy will present the ways to remain globally competitive in medium and long term and achieve the sustainable rapid growth. It will also turn our country towards Vision 2020.
In order to achieve the new economic model goals in turning the Malaysian economy to be a high income and knowledge driven economy by 2020, the quality of the workforce will make the difference in creating productivity driven economy. To have a knowledge based economy, the administration needs to make a situation for a reasonable, aggressive commercial centre which is free by government controls or motivations which would be counterproductive to the point.