Good response to new investment guidelines


  • Business
  • Monday, 20 Jul 2009

PUTRAJAYA: The Government has received good response to the recently relaxed investment guidelines from potential investors in the Middle East, China and India.

“We have received enquiries related to Islamic finance, banking, construction, education, information technology, outsourcing, infrastructure and tourism,’’ Finance Ministry secretary-general Tan Sri Dr Wan Abdul Aziz Wan Abdullah told StarBiz.

Foreign investments this year are expected to be only half of last year’s figure, and the Government has stepped up efforts to facilitate the private sector to play a more active role in contributing to economic growth.

Private investment growth has slowed to an average of less than 5.1% a year since the Asian financial crisis of 1997/98 against 19.2% a year during 1990-1997. Some of the factors include:

● rising costs of production leading to lower returns on capital;

● low levels of efficiency with inadequate investment in skills training, technology upgrading, and research and development; and

● skills and technical knowledge gap.

“Additionally, the continued dependence on cheap and low-skilled labour is a hindrance to moving up the value chain and attracting more capital-intensive investment,’’ Aziz said.

The Government recently liberalised the services sector, bumiputra equity guidelines as well as the fund management and stockbroking industries, and set up Danajamin Nasional Bhd to help viable companies tap the bond market.

Meanwhile, Government-linked companies will now focus on core activities and divest their non-core activities. This will enable greater private sector participation in the economy, while ensuring fair competition.

“All the measures announced are initial steps to boost private investment, both domestic as well as foreign, and contribute significantly to economic growth. The Government will introduce a new economic model which would transform Malaysia into a high-income economy,’’ Aziz said.

He said the Budget 2010, to be announced on Oct 23, would adopt a slightly different approach in view of the recent global financial crisis. “We are working with limited resources. There will be adjustments and sacrifices as we cannot meet all requests,’’ he said, adding that the approach would be outcome-based.

“It will be based on the outcome of a certain initiative rather than measuring of output,’’ he said.

For instance, in education, it would not be so much in terms of the number of higher learning institutions built but the quality of graduates who are employable.

Following the annual budget consultation on June 11, a series of focus group discussions will be held to look into issues, which include private investment, public transport, crime prevention and public safety, education, rural infrastructure, social safety net, human capital, fiscal consolidation and niche growth areas.

“This inclusive budgeting process helps ensure that the measures and resources allocated in the budget are well targeted and consistent with broad socio-economic objectives of the Government,’’ Aziz said.

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