Does Malaysia need a Ministry of Economy? (Part 1)

Murray Hunter


Does Malaysia need a Ministry of Economy? (Part 1)

Samirul Ariff Othman
May 01, 2025



Rafizi Ramli was given a ministry with a road to nowhere. The MoE could have been Malaysia’s DOGE.


Malaysia’s newest Ministry of Economy (MoE) was created to oversee long‐term planning and development. In practice, however, virtually all economic policy power remains elsewhere. Key financial controls lie with the Ministry of Finance (MoF) (which sets budgets and taxes), Bank Negara Malaysia (BNM, the central bank, which manages monetary policy), and the Prime Minister’s Office/Economic Planning Unit (PMO/EPU) (which coordinates national development plans). These agencies already handle budgeting, currency, and macroeconomic strategy, leaving the MoE with largely advisory and coordination roles . In short, critics argue the MoE has little independent power – it cannot raise revenue or print money, and many of its planning functions overlap with existing bodies.


• Budgetary and fiscal control in MoF: Malaysia’s Constitution vests revenue and expenditure authority in the Finance Ministry. As one study notes, the MoF “is the custodian of Malaysia’s public finances,” coordinating and scrutinizing state budgets, development programmes, and five‐year economic plans. In effect, any major spending decisions (development allocations, value management, debt issuance, etc.) must pass through the MoF. The MoE’s mandate to “determine ceiling and distribution of development expenditure” is therefore subordinate to MoF approval.

• Bank Negara’s monetary power: The central bank sets interest rates, manages currency and reserves, and oversees financial stability. By law, Bank Negara operates independently on monetary policy, meaning it can counteract or override fiscal moves. As a leading analysis explains, Malaysia’s macroeconomic policy is “coordinated by the EPU, Ministry of Finance and Bank Negara Malaysia” – with the PMO/EPU and MoF driving budget and plan decisions, and BNM steering money supply and inflation. This trilateral core leaves little scope for the MoE to alter macro trends.

• Prime Minister’s Office and EPU coordination: The PMO (through the Economic Planning Unit and inter-agency councils) effectively manages national development strategy. The EPU “plays a central role in managing the national economy and in overseeing national economic policies” (including key programs like the New Economic Policy and Malaysia Plans). It sets policy standards, prepares development budgets, and advises the government on economic issues. The Cabinet Secretary (chief of PMO) likewise “coordinates the policies of the various ministries and ensures that Cabinet decisions are implemented” . In short, the Prime Minister and his Planning Unit already coordinate cross‐ministry economic policy and serve as the “national secretariat” for economic action.

Given this structure, the MoE has limited authority in practice. Its published functions – socioeconomic planning, coordinating inclusive development (Bumiputera agenda), and monitoring projects – overlap with the PMO/EPU, state governments, and line ministries (e.g. Agriculture, Energy, Social Services also fall under MoE’s umbrella). The MoE can formulate plans and conduct research, but it cannot independently allocate revenue or enforce policy. Some analysts argue this makes the ministry largely symbolic or duplicative. As one government briefing notes of Malaysia’s institutional setup, “the Federal Government has authority over macroeconomic policies,” and these are already coordinated by the EPU, MoF and BNM – not by a new economy ministry.

Counterargument: Why a Ministry of Economy Was Created

Proponents of the MoE argue that Malaysia needs a dedicated agency to champion long‐term development and inclusive growth. They point out that the MoE’s remit – from drafting Malaysia Plans to addressing income inequality – is broader than any single ministry. In theory, a specialized ministry can focus on coordination, cutting red tape and ensuring that development policies (like regional projects or green economy initiatives) are aligned. For example, the MoE’s official mandate includes serving as the secretariat to the Majlis Tindakan Ekonomi Negara (National Economic Action Council) and other councils, suggesting it should drive the national agenda. Supporters say a centralized economy ministry could improve focus on non-financial aspects of the economy (like sustainability, digital transformation, and trade negotiations), freeing the MoF to concentrate on fiscal matters.

Moreover, Malaysia’s ruling coalition created the MoE partly to reflect political commitments (e.g. inclusive “Malaysia MADANI” goals). A separate MoE, held by an ally of the Prime Minister, may help ensure diverse views (states’ interests, social sectors) are represented in national planning. By bringing together departments such as Agriculture, Rural Development, and Energy under one umbrella, the MoE might in theory streamline development programs and avoid fragmentation.

Rebuttal: Limited Impact Despite Intended Role

While these arguments have merit in principle, in practice the Ministry of Economy lacks the teeth to deliver such coordination independently. Its successes depend on cooperation from the very bodies that hold real power. Critically:


• Budgets stay with Finance: No matter how good a plan the MoE draws up, it must still pass through the Finance Ministry. If MoF priorities differ (for example, reallocating funds to debt service or subsidies), the MoE cannot override that. The MoE does not prepare the national budget; it only influences the development portion of it. As one academic analysis notes, even state governments’ “five-yearly economic policy” must be scrutinized by the MoF and EPU . Thus the ultimate allocation of resources is not within MoE control.

• Economic levers remain external: Key decisions like adjusting interest rates or currency policy are set by Bank Negara, not by the MoE. External shocks (oil prices, global markets) are handled by central bank interventions and fiscal stimulus packages, again crafted by BNM and the MoF. The MoE’s role in such crises would only be advisory.

• Overlap with PMO/EPU limits novelty: Many initiatives the MoE might claim – like poverty reduction or industrial development – are already embedded in the Malaysia Plan and other established frameworks. For instance, the EPU has traditionally coordinated broad socio-economic targets and major infrastructure projects. The PM’s office chairs national councils and has the final say on policy across ministries. In effect, the MoE often implements directives from those bodies rather than setting independent strategy.

• Real-world evidence: If the MoE had strong independent clout, we would expect to see it prominently influencing policy outcomes. Instead, news reports show it mostly working with others (for example, co-chairing oversight teams with the anti-corruption agency to monitor allocations) – a coordination role rather than a decision-making one. Meanwhile, major policy speeches (e.g. budget announcements, foreign investment treaties) still come from the Finance Minister or Prime Minister, not the Economy Minister.

In sum, while a Ministry of Economy can claim a broad mission statement, the levers of power remain firmly with Malaysia’s long-established institutions. Without budget autonomy or monetary authority, the MoE’s initiatives must be approved and supported by MoF, BNM, and the PMO. This reinforces the critique that the ministry is largely superfluous as an independent actor, rather than a fourth pillar of economic power.

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Economist Samirul Ariff Othman is an international relations analyst. He completed his graduate studies at Macquarie University in Sydney, Australia. The views in this OpEd piece are entirely his own.

Malaysia’s newest Ministry of Economy (MoE) was created to oversee long‐term planning and development. In practice, however, virtually all economic policy power remains elsewhere. Key financial controls lie with the Ministry of Finance (MoF) (which sets budgets and taxes), Bank Negara Malaysia (BNM, the central bank, which manages monetary policy), and the Prime Minister’s Office/Economic Planning Unit (PMO/EPU) (which coordinates national development plans). These agencies already handle budgeting, currency, and macroeconomic strategy, leaving the MoE with largely advisory and coordination roles . In short, critics argue the MoE has little independent power – it cannot raise revenue or print money, and many of its planning functions overlap with existing bodies.


• Budgetary and fiscal control in MoF: Malaysia’s Constitution vests revenue and expenditure authority in the Finance Ministry. As one study notes, the MoF “is the custodian of Malaysia’s public finances,” coordinating and scrutinizing state budgets, development programmes, and five‐year economic plans. In effect, any major spending decisions (development allocations, value management, debt issuance, etc.) must pass through the MoF. The MoE’s mandate to “determine ceiling and distribution of development expenditure” is therefore subordinate to MoF approval.

• Bank Negara’s monetary power: The central bank sets interest rates, manages currency and reserves, and oversees financial stability. By law, Bank Negara operates independently on monetary policy, meaning it can counteract or override fiscal moves. As a leading analysis explains, Malaysia’s macroeconomic policy is “coordinated by the EPU, Ministry of Finance and Bank Negara Malaysia” – with the PMO/EPU and MoF driving budget and plan decisions, and BNM steering money supply and inflation. This trilateral core leaves little scope for the MoE to alter macro trends.

• Prime Minister’s Office and EPU coordination: The PMO (through the Economic Planning Unit and inter-agency councils) effectively manages national development strategy. The EPU “plays a central role in managing the national economy and in overseeing national economic policies” (including key programs like the New Economic Policy and Malaysia Plans). It sets policy standards, prepares development budgets, and advises the government on economic issues. The Cabinet Secretary (chief of PMO) likewise “coordinates the policies of the various ministries and ensures that Cabinet decisions are implemented” . In short, the Prime Minister and his Planning Unit already coordinate cross‐ministry economic policy and serve as the “national secretariat” for economic action.

Given this structure, the MoE has limited authority in practice. Its published functions – socioeconomic planning, coordinating inclusive development (Bumiputera agenda), and monitoring projects – overlap with the PMO/EPU, state governments, and line ministries (e.g. Agriculture, Energy, Social Services also fall under MoE’s umbrella). The MoE can formulate plans and conduct research, but it cannot independently allocate revenue or enforce policy. Some analysts argue this makes the ministry largely symbolic or duplicative. As one government briefing notes of Malaysia’s institutional setup, “the Federal Government has authority over macroeconomic policies,” and these are already coordinated by the EPU, MoF and BNM – not by a new economy ministry.

Counterargument: Why a Ministry of Economy Was Created

Proponents of the MoE argue that Malaysia needs a dedicated agency to champion long‐term development and inclusive growth. They point out that the MoE’s remit – from drafting Malaysia Plans to addressing income inequality – is broader than any single ministry. In theory, a specialized ministry can focus on coordination, cutting red tape and ensuring that development policies (like regional projects or green economy initiatives) are aligned. For example, the MoE’s official mandate includes serving as the secretariat to the Majlis Tindakan Ekonomi Negara (National Economic Action Council) and other councils, suggesting it should drive the national agenda. Supporters say a centralized economy ministry could improve focus on non-financial aspects of the economy (like sustainability, digital transformation, and trade negotiations), freeing the MoF to concentrate on fiscal matters.

Moreover, Malaysia’s ruling coalition created the MoE partly to reflect political commitments (e.g. inclusive “Malaysia MADANI” goals). A separate MoE, held by an ally of the Prime Minister, may help ensure diverse views (states’ interests, social sectors) are represented in national planning. By bringing together departments such as Agriculture, Rural Development, and Energy under one umbrella, the MoE might in theory streamline development programs and avoid fragmentation.

Rebuttal: Limited Impact Despite Intended Role

While these arguments have merit in principle, in practice the Ministry of Economy lacks the teeth to deliver such coordination independently. Its successes depend on cooperation from the very bodies that hold real power. Critically:


• Budgets stay with Finance: No matter how good a plan the MoE draws up, it must still pass through the Finance Ministry. If MoF priorities differ (for example, reallocating funds to debt service or subsidies), the MoE cannot override that. The MoE does not prepare the national budget; it only influences the development portion of it. As one academic analysis notes, even state governments’ “five-yearly economic policy” must be scrutinized by the MoF and EPU . Thus the ultimate allocation of resources is not within MoE control.

• Economic levers remain external: Key decisions like adjusting interest rates or currency policy are set by Bank Negara, not by the MoE. External shocks (oil prices, global markets) are handled by central bank interventions and fiscal stimulus packages, again crafted by BNM and the MoF. The MoE’s role in such crises would only be advisory.

• Overlap with PMO/EPU limits novelty: Many initiatives the MoE might claim – like poverty reduction or industrial development – are already embedded in the Malaysia Plan and other established frameworks. For instance, the EPU has traditionally coordinated broad socio-economic targets and major infrastructure projects. The PM’s office chairs national councils and has the final say on policy across ministries. In effect, the MoE often implements directives from those bodies rather than setting independent strategy.

• Real-world evidence: If the MoE had strong independent clout, we would expect to see it prominently influencing policy outcomes. Instead, news reports show it mostly working with others (for example, co-chairing oversight teams with the anti-corruption agency to monitor allocations) – a coordination role rather than a decision-making one. Meanwhile, major policy speeches (e.g. budget announcements, foreign investment treaties) still come from the Finance Minister or Prime Minister, not the Economy Minister.

In sum, while a Ministry of Economy can claim a broad mission statement, the levers of power remain firmly with Malaysia’s long-established institutions. Without budget autonomy or monetary authority, the MoE’s initiatives must be approved and supported by MoF, BNM, and the PMO. This reinforces the critique that the ministry is largely superfluous as an independent actor, rather than a fourth pillar of economic power.

——————————————————————

Economist Samirul Ariff Othman is an international relations analyst. He completed his graduate studies at Macquarie University in Sydney, Australia. The views in this OpEd piece are entirely his own.