Wednesday, 16 March 2011 (TIOS Daily Digest) -
Malaysia’s transformation is characterized by government and economic transformation programs laid out by the Najib administration in an effort to achieve high-income nation status while fostering a sustainable and inclusive growth.
The government defines the high-income threshold at per capita income of about RM48,000 or USD$15,000 by 2020, based on the World Bank’s definition of high-income. To reach its targets Malaysia will need to achieve an annual real growth rate of about 6 percent in the next 10 years.
This is the first time a reform effort of this scope has ever been undertaken in Malaysia and the program provides strong focus on a few key growth engines selected based on economic and financial analysis. The 12 National Key Economic Areas (NKEAs) are expected to make substantial contributions to Malaysia’s economic performance and they are receiving prioritized public investment and policy support.
Under the 12 NKEAs the government has identified 131-entry point projects (EPPs) expected to have concrete impacts on the growth of the economy. The EPPs and other business opportunities identified under each NKEA are anchored to how much they contribute to Growth National Income (GNI). Companies, local or foreign, whose projects qualify under any of the NKEAs are granted direct facilitation from some of the governments most important stakeholders including the Prime Minister, Minister of International Trade and Industry and the Malaysian Investment Development Authority.
These projects are not government sponsored initiatives and 92 percent of investment across the various projects is expected to come from the private sector and have included major investments from companies such as Royal Dutch Shell, General Electric, Schlumberger, ExxonMobil as well as a host of domestic players.
In May 2010, a thousand-person workshop was run to help identify the NKEAs and the government has continued to foster private sector engagement with high levels of transparency and regular announcements of projects. A number of labs were run in June 2010 with 500 public and private sector leaders coming together in contribution to the development of what eventually was to become the NKEAs. Open days were conducted in the country’s biggest cities, such as Kuala Lumpur, Sabah and Sarawak and 5,500 visitors from the business community, multinational corporations and the media attended providing further input.
NKEA: Greater Kuala Lumpur/Klang Valley
Key EPPs include a new high-speed rail system and internal and external immigration programs to promote increased headquarter relocation for big companies. MMC and Gamuda has entered into a joint venture to developed the rail system.
NKEA: Oil, Gas and Energy
Key EPPs include projects that contribute to sustaining oil and gas production, enhancing downstream activities and positioning Malaysia as an Asian hub for oil field services. ExxonMobil, Royal Dutch Shell and a local consortium led by Dialog Group have invested heavily in NKEA Oil, Gas and Energy projects.
NKEA: Financial Services
Key EPPs are targeted at companies and projects that engage in developing new subsectors for growth, revitalizing capital markets and tapping external markets for growth.
NKEA: Wholesale and Retail
Key EPPs include company initiatives to grow large retail businesses, such as those undertaken by Carrefour and Tesco and modernizing SME retailers and boosting retail expenditure of tourists.
NKEA: Palm Oil
Key EPPs include projects that bolster upstream productivity and sustainability and grow the strength and volume of the downstream sector.
Key EPPs include bolstering Malaysia’s luxury market, such as the CMY Capital project to introduce the St Regis hotel and YTL Hotels’ investment in refurbishing existing hotels as well as projects targeted at expanding Malaysia’s nature tourism offerings.
NKEA: Electronics and Electrical
Key EPPs include projects in solar, such as that undertaken by UOA Solar, light emitting diodes, such as that undertaken by General Electric and industrial electronics.
NKEA: Business Services
Key EPPs include projects that contribute to accelerating growth in existing business service sectors and developing new areas of expertise.
NKEA: Communication Content and Infrastructure
Key EPPs include improving Malaysia’s domestic capability and advancing knowledge based industry in e-learning, e-healthcare and e-government. For example, Telekom Malaysia (TM), PT XL Axiata and PT Mora Telematika have invested heavily in a new cable system.
Key EPPs include projects aimed at increasing educational capacity, concentration and specialization initiatives and creating an education hub in Malaysia, such as the development of Asia E-University.
Key EPPs include tapping premium markets, ensuring food security and increasing participation in the regional food supply chain.
Key EPPs include initiatives that can make a difference immediately and opportunities in generic drugs and expanding the health travel industry.
Written by Joshua Brown