New approaches light up investment environment

The entry of global fund managers and stockbrokers in the ocuntry has served to dynamize the economy

Malaysia continued producing strong economic indicators in 2003 with even higher growth predicted for 2004 – a sure sign that the country has firmly put the 1997 Asian crisis behind it. GDP growth for 2003 was registered at 5.2% despite a turbulent global climate, up from 4.1% in 2002. Estimates for 2004 are for a buoyant 7% growth, driven primarily by the country’s manufacturing and service sectors. The country also maintains healthy foreign exchange reserves, a relatively small external debt, and has managed to keep inflation well in line. The country’s budget deficit on the other hand is relatively high, reflecting the government’s willingness to use deficit funds to support the economy. Consequently, Prime Minister Badawi has made reducing the deficit part and parcel of his economic program, targeting 4.5% of GDP for 2004. Second Finance Minister Mohammed Yakcop comments, “What we decided with Prime Minister Badawi is that we had to bring back the deficit to a declining trend. The deficit was 5.6% two years ago and we want to keep it decreasing in the following years. We want to allocate funds efficiently and we make sure that all projects that are government funded are cost effective and that they bring the best to the community.”

As a result, in his first year in office Prime Minister Badawi has slowed government spending on large infrastructure projects and worked to consolidate Malaysia’s tight fiscal position. He has also liberalized the domestic capital market and allowed the entry of five foreign global fund managers and five major stockbrokers. Another key element in his economic program is the rejuvenation of the agricultural sector and agro-based industries. The Prime Minister unveiled plans for new investment in the sectors while affirming his commitment to the country’s ongoing goal of becoming a fully knowledge-based economy and a leading producer and developer of high-tech products.

ABDUL RAZAK Deputy Prime Minister of Malaysia

Deputy Prime Minister Abdul Razak says, “What the Prime Minister wants to do is to identify new sources of wealth and growth for Malaysia and resuscitate the traditional areas that require an infusion of capital and new approaches to modernize.”

Malaysia’s strong growth in 2004 was also the result of continuing government efforts to bolster the private sector and encourage expansion across the globe. Indeed, statistics from the World Investment Report 2004 by the United Nations Conference on Trade and Development show that Malaysia has emerged as one of the larger and more established outward investors in the developing world. Governor of Bank Negara Malaysia, the country’s central bank, Zeti Akhtar Aziz, states, “There are several emerging trends that are very encouraging this year.

First of all, the outlook for economic performance driven by the private sector is very promising. Furthermore, we have achieved stability in all the influential areas – economic, financial, monetary, social, and political, to reinforce the favorable environment in the country.”

The Malaysian Industrial Development Authority (MIDA), the country’s one-stop center for information on investment, trade, financing and productivity in Malaysia’s manufacturing and manufacturing services sectors is available to guide new investors in the country. MIDA is the government's principal agency for the promotion and coordination of industrial development, and the first point of contact for investors who intend to set up projects in the manufacturing and its related support services sectors in Malaysia. The agency has five offices located throughout the United States in New York, Boston, Chicago, San Jose, and Los Angeles.