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M'sia May Turn Out to be the Biggest Economic Surprise in Asia
28 October 2010 | The Star | By Authors : Teoh Kok Lin
Malaysia is blessed. We sit on a great location in Asia; in a geographically peaceful, fertile land with abundant natural resources.
We are a multi-cultural, multi-lingual and multi-talented nation. We have a well-trained workforce and also modern infrastructure in place. We also know there is an urgent need to quickly improve existing infrastructure; such as with better mass rapid transit in Kuala Lumpur, faster Internet broadband across the country and an improving education system for the population, among others.
Malaysia's good economic prospect was never in question; it is how Malaysia goes about fulfilling its good potential that has been in doubt.
Today, in general, expectations for Malaysia to outperform economically are not that high however, I personally feel Malaysia could potentially spring the biggest economic surprise in Asia.
Here are four reasons why:
First and second are closely linked. I believe the country's governance and economy could potentially improve substantially with both the Government Transformation Plan (GTP) and Economic Transformation Programme (ETP) now off the ground and running. While their successful implementation depends critically on political will and the determination of all Malaysians to work together, there has been gathering momentum and some early signs of success.
In the GTP for example, efforts to improve urban transportation quickly transformed into decisions to invest an estimated RM36bil in the mass rapid transit (MRT) system for “Greater KL”which is scheduled to start work by July 2011.
If completed successfully with an open tender system and full transparency as proposed, it will also speak volumes for good governance.
Similarly, reducing crimes and fighting corruption are two areas of GTP showing early results. Pemandu and the Home Ministry said in December that street crimes in the country were down by almost 40%, with certain parts of KL experiencing 47% reduction. The Government plans to continue rolling out new initiatives for crime prevention next year.
And in fighting corruption, we see many more prominent corruption cases being bought up to the courts this year.
Second, under ETP, both the New Economic Model and National Key Economic Areas crucially focus on lifting working Malaysians to a higher income level by attracting best-of-the best industries to operate in Malaysia creating high quality employment and income.
This model is to help get us out of the “middle income trap” Malaysia needs to move up the value chain as China, India, Indonesia and Vietnam have been out-competing us in our traditional areas of expertise in labour intensive and other export and contract manufacturing industries.
Wages and employment income of a nation's working population is the real measure of a nation's wealth. It is therefore more critical to create higher income jobs, professions and enterprises as a means to address any social inequality.
To quote the New Economic Model concluding part (Dec 3, 2010) executive summary chapter six, “After all, before wealth is to be distributed it must first be sustainably generated” It is hoped that the focus will be on expanding the economic pie rather than how to split an existing pie.
Third, while liberalisation increases competition domestically, it also encourages Malaysian companies to venture out and become regional champions. Khazanah, for example, has been fairly successful at transforming Malaysia's government-linked companies into regional champions such as with CIMB and Axiata.
There are many factors to Khazanah's success but one key secret I believe is that for many years, Khazanah has been hiring and paying for top talents from the financial, consulting and banking industries both locally and from abroad.
I personally have visited successful Khazanah-owned companies such as CIMB Niaga, the Indonesian subsidiaries of CIMB and XL, the Indonesian subsidiary of Axiata. A common thread I noticed is they are well integrated with local culture, they hire the best talents and they are meritocracy-based.
Meritocracy is also part of the foundation for a civil society where talents can come from any nation and be any race, all working to attain high level of accomplishments.
Finally, Malaysia is again fortunate to be a trading nation sitting in the middle of an economically-vibrant Asia. To our right is India, a market with one billion population and an economy that is just starting to take off after more than 10 years of reforms; to the far north of us sits China, the second-largest economy in the world with 1.3 billion people and the new economic engine of the world; and to the south of us lies Indonesia, 300 million strong of increasingly vibrant and wealthier consumers.
Malaysia enjoys good relations with all these major economies and should take full advantage of many economic opportunities in these coming years.
With China for example, Malaysia is not only one of China's largest trading partners (total trade was about US$52bil in 2009) but China is now increasingly funding Malaysian infrastructure projects such as for the Second Penang Bridge (US$800mil) and likely more projects in the future.
The potential inflows of large direct investments from China and other Asian countries can also be a very important component to boost our economic growth.
What we do with our advantages and opportunities will determine if we are a successful nation or not. I personally think Malaysia's government today is getting some of our priorities right in theory with these transformation programmes, I hope we put these plans into good practice.
Some direct or portfolio investors may still be sceptical but the increasing contributions by these programmes to Malaysia's economic growth are quite clear to me. In addition, good governance will attract more talents and investors to our shores, and will likely give an added boost to Malaysia's capital and equity markets.
I, for one, am certainly more optimistic and hopeful than before.
Teoh Kok Lin
Publication : The Star
Publication date : 28 October 2010
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