banner image
News

The Malaysian Reserve: Malaysia must move from cost-centred to value-centred economy

Originally published in The Malaysian Reserve, 29th October 2025

Malaysia must now focus on productivity and workforce upskilling to move from a cost-centred to a value-centred economy, despite its unemployment rate being at a decade low and wages rising.

Human Resources Minister Steven Sim said Malaysia’s economic model must evolve from one driven by low-cost labour to one defined by innovation, technology and long-term value creation.

Speaking at Grant Thornton Malaysia’s “Budget 2026 – Budget Highlights and Recent Tax Developments” forum in Kuala Lumpur, Sim told an audience of tax and corporate leaders that he had introduced the practice of “pantun” recitation within his ministry to promote creativity and agility in thinking, traits he sees as essential for an innovative workforce. 

The “pantun”, he said, reflects Malaysia’s rich cultural heritage while serving as a form of “mental gym” that sharpens wit and intelligence. 

“You have to be witty and intelligent to create an original ‘pantun’,” he said.

Sim added that encouraging such creative expression within the ministry mirrors the kind of mindset Malaysia needs to embrace — one that values originality, problem-solving and continuous innovation to remain competitive on the global stage. 

This, he said, reflects the structural shift required to strengthen Malaysia’s position amid intensifying global competition.

Sim warned that “business as usual would mean businesses will go out of business”, adding that Malaysia could no longer depend on its traditional “made-in-Malaysia” low-cost manufacturing model. 

Instead, he proposed what he called a “made-by-Malaysia” economy — one driven by high-value industries and local expertise.

To achieve that, Malaysia must invest in four key areas: Talent, technology, things (referring to products and services) and trademarks.

He stressed that these are the foundations of long-term economic resilience. 

“We need to invest in a long-term strategy to enhance the value of our economy. We must move from being merely a cost centre to a value centre, not just a factory of products but also a factory of ideas,” he said. 

Sim’s message connected human capital policy with the broader fiscal reforms outlined under the upcoming Budget 2026 and the Madani Economy framework. 

He said the government’s long-term goal was not only to raise economic output, but also to uplift income levels and ensure that growth is anchored by innovation.

Read the full article here: Malaysia must move from cost-centred to value-centred economy in The Malaysian Reserve, 29th October 2025

Copy text of article