Malaysia S Growth Has Come At High Social Environmental Cost Says Think Tank

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The genuine prosperity indicator takes into account factors like social wellbeing, personal consumption, environmental degradation, loss of natural resources, and even the crime rate.
PETALING JAYA: While Malaysia has made major strides in terms of economic growth over the years, a think tank says this has come at a higher social and environmental cost.
The Academy of Professors Malaysia said a study applying the use of the genuine prosperity indicator (GPI) found that Malaysia’s GPI per capita of RM25,626 in 2023 was much lower compared to its gross domestic product (GDP) per capita of RM44,638 that year.
It said that based on its study for the period from 1990 to 2023, the gap between GDP and GPI had been growing wider.
The GPI takes into account factors like environmental degradation, social wellbeing, personal consumption, loss of natural resources, and even the crime rate, to name a few.
The academy believes that the GPI is a more comprehensive index to measure the nation’s progress than the GDP as it takes into account various social and environmental factors.
For example, it said, heavy reliance on foreign direct investments (FDIs) may fuel GDP growth but not GPI, as it may not benefit local talents or contribute to technological developments in Malaysia.
“The study depicts that Malaysia’s economic growth often comes at a higher social cost relative to environmental cost. For some years, persistent income inequality has muted the benefits of economic expansion, as the gains are not well distributed.
“Similarly, environmental degradation, including resource depletion and pollution, has significantly eroded the country’s GPI,” said Jamal Othman, the chairman of the think tank’s economic, regional development and social wellbeing cluster.
In a statement, Jamal said there was a need for Malaysia to move away from consumption-driven growth to one propelled by sustainable consumption and production pathways.
He said development planning should incorporate the GPI to produce better outcomes, particularly to yield social and environmental benefits.
“Malaysia’s resource-based economy and reliance on FDIs must give way to more indigenous, home-grown technological development and greener alternatives.
“This transition requires a combination of innovative incentives for businesses to adopt more sustainable practices, including awareness-raising campaigns to move consumers towards smart or sustainable consumption behaviour,” he said.
The study found that the Asian Financial Crisis in the late 1990s had a greater impact on the GPI, specifically economic welfare, due to job losses and higher inequality.
On the other hand, the 2009 global financial crisis had a bigger impact on GDP as it primarily affected financial markets. - FMT

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