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KEYNOTE ADDRESS
YB DATO' SRI MUSTAPA MOHAMED
MINISTER OF INTERNATIONAL TRADE AND INDUSTRY
MALAYSIAN INSTITUTE OF MANAGEMENT (MIM)
CEO LUNCHEON TALK
HOW THE 10TH MALAYSIA PLAN STIMULATES GROWTH OF PRIVATE SECTOR INVESTMENT: PLANS AND IMPACT ON THE NATION’S ASPIRATION TO BECOME A HIGH-INCOME NATION BY 2020
5TH APRIL 2011 (TUESDAY)
INTERCONTINENTAL HOTEL, KL
Assalamualaikum W.B.T and Salam 1Malaysia.
(SALUTATION)
Members of the Media,
Ladies and Gentlemen,
1. First and foremost, I must convey regards and apologies from MITI Minister, Dato’ Sri Mustapa Mohamed for not being able to be here today. Let me assure you that Dato’ Sri Mustapa would have loved to be here to join all of you for the CEO Luncheon Talk organise by MIM. He has asked me to do the honours for him and I am please to be given this pleasant task of reading his speech today.
Ladies and Gentlemen,
2. I would like to begin by thanking the MIM for organising this luncheon and inviting me to deliver the keynote address at this all important time of the day. Now that we have enjoyed our delicious meal, I urge you to sit back and enjoy your coffee or tea. The subject that I will be addressing you on is a serious one and one that is very close to my heart.
3. Ever since the Government launched its Government Transformation Programme in 2009, we have reshaped the administration to reflect closer the practices of the private sector. Like most of you, I have a set of KPIs to meet and from this year onwards, my most important KPI is to raise the level of private investment in the country. Based on the EPU’s growth projection, my target is to secure RM83 billion in private investment this year. This is a very ambitious target but it is also one which I must achieve in order for Malaysia to stay on track of the vision to become a high income nation by 2020.
4. As many of you would know, since 1966, we have had successive Malaysia Plans to chart the country’s economic development plan over five-year planning periods. Each plan is designed to achieve specific goals of the administration.
5. The guiding principles for the 10th Malaysia Plan, which covers the period from January 2011 to December 2015, were laid out in the New Economic Model. By 2020, we aspire to become a developed country with a high-income economy. To get there, the private sector would have to take the lead and become the growth engine of the economy. The 10MP, therefore, outlines the Government’s policy priorities over the next five years in order to achieve these goals.
Ladies and Gentlemen,
6. The 10MP forms a major part of the Government’s reform drive to counter the effects of the global financial crisis of 2008/2009. The plan contains various measures to improve the country’s administrative system and infrastructure to restore its competitiveness on a global stage. Unlike previous Plans, a unique component of the 10MP is that it incorporates an element of flexibility and innovation to allow for policies to be adapted to suit a rapidly changing global environment. This seems providential now with the unfolding events in the Middle East and North Africa. We were fortunate to have made a full turnaround last year to achieve 7.2% GDP growth but this growth trend cannot be taken for granted. The implications of the events in the Middle East and North Africa are still being analysed but I believe no country is likely to remain unaffected.
7. However, these developments do not change our priorities. In fact, they strengthen our reform imperative to bring about a comprehensive transformation of the economy. We are no longer looking at business as usual. In giving the private sector the lead role, we hope to see innovation become a key driving factor in moving our economy on to a steep growth trajectory. To give you an idea of the scale of our aspiration, let me list some of the macro-economic targets set out in the 10MP.
8. For the five year period until 2015, we aim to raise Gross National Income (GNI) per capita to RM38,850 per annum from about RM21,000 currently. This requires a Real GDP growth rate of 6% per annum and a private investment growth rate level of RM115 billion per annum. Private sector investment is crucial to the success of this policy because the Government’s priority is to reduce fiscal deficit from 5.3% of GDP at present to less than 3% by 2015. We recognise that a high income nation cannot be built with a low-skilled workforce. Therefore, we also aim to increase the composition of highly skilled workers in the country from 23% to 37% of the workforce by the end of the 10MP period.
9. To achieve these targets, the 10MP comprises a series of measures organised around five key strategic thrusts, namely:
• Stimulating economic growth
• Developing a first-world talent base
• Ensuring inclusive Social-Economic Development
• Building an environment that enhances quality of life, and
• Transforming the Government
10. For the purpose of today’s audience, I will address mainly policy measures designed to achieve the first two strategic thrusts. To stimulate growth, a central focus of the 10MP is to scale back Government involvement in the economy so as to open up new opportunities to the private sector and reduce distortions in the economy caused by an extensive subsidies structure. By rationalising subsidies, we aim to strengthen market mechanisms and create incentive for firms to be more efficient and competitive.
11. As public sector involvement is scaled back, efforts are to be redoubled to enhance the role of the private sector as the growth engine of the economy. The initiatives outlined in the 10MP to facilitate investments are aligned to the Economic Transformation Programme which identified 12 National Key Economic Areas, deemed to have the potential to generate high income growth. These include oil, gas and energy, tourism, healthcare and financial services. To achieve maximum impact the soon-to-be corporatised, MIDA, the national investment arm, has been tasked to promote investments in these sectors through a range of incentives and support programmes.
12. In tandem with investment promotion, the 10MP also stipulates the need to improve on the overall business environment in the country. Since 2007, Pemudah, the Special Task Force to Facilitate Business, has implemented a wide range of initiatives to cut red tape across the public sector and improve the business environment. To complement these initiatives, the Malaysian Productivity Corporation (MPC) was restructured late last year to spearhead a comprehensive review of business regulations affecting major economic sectors.
13. Another strategy to encourage private investment growth is by accelerating liberalisation of the services sector. This is a significant area of growth as the sector now contributes more than 57% to GDP. Opening up this sector would create opportunities for higher levels of investments, increased skilled job opportunities and transfer of know-how. In 2009, the Government started the ball rolling by lifting foreign equity restrictions on 27 services sub-sectors. Under the 10MP, this programme of liberalisations is to continue specifically through bilateral and regional preferential trade arrangements.
14. The most extensive series of services sector liberalisations are currently undertaken as part of the ASEAN Framework Agreement on Services which aims to liberalise 115 services subsectors by 2015. Last year, Free Trade Agreements were concluded with India and New Zealand opening up new services sectors for cross- investments. This year, services liberalisation will also receive strong attention in our FTA negotiations with the European Union and members of the Trans Pacific Partnership, which includes the United States. More broadly, these FTAs will increase the market reach of our businesses while making Malaysia a more attractive destination for investments.
Ladies and Gentlemen,
15. The 10MP also seeks to address two common feedback that we receive from the investor community, a lack of funding and shortage of skilled workers. In the area of financing, the Government has set aside allocations for several funds to encourage public-private partnerships. For example: a Facilitation Fund of RM20 billion is allocated to finance projects with strategic significance and potential to generate considerable spillover benefits to other sectors of the economy. To assist business start-ups, a Business Growth Fund with an initial allocation of RM150 million is being established to bridge financing gaps during early stages of commercialisation and to provide venture capital financing for high-tech products.
16. To address the issue of skills shortage, the 10MP contains extensive provisions for reforms in the area of education. A systematic revamp of the education system will be undertaken while new emphasis will be given to the area of vocational training. Public-private collaborations are being discussed whereby partner corporations provide trainers and training modules while the Government provide free use of existing training venues.
17. These medium to long term measures are to be enhanced by the Talent Corporation which was established last year under the Prime Minister’s Office to undertake measures to help the country meet its talent needs. Some of the initiatives announced include allowing Government funded graduates to seek employment outside of the civil service and the easing of immigration restrictions on foreign talent. In liberalising the labour market, we expect to achieve a strong boost on talent. This is expected to create a virtuous cycle to attract new investments to the country.
Ladies and Gentlemen,
18. The initiatives that I have listed above only cover a small sector of the 10MP. I urge you to know the plan in more detail so that you can individually contribute to making our 2020 vision a reality. The Government’s commitment has not changed and we will be rolling out further reforms to improve the efficiency of the civil service. Departments will be streamlined and procedures simplified to ensure that bureaucratic processes contributes towards, and do not impede growth.
19. In turn, I hope that the private sector will heed this call to lead the country’s next phase of growth. We welcome feedback. Our doors are always open should you wish to discuss how we can better support your growth plans. I wish you much success and thank you for your kind attention.
Thank you. |
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