Prime Minister Najib Razak unveils the 10th Malaysia Plan this week — a 5-year economic strategy for bringing the country closer to its somewhat ambitious goal of achieving developed nation status by 2020. It is part of Najib’s “New Economc Model” that aims to replace Malaysia’s race-based system with a more efficient and equitable economic framework.

But with support flagging among the core ethnic Malay support base of Najib’s UMNO party, there is widespread scepticism among investors over whether he will deliver on promised reforms, given that they may well be vote-losers at least in the short-term.

This week’s economic plan is not expected to mention controversial subsidy cuts and there will be little or no reaction from markets. But over the longer-term, the prospects for real economic reform will be crucial in determining whether more foreign investors put their money into Malaysia.

Kuala Lumpur bureau chief David Chance discusses prospects for subsidy cuts in this scenario analysis.

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