PUTRAJAYA - Malaysia's economic policies will focus on reducing income inequality said Prime Minister Mahathir Mohamad on Saturday (Sept 14), after a special Cabinet meeting held to discuss the government's "Shared Prosperity" plan.

These will include measures such as skills training for low earners, and plans to raise revenues for poorer states like Perlis, Kedah and Kelantan, and in rural areas.

"We need to raise earnings but not just by raising salaries alone," said Tun Dr Mahathir at a press conference after the meeting. "We need to uplift the abilities of our workers so they're more productive".

The "Shared Prosperity" economic plan was unveiled in May this year as a needs-based approach to achieving sustainable and equitable economic growth by 2030. It aims to provide a "decent standard of living for all Malaysians" across race, geography and class.

This plan marked a shift to a more inclusive development strategy that cuts across all ethnic groups, a departure from the country's decades-old National Economic Policy that favours the majority Malay community.

Dr Mahathir's announcement came as main opposition parties Umno and Parti Islam SeMalaysia (PAS) signed a political cooperation pact to unite against government policies that they say sideline the Malay Muslim community.

While the Prime Minister did not mention the Malays specifically, they stand to benefit the most from these measures as they make up the majority of low-income groups and those who live in rural areas.

Two of the poorer states singled out for assistance, Perlis and Kelantan, are currently administered by Umno and PAS respectively.

Kedah is governed by Dr Mahathir's Pakatan Harapan coalition, with his son Mukhriz Mahathir the Menteri Besar.

Dr Mahathir also said the government will end the practice of indiscriminately handing out licences, contracts and approved permits. The so-called AP system was originally intended to assist Malay entrepreneurs gain a foothold and advance in business, but has been open to abuse.

"We will prioritise results more than (giving out) opportunities," he told reporters, explaining that some of these opportunities have been wasted in the past.

Dr Mahathir said that instead of using these contracts to further their skills in a certain industry or sector, some companies sold off the contracts to others for a quick buck instead.

The Prime Minister said this year's Budget, set to be announced on Oct 11, will emphasise providing vocational and skills training to keep up with higher-end jobs.