Regions will
lead push for growth
One of
the most vibrant economies in South Asia, Malaysia
has big plans to increase its competitiveness and
attract foreign investment into growth areas across
the country
Last year was a momentous one
for Malaysia. It celebrated its 50th anniversary as
an independent nation, attracted more tourists than
ever, launched new economic development corridors
while keeping up a high rate of growth and sent its
first ever astronaut into orbit (courtesy of the Russian
Space Agency).
A federation of 13 states
and three federal territories, divided into two regions
separated by the South China Sea, Malaysia has a highly
diverse population of around 27 million. Eleven of
the states and around 20 million of the people live
on Peninsular Malaysia, which is bordered by Thailand
to the north and the island state of Singapore to
the south. The other two states, Sarawak and Sabah,
and the federal territory of Labuan are 400 miles
away on the island of Borneo.
Over its first half century,
Malaysia has transformed its economy and become one
of the richest members of the Association of Southeast
Asian Nations (ASEAN). “Fifty years ago, Malaysia
was merely the largest producer of rubber and tin
in the world,” says Prime Minister Abdullah Ahmad
Badawi. “Today, Malaysia produces palm oil on
an industrial scale and leads as an exporter of many
manufactured products as well as services.”
|
| Abdullah Ahmad Badawi
Prime Minister of Malaysia |
Along with other states in
the region, Malaysia was hit severely by the 1997
Asian economic crisis, but a decade on the economy
is firmly back on the path of rapid growth. In the
past two decades, electrical and electronic products
have become its biggest export earner. In 2006, it
was ranked the 19th largest trading nation in the
world by the World Trade Organisation.
Tan Sri Nor Mohamed Yakcop,
Minister of Finance II, expects the country to sustain
its impressive annual growth rate of around 6 per
cent this year despite volatile external conditions
such as high oil prices, because the domestic economy
has diversified. “Even in terms of exports, we
have diversified away from reliance on one or two
countries by increasing our exports to other countries,”
he says.
The government is well aware,
however, that a reorientation of the economy is required
for Malaysia to navigate the challenges of a changing
and competitive world as well in the future as it
has in the past. While exports are expected to continue
to grow at a healthy rate of 8.5 percent a year, Malaysia
faces increasing competition for trade and investment
from China and India, and other developing countries
across Asia.
Malaysia’s ongoing five-year
strategy for preparing to meet these challenges is
contained in the Ninth Malaysia Plan, usually referred
to in a country with a mania for abbreviation as 9MP.
The government is pouring RM 200 billion worth of
investment into this five-year blueprint for the economy,
which runs until 2010.
The objective is to move Malaysia
on from a labour-intensive to a value-added capital-intensive
economy driven by knowledge and innovation. New sources
of growth, employment and wealth creation are being
sought. There are plans to move industry up the value
chain, upgrade agriculture and agro-industry, and
develop the services sector.
|
Tan Sri Nor Mohamed Yakcop
Minister of Finance II |
The plan aims to address the
disparities in income and wealth that still exist,
especially between ethnic groups and between rural
and urban areas. In the past, development in Malaysia
has been concentrated in the traditional centres of
Kuala Lumpur, Penang, and Johor Bahru. Central to
9MP, however, is the development of regions and rural
areas. The Prime Minister says that for Malaysia to
meet its goal of becoming a developed nation by the
year 2020, there is a need to bring the rest of Malaysia
up to par with Kuala Lumpur.
This is to be achieved through
the establishment of a series of economic development
“corridors” aimed at attracting both local
and foreign investment. Mr Abdullah says they will
“change the face of the country.”
The first to be launched,
in 2006, was the South Johor Development Region, otherwise
known as Iskandar Development Region or IDR, in the
state of Johor. Last year, two more were introduced.
These were a Northern Corridor Economic Region, covering
the states of Penang, Kedah and Perlis, and the north
of Perak, and an East Coast Economic Region (ECER),
covering the states of Kelantan, Terengganu, Pahang
and the Johor northern district of Mersing. Further
corridors are to be launched soon for the East Malaysia
states of Sarawak and Sabah.
Mr Abdullah says the corridors
are based on the concept of leverage. “We do
not intend to start new initiatives from scratch.
Instead, we aim to build on our existing economic
strengths to venture into new areas.”
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GREECE PROJECT TEAM
Project Director: M. Mercedes Pagalday
Editorial Director: Fredrik Meloni
Project Assistant: Idil Demirel