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Consolidating its strength among Southeast Asian neighbors

By Philippe Le Saux
- Jun 25, 2013
Credit : GMI Post


As several countries around the world struggle to jumpstart their economies, Malaysia has impressively shown much resilience and stability the past several years. Led by Prime Minister Najib Tun Razak, the government unveiled in 2010 its National Transformation Programme, which aims to raise per capita income to about $15,000 and transform the once agricultural economy into a high income, knowledge-based one, just like the most mature economies found in Europe and North America.

Just three-years-old, the NTP — made up of the Government Transformation Programme (GTP) and the Economic Transformation Programme (ETP) — has already yielded impressive results.

Likewise, the ETP comprises 152 Entry Point Projects, or EPPs, divided among twelve National Key Economic Areas, or NKEAs. Overseeing this comprehensive effort is the Performance Management & Delivery Unit (PEMANDU).

“Three key words for us at the moment are: focus, competitiveness, and execution. We are focused on sectors where we can compete robustly and make ourselves more competitive by undertaking fundamental policy reforms that will allow businesses to flourish. Finally, the discipline of execution is what enables this planning to come to fruition,” said Ku Kok Peng, PEMANDU’s director of investments for palm oil and rubber National Key Economic Area (NKEA).

“The National Key Economic Areas are the engines of growth, while EPPs are the spark plugs that will fire up these engines to a new level of performance,” added Ku. Contributing about one-fifth of the national GDP over the past decade, the oil, gas, and energy sector is among the twelve NKEAs selected by the government.

“With the rapidly changing energy landscape, we must continue to address the impact of rising fuel costs on subsidies and energy efficiency to ensure the sustainability of Malaysia’s economy. Economic competitiveness requires efficient energy production and consumption,” said Dato’ Sri Peter Chin Fah Kui, minister of energy, green technologies and water, as cited in PEMANDU’s Annual Report in 2012.

The private sector has responded enthusiastically as it continues to work closely with the government to maintain Malaysia’s competitive advantage over its Southeast Asian neighbors by providing reliable energy at a competitive cost.

“The government has strong confidence in us. We enabled the country to transform itself intowhat it is today and to what it is targeting to be. We played a major role in the country’s industrialization.

As the government tries to lure more investment from abroad, one of the things international investors are looking for is stable, reliable, and affordable energy supply,” said Datuk Seri Ir. Azman Mohd, president and CEO of Tenaga Nasional Berhad.

“Our energy costs are much lower compared to other nations of the region. We are helping the country with a competitive advantage to bring in foreign investment” he added.

At the moment, there are thirteen EPPs tasked to deliver the targets set by the ETP. These projects include plans to turn Malaysia into an oil and gas hub, and tax incentives to spur exploration investment in marginal oil and gas fields, with an emphasis on the development of renewable energy.

In the field of hydroelectricity, the Malaysian state of Sarawak, on the island of Borneo, has emerged as a key source, namely through the Sarawak Corridor for Renewable Energy (SCORE), which boasts an abundance of natural resources and offers commercial users clean energy at competitive rates.

“We are going from 8 percent hydroelectric power use in 2010 and will stabilize to about 70 percent by the end of the century. In the meantime, we will develop state–of–the–art gas– and coal–fired power plants to take advantage of the indigenous resources in Sarawak,” said Torstein Dale Sjøtveit, CEO of Sarawak Energy Berhad.

Complementing the push towards becoming a knowledge-based economy, the government has shown strident support to the country’s schools and universities, which have begun online distance learning in fields such as Islamic finance specialization.

While top–tier foreign universities have set up campuses in Malaysia, established institutions of higher learning are making their unique mark in the education sector.

Celebrating its thirtieth anniversary this year, the International Islamic University Malaysia (IIUM) has raised its profile in the international community by emphasizing its inclusive and individual nature.

“The International Islamic University in Malaysia is true to its name. We are located in Malaysia, but have on the board of governors and council representatives from other countries as well. The president of the Organization of Islamic Cooperation, for example, is a member of the board of governors. We also have representatives from other countries, like Egypt, Pakistan, Bangladesh, Saudi Arabia, among others,” said IIUM president Tan Sri Sidek Hassan.

“We truly want to live by Islamic principles. What is interesting is that, perhaps contrary to popularexpectations, we are not all about Islam. We have twelve colleges outside of the college of social sciences, and these colleges are as worldly as any faculty in the United States. What differentiates us from other universities is that we add the Islamic dimension. The Islamic dimension is about religion, the teaching of religion. It’s about integrity and doing what is right,” he continued.

Malaysia Rubber Export Promotion Counci CEO Dato' Suat Cheng

For centuries, Malaysia has been known for its rubber industry, which currently supplies 60 percent of global demand.

“Malaysia enjoys several distinctions in the rubber industry. It is the number—one supplier of natural rubber and nitrile gloves, Foley catheters, and latex condoms to the world. Malaysian exports of latex products accounted for about 80 percent of the total export value of rubber products, which was largely contributed by gloves.

Currently, Malaysia is home to the world’s leading producers of rubber gloves,” said Dato’ Suat Cheng, CEO of the Malaysian Rubber Export Promotion Council

The government has set a specific performance target for the rubber industry: to increase its contribution to GNI from $5.84 billion currently to $16.70 billion by 2020, a clear and robust vote of confidence in the its capability to dominate the global market for rubber products.

Meanwhile, information and communications technology (ICT) has kept its preferential status ever since the government established the Multimedia Development Corporation (MDeC) in 1996 to advise the government on policy and legislation and oversee the development of the Malaysian Multimedia Super Corridor, known presently as MSC Malaysia.

MSC Malaysia aims to create an ideal platform to help Malaysian small and medium enterprises (SMEs) in the ICT sector become world-class businesses while attracting investment from foreign ICT companies and encouraging them to develop cutting—edge digital and creative solutions.

“Since the inception of MSC Malaysia, the ICT sector has become one of the important industries in Malaysia. In 2010, MSC Malaysia’s contribution to the country’s gross domestic product (GDP) stood at $2.41 billion. With the growth of the country’s ICT industry, the contribution to nation’s GDP increased to $3.03 billion in 2011,” said Datuk Badlisham Ghazali, CEO of MDeC.

“MDeC is also looking to position Malaysia as an SSO (single sign-on) destination of choice for vertical sectors such as information and communication technology; banking, financial services, and insurance; energy, chemical and resources; logistics and transportation; and pharmaceutical and health care,” he also said.

As the NKEAs continue to grow, support industries have also thrived. As Malaysia sees an increase in foreign direct investment, domestic law firms with an expertise in intellectual property have gained more business from multinational companies seeking local business knowledge.

“We provide solutions to clients. We provide value-added services. I must say, there has been a yearly increase in the business that we generate. Seventy percent of our business comes from foreign clients,” said Wong Jin Nee, founding partner of Wong Jin Nee & Teo Advocates & Associates.

“Malaysia is a place worth investing in. I think Malaysia has a very conducive environment for investment. We are in a good position to provide a strategic partnership to those prospective clients. We are committed to exploring long-term partnerships,” Wong explained.

Note: This Special Report on Malaysia originally appeared in Foreign Affairs in July 2013 (Credit: Philippe Le Saux

Malaysia 2013 was prepared for and originally printed in Foreign Affairs magazine.

PDF of the printed report

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