Market review gif
Big Investment Plans Revealed by Malaysia
Source:
GlobalIlamicFinanceMagazine.com
Malaysia on 22nd September 2010 un- veiled ambitious plans to boost its economy by mobilising hundreds of billions of dollars of private investment, although questions remained over whether the money would materialise. The plans ranged from a new mass transit system to relieve congestion in the capital, Kuala Lumpur, to building a huge oil storage facility next to neighbouring Sin- gapore to form a regional oil products trad- ing hub. A government think tank said it had identified investments worth $444 billion over 10 years, of which 60 percent would come from the private sector, 32 percent from government-linked companies and 8 percent from government.
The investment aims to double per capita income and push Malaysia into the ranks of “developed” nations by 2020, rebalanc- ing Asia’s third most export-driven economy toward domestic demand and the service sector. “The plan does not provide a clear sense of where the money is coming from. A lot of these numbers are pie in the sky,” said Bridget Welsh, a Malaysia specialist at Singapore Management University. Malay-
sia is competing for investment with other fast-growing countries in Southeast Asia and neighboring Indonesia recently unveiled plans to boost infrastructure too. In the past 10 years, private companies invested just 535 billion ringgit ($172.4 billion), accord- ing to official data and Malaysia’s private in- vestment rate of around 10 percent of gross domestic product (GDP) is among the lowest in Asia and a third the level it was before the 1998 Asian financial crisis. The government, which in 2009 ran its biggest budget deficit in 20 years as a percentage of GDP, contrib- utes around half the investment in Malaysia and the minister in charge of presenting the investment plans said the new targets were credible. “I don’t think the government would publish a document that thick if there is no political will. It’s a risky strategy to expose yourself so publicly when you have no plan to do it,” Idris Jala told a public presentation on the plans.
The plan relies heavily on domestic capital as foreign direct investment in this country which in the early 1990s accounted for al- most 40 percent of the Southeast Asian to- tal accounted for just 3.8 percent in 2009, according to United Nations data. Malaysian companies like leading bank CIMB and telco Axiata have started building a regional pres- ence in large, fast growing countries, such as Indonesia. Economists warned without a new policy framework to encourage invest- ment the Malaysian plans would be hard
to realise. “It will be difficult to achieve the private investment growth target set by the government if there are no additional tax incentives given to the focus sectors,” said Gundy Cahyadi, regional economist at investment bank OCBC. The plans aim to create another 3.3 million jobs by 2020, many in the high-value service sectors such as Islamic finance. Idris said 46 percent of the new jobs would be “middle-class.” Despite churning out tens of thousands of graduates, Malaysia’s education system has failed to deliver and is becoming increas- ingly polarised by arguments over language between the majority Malay population and minorities such as the large ethnic Chinese population. The government think tank that designed today’s investment plan said that in 2003 Malaysia had just 21,000 finance and accounting professionals qualified to be employed by multi-national companies com- pared with 341,000 in India and 127,000 in the Philippines.
“How can you create middle-class jobs when you do not have an education system that works,” said Singapore Management Univer- sity’s Welsh. There is also policy risk in Ma- laysia. Recent plans for a radical overhaul of the country’s costly subsidy regime proposed by the same think tank that outlined the in- vestment plans were shot down by govern- ment politicians who feared unpopularity.
gif
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88