A new year - challenges and opportunities

1. 2009 was a challenging year for the economies of most countries across the globe. Whilst the financial crisis started in the last quarter of 2008, its impact was felt by the middle of last year.

2. Many companies were resilient and have survived so far.

3. For the Malaysian economy, foreign direct investments (FDIs) have been relatively low for the whole of the last decade. The average FDI being about 4% compared to Singapore, Thailand, Indonesia and Vietnam, whose performance was in the region of 15% to 25%.

4. Increased FDI's leads to an increase in skilled expatriate population, generate more demand for housing and office space and higher value employment opportunities.

5. Malaysia's global competitiveness is also affected by security, government delivery systems, corruption, market size, productivity of the workforce etc.

6. Further liberalization is to be expected with more competitive tax regimes and the opening up of the services sector. But when? There doesn't seem to be a timeline for these necessary changes.

7. The Government Transformation Programme (GTP)launched by the Malaysian government identifies six key areas that needed "urgent attention"; crime, corruption, education, poverty, rural infrastructure and public transportation. The Prime minister's Department set up the Performance Management and Delivery Unit or PEMANDU. How will it respond to feedback on these key areas from a "skeptical" public?

8. Can the Government and public servants respond effectively to the needs of the private sector; the wealth creators in the economy? How can it become less bureaucratic, be more transparent and make it easier to gain access to finance?

9. Malaysia is aiming high. It wants to be in the top ten trading nations in the world by 2020. According to World Trade Organisation figures currently it is ranked as among the top 21 exporters and top 28 importers in merchandise trade. With demand from the USA decreasing, demand from the Asian markets, most significantly China, has increased in recent years. In the fourth quarter of 2009, exports grew by about 2%.

10 Malaysia is a member of the Asia Pacific Economic Cooperation (Apec). This economic zone should offer further opportunities if Asean members keep their markets open, increase intra-member investments and undertake joint promotions. A reduction of tariffs up to 0% could help boost exports and investment.

Some useful references;

PERMANDU

WTO Report Malaysia; Strategies for Liberalisation of the Services Sector