Team: Iuliia Diuba Nadiia Smirnova Valentyn Rudnytskyi Anna Shevchenko Elena Gorodinscaia

MALAYSIA

Contents

What Ukraine and Malaysia may share in COMMON? What are the DIFFERENCES? What lessons from Malaysia are applicable in Ukraine? What recipes can be adopted?

Commonalities
ECONOMY
Services - a relatively small portion of GDP Reliance on Exports & export diversification Relatively cheap labor force (stuck in the middle) Relatively low FDI inflows / Shady nature of FDI (reinvestment from offshores?) Search for new possibilities SOCIAL Income distribution inequality POLITICAL Maturity Newly independent

Commonalities
1. Large portion of non-services in GDP structure

2. Cheap labor force

Average salary in Ukraine: $341 Malaysia: $350 (unskilled)

Commonalities
3. Low FDI flows

Net FDI inflows: 2-4% GDP over years Different reasons, same result

4. Income distribution
10% of richest
Ukraine: 25% Malaysia: 35% 20% of poorest

Ukraine: 11% Malaysia: 5%

Commonalities
5. Newly independent countries
Malaysia: 1957 from the UK Ukraine: 1991 from the USSR
Large capital stock v.s. Absence of self-governance traditions

6. Search for new possibilities

Diversification
Move towards services Growth of role of education

Commonalities
7. Reliance on Exports Both countries rely heavily on exports:
Malaysia 87% of GDP Ukraine 51% of GDP

Malaysia export diversification - decreasing susceptibility to foreign shocks in demand. Ukrainian export largely undiversified.

Differences
Economic
Overall, Malaysia scores much higher on key economic indicators GDP : absolute, per capita, growth, structure National saving and Household Consumption as a % of GDP Levels of Investment in the economy . Deficits and Debt (public, external debt) Financial sector & Reforms to attract investment Transparency and ease of doing business (regulations and restrictions). Aspirations: technology-intensive economy with higher value-added activities vs. traditional raw materials/manufacturing economy

Differences

Differences

SOCIAL
Demographic homogeneity: ethnic groups, religions Mentality and work ethics: Malaysia Islam+Buddhism, Ukraine Soviet past+Christian influences Social tension and Interracial conflicts Migration : Malaysia illegal immigration (other Asian countries) Ukraine unofficial emigration (brain drain)

Differences

Political/ Legal
Legal system: Malaysia largely based on English common law Ukraine - Civil law system Government type: Malaysia - Constitutional monarchy Ukraine -Republic

Lessons learned

Peoples belief in a single common idea (create a strategic development plan and communicate it to the general public) Retention of the talents ( Malaysia has invested in the development of its human resources, in order to move up the value-added production chain and compete in the intellectually-intensive sectors). Emphasizing branches of economics with large potential and their development (invest in the economic sectors of tomorrow, IT, medical tourism etc. Stimulate entrepreneurial outlook)

Lessons learned

Improve business climate - Fight corruption (Malaysia has reduced its system risks and improved its investment climate by decreasing bureaucracy and corruption levels, and overall, making its economy more market-friendly) Attract investment (reform the financial sector, improve business climate, relax enterprise-ownership limitations etc.) Improving the living standards of the population: Reduction of the crime level, Increasing of the life level (income) of poor people, reducing inequality. Getting rid of inefficient practices (dismantling NEP, eliminating subsidies etc.)

What can be ADOPTED

Create the idea of "Ukraine-2030" and gain peoples support. Investing in intellect: Stop brain drain.

Intellectual property protection

Reducing of the budget places, improve the quality of graduates

What can be ADOPTED

Focus on the development of economic sectors with higher value-added potential (i.e. IT, medicine, production of technologically intensive machinery etc.)
Improve business climate (reduce bureaucracy, create simple and transparent rules and reduce number of restrictions, reduce corruption). Attract FDI (tax-exemptions, market-friendly legal and regulatory systems, etc) Stimulate domestic investment (improve domestic business climate, reform the financial sector, reduce the tax burden etc.) Reduce the budget deficit (increase tax revenues by reducing the tax burden and reducing the underground economy, revise the contracts on tax-havens, such as the contract with Cyprus etc.). Eliminate inefficient practices (revise subsidies, reduce number of government-controlled enterprises, reduce direct government participation in the economy etc.)

Thank you for attention!