The 9th MALAYSIA PLAN - A 5 YEAR PLAN

Prime Minister Datuk Seri Abdullah Ahmad Badawi unveiling the Ninth Malaysia Plan (9MP) which will steer the National Mission towards realising Malaysia's vision of becoming a developed nation by 2020. Pix: Rosli AwangThrust 1: Moving the Economic Up the Value Chain

KUALA LUMPUR, March 31, 2007 -- The Prime Minister Friday unveiled the Ninth Malaysia Plan (9MP) which will steer the National Mission towards realising Malaysia's vision of becoming a developed nation by 2020.


Datuk Seri Abdullah Ahmad Badawi said the 9MP is consistent with the ambition to build a country with an advanced economy, balanced social development and a population which is united, cultured, honourable, skilled, progressive and farsighted.

"We want progress that is enjoyed by all, regardless of religion or ethnicity.

"We want to build a progressive and developed civilisation that echoes the glorious age of Islam and other civilisations, in line with the concept of Islam Hadhari," he said in his speech in Parliament when tabling the 9MP themed 'Building a civilisation to elevate the nation's dignity.'

As a guide for the rest of the journey, the government has drafted and will implement the National Mission, a framework for the country's development agenda which outlines the key steps to be taken in the next 15 years.

In his speech, the Prime Minister outlined the five thrusts of the National Mission which focused on key priority areas which would enable the nation to achieve Vision 2020. They are:

* To increase the value add of the national economy;
* To raise the country's capacity for knowledge, creativity and innovation and nurture "first class mentality";
* To address persistent socio-economic inequalities constructively and productively;
* To improve the standard and sustainability of the quality of life; and
* To strengthen the institutional and implementation capacity of the country.

The first thrust is to increase the value add of existing economic sectors as well as generate new knowledge-intensive activities and employment in information communication and technology (ICT), biotechnology, nanotechnology and services.

Under this strategy, the government will also build a conducive environment for the private sector to take a leading role in the country's development.

Under the second thrust, the government aims to undertake comprehensive improvement of the country's education system, from pre-school to tertiary and vocational institutions, besides fostering a more enabling environment to encourage Research and Development (R&D).

At the same time, heavier emphasis will be placed on the shaping of values to create more well-rounded individuals.

The third thrust aims to eradicate poverty, generating more balanced growth and ensuring the benefits of growth are enjoyed by the people in a fair and just manner.

The fourth thrust stresses on the provision for basic needs such as water, energy, housing, transportation and other amenities but more emphasis would be placed in addressing issues related to maintenance, upgrading and efficient usage of resources.

In the fifth and final thrust, the government is committed to improve the public services delivery system at various levels, and will also address issues related to corruption and integrity in the public sector and among the general public.

Elaborating on the first thrust, the Prime Minister said the government will continue to promote the transition to higher value added activities in three main sectors, manufacturing, services and agriculture.

He said new sources of growth will be identified and promoted to generate additional income and to develop new sources of economic growth.

With globalisation, "not only does the domestic macroeconomic structure and environment need to be strengthened, elements of the micro economy including the respective economic sectors and local corporations also need to be made more resilient," said Abdullah.

Among others, the government will prepare specific incentives to attract investments, including high quality Foreign Direct Investment (FDI) for manufacturing sector activities that are being promoted. In addition, small and medium enterprises (SMEs) with high innovation capabilities will be promoted to become part of the global supply chain.

The Prime Minister said some of the projects to be implemented to enhance the manufacturing sector include the expansion of Kulim High Technology Park, the establishment of Sarawak Technology Park and Perak Technology Park and the development of 20 industrial and SME parks throughout the country.

To enhance the manufacturing sector, the government will develop several industrial clusters, which include electrical and electronics clusters (E&E) clusters in Penang and Kulim and High Technology Park and petrochemical clusters in Pahang and Terengganu.

To improve access to sources of finance, the government will create several funds such as the Strategic Investment Fund, the Automotive Development Fund, the Industrial Restructuring Fund, the Automation Fund and specific funds for biotechnology, halal products and handicraft.
Abdullah said the government will establish the Halal Industry Development Board to develop the industry in a holistic and orderly manner.

The South Economic Region, he said, will be developed as a dynamic regional services hub as part of efforts to expand the sector from the Klang Valley to other locations.
The government will set up the Export Services Fund and SMEs Export Services Fund to enhance the services sector's access to financing.

On tourism, Abdullah said the government will also develop Malaysia as a regional centre for health tourism in both traditional and modern health treatments through the creation of a brand for Malaysian health services, which will be known as "Health Malaysia."

The Prime Minister said, the government will double efforts to develop Malaysia as a regional centre for excellence in the provision of tertiary level education through strategic marketing efforts and the branding of educational products.

He said the agriculture sector will be given a new lease of life in order to become the third engine of economic growth through the 'New Agriculture' programmes, which will focus on enhancing the value chain, cultivating high value added agricultural activities and large scale commercial farming, utilising ICT as well as exploiting the full potential of biotechnology.

The New Agriculture programmes which also encourage participation from the private sector, graduates and agriculture entrepreneurs, are aimed at making Malaysia become a net export of food by 2010.

The Prime Minister said, to realise these objectives, the Prime Minister said, the government had allocated RM11.4 billion for the agriculture sector, a 70 per cent increase over the allocation in the Eighth Malaysia Plan (8MP).

"There are no limits to the upside potential of this sector if it is managed effectively. The agriculture sector needs to be viewed through a new lens, infused with fresh conviction, developed with a new spirit - a new agenda," said Abdullah.

Other sectors to be focused in the first thrust of the National Mission include generating new sources of wealth through ICT and biotechnology and creation of new jobs to keep unemployment low and to ensure that graduates and skilled workers are able to secure employment suitable to their qualifications.

At the same time, focus will also be given to efforts to make the private sector a driver of economic growth by promoting the Private Financing Initiative (PFI) as a new approach under the privatisation programme; and to expand the market for Malaysian products and services which will help strengthen its position in traditional markets and by exploring new markets.

On the second thrust, the Prime Minister said the development of quality human capital will be intensified, which will be a holistic approach and with emphasis on the development of knowledge, skills, intellectual capital in science, technology and entrepreneurship, while developing a culture that is progressive, coupled with high moral and ethical values.

"This is what is meant by human capital with first class mentality," said the Prime Minister, outlining three main strategies to be adopted to achieve the objective.

He said the three strategies are firstly, increasing the capacity for and the mastery of knowledge; secondly, strengthening the nation's capabilities in science, R&D and innovation; and thirdly, nurturing a cultured society that possesses strong moral values.

To increase the capacity for knowledge, Abdullah said the government will enhance rural school facilities, especially in Sabah and Sarawak.

At tertiary level, the Universiti Darul Iman in Terengganu and Universiti Darul Naim in Kelantan and a number of polytechnics will be constructed.

The Prime Minister said as part of efforts to make national schools the "School of Choice", all existing national schools will be made "Smart Schools".

He said to this end, RM284 million will be allocated for the Smart School Programme and RM1.51 billion for the Computerisation of Schools Programme.

Under the third thrust, Abdullah said, in addressing socio-economic disparities, the government will fine tune and streamline strategies, taking into account the open nature of the global economy and the lessons learnt.

He said the government has outlined three principles to address the socio-economic disparities, and they are:

* Eradicating poverty and ensuring no one is left out of the development process;
* Generating balanced development especially in under-developed areas and creating more opportunities for direct participation in the country's economic development; and
* Ensuring that all Malaysians benefit from the economic growth fairly and equitably.

Abdullah said to this end, the government is committed to achieving the target of 30 per cent bumiputera equity share ownership by 2020; assisting the development of customary land in Sabah and Sarawak; and raising the share of equity ownership for ethnic Indians to 3.0 per cent by 2020.

Through the fourth thrust of the National Mission, the government is committed towards ensuring that all citizens benefit from the development programmes and share the fruits of success.

"Such development will be more meaningful if it is equitably shared to improve the quality of life of the citizens," said the Prime Minister.

To achieve the objective of the fourth thrust, focus will be made towards meeting housing needs and improving urban services; improving healthcare services with the construction of new hospitals and implementing a human resource development programme in healthcare.

Others include improving transportation facilities and infrastructure, such as the establishment of a National Commission to regulate the overall public transportation system, with a specific commission to be set up for the Klang Valley.

Abdullah said the government will also implement a number of major projects across the country, including the Penang Monorail and the Eastern Dispersal Link in Johor.

To improve the quality of life of the people, the government will enhance water supply systems and overcome floods.

It will also focus on programmes to ensure national security and public order.

The fifth thrust of the National Mission outlines the government's efforts to improve the delivery system particularly amongst government-linked companies (GLCs).

In addition, human capital development amongst the civil service will also be intensified through education and training.

The Prime Minister said to improve the delivery system in the public sector, the government will review and amend laws and regulations which impede development.

He said, a Public-Private Sector Action Committee will be formed to recommend needed amendments to laws and regulations.

Abdullah also proposed the establishment of two National Implementation Action Bodies; one to monitor selected high impact projects from the 9MP and the second to monitor programmes related to the formation of a new generation of the Bumiputera Commercial and Industrial Community (BCIC2).

Before concluding his speech, which lasted for about one hour and 40 minutes, the Prime Minister stressed on the need for full commitment and concerted efforts from all parties to ensure the successful implementation of the Ninth Malaysia Plan.

The Prime Minister said: "Each one of us plays an important role in ensuring success of our nation and our race.

"The private sector must take the lead in generating the economic growth while the public sector enables economic growth and is the provider for socio-economic facilities. Civil society must be a partner in development.

"If we want to realise our aspiration to become a developed nation, every citizen has to show commitment and willingness to work hard, improving our self-worth and embrace life long learning."

Malaysia Massive US$ 51 Billion Northern Development Plan NCER

Malaysia is a country on the move. From a country dependent on agriculture and primary commodities in the sixties, Malaysia has today become an export-driven economy spurred on by high technology, knowledge-based and capital-intensive industries. Continuous efforts have been pursuit to enhance the services sector, accelerate value-added of the manufacturing sector as well as boost the agriculture and agro-based sector as the third engine of growth. New sources of growth continue to be promoted and developed such as biotechnology, information and communications technology, halal products and Islamic finance.

A major factor that has attracted investors to Malaysia is the government's commitment to maintain a business environment that provides companies with the opportunities for growth and profits. Foreign investors in Malaysia's can hold 100% equity for all investments in new projects. Malaysia continues to enjoy healthy surplus in the external trade, low unemployment as well as strong international reserves and high national savings.

Today, Malaysia can boast of having one of the most well-developed infrastructure among the newly industrialising countries of Asia. Indeed Malaysia is developing as a knowledge-based economy, driven by human capital, innovation and ideas .

Prime Minister Abdullah Ahmad Badawi launched a 51-billion-US-dollar development masterplan to spur economic growth and reduce poverty in northern Peninsula Malaysia.

The Northern Corridor Economic Region (NCER) is a government initiative to boost the economy and raise income levels in the northern states of Perlis, Kedah, Penang and Perak over 18 years.

Projects and programmes to enhance human capital, infrastructure, and competitiveness in the region will involve about 177 billion ringgit public and private sector investments from 2007 to 2025,' a government statement said.

'The focus will be to turn the NCER into a modern food zone of Malaysia, increase the value-add in the manufacturing sector and strengthen tourism,' it said.

Of the 177 billion ringgit, one-third will be spent by the government, with the balance to be undertaken through private finance initiatives and private sector investments, the statement said.

'It will be led and driven by the private sector and market imperatives,' it said, adding that the masterplan aims to create half a million jobs by 2012 and one million by 2018.

The government added that financial incentives will be given to promote agricultural transformation through economies of scale.

The masterplan includes key benchmarks, with the agriculture sector expected to increase its exports to 48 billion ringgit by 2012 from 32 billion ringgit in 2005.

For manufacturing, investments are projected to jump to 24.3 billion ringgit by 2012 from 16.5 billion ringgit in 2006, while the tourism sector aims to raise average spending per visitor to 3,034 ringgit by 2012 from 1,890 ringgit currently.

Government-linked conglomerate Sime Darby, which drew up the masterplan for the Northern Corridor, will act as project manager and investor.

The launch of the NCER comes months after the prime minister kicked off the Iskandar Development Region in southern Johor state.

Abdullah, also finance minister, has said Malaysia aims to attract 50 billion ringgit to the IDR in the next five years as part of an initiative to turn the area, 2.5 times the size of neighbouring Singapore, into a new Asian metropolis.

"We have launched the Northern Corridor, while the Eastern Corridor as well as the Sabah and Sarawak Corridors, when they are launched, we feel that the Japanese has a very constructive role to play and Malaysia has benefited as a result of economic relations with Japan," he said.

Menjelang Pelancaran ECER - Rapatkan Jurang Timur Dan Barat

Sekian lama Banjaran Titiwangsa menjadi tembok pemisah yang mewujudkan ketidakseimbangan pembangunan antara wilayah pantai Barat dan Timur Semenanjung Malaysia.Minggu depan, tembok penghalang itu bakal "dilenyapkan" apabila Datuk Seri Abdullah Ahmad Badawi dijadual melancarkan pelan pembangunan Wilayah Ekonomi Pantai Timur (ECER) di Kuala Terengganu 29 Oktober ini.

ECER bakal melengkapkan rencana pembangunan bagi mengimbangi seluruh wilayah di Semenanjung selepas pelancaran Wilayah Ekonomi Koridor Utara (NCER) di Utara dan Wilayah Pembangunan Iskandar (IDR) di Selatan.

Nota:- Wilayah Ekonomi Koridor Utara (NCER) yang menjanjikan pelaburan sebanyak RM177 bilion dalam tempoh 18 tahun antara 2007 dan 2025 di Kedah, Perlis, Pulau Pinang dan Perak.

Pelan Pembangunan Koridor Ekonomi Pantai Timur (ECER), sebuah rancangan pembangunan ekonomi mega, dijangka mencetuskan kegiatan ekonomi yang rancak dan memberi faedah sampingan yang besar di Pahang, Terengganu, Kelantan dan sebahagian daripada Johor dimana sejumlah RM112 bilion akan dilaburkan dalam Koridor Pantai Timur, dengan kira-kira 40 peratus daripadanya akan dibelanjakan bagi hubungan pengangkutan utama dan kemudahan-kemudahan prasarana penting yang lain.

Pelan induk yang dirangka oleh syarikat multinasional negara, Petronas, dilihat sebagai pembasmi kemiskinan dan pemangkin kemajuan bagi negeri Kelantan, Terengganu, Pahang dan kawasan Mersing di Johor.

Presiden dan Ketua Pegawai Eksekutif Petronas Tan Sri Mohd Hassan Marican berkata tumpuan program ialah mewujudkan jalinan perhubungan dan pengangkutan seperti pembinaan fasa ketiga Lebuh Raya Pantai Timur dari Kuala Terengganu dan Kota Bharu, fasa empat Lebuh Raya itu yang menghubungkan Kuantan ke Johor Bharu dan jalan raya menghubungkan Temerloh ke Kuala Pilah.

Walaupun negeri-negeri dalam ECER meliputi 51 peratus keluasan Semenanjung Malaysia, namun pendapatan purata isi rumah adalah yang paling rendah di Malaysia. Terengganu mencatatkan kemiskinan tertinggi iaitu 15.4 peratus, diikuti Kelantan 10.6 peratus dan Pahang 4.9 peratus.

Di bawah pelan induk ECER, sejumlah 561,000 pekerjaan akan diwujudkan menjelang 2020 dengan pelancongan dan pertanian menjadi teras di samping industri petroleum dan gas yang akan dterus dikembangkan oleh Petronas.

Antara 227 projek yang dilaksanakan di bawah ECER, sektor pembangunan yang diyakini dapat mengembangkan ekonomi masyarakat Melayu ialah penggunaan pintar ke atas rizab Melayu di Pantai Timur, dengan keluasan 40 peratus daripada tanah dalam ECER.

Inisiatif ECER adalah sejajar dengan hasrat yang dinyatakan Perdana Menteri iaitu untuk membasmi kemiskinan dan membangunkan modal insan, tegas Petronas.

Ia bertujuan menambah pendapatan hampir empat juta orang, yang mewakili 15 peratus daripada keseluruhan penduduk negara ini, bakal mewujudkan 560,000 pekerjaan baru dan menarik pelaburan berjumlah RM112 bilion dalam tempoh 12 tahun akan datang.

Pelan induk yang "memberi tumpuan kepada rakyat" dan dikendalikan Petronas ini melibatkan 227 projek dalam sektor pengangkutan, prasarana, pelancongan, pendidikan, pembuatan, minyak dan gas serta pertanian.

ECER juga bertujuan menangani ketidak seimbangan pembangunan antara pantai timur dan barat Semenanjung Malaysia serta perbezaan pendapatan antara kawasan bandar dan luar bandar dalam wilayah berkenaan.

All eyes on eastern corridor

WITH the Iskandar Development Region (formerly the South Johor Economic Region) kicking off rather successfully, the spotlight is now on the Petroliam Nasional Bhd (Petronas)-led Eastern Corridor Economic Region.

The eastern corridor development blueprint, which is expected to be out this quarter at the earliest, is said to be focused on the socio-economic and industrial development of the region involving Kelantan, Terengganu and Pahang.

The development of the eastern corridor, together with the northern corridor spearheaded by Sime Darby Bhd and southern corridor (Khazanah Nasional Bhd) are part of the Ninth Malaysia Plan (9MP), which has the objective of spreading economic development throughout the country.

Billions are expected to be poured into the region – RM22.3bil from Government coffers under the 9MP (which is a big 56% jump from the 8MP) and about RM40bil from Petronas' investments in O&G projects there.

"We expect the modus operandi of the eastern corridor development to be similar to the Iskandar Development Region in terms of the setting up of special bodies and institutions akin to the Iskandar Regional Development Authority and South Johor Investment Corp.

"This is to ensure smooth implementation, active engagements and balanced representation among the private and public sectors, Petronas (as the lead agency in the project), the federal and State Governments,” Aseambankers said.

So, what's new that could emerge from the Eastern Corridor Economic Region development?

"Setting up a shipyard in Terengganu’s backyard could also lead to greater economic activities, considering that there is a massive need for offshore marine vessels to support the O&G activities there.

"We also foresee further expansion at existing seaports and the centralised tankage facilities in Kertih,” Aseambankers said.

Kelantan offers ample opportunities in terms of new infrastructure requirements to support the increasing activities in the Malaysia-Thailand Joint Development Area and potential O&G discoveries offshore Kelantan.

"We favour the idea of setting up O&G infrastructure (supply base and petrochemical site) in Kelantan similar to that of Terengganu, as it is strategically located and could potentially become a regional base for Malaysia-Thailand-Vietnam O&G activities,” Aseambankers said.

It added that a new cracker plant could be built in the region as well. The development of the eastern corridor as the country's petrochemical hub is now well underway.

"The challenge would be to spearhead its growth into a leading petrochemical and O&G hub in the region by catalysing an inflow of investments in related industrial, commercial and infrastructure development,” he said.

He believes further expansion and deepening of the petrochemical hub will be the eastern corridor's core economic foundation and strategy for growth and industrial development.

Yeah expects the potential size of the investments, together with Petronas' ongoing capital investment in O&G exploration, development and production activities to rival those in the other corridors.

"Given Petronas' strong profits in recent years, an assumed 10% to 20% re-investment rate of after tax profits would result in an internal financing capacity of RM5bil to RM10bil annually,” he said.

Malaysia 2008 Outlook

Malaysia's economy is 64.5 percent free, according to 2008 assessment, which makes it the world's 51st freest economy. Its overall score is essentially unchanged from last year, reflecting worsened scores in three of the 10 economic freedoms.

Malaysia is ranked 8th freest out of 30 countries in the Asia–Pacific region, and its overall score is higher than the regional average.

Malaysia scores above average in eight of the 10 areas measured and scores highest in government size, freedom from corruption, and labor freedom. The labor sector is highly flexible, with simple employment procedures and no minimum wage.

The top income and corporate tax rates are moderate, and overall tax revenue is relatively low as a percentage of GDP. Inflation is minor, and direct subsidies do not widely distort market prices. The tariff rate is fairly low, and the government has been working to eliminate some non-tariff barriers.

Malaysia suffers from weak investment freedom and financial freedom. Despite efforts to liberalize procedures, impediments include limited voting shares in companies, enforced hiring of ethnic Malays, and case-by-case government pre-investment approval. The financial sector is fairly well developed but subject to government interference and some restrictions on foreign involvement.

Background:
Malaysia is a constitutional monarchy, and politics is dominated by the ruling United Malays National Organization. Prime Minister Abdullah Ahmad Badawi has pledged to achieve developed-nation status by 2020. A leading exporter of electronics and information technology products, Malaysia has industries that range from agricultural goods to automobiles. Government ownership in certain key sectors, such as banking and airlines, remains high. The government recently relaxed capital controls and foreign investment restrictions in a bid to attract foreign capital. It also indicated a willingness to ease politically formidable affirmative action policies that have discouraged foreign investment and economic development.

Business Freedom - 69%
The overall freedom to start, operate, and close a business is somewhat limited by Malaysia's regulatory environment. Starting a business takes an average of 24 days, compared to the world average of 43 days. Obtaining a business licenses takes more than the world average of 19 procedures and 234 days. Bankruptcy proceedings are relatively straightforward.

Trade Freedom - 76.2%
Malaysia's weighted average tariff rate was 4.4 percent in 2005. Liberalization has progressed, but import restrictions, high service market access barriers, high tariffs, import and export taxes, non-automatic import licensing for import-sensitive industries, non-transparent regulations and standards, non-transparent government procurement, export subsidies, and weak protection of intellectual property rights still add to the cost of trade. An additional 15 percentage points is deducted from Malaysia's trade freedom score to account for non-tariff barriers.

Fiscal Freedom - 82.2%
Malaysia has moderate tax rates. The top individual income tax rate is 28 percent, and the corporate tax rate has been reduced to 27 percent in 2007 and 26 percent in 2008. Other taxes include a capital gains tax and a vehicle tax. The real property gains tax has been abolished. In the most recent year, overall tax revenue as a percentage of GDP was 16.3 percent.

Freedom from Government - 80.8%
Total government expenditures, including consumption and transfer payments, are moderate. In the most recent year, government spending equaled 25.3 percent of GDP. The retains considerable industrial and commercial holdings.

Monetary Freedom - 78.6%
Inflation is moderate, averaging 3.3 percent between 2004 and 2006. Relatively unstable prices explain most of the monetary freedom score. Most prices are determined in the market, but the government influences certain prices through state-owned enterprises; controls the prices of petroleum products, steel, cement, wheat flour, sugar, milk, bread, and chicken meat; and usually sets ceiling prices for a list of essential foods during major holidays. An additional 10 percentage points is deducted from Malaysia's monetary freedom score to account for policies that distort domestic prices.

Investment Freedom - 40%
Rules have been eased, but foreign investors still face such restrictions as limited voting shares, prior approval, and mandatory hiring of ethnic Malays. Investment is banned in the news media, lotteries, or security paper. Foreigners may own 100 percent of certain kinds of new companies, but most existing corporate equity requires that a 30 percent stake be Malay-owned, and foreign ownership is capped in most sectors. Certain kinds of investment are screened, though commercial operations can begin before approval. Residents and non-residents may hold foreign exchange accounts, subject in many cases to government approval. Nearly all capital transactions are prohibited, are subject to restrictions, or require government approval.

Financial Freedom - 40%
Nine of the 32 commercial banks as of September 2006 were domestically owned, and 13 were foreign-owned. Ten Islamic banks account for over 10 percent of assets. The government owns a majority of the two largest local commercial banks and is active in creating larger "anchor banks" to compete internationally. Banks must lend to certain groups like low-cost housing projects. There are several offshore banks, insurance companies, and other financial institutions. Non-performing loans remain a problem. The 41 insurance companies are subject to (among other limits) restrictions on expatriate employment and foreign equity. Foreigners may trade in securities and derivatives, but participation in stock brokering and trust management is restricted.

Property Rights - 50%
Private property is protected, but the judiciary is subject to political influence. Corporate lawsuits take over a year to file, and many contracts include a mandatory arbitration clause. The International Intellectual Property Association estimates piracy-related 2004 industry losses in Malaysia at $188 million. The manufacture and sale of counterfeit products and medicines have led to serious losses for producers of consumer products and pharmaceuticals.

Freedom from Corruption - 50%
Corruption is perceived as present. Malaysia ranks 44th out of 163 countries in Transparency International's Corruption Perceptions Index for 2006. Bribery is a criminal act, but perceptions of widespread corruption and "crony capitalism" persist.

Labor Freedom - 78.7%
Relatively flexible employment regulations could be further improved to enhance employment opportunities and productivity growth. The non-salary cost of employing a worker is low, but dismissing a redundant employee can be difficult and costly. There is no national minimum wage, and restrictions on the number of work hours are flexible.

Malaysia
Rank: 51
Regional Rank: 8 of 30

The Government of Malaysia has on the other hand refused to face up to economic realities for political considerations as the next General Elections is expected within the next 3 months. It has earlier been forecast that the Malaysian economy will grow between 6.0 to 6.5% for 2008. However, in the light of the rising oil prices, the global liquidity crisis and consequently the global economic slowdown, the Second Finance Minister has as recent as 19 December continued to insist that the country will be able to meet its growth targets

KUALA LUMPUR, Dec 28 (Bernama) -- The outlook for the Malaysian economy in 2008 is expected to be favourable with growth of between 6.0 and 6.5 percent despite adverse external factors as brisk activities from new growth corridors coupled with belt-tightening measures, high commodity prices, stable interest rates and inflation provide a crucial boost to the economy.

Gross domestic product (GDP) grew by 6.7 percent in the third quarter this year, its highest in three years, after posting 5.8 percent in the second quarter and 5.5 percent in the first quarter. For the whole year of 2007, the rate is expected to be 6.0 percent.

The positive performance in the third quarter was supported by the robust growth of the services sector of 10.5 percent, followed by construction (4.7 percent), manufacturing (3.4 percent), mining (2.3 percent) and agriculture (0.6 percent).

The trade account recorded a surplus of RM28.2 billion in the third quarter from RM22.6 billion previously.

The ringgit was also strong against the US dollar with the exchange rate in the first 11 months of this year more than 6.0 percent higher than the average for 2006 as a whole. This has created, through stable import prices, a stable investment climate for enterprises.

The local unit has year-to-date rose 4.9 percent and almost 12 percent since it was unpegged from the greenback in July 2005.

Prime Minister Datuk Seri Abdullah Ahmad Badawi had said the government was prepared to face any external negative effects generated by the global economic environment.

Abdullah, who is also finance minister, said the current economic situation in the country was improving, backed by ample reserves and strong fundamentals.

He also said Bank Negara Malaysia (BNM) has developed a system that enabled it to gauge "what is happening now and before" and analyse any kind of developments in countries with which Malaysia has strong investment and trade relations, such as the US, Japan, Singapore and Hong Kong.

BNM governor, Tan Sri Dr Zeti Akhtar Aziz, had said the country's growth momentum was expected to be sustained in the near term.

However, she said, there were greater uncertainties in the medium term such as a pronounced slowdown in the US economy which would make the global financial market volatile and the continued high energy prices.

"Overall, potential exists for the domestic economy to record steady growth. Malaysia's track record showed that each time it faces a challenging time, the country has the capacity and flexibility to respond and produce the desired outcome," she said.

Total investment will grow by 8.4 percent, accelerating slightly from the 2006 rate of 7.9 percent.

Meanwhile, Hong Kong-based Economist Intelligent Unit said Malaysian domestic demand would pick up to ensure that growth remained robust with private consumption to make the largest contribution to GDP this year followed by private investment.

Private consumption is set to grow by 7.3 percent this year, slightly higher than 2006's 7.1 percent while government consumption is expected to grow by 10.8 percent, a rate approximately twice the 5.0 percent posted in 2006.

Private investment is predicted to increase by 7.5 percent this year from 7.0 percent last year while public investment is expected to increase by 9.3 percent from 8.9 percent.

EIU's director of corporate network, Justin Wood, said the domestic demand would be contributed by government spending, particularly due to civil service pay increase while the private sector would invest in plants and machinery.

Demand from the public sector would be driven by infrastructure projects such as the Iskandar Development Region (IDR).

IDR, in southern Johor, is one of the three growth corridors outlined in the Ninth Malaysia Plan, the government's RM200 billion development blueprint which will run through 2010.

The IDR is the first regional development strategy that was launched by the prime minister in November last year to boost the domestic economy, to sustain growth and to shield it from any external shocks.

The other two corridors are the Northern Corridor Economic Region and the East Coast Economic Region which were launched in July and October 2007 respectively.

Meanwhile, in the event of the surge in global crude oil prices, Dr Yeah Kim Leng, group chief economist of RAM Holdings Bhd, said the economy would be spared the direct impact due to massive government subsidies, but cautions that there could be a need for belt-tighthening measures.

Crude oil prices currently hover around US$93 (US$1=RM3.33) per barrel.

While the government should continue to provide subsidies, Yeah nevertheless said that "it may not be sufficient for the government to increase subsidies further as it could exert pressure on the country's financial state."

Subsidies cost the government RM4.788 billion last year and are expected to increase up to RM8.959 billion this year.

The government has promised that the low-income group would not be affected if the petrol and gas prices were reviewed.

Second Finance Minister, Tan Sri Nor Mohamed Yakcop, had said the rising oil prices would help and hurt the economy.

"As a net exporter of crude oil, the country stands to gain RM250 million for every US$1 rise in prices. However, at the same time, the government will have to pay higher subsidies for retail fuel. "But the net effect is positive," he said.

Higher oil prices could translate into higher inflation but the country is confident of maintaining it at between 2.0 and 2.5 percent this year.

The consumer price index (CPI), the indicator for inflation, has increased 2.3 percent year-on-year in November, the highest in nine months.

THIS year, we believe the Malaysian economy will remain strong on the back of the expected significant investment growth and large government projects lined up to boost infrastructure spending within the three economic corridors of development. The country's growth is expected to remain robust between a moderate range of 6.0% to 6.5% in 2008. The Overnight Policy Rate (OPR) is expected to finish the year up 20 to 25 bps to between 3.7% and 3.75% barring any slowdown in growth; while the inflation is expected to rise to a range of 2.5%-3.0%. We also think that the Fed may cut the funds rate by a further 25 bps this year to 4% to avoid a recession.

On the fixed-income segment, we expect the Government’s financing need to add up to about RM44.3bil; hence we believe the Government will issue a minimum of RM45bil worth of government securities (both MGS and GII) in 2008. Meanwhile, the MGS curve is expected to get steeper in 2008 as yields in the longer tenured papers continue to rise. We expect the market to trade the bonds cautiously with bearish bias in response to the inflationary pressures and the unsettled credit issues in the US.

Elsewhere, issuance in the private debt securities (PDS) market is also expected to grow next year in facilitating bigger new corporate structures in the local market and the Private Funding Initiative (PFI). In the near term, continued speculation on further strengthening of the MYR currency leads us to expect a continual foreign interest in the local bond market.

Global Outlook (US)

The first half of 2008 is expected to remain murky, until the actual depth of losses and the full impact of the credit crunch is realised although we expect further knock-on contagion effects to materialise no less from further mortgage resets and rising credit card defaults.

The focus of the second half will be on more control and fixing of the damage in the housing and credit market and limiting the effects of the same. Rising concerns over surging oil prices and the possibility of further deterioration of the US housing slump spreading to the wider economy and affecting consumer spending and business investment contributes further to a possible recession in the US.

The credit crunch did not hit only the mortgage industry but has also led many banks and financial institutions to tighten their lending requirements besides reducing their lending ability as losses hit their balance sheets. This has resulted in heightened risk aversions among investors and widening of interest rate spreads in both short and long-term rates; despite several cuts in the Fed fund rates.

Thus far, the forecast losses arising from the US subprime-related losses total about US$300bil and many financial institutions have warned that there will be more to come next year. However, the Fed was prompt in acknowledging the issues and reacted to it by lowering the Fed funds rate by 50 bps in September, 25 bps in October and another 25 bps during the recent FOMC meeting in December; leaving the rate to stand at 4.25% now.

The Fed has also been gradually injecting liquidity into the money market to contain the financial market turmoil and to avoid the economy from being thrown into an irrecoverable tailspin. In addition, the US Fed also agreed to freeze interest rates on subprime mortgages for the next five years although the effectiveness of this remains uncertain.

The Fed also decided to add liquidity to money markets in collaboration with some of the main central banks in the world such as the BOC, ECB, BOE and SNB with the objective of alleviating the credit crunch although whether this would help alleviate the underlying weakness in the economy remains questionable.

High crude oil prices will continue to threaten the economy next year, carrying forward the spillover effect from 2007. A weaker US currency coupled with market speculation resulted in crude oil rising to an all-time high of US$99.25 per barrel. The current situation however is one that is demand-led and the surge in oil prices is likely to reverse in the event of a slowdown in the global economy.

This situation is underlined by OPEC’s decision to maintain the crude oil production at 31.5 million barrel per day until early 2008 sufficient to meet the expected demand. This has calmed the raging seas not only in US but across the globe as well. However, the impact of market speculation on oil prices and as a hedge to a weaker USD cannot be underestimated.

As the economy continues to be burdened by the dollar depreciation, high oil prices and inflationary pressures, we believe that the Fed will not be complacent at the current funds rate and there may be more rate cuts next year. In the latest FOMC meeting in December, the Fed dropped the language from its previous statement that risks of slower growth and faster inflation were “roughly balanced”; adding that they are ready for further cuts if the housing slump and the credit crunch continue to deteriorate. Given the current release of weaker data and the strong hint by the Fed, we opine that there might be another rate cut in the first half of 2008 which will bring the Fed Funds Rate to 4.00%. However, the next course of action will be very much dependent on the economic data.

As such, we think the US Treasury yield curve will steepen further during the first half. In addition, the 10-2 year US Treasury benchmark spreads has been gradually widening, as the Fed continues its easing policies.

Asian Market

Despite increased risks following the financial turbulence/credit fears in the US economy coupled with surging oil prices, the global economy remains sustained by the continued strength in the emerging economies in the Asian region. Whether these Asian economies can fully support a prolonged and sustained weakness in developed markets' economies will depend on the rate of growth of internal consumption and spending.

Spreads between Asian high-grade bonds and US high-grade bonds had widened tremendously ever since the US market downturn and this trend is expected to prevail through the first half of 2008; as investors patiently anticipates for further signal on the development in the US market.

The outlook of Asian credit remains vague in 2008 following one of the most challenging years experienced by investors in this decade. Given the slowdown in the US economy (with more possible rate cuts in 2008), it should be a stepping stone for Asia to grow moderately while foreign investors continue to invest in Asia due to interest in the widened spreads.

As such, our recommendation for 2008 remains to be defensive, at least until the ongoing impact of the liquidity crunch becomes more visible.

Arabs Pumping Billions In To IDR, Malaysia

The Southern Economic Corridor - the first of four economic corridors Middle East investors are set to make their biggest investments in Malaysia so far in the Iskandar Development Region (IDR). While the initial investment in the development is projected to be more than RM3bil, the construction cost is estimated to be between US$10bil and US$12bil, according to sources.

Among these funds, the Abu Dhabi Investment Agency alone has investment assets exceeding US$500bil. The agency is jointly owned by Abu Dhabi Investment Council and the National Bank of Abu Dhabi. The sectors that these investors are eyeing include infrastructure, banking, property, logistics, construction, engineering, tourism, hotels, theme parks and convention centres. IDR is projected to be completed no later than 2015. and it will not be a surprise if a sort of Middle Eastern enclave is formed in the commercial centre of South Johor .


Aug 29, 2007. A group of investors from Abu Dhabi, Kuwait, Saudi Arabia and Lebanon are expected to join Malaysian investors to develop 2,000 to 2,500 acres in the Iskandar Development Region (IDR) into a high-end integrated city.

While the initial investment in the development is projected to be more than RM3bil, the construction cost is estimated to be between US$10bil and US$12bil, according to sources. The massive development, which will be spearheaded by investors that have transformed cities in the Middle East, is projected to be completed no later than 2015.

The Iskandar Development Region (IDR) in Johor, which has attracted a RM4.1bil foreign investment, is a reflection of investor confidence in Malaysia. Four agreements between South Johor Investment Corporation Berhad (SJIC) and companies from the Gulf Cooperation Council (GCC) countries were signed in the initial stage.





Strategic Advantages

-Located at the crossroads of the East-West trade routes.

-Mid-way between rapidly growing Chinese and Indian Markets.

-Accessible by Air, Land or Sea from the rest of Asia .

-Supported by world-class ports servicing the world.

-2 causeways and railway link into Singapore.

-Almost 3 times the size of Singapore, with vast land banks primed with ready transportation and telecommunications infrastructure.

-Enjoys the same standards of living at a much lower cost of living than Singapore, Hong Kong, Taiwan, Japan or Korea.

-Populated with a multi-lingual, educated workforce from within Johor and the rest of Malaysia.

The investing companies are Mubadala Development Company (MDC), Kuwait Finance House (KFH) and Millennium Development International Company (MDIC). Aldar Properties PJSC will be managing the development of the project.


People always look towards Gulf residents, they have the money, and they are the ones looking for places to invest. So they have decided that Malaysia is the place for investment,” he said.

The Prime Minister said the agreements were proof that investors had confidence in Malaysia.

"This big project is a very good birthday present for the country.” The landmark investment will be on an 892ha area at the development region referred to as Node 1.


Aldar Properties chairman Ahmed Ali Al-Sayegh praised the project as “a carefully planned venture that will create job and investment opportunities for this region for a long, long time.”

While the initial investment in the development is projected to be more than RM3bil, the construction cost is estimated to be between US$10bil and US$12bil, according to sources.The massive development, which will be spearheaded by investors that have transformed cities in the Middle East, is projected to be completed no later than 2015.




ALDAR Properties PJSC, which is part of a consortium of Middle Eastern companies that will be investing billions of ringgit in Node 1 of the Iskandar Development Region (IDR), believes the project holds tremendous potential.Ahmed Ali Al Sayegh, chairman of ALDAR Properties, which will act as the master planner for the development, said the IDR would be a major world-class development, given its location.

"The vision is very clear. This will be a world-class city, a place for hundreds of thousands of people to work, play and get old, get educated,'' he told a media conference yesterday. From participating in one of the biggest property boom markets in the world, Al Sayegh feels the IDR has the most important tenet in property. "For real estate, it is location, location, location,'' he said.

He said following the requirement from the Malaysian Government, the project would be well planned and “will create a zone not only for working and logistics but for entertainment, education and health that will make the place very liveable”.

"We are pleased to be part of the Government's vision, a clear vision which is important for this thing to take place,'' he said. As for returns, Al Sayegh said there was no set target for returns from this investment but thought it would be very rewarding in the long term.

Why Invest In Malaysia

Renowned as a stable, well-established financial hub with one of the strongest economies in Asia, Malaysia has much to offer to investors.

Economic Strength

Malaysia is a country on the move. From a country dependent on agriculture and primary commodities in the sixties, Malaysia has today become an export-driven economy spurred on by high technology, knowledge-based and capital-intensive industries.

The structural transformation of Malaysia's economy over the last 40 years has been spectacular. Often dubbed the "lucky country" because of its wealth of mineral resources and fertile soils, Malaysia did not rest on its laurels but took decisive steps to progress from an economy dependent on agriculture and primary commodities to a manufacturing-based, export-driven economy spurred on by high technology, knowledge-based and capital-intensive industries.

Continuous Economic Growth

Malaysia's pragmatic and flexible management approach has enabled the economy to raise its competitivenes and enhance its resilience in facing challenging circumstances. Deliberate measure has been taken to make the economy more diversified and broad-based to ensure sustainable growth. Continuous efforts have been pursuit to enhance the services sector, accelerate value-added of the manufacturing sector as well as boost the agriculture and agro-based sector as the third engine of growth. New sources of growth continue to be promoted and developed such as biotechnology, information and communications technology, halal products and Islamic finance. Indeed Malaysia is developing as a knowledge-based economy, driven by human capital, innovation and ideas.

The global environment remains challenging in 2007, as a result of a persistently high crude oil price, inflationary pressures and monetary tightening, which has resulted in higher interest rates as well as the prospects of slower growth in the second half of the year. However, Malaysia remain confident in facing these challenges to achieve a healthy growth rate for 2007, given the nation more diverse economic structure and strengthened domestic fundamentals.
Malaysia continues to enjoy healthy surplus in the external trade, low unemployment as well as strong international reserves and high national savings.

Supportive Government Policies

Government policies that maintain a business environment with opportunities for growth and profits have made Malaysia an attractive manufacturing and export base in the region. The private sector in Malaysia has become partners with the public sector in achieving the nation's development objectives.

A major factor that has attracted investors to Malaysia is the government's commitment to maintain a business environment that provides companies with the opportunities for growth and profits. This commitment is seen in the government's constant efforts to obtain feedback from the business community through channels of consultation such as regular government-private sector dialogues. These allow the various business communities to air their views and to contribute towards the formulation of government policies which concern them.

Liberal Equity Policy

Generally, foreign investors in Malaysia's manufacturing sector can hold 100% equity in projects which export at least 80% of their production. However, effective from 17 June 2003, 100% foreign equity holding is allowed for all investments in new projects, as well as investments in expansion/diversification projects by existing companies irrespective of their level of exports.

Employment of Expatriates

Foreign companies in the manufacturing sector are allowed to employ expatriates where certain skills not available in Malaysia. A company with foreign paid-up capital of US$2 million and above will be allowed up to 10 expatriate posts, including five key posts, that is, posts that are permanently filled by foreigners.

Attractive Tax Incentives

Malaysia's company tax rate is attractive at 27% and is applicable to both resident and non-resident companies. Malaysia also offers a wide range of tax incentives for manufacturing projects under the Promotion of Investments Act 1986 and the Income Tax Act 1967. The main incentives are the Pioneer Status, Investment Tax Allowance, Reinvestment Allowance, Incentives for High Technology Industries and Incentives for Strategic Projects and Incentives for the Setting-up of International/ Regional

Educated Work Force

Malaysia offers investors a young, educated and productive workforce at very competitive costs. Malaysia's literacy rates are high at more than 94% and school leavers entering the job market have at least 11 years of basic education.

Malaysia offers investors a young, educated and productive workforce at costs competitive with other countries in Asia. Backed by the government's continued support of human resource development in all sectors, the quality of Malaysia's workforce is one of the best in the region. Literacy levels are high at more than 94% and school leavers entering the job market have at least 11 years of basic education. In addition, labour productivity has grown steadily at more than 3.3% per annum over the last few years surpassing that of many developed countries.

High Priority on Education

Education and training are accorded high priority in national development under Malaysia's five-year development plans.

To-date, there are more than 17 public and 20 private universities and colleges, as well as various polytechnics and industrial training institutes that offer courses leading to certificate, diploma, degree and post-graduate degree qualifications. Total enrolment in public institutions of higher learning alone is projected to reach over 300,000 with more than half in the science and technical disciplines.

The private sector has also set up educational institutions to supplement the government's efforts to generate a larger pool of professionals and semi-professionals. Among these are institutions of higher learning set up by large corporations such as Telekom Malaysia Berhad, Tenaga Nasional Berhad and Petronas which provide degree-level courses. Various private colleges in Malaysia offer degree programmes on a twinning basis with overseas institutions of higher learning, while foreign universities have set up branch campuses in the country.

Industrial Training

In 1993, the Human Resource Development Fund (HRDF) was launched by the government to encourage training, retraining and skills upgrading in the private sector. Employers, in the manufacturing and service sectors who contribute to this fund are eligible to apply for grants to defray or subsidise the costs incurred in training and retraining their workforce. The National Vocational Training Council under the Ministry of Human Resources coordinates the planning and development of a comprehensive system of vocational and industrial training programmes for all public training agencies. It also develops the National Occupational Skills Standards (NOSS) on a continuous basis. To-date, there are more than 700 standards covers certificate, diploma and advanced diploma qualifications. Besides the increasing number of public training institutions such as technical schools, polytechnics, industrial training institutes and skills development centres to meet the growing requirements of the industrial sector, collaborative efforts between the Malaysian government, enterprises and foreign governments have resulted in the establishment of several advanced skills training institutes such as the German-Malaysian Institute, Malaysia France Institute, Japan Malaysia Technical Institute, British Malaysia Institute and Malaysian Spanish Institute.

Harmonious Industrial Relations

Industrial relations in the country are harmonious with minimal trade disputes that result in strikes. Malaysia's labour laws safeguard the interests and spell out the rights and responsibilities of employers and employees, thus providing a legal framework for the orderly conduct of industrial relations in the country.

Developed InfrastructureMalaysia's persistent drive to develop and upgrade its infrastructure has resulted in one of the most well-developed infrastructure among the newly industrialising countries of Asia. The greatest advantage to manufacturers in Malaysia has been the nation's persistent drive to develop and upgrade its infrastructure. Over the years, these investments have paid off and serious bottlenecks have been avoided.

Today, Malaysia can boast of having one of the most well-developed infrastructure among the newly industrialising countries of Asia. A landmark event was the completion of Malaysia's newest and biggest airport, the Kuala Lumpur International Airport (KLIA), which opened for business in 1998. The following year, Cyberjaya, Malaysia's first intelligent city and the nucleus of the country's Multimedia Super Corridor (MSC), became a reality, complete with a multimedia university to provide a pool of knowledge workers for industries. Recently launched is Kuala Lumpur Sentral, a transportation hub integrating all major rail transport networks, including the Express Rail Link to the KLIA and Putrajaya, the government's new administrative centre.

Network of Highways

Peninsular Malaysia's network of well-maintained highways is a boon to industries. These highways link major growth centres to seaports and airports throughout the peninsula and provide an efficient means of transportation for goods. To complement these highways, a Kuala Lumpur-Bangkok-Kuala Lumpur containerised service known as the Asean Rail Express (ARX) has been initiated with the aim of expanding it to become the Trans-Asia Rail Link that will include Singapore, Vietnam, Cambodia, Laos and Myanmar before ending up in Kunming, China.

Efficient Seaports

International trade, especially seaborne trade, has traditionally been the lifeblood of Malaysia. Today, 95% of the country's trade is by sea via Malaysia's seven international ports - Penang Port, Port Klang, Johor Port, Port of Tanjung Pelepas, Kuantan Port and Kemaman Port in Peninsular Malaysia and Bintulu Port in Sarawak. Hong Kong-based Cargonews Asia placed Port Klang and Port of Tanjung Pelepas among Asia's top ten best seaports and top ten best container terminal operators.

Port Klang's central location and the government's emphasis on making the port a national and regional hub has resulted in an increasing volume of cargo.Port Klang recorded 4.5 million twenty-foot equivalent units (TEUs) for 2002, which ranks it the top 11th in the world. Port Klang's Westport has excellent deep water facilities which allow the world's largest ships to dock without any difficulty. Malaysia's newest port, the Port of Tanjung Pelepas (PTP), at the southern tip of Peninsular Malaysia, commenced operations in late 1999. With the location of Maersk-Sealand's and Evergreen's transhipment facilities at PTP, the port is expected to achieve an annual cargo volume of 2.5 million TEUs in 2003. Another port, Kuantan Port on the east coast of Peninsular Malaysia, is also undergoing a 30-year expansion to meet increasing throughput from the massive petrochemical complex along the Kertih-Gebeng corridor. Besides the physical infrastructure being in place, the electronic data interchange (EDI) in Port Klang, Penang Port and Johor Port has allowed speedy clearance of cargo with the electronic transfer of documentation.

International Airports

Malaysia's central location in the Asia Pacific region makes her an ideal gateway to Asia. Air cargo facilities are well-developed in the five international airports - the Kuala Lumpur International Airport (KLIA), Penang International Airport and Langkawi International Airport in Peninsular Malaysia, Kota Kinabalu International Airport in Sabah, and Kuching International Airport in Sarawak. Malaysia's biggest airport, the KLIA, located 50 kilometres south of Malaysia's federal capital of Kuala Lumpur, has an initial capacity of 25 million passengers and 650,000 tonnes of cargo per year. Cargo import and export procedures are fully automated at the KLIA to cut down delivery time. Within a short span of two years since its opening, the KLIA was ranked number one for overall business passenger satisfaction* in an International Air Transport Association (AITA) survey.

Developed Industrial Parks

Industries in Malaysia are mainly located in over 200 industrial estates or parks and 13 Free Industrial Zones (FIZs) developed throughout the country. New sites, fully equipped with infrastructure facilities such as roads, electricity and water supplies, and telecommunications, are continuously being developed by state governments as well as private developers to meet demand. FIZs are export processing zones which have been developed to cater to the needs of export-oriented industries. Companies in FIZs are allowed duty free imports of raw materials, components, parts, machinery and equipment directly required in the manufacturing process. In areas where FIZs are not available, companies can set up Licensed Manufacturing Warehouses (LMWs) which are accorded facilities similar to those enjoyed by establishments in FIZs.

Specialised Parks

Specialised parks have been developed in Malaysia to cater to the needs of specific industries. Examples of these parks are the Technology Park Malaysia in Bukit Jalil, Kuala Lumpur and the Kulim Hi-Tech Park in the northern state of Kedah which cater to technology-intensive industries and R&D activities. TPM is among the world's most advanced and comprehensive centres for R&D by knowledge based industries. Spanning 300 hectares (750 acres), its first phase comprises 12 state-of-the-art buildings with specific functions. To the North is the sprawling 1,450-hectare (3,580-acre) Kulim Hi-Tech Park, the country’s first, fully-integrated high technology park. Besides providing one of the best infrastructure there is for high technology manufacturing and R&D, the Park’s Masterplan also emphasizes on the quality of life within a self-contained township. Amenities incorporated in the plan include a shopping centre, a hospital, educational institutions and recreational facilities. Phase 1 of its Industrial Zone is fully leased while there are still some limited prime industrial land in Phase 2 to host interested companies.

Under the Equal Access Regime, telephone subscribers in Malaysia can choose from five network service providers for a full range of local, domestic and international services encompassing voice and data facilities.There are also four internet service providers and five cellular service operators providing services nationwide.

Malaysia is linked to the rest of the world through various fibre optics and satellite consortia such as FLAG, SE-MA-WE, APCN, China-US, Japanese-US, Measat and Intelsat. To support the increasing demand for bandwidth, medium and high-end technologies such as IDSL, IP, VPN and ATM are being extensively deployed throughout the country.

High-Tech Telecommunications

Malaysia's telecommunications network has seen impressive expansion and upgrading during the past decade following the successful privatisation of its Telecommunications Department. The latest digital and fibre optics technology is being used to provide high quality telecommunication services at competitive prices.

A Vibrant Business Environment

Malaysia's market-oriented economy, supportive government policies and a large local business community that is ready to do business with international corporations have made Malaysia a highly competitive manufacturing and export base. A market-oriented economy and government policies that provide businesses with the opportunity for growth and profits have made Malaysia a highly competitive manufacturing and export base. In addition, Malaysia's rapid move towards the k-economy allows companies to do business in an environment that is geared towards information technology. One of Malaysia's major pull factors is its large pool of young, educated and trainable workforce. Many of Malaysia's university graduates are trained overseas in fields such as engineering, and accountancy, allowing them to adapt easily to an international corporate environment.

English is widely used in Malaysia, especially in business thus facilitating the investor's communication with local personnel and suppliers. The country's legal and accounting practices derived from the British system are familiar to most international companies.

Chambers of Commerce and Industry

Newcomers to Malaysia's business scene will feel at home with the presence of the various chambers of commerce and trade associations made up of corporations from different countries. These oganisations are invaluable sources for general business information, advice and assistance, and complement the role of government agencies such as MIDA. The major organisations, are the Malaysian International Chamber of Commerce and Industry (MICCI), Federation of Malaysian Manufacturers (FMM), the Japanese Chamber of Trade and Industry (JACTIM), and American-Malaysian Chamber of Commerce (AMCHAM), as well as several trade associations such as the Malaysian-American Electronics Industry (MAEI) Group.

Developed Financial Facilities

A well-developed financial and banking sector has enhanced Malaysia's position as a dynamic export base in Asia. Sophisticated financial facilities are available through domestic and foreign commercial banks and their nationwide network of branches. There are also representative offices of several foreign banks that wish to establish a presence in the region. Besides the commercial banks, merchant banks, finance companies and industrial finance institutions are major sources of credit to the industrial sector in Malaysia. Exporters in Malaysia can also take advantage of the credit facilities offered by the Export-Import Bank of Malaysia Berhad (Exim Bank), while another institution, Malaysia Export Credit Insurance Berhad (MECIB), offers export insurance cover and guarantees. To complement Malaysia's financial system, the government has established an international offshore financial centre (IOFC) on the island of Labuan located off the north-west coast of Borneo. Companies in Labuan enjoy minimal taxes as well as confidentiality.

To-date, more than 2,700 offshore companies have started their operations in Labuan. These include offshore banks, trust companies, and insurance and insurance related companies. The Labuan Offshore Financial Services Authority (LOFSA) is the agency which promotes and develops Labuan as an IOFC.

Local Vendors

Over the last three decades, Malaysia has developed a large pool of ancillary and supporting industries that was initiated with the entry of MNCs into the country. These MNCs, especially those which pursued active vendor development programmes, have contributed greatly towards the development of local small-and-medium scale industries (SMIs) that are highly competent and competitive with some even penetrating export markets.

Joint-Venture Partners in Malaysia

Most large Malaysian companies have been involved in trade and industry for generations, and many have excelled in international and regional markets. Thus, foreign investors seeking joint-venture partners in Malaysia will be able to select from a wide range of companies to find one that matches their needs.

MIDA also assists foreign investors in business match-making to start joint-venture projects or to undertake contract manufacturing.

Quality of Life

Malaysia is among the most friendly and hospitable places in the world to work and live in, while Malaysians are warm, friendly people who easily accept foreigners into their circle of friends.

Malaysia is among the most friendly and hospitable places in the world to work and live in. In addition, the country's tropical climate with its uniform temperatures allows light, comfortable clothing throughout the year.Expatriates and their families will enjoy a safe and comfortable living environment with 21st century amenities, good healthcare and medical facilities, excellent educational institutions, and world-class recreational and sports facilities - at costs much lower than in their own countries.

One of the country's most distinctive features is its rich diversity of cultures, a heritage derived from its racial mix of some of the world's oldest civilisations - Malay, Chinese and Indian. This potpourri of race and culture has enabled Malaysians to speak at least two, and even three, languages - Malay (the national language), English, and their own mother tongue. Living in such a cosmopolitan environment, Malaysians are warm, friendly people who easily accept foreigners into their circle of friends.

Comfortable Housing

There is a wide selection of comfortable housing in Malaysia. According to a survey on expatriate living costs by the Malaysian International Chamber of Commerce & Industry, monthly rentals for accommodation can range from as low as RM2,700 - 8,500 (US$762-2,398) for a furnished 3-bedroom condominium in the suburbs of Kuala Lumpur to RM10,000 - 28,000 (US$2,821-7,900) for a luxury bungalow in the posh neighbourhood of Kenny Hills nearer to the city.

International Schools

There are over 30 international schools registered with the Ministry of Education. These schools are located in the federal territories of Kuala Lumpur and Labuan, and in the states of Johor, Kelantan, Melaka, Negri Sembilan, Pahang, Penang, Perak, Sabah and Sarawak. They include American- and British-style international schools as well as French, German, Japanese and Taiwanese schools that have facilities for pre-school to college education.

Shopping

With the wide range of foodstuffs and consumer products available in the supermarkets and departmental stores, expatriate wives will find Malaysia a home-away-from-home. Establishments in Malaysia cater for every taste and budget and range from shopping malls to hypermarkets to specialty stores. A novelty for expatriates is the pasar malam or night market where hawker stalls sell almost anything - from fresh fruits and vegetables to clothing and shoes. Malaysia is also a treasure chest of artifacts and antiques, and expatriates usually not only take back with them fond memories of their stay but also many a collector's item as well .

An Unsurpassed Lifestyle

Life in Malaysia is an adventure. The year-long warm and sunny climate offers an unsurpassed lifestyle, especially for people who love the outdoors. Families can spend many an exciting weekend at Malaysia's national parks with their magnificent rivers and mountains. Or fly to one of the many island retreats for snorkelling and scuba diving. Or drive for a game of golf in a cool hill resort. For people who prefer to be indoors, they can shop-until-they-drop in ultra-modern shopping complexes that offer the latest in designer fashions, leather goods and electronic items at very competitive prices. A not-to-be-missed attraction in the federal capital of Kuala Lumpur is the Petronas Twin Towers, the world's tallest building, where one can enjoy world-class performances in the acoustically-perfect Petronas Philharmonic Hall.