LIBERALISATION: GLOBALISING THE MALAYSIAN SERVICES SECTOR

YB DATO’ MUKHRIZ MAHATHIR
DEPUTY MINISTER OF INTERNATIONAL TRADE AND INDUSTRY

LIBERALISATION: GLOBALISING THE MALAYSIAN SERVICES SECTOR
AT
THE INSTITUTE OF SURVEYORS (ISM)
EXTRAORDINARY GENERAL MEETING

18TH DECEMBER 2010 (SATURDAY)

CROWNE PLAZA MUTIARA, KL

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Assalamualaikum W.B.T, Good Morning and Salam 1Malaysia.

Sr Elvin Fernandez,
President of the Institution of Surveyors Malaysia (ISM);

Sr Ahmad Fauzi Nordin
Deputy President the Institution of Surveyors Malaysia (ISM);

Members of ISM;
Members of the Media;

Ladies and Gentlemen.

1. First and foremost, I would like to extend my sincere appreciation to the organisers for their kind invitation for me to officiate this EGM. It is a fact that Malaysia is an open economy which relies heavily upon international trade. It is also a fact that we are embarking on limited liberalisation of certain sectors of the economy to meet the challenges of a rapidly evolving and competitive business and trade environment both regionally and globally. Therefore, we must act now and as such the Malaysian Government is in high gear.

2. For your information, in October 2010, Malaysia’s exports and imports recorded an increase of 8.9% and 10.7% to RM55.0 billion and RM48.1 billion respectively, month-on-month. As compared with October 2009, exports grew by 1.3% from RM54.3 billion while imports rose by 12.5% from RM42.8 billion.

3. As a result, for the first ten months of 2010, total trade exports rose by 18.1% to RM529.6 billion while imports surged by 24.7% to RM438.0 billion as compared with the same period of last year. During this period, Malaysia’s total trade was valued at RM967.6 billion, a growth of 21.0% from the same corresponding period of 2009. Malaysia’s external trade balance recorded a surplus of RM91.5 billion.

4. As for the services sector, it remained the largest contributor to GDP in 2009 with its share increasing to 57.6% as compared with 55.28% in 2008. In the first half of 2010, exports of services amounted to RM47.94 billion while imports amounted to RM44.43 billion.

5. In the same vein, Malaysia continues to attract capital and foreign direct investments (FDIs) by pursuing liberalisation policies through greater participation in bilateral and regional FTAs. Allow me to elaborate further. Malaysia embarked on the path to bilateral FTAs with Japan in 2005 and has recently concluded an FTA with New Zealand. In general, Malaysia has concluded, signed or implemented four bilateral FTAs including Pakistan in 2006 and Chile in May 2010. Malaysia is expected to ink a bilateral FTA with India in January of 2011. As for ASEAN, we have concluded multilateral FTAs with China, Japan, Korea and India, as well as Australia and New Zealand.

Ladies and Gentlemen,

6. As you may well know, on the 22nd of April 2009, the Government liberalised 27 services sub-sectors to attract more foreign investment that brings with it new technology and expertise. No equity conditions were imposed on these potential investors.

7. Then on the 28th of April 2009, the Right Honourable Prime Minister had announced the liberalisation of the financial sector by allowing up to five top international law firms with expertise in international Islamic finance to practise in Malaysia. The dismantling of the Foreign Investment Committee (FIC) was also part and parcel of the Government’s liberalisation initiatives.

8. We hope that these liberalisation initiatives will benefit the country by attracting quality foreign investments as we seek to entice specific expertise and bring forth new technology, add new capacity to fill-in the under-capacity in certain industries, give us access to other markets in this region and beyond, create opportunities for win-win joint ventures (domestic and overseas), increase overall competitiveness, create high-value jobs, provide wider choices for consumers; and last but not least allow for the free movement of talent and professionals into Malaysia.

9. In a nutshell, liberalisation is intended to have the effect of spurring the Malaysian economy and local entrepreneurs to actively expand their business with the greater opportunities available both in Malaysia as well as with our trading partners.

10. The Government’s economic policies as you may have noticed gives due attention to the importance of our service sector as another vibrant area of our diversified economy. The Tenth Malaysia Plan (RMK 10) has as its basis both the Government Transformation Programme (GTP) recommendations and the elements of New Economic Model (NEM) which among many things aims to achieve a high-income, sustainable and inclusive economy for the Rakyat.

11. Malaysia’s high-income economy will hinge on higher productivity from its workforce and the close cooperation of the private sector with the Government.

12. The 10th Malaysia Plan which covers the period commencing from 2011 to 2015 will have a high impact on the Malaysian construction sector with the sector expected to grow at 3.7% annually. This anticipated growth could very well generate a multiplier effect in stimulating and enhancing demand and domestic growth for the entire economy as well as producing spillover effects to other sub-sectors such as the engineering and surveyor services. This is good news for all of you.

13. Furthermore, approximately RM230 billion in development allocations and RM20 billion in facilitation funds have been approved under the 10th Malaysia Plan. Both these allocations should spark appetite in the construction sector and drive-up demand as out of the RM230 billion for development expenditure, 60% or RM138 billion will be spent on physical development to be undertaken by the construction sector. The RM20 billion facilitation fund is expected to attract private sector investment worth at least RM200 billion of which a major portion of that investment would involve the construction sector.

Ladies and Gentlemen,

14. MITI and its agencies will continue to intensify efforts to open up access into non-traditional markets and continue with trade diversification efforts as well as promote investments in new growth areas that are of higher value-added and are technology-intensive.

15. Also, to alleviate the unintended but unavoidable shock effects of such liberalisation initiatives, the Government will continuously provide support to the private sector and stakeholders through incentives, tax exemptions and improving the public delivery system.

16. It may be of interest to you that the Mutual Recognition Arrangement (MRA) is another liberalisation initiative within the services integration process under the ASEAN Framework Agreement in Services (AFAS). The objective is to facilitate movement of professionals within ASEAN and realising the ‘Free Flow of Services’ as one of the key pillars of the ASEAN Economic Community (AEC) as a single integrated market.

17. As a tool for trade facilitation the MRA enables professionals or certain service providers who are themselves registered, certified and recognised in their country of domicile to be equally recognized within other signatory Member States. The MRA for Architectural Services and MRA Framework for Surveyor Qualifications were signed on the 19th of November 2007.

Honourable Guests,

18. I hope to have clearly outlined the Governments efforts with regards to the topic at hand. Liberalisation is not a one-way street. It is part of a broader commitment particularly within ASEAN and the wider Asian region against the backdrop of declining traditional markets. Let us not dwell on the past by resisting the inevitable and shortchanging ourselves as to the bounties to be gained. I am confident that with hard work and perseverance we can succeed.

19. Lester Thurow, the former dean of the MIT Sloan School of Management and author of numerous bestsellers on economic topics remarked that: “A competitive world offers two possibilities. You can lose. Or, if you want to win, you can change”.

20. And with that I take my leave. Thank you.