Malaysia’s government said it has identified private sector-led projects worth $444 billion that can turn around a slump in investment and help the country achieve developed nation status by 2020.
A total of 131 initiatives were identified during two months of brainstorming with representatives from 200 private-and public-sector companies, including Exxon Mobil Corp. and Tesco Plc, said Idris Jala, chief executive officer of the government’s Performance Management and Delivery Unit, or Pemandu. Details will be unveiled on Sept. 21 in the first of three exhibitions across the country, he said.
Foreign investment in Southeast Asia’s third-largest economy has fallen over the past three years amid growing competition from neighbors including India and China. Investment from overseas fell 81 percent last year to $1.4 billion, according to the United Nations 2010 World Investment Report. Singapore, Indonesia and Thailand all fared better.
“Quite clearly business as usual is not enough,” Jala, who is also a minister in the Prime Minister’s department, said in a Pemandu statement dated Sept. 15. “Malaysia needs a complete economic transformation. We are at risk of being stuck in a middle-income trap and have not been able to move up the value chain to compete with high-income nations.”
To help get things back on track, Prime Minister Najib Razak, who took office in April 2009, has proposed a so-called New Economic Model, which advocates further liberalizing the country’s services industry and rolling back some affirmative-action policies favoring the country’s ethnic-Malay majority and indigenous people.
While many details of Najib’s plans have yet to be announced, Malaysia’s key stock index has surged 15.8 percent this year and its currency touched a 13-year high this week.
Of the 131 projects targeted, 7 are ready to go, 12 are close to contractual agreement and 34 are in active discussions, Jala said. The complete package of initiatives will require $444 billion of investment in the current decade, of which about 92 percent, or $410 billion, will come from private and government-linked companies, he said.
The projects focus on 11 core economic areas, including financial services, tourism, palm oil and energy, Pemandu said. There are also plans to make the greater Kuala Lumpur area a more attractive city, it said.
“Implementation is key to the success of the government’s economic transformation agenda,” Bernard Ching, an analyst at ECM Libra Capital Sdn. in Kuala Lumpur, said in a report today. “We are positive that the government is taking pro-active steps towards transformation, both economically and politically.”
Foreign direct investment into Malaysia slumped to $1.4 billion in 2009 from $7.3 billion the previous year, according to the UN’s World Investment Report. That’s less than the $4.9 billion Indonesia attracted and the $16.8 billion received by Singapore.
Foreign investment rebounded this year, helping Malaysia lure the equivalent of $1.6 billion in the first quarter, International Trade & Industry Minister Mustapa Mohamed said on July 26.
The government aims to boost gross national income to close to $523 billion in 2020 through its economic transformation program, Jala said. That would raise Malaysia’s per capita income to at least $15,000, meeting the World Bank’s definition of a high-income nation, he said.
This will require the country to grow by an average 6 percent annually over the next five years, according to a government report on June 10.
Gross domestic product expanded 10.1 percent in the first quarter from a year earlier and rose 8.9 percent in the second quarter. Growth may exceed 6 percent this year, central bank Governor Zeti Akhtar Aziz said last month.