Journal of Human Resource and Sustainability Studies
Vol.03 No.03(2015), Article ID:59744,8 pages

Financing for Sustainable Development: Reflections on the Malaysian Perspective against the Six Capital Types Proposed by United Nations Sustainable Development Solutions Network

Radieah Mohd Nor, Kanayathu Chacko Koshy, Kamarulazizi Ibrahim

Centre for Global Sustainability Studies (CGSS), Universiti Sains Malaysia, Penang, Malaysia


Copyright © 2015 by authors and Scientific Research Publishing Inc.

This work is licensed under the Creative Commons Attribution International License (CC BY).

Received 4 September 2015; accepted 18 September 2015; published 21 September 2015


This article is about analysis of Malaysia’s achievements regarding the proposed main capital outlined by the United Nations Sustainable Development Solutions Network (UN SDSN) that to be empowered by every country in the world. There are six main types of capital proposed by UN SDSN which are infrastructure, human capital, natural capital, business capital, intellectual capital and social capital. Based on the proposed six categories, Malaysia should take the initiative proposed so that Malaysia can achieve sustainability in its development as outlined in the Sustainable Development Goals (SDGs). This situation needs to be done because Malaysia is still lagging in their efforts to preserve the type of capital owned by them. Good management needs to be done to strengthen the type of capital held in Malaysia.


Malaysia, United Nations Sustainable Development Solutions Network, Capital

1. Introduction

This article is about analysis of the Malaysia’s achievements to the things that were outlined in a working paper published on March 19, 2015 by Network Solutions Sustainable Development: A Global Initiative for the United Nations. The working paper entitled “Key Elements of a Successful Addis Ababa Accord on Financing for Sustainable Development”. This working paper is the result of discussions at various conferences including the 2015 Financing for Development (FFD) Conference in Addis Ababa, Ethiopia, the 2002 Monterrey Consensus 2008 Doha Declaration on Financing for Development. All of the conferences, declarations and others were as preparation for reaching agenda of Sustainable Development Goals (SDG), which was held in late 2015 to replace the Millennium Development Goals (MDGs).

2. Method of Analysis

Through the working paper there are 11 elements outlined to be followed so that the countries in the world achieve strong development especially from the point of financially. To archive the 11 elements, the working paper outlines six types of capital that needs to be given attention. Each of the six types of capital requires investments by the public sector, the private sector, and the social (not-for-profit) sector, comprising foundations, academia, and social enterprises. Six types of the capital are as Table 1 below.

This article focuses on six areas that were outlined by UN SDSN as a method to analyze on what has been done in Malaysia to achieve the six types of capital. By six points outlined by UNSDSN as the main source of capital, almost all have been achieved by Malaysia. This matter will be analyzed in depth in the next sub topic.

3. Analysis

3.1. Infrastructure

Infrastructure in Malaysia is among the most advanced infrastructure in Asia including Singapore, Japan, Hong Kong, Korea, China and Taiwan [2] . The quality of its infrastructure including quality of trade and transport related infrastructure such as ports, railroads, roads and information technology. Telecommunications network is second best after Singapore in Southeast Asia, with 4.7 million fixed-line subscribers and more than 30 million cellular subscribers. Malaysia have seven international ports and the main port is the Port Klang. There are 200 industrial parks such as Technology Park Malaysia and Kulim Hi-Tech Park. Clean water supply is also available for more than 95 percent of the population. During the colonial period, development confined to the cities that have high economic power. While rural areas were also given focus in development, they still lag behind for example Sabah and Sarawak. Telecommunications network even stronger in urban areas, but less in rural areas [3] .

Good infrastructure facilities are due to the monitoring of the federation and local government. Infrastructure facilities built by private developers such as earthworks, roads and drainage and dredging, lying of cables and pipes by private agencies are built perfectly on implementing stage. The private sector must comply with all applicable Laws, Small Laws, Codes of Practice and the policies and standards set by the government [4] .

To improve the life quality of rural communities through increasing access of basic physical infrastructure and social with quality under the National Key Result Areas (NKRA), the government focuses on four core developments. Four core developments are:

Table 1. Main types of capitals.

Source: UN SDSN (2015) [1] .

1) Construction and roads upgrade to connect rural areas with social center and economic (JALB),

2) Provide clean water and through additional connections and alternative solutions (BALB),

3) Construction and house upgrade for the poor and extreme poor (PBR),

4) Provide electricity to the public by focusing on Sabah and Sarawak (BELB).

To ensure the successful implementation of this program, more allocation has been allocated by the government to the Ministry of Rural and Regional ministry as implementing agency [5] . Ministry of Works Malaysia also engaged extensively in infrastructure development projects and public development to help developing country. Ministry is responsible for ensuring that all development projects are under the control of the Ministry of Works is implemented according to schedule and cost prescribed [6] . Investment to build infrastructure facilities in Malaysia are not only involving governmental investment but also from the private sector.

Infrastructure in Malaysia has developed a lot compared to 10 years ago. However, development of the infrastructure is still not balanced because there are areas that do not have access to comprehensive infrastructure. For example, the interior of Sabah and Sarawak. Rural areas are still using water transport to connect with other areas. The transport is very poor and do not have the characteristics of a good safety features. Safety features are not being considered properly. This situation is among the causes of accident, which caused 11 lives lost on January 18, 2014 in Daro, Sarawak. Long boat carrying 27 passengers including the bridal entourage turned into tragedy [7] .

A lot of other reports indicating the occurrence of boat capsized tragedy occurred in Sarawak because of water transport is the best and quickest way to get to an area as statistics follows (Table 2).

The Malaysian government should improve public transport system, especially in the area of water transport to prevent re-occurrence tragedy. UN SDSN also been suggested that the infrastructure in a country needs to get cooperation through investments made by the government and private sectors. Financial resources can be obtained from the Domestic Budget Revenues (DBR), International Development Financing (IDR) and private financing.

3.2. Human Capital

Human capital meant by UN SDSN (2015) is the investment made in the country in terms of health and education. UN SDSN (2015) proposed that each country needs to make investments in human capital by making government as the primary source as investors. However, the private sector can also involve.

The health sector in Malaysia still has much room for improvement, especially from the point of maternity hospital. Based on statistics obtained from the Department of Statistics Malaysia, up to 2013, the maternity hos-

Table 2. Boat capsized tragedy in Sarawak since 1973.

n.d―No data. Source: Rabi’atul’Adawiyah Ismail & Akhmaruddin Ahmat (2014) [8] .

pital in Malaysia only consist of private maternity hospital. Government maternity hospitals are still unavailable. This condition may occur due to the government hospital also houses the maternity ward in the same area in the hospital. Table 3 below shows the total number of government and private hospitals in Malaysia in 2013.

The ratio of doctors to population in Malaysia until 2013 for medical doctor is 1 per 758 population ratio (1:758), dentist is 1 per 6436 inhabitants (1:6436) and pharmacist is 1 per 3039 population ratio (1:3039).

The Malaysian government has set a target in 2020, that medical doctor ratio is equal to 1: 600. This ratio is based on the standards set by the World Health Organization (WHO), and 1: 400 in accordance with the standards of developed countries. Number of medical doctor recorded until December 31, 2013 was 46,916 as mentioned in Table 4.

Statistics of educated person in Malaysia are as in Figure 1. In the figure, it shows that the educational level of the population is increasing every year. Although higher education is also offered by the private sector but the government still plays an important role. However, the private sector dominates the education sector at the diploma level.

Financing in education and health sector in Malaysia is still low given by either the donor or the private sector. In Malaysia, the financial resources to pay for education and health still depend heavily on government resources. Therefore, this sector should be improved so that Malaysia’s education sector is not lagging behind the developed countries. The education system in Malaysia should be parallel with current developments so that graduates produced from the system are able to compete in foreign markets.

Table 3. Number of government and private hospitals in Malaysia for Year 2013.

Source: National Healthcare Establishment and Workforce Statistics Hospital 2012-2013.

Table 4. Human capital for health sector as 31 December 2013.

Notes: n.a, not available, aIncludes House Officers, bIncludes Midwives (Division II), cRefers to registration of local and foreign practitioners. Sources: 1Human Resources Divisions, Ministry of Health (MoH); 2Malaysia Medical Council; 3Malaysia Dental Council; 4Pharmacy Board Malaysia; 5Malaysia Optical Council; 6Medical Assistant Board; 7Malaysia Nursing Board; 8Oral Health Division, MoH; 9Traditional & Complementary Medicine Division, MoH. Source: Ministry of Health Malaysia (2014) [9] .

Figure 1. Number of graduates according to the institute of higher education in Malaysia. Source: Ministry of Education Malaysia (2013) [10] .

3.3. Natural Capital

All countries in the world either government sector or the private sector should take part to protect natural resources such as protecting ecosystem function, water resources, forests, habitat, wildlife conservation, water, biodiversity and climate resilience. Based on the results of the discussion in Addis Ababa, Utopia, UN SDSN (2013) suggested that The Global Environment Facility (GEF) and the Green Climate Fun (GCF) should be fulfill the capital to assist countries that have official financing for investments.

Currently, Malaysia is still lagging behind to fight for the preservation of the environment. Relatively, it was found that developed countries are far forward in solving environmental problems. Countries like the United Kingdom or Germany once suffer from environmental problems such as severe pollution consequences of the industrial revolution which began at the end of the 19th century, but now these countries have solved these issues successfully. The rivers that were dead due to pollution caused by industrial wastes has been restored. Rivers that run into the treatment has been restored. Their progress is not actually occurring unintended or unplanned, but through certain processes involving various institutions [11] .

The biggest investment for natural resources in Malaysia is still done entirely by the government. Although there are non-governmental organizations (NGOs) which also contribute either physical or non-physical to restore the resource, their contribution is still lacking. Either from the government or private sector, their contribution to preserve and protecting the environment is still at a minimum level compared to developed countries.

Generally in Malaysia, despite various policies has been legislated to preserve and conserve the environment, the level of society awareness is still low. Based on Eyu Ghim Siang (2011) [12] , the issue of preserving the environment in Malaysia arises due to;

1) Conherence and implementation issues,

2) Political and economic constraints,

3) Jurisdication and hierarchy of Department of Environment (JAS) issues,

4) Staff issues,

5) Management costs issues,

6) Awareness and public acceptance issues,

7) Weakness of education system,

8) Weakness of law enforcement.

Malaysian public awareness of environmental preservation and conservation are low and can be seen when the local newspaper continuously displays the local community low awareness towards environmental. As example when there are reports of people’s reluctance to throw garbage into the trash bin [13] .

Through UN SDSN paperwork, they proposed that the government should be the main sector to lead for preserving and conserving nature. Financial source is advised to be obtained from Domestic Budget Revenues (DBR) through agreements made between the International Development Financing, philanthropists and private finance. It is hoped that through these proposals, preservation and conservation of the environment in Malaysia can be improved.

3.4. Business Capital

Business Capital meant by UN SDSN is more to agriculture in small scale. Small-scale agriculture applies because they have small farm size and they are categorized as poor. Therefore, it is very important to help them so they can get out of poverty. Public finance for small farmers is based on the three dimensions of sustainable farming which are economic improvement and the reduction of hunger, social inclusion, and environmental sustainability.

UN SDSN have suggested that smallholder carry out relationship with The International Fund for Agricultural Development (IFAD), which has now become a Global Fun for Smallholder Agriculture and Nutrition, and other financial mechanisms such as the Global Agriculture and Food Security Program (GAFSP). The financial institution target distribution as much as $10 billion a year by 2020 from $0.5 billion today by IFAD.

In Malaysia, agriculture as a source of income has been applied by the government to its citizens. Many assistances offered by the government to help small farmers to break the cycle of poverty. Among the special assistance by the government is the Azam Tani program. Malaysian Government under the Ministry of Women, Family and Society, has launched 1 AZAM (End the Poverty) to boost the standard of living of society with low income. Under 1 AZAM there is program specializing in agriculture, known as Azam Tani. Through the program, in 2010 until 2013, the Department of Agriculture has been successful assisting 1428 heads of households in the state of Kedah, Johor, Terengganu, Pahang, Negeri Sembilan and Melaka. Various agricultural products including fisheries were distributed to participants of Azam Tani. Among the assistance includes boat and engine, freshwater fish projects, poultry, Agro-based products sale using the kiosk and three-wheeled motorcycle and other agricultural projects which quickly bring results [14] .

Based on the efforts undertaken by Malaysia to supress poverty, Malaysia has managed to reduce poverty from 49.3% in 1970 to 1.7% in 2012 [15] . In fact, the rate declined further to 1.0% in 2014 [16] . Programs implemented by Malaysia can also be applied in other countries so that world poverty could be eliminated. Through the assistance carried out by UN SDSN, through methods to obtain financial and investment, it could ease the program conducted in Malaysia to be done on a global level.

3.5. Intellectual Capital

Intellectual Capital meant by UN SDNS (2015) is related to technology for sustainable development. From the point of intellectual capital, UN SDSN (2015) suggested that the combination of cooperation from the government and private sectors in the investment. Through financial UN SDSN (2015), combination between DBR, IDF and private financial needs to be done to strengthen the finance to obtain high performance of intellectual capital in a country. Advanced revolution needs to be done in ICT, genomics, energy, materials science, and other areas can support “smarter” systems for transport, water, industry, land use, health, waste management, and education. UN SDSN (2015) also underlines that the FFD must also support the Research, Development, Demonstration, and Diffusion (RDD & D) for new sustainable technologies.

Intellectual Capital is also directly to achieving Sustainable Development Goals (SDGs), issued technology must meet several criterias. These include low-carbon energy; energy efficiency in buildings, industry and transport; climate-resilient agriculture; and low-cost, high-quality health and education services relying heavily on new ICTs. In order to launch this plan smoothly, government have launched a new Public-Private Partnerships for Sustainable Technologies with PPPs established in each of the priority areas. In agriculture, PPPs should be established to improve farm systems, economical use of water and fertilizers and improve crop resilience to climate changes. In health and education, special attention should be devoted to fully utilize advances in ICTs to improve the health and education budgets even with low income.

Based on the things outlined by UN SDSN (2015), Malaysia is still far behind to meet the needs recommended by UN SDSN. Malaysia still uses child labor to develop the country. The new technology adopted by developed countries like Japan has not been applied in Malaysia yet. Creation of new technologies for the development and the economy is still weak compared to other developed countries. However, Malaysia has been speculated the green technology. This shows the willingness of the country to utilize the use of technology in Malaysia.

Expansion of research and development activities in public and private universities to enrich the knowledge and the concept of economic production innovation and commercialization acculturation. Under the 9th Malaysia Plan (9 MP), a total of RM285 million has been allocated for Fundamental Research Grant Scheme (FRGS) for research projects and commercialization in 2009, a total of 2512 applications under the research project has received FRGS funding from 20 IPTA and 3 IPTS where a total of 611 research and development projects was approved by JPT involving funds of RM26.5 million. Based on the balance of the existing provisions, RM57 million will be saved to meet new projects FRGS for 2010. A total of 4,731 researchers produced and 543% or 4.3% of revenue from 12,523 R & D commercialized [17] .

Ministry of Science, Technology and Innovation (MOSTI) also offers three funds financing research and development (R & D), which are the Science Fund, Techno Fund and Inno Fund to stimulate the economy. Financing in the form of funds or grants included in the commercialization phase. Under the 10th Malaysia Plan (10MP) implemented starting in 2011 to 2015 there were also other funds introduced apart from these three funds, there are also other funds that may be requested by applicant. Funds offered by MOSTI are Commercialization Fund, Biotech Commercialization Fund and Technology Acquisition Fund.

While R & D has been carried out to maintain the world’s ecosystems, implementation of these created technologies are still minimal. Based on reports from MOSTI, until October 2014, a total of 4106 research projects, development and commercialization completed and 1172 of it are potentially to be commercialized. However, only 366 projects have been successfully commercialized. This situation shows that the implementation of R & D products in Malaysia is still low. Unfortunately, the target for 2015 is still low by the provisions of the 2015 Budget, the ministry aimed as much as 360 high-impact product innovation for commercialization by 2020 [18] . It would be better if every R & D that have been done have the place to be commercialized compared to only some amount from total R&D during the year.

3.6. Social Capital

The main source of social capital is from public regulation and Corporate Social Responsibility (CSR). The proposed financing for supporting social capital are from Domestic Budget Revenue in order to get a good governance and inclusive policies. Moreover, private capital should also participate to support private sector CSR. Philanthropic fund should also participate to support NGOs to strengthen the financial position of social capital.

Social capital is very important because it is the benchmark for high public trust. It also fosters fairness and sovereignty of the law in government action and business operations. Therefore, investment in social capital means investing for integrity, inclusiveness policy, and stakeholder participation in investment for decision making. By implementing SDGs, governments and businesses must report their financial flows and contracts, as well as their performance on the SDGs. New forms of corporate accounting should maintain environmentally and socially in every actions.

Effective monitoring of SDGs requires a modest financial resource compared with other main capitals. However, the investment that can effectively monitor and support progress in all areas.UN SDSN in collaboration with other organizations’ partner, estimates that developed countries will need to spend about $1 billion for all countries in the world for the purpose of monitoring and data systems. It also includes early work to help the foundation and framework such as the census and registration system at the national level. For this purpose UN SDSN propose that financial resources are collected and removed through the DBR, private capital and philanthropic.

In Malaysia such matters should be emphasized. While Malaysia has grown in such a way to strengthen the basic integrity and identity of its citizens, it still felt weak that it could threaten national security. Improvements need to be made through it by trying to follow the recommendations from UN SDSN so that community mentality is on par with first class provided by the government.

Social capital is important for Malaysia to be applied to decrease the crime rate. Problems that occur now is clash between the statistics submitted by the Malaysian Crime Watch Task Force (MyWatch), an NGO that focuses specifically on crime in Malaysia with the statistics presented by the Royal Malaysia Police. According to My Watch, crime rate in Malaysia is increasing. Crime index within 60 days from January 1 to February 28, 2015 shows a total of 20.096 criminal cases that have been recorded while Director of the Department of Crime Prevention and Eradication, Bukit Aman Police Headquarters, Ayub Yaakob said previously that the crime rate in the country was reduced by 27 percent. MyWatch Chairman, R. Sri Sanjeevan claimed, crime statistics by Department of Crime Prevention and Eradication, Bukit Aman Police Headquarters, is doubtful due to increasing crime rate [19] .

4. Conclusions

Malaysia is a highly open upper-middle income economy [16] . Through the principles of Vision 2020, Malaysia is trying to become a developed country with high income economy. Vision 2020 carried out under the Third Outline Perspective Plan (RRJP3) of the National Vision Policy (DWN), which covers the period of 2001-2010. DWN aims to strengthen the competitiveness and resilience as well as creating an equitable society to ensure the stability and unity. New dimension introduced including:

1) To develop Malaysia as a knowledge-based society.

2) To generate growth based on local resources and strengths.

3) To make the agricultural sector, manufacturing and services more dynamic.

4) Eradicating poverty among small groups of poor in urban and rural areas and to improve the quality of life of 30 percent of the lowest income group.

5) To achieve effective Bumiputera (Malays and natives of Sabah and Sarawak) participation and equity ownership of at least 30 percent by 2010.

Implementation of Vision 2020 meets the challenges of slow economic growth momentum after the Asian Financial Crisis of 1997/98 and World Financial Crisis in 2008/09. This resulted in the country being in the trapped in the middle-income and may not achieve its objective to become a developed nation by 2020.

The third phase was implemented in 2020 under the New Economic Model (MBE), which was launched in 2010 covering the period of 2011 to 2020. The MBE will be a catalyst in driving the country’s potential growth. The main goal of MBE is to improve quality of life by focusing on three dimensions, namely high income, sustainability and inclusiveness that emphasizes the lowest 40 percent of income earners. MBE include four pillars of transformation countries under the “1Malaysia, People First Performance Now”, which is the Government Transformation Programme; Economic Transformation Programme, Political Transformation Programme and Rural Transformation Program. Implementation strategies are detailed in MBE Tenth and Eleventh Malaysia Plan.

To achieve this vision, Malaysia should take initiative proposed by UN SDSN so that the vision can be achieved fast by Malaysia. There are still many weaknesses that need to be improved by Malaysia.

Cite this paper

Radieah MohdNor,Kanayathu ChackoKoshy,KamarulaziziIbrahim, (2015) Financing for Sustainable Development: Reflections on the Malaysian Perspective against the Six Capital Types Proposed by United Nations Sustainable Development Solutions Network. Journal of Human Resource and Sustainability Studies,03,141-149. doi: 10.4236/jhrss.2015.33019


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