Why has Malaysia failed to develop into a first world country like Singapore?

Malaysia's journey to becoming a first-world country, like Singapore, has been hindered by several factors. Here are some key reasons:

Economic Structure and Policies

1. Economic Diversification and Industrialization: Malaysia has made significant strides in transforming from an agricultural economy to a manufacturing and service-based economy. However, it has faced challenges in moving up the value chain and becoming a high-tech industrial powerhouse, partly due to misaligned policies and a lack of strategic focus on innovation24.

2. Corruption and Governance: Unlike Singapore, which is known for its corruption-free environment, Malaysia has struggled with corruption issues. This has deterred foreign investment and hindered economic development5.

Education and Human Capital

1. Education and Skills Development: Malaysia's workforce has a lower percentage of tertiary education compared to Singapore. This gap affects the country's ability to compete in high-skilled industries and innovate14.

2. Productivity and Wage Growth: Malaysia faces challenges in improving productivity and wage growth, partly due to a mismatch between skills and job opportunities. This has led to underemployment among tertiary-educated youths4.

Fiscal and Taxation Systems

1. Taxation and Incentives: Malaysia's corporate tax rate is higher than Singapore's, which can make it less attractive for foreign investors. However, Malaysia offers specific tax incentives for certain industries and regions13.

2. Economic Inequality: Malaysia struggles with income inequality, which can hinder economic growth and social stability. Addressing this issue requires targeted social policies and enhanced taxation strategies4.

Global Integration and Trade

1. Trade and Export Dependence: Both countries are heavily reliant on exports, but Singapore's diversified economy and strategic trade agreements have helped it maintain a strong position in global trade5.

2. Infrastructure and Business Environment: Singapore's advanced infrastructure and pro-business policies make it more attractive for investors compared to Malaysia, which faces challenges in maintaining a competitive business environment15.

In summary, while Malaysia has made significant economic progress, it faces challenges in areas such as education, governance, economic diversification, and social inequality, which have hindered its transition to a first-world status similar to Singapore.