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Malaysia- drumming up its economic competitiveness

Updated On: Jun 22, 2007

Recently Malaysia has unveiled great plans to enhance its position among the world's most competitive economies.

To achieve this, it aims to expand its economy through both internal initiatives and foreign cooperation.

Malaysian Industrial Development Authority (MIDA) director-general Datuk R. Karunakaran said on Tuesday, 19 June, that while “Malaysia was currently ranked 23rd in terms of competitiveness by the Lausanne Institute of Management (IMD) compared to 28th in 2005, this was still not good enough”. He felt that “key issues concerning the business environment” needed to be tackled so as to improve, the Star reported. 

Karunakaran added, “Our challenge is to promote our technology, skill-intensive and higher value-added industries. In this respect, we are not only competing with other nations in the region but the whole world. Additionally, our infrastructure, public delivery system, skilled workers and bureaucracy for investors must meet the requirements of foreign and domestic investors.” While the important factor of keeping business costs low in Malaysia was a continuing challenge, Karunakaran felt that “Malaysia already had the advantage of skilled workers, a good legal system, stable economy and political condition and excellent infrastructure. [Moreover] the 9th Malaysia Plan and 3rd Industrial Master Plan were proof that Malaysiawas moving towards a conducive business environment. ”

As for foreign relations, just a month after the informal discussions with Singapore over the proposed Iskandar Development Region (IDR) in the southern state of JohorMalaysiahas now widened its ambit to attract external economic investments. Meetings with Russia and Indonesia this week signal Malaysia’s desire to deepen its relations with its neighbours as well as further afield to drum up support for its economic plan.

On Wednesday, 20 June, Malaysian Prime Minister Abdullah Ahmad Badawi met Russian President Vladimir Putin in Moscowto commemorate the 40th anniversary of diplomatic relations with Russia. Bernama reported Abdullah reaffirming the “cordial ties over the last four decades based on mutual interest and shared benefits” and that Malaysiahighly appreciated “Russia’s contributions to peace and stability in Southeast Asia”. Putin seconded this view, saying, “Our relations are developing successfully.”

In addition, Badawi voiced his hopes of greater “trade and investment in sectors such as in information and communications technology, construction and infrastructure as well as in the services sector”. He said, “We should also look beyond the exchange of traditional products and focus attention as well in the field of services [as] Malaysia has been internationally recognised as excellent providers of specialised services…we wish to explore joint-venture projects with Russiain such fields.” Malaysia and Russia have also pledged “to work together more closely in the areas of energy cooperation, space, agriculture, biotechnology and medicine”.

The two countries “are now working towards establishing an Investment Guarantee Agreement in their effort to expand bilateral trade and investment”. Moreover, “a joint commission to expedite several agreements to improve relations and economic ties” will also be established, the Star reported. This commission comprising ministers from both states will “act as a catalyst to expedite these agreements and points that [were] discussed”. Topmost priorities tabled are agreements for the avoidance of double taxation and protection of intellectual property. 

All this bodes well for Gazprom and Rosneft (the largest energy companies in Russia) and Petronas (the Malaysian national oil company). According to Bernama, Badawi shared that “Petronas is in talks with giant corporations Gazprom and Rosneft to venture into sizeable energy projects in Russia”. However, he did not disclose further details on potential partnership agreements, saying “What they have told me was that they are going to enter into is a very worthwhile investment. Big.” It is also believed that Gazprom Deputy CEO Alexander Medvedev had gone to Kuala Lumpur in June and signed contracts with “Petronas to cooperate in energy projects worldwide”. In addition, Bernama said “Petronas bought US$1.1 billion worth of Rosneft stock in the company's initial public offering in July 2006”.

Closer to home, Malaysia and Indonesia are “looking into at least six areas of collaboration to venture into the global market”, Bernama noted. Minister in the Prime Minister’s Department Datuk Seri Effendi Norwawi has met with Indonesian Minister for Economic Affairs Co-ordination Dr Boediono on Tuesday, 19 June, to discuss “palm oil, tourism, halal products, small and medium-scale enterprises development, Islamic finance and regional development initiatives as potential fields for collaboration”. (21 June 2007)

Sources:

Joint-venture oil and gas project in the pipeline(NST, 21 June 2007)

Malaysia Petronas in talks with Gazprom, Rosneft for major energy deal – report (AFX News Limited, 20 June 2007)

Abdullah and Putin agree on joint commission to expedite agreements (Star, 20 June 2007)

Putin, Malaysian PM vow closer ties (Channel News Asia, 20 June 2007)

Key challenges for Malaysiato be competitive (Star, 20 June 2007)

MalaysiaIndonesiamay work together in six areas (Bernama, 20 June 2007)

RussiaCan Find Solutions to Middle EastConflict - Abdullah (Bernama, 20 June 2007)

MalaysiaPM in Moscowfor Arms Talks (Kommersant, 19June 2007)

Malaysianeeds to identify key issues concerning business environment (Star, 19 June 2007)

Improving Malaysia's Ranking Among World's Most Competitive Economies (Bernama, 19 June 2007)

Turning More towards Asean, Middle East & Africa for Markets (Bernama, 19 June 2007)

Putin, Badawi satisfied with cooperation in space, oil, gas areas(Itar-Tass, 19 June 2007)

In need of help to douse the flames (The Economist, 15 Feb 2007)