As Malaysia strives to become a high-income economy, the need for advanced and specialized skills will be crucial to maintain its economic competitiveness. Sophisticated skills, whether cognitive, technical or socio-emotional, are built on strong foundational skills. Malaysia has expanded early childhood education and achieved near universal primary education with remarkable equity in resources and student experiences. Part 1 of this Malaysia Economic Monitor (MEM) presents a review of recent economic developments and a macroeconomic outlook. Part 2 begins by outlining the learning outcomes challenge and identifying the bottlenecks that the Malaysian education system faces in improving learning outcomes. This section attempts to understand why overall learning outcomes in Malaysia are low relative to expectation, with low-income students doing especially poorly. Reflecting this, the special thematic topic identifies the steps that can be taken to improving foundational skills and learning outcomes in Malaysia.