INVESTMENT IN MALAYSIA - ISSUES,

CHALLENGES AND FUTURE STRATEGY

Stewart Forbes

Executive Director

Malaysian International Chamber of Commerce & Industry

Strategy is a high level plan to achieve one or more goals under

conditions of uncertainty.

Strategy is important because the resources available to achieve

these goals are usually limited.

Henry Mintzberg from McGill University defined strategy as "a

pattern in a stream of decisions" to contrast with a view of

strategy as planning[2] while,

Max McKeown (2011) argues that "strategy is about shaping the

future" and is the human attempt to get to "desirable ends with

available means”.

- Wikipedia -

Investment in Malaysia

Where are we today?

Where do we want to go?

Facilitators

Limiters (the drag factors)

Optimisation

Conclusion

Where are we today?

Preface by Dato' Sri Mustapa Mohamed, Minister of International Trade and

Industry, Malaysia to OECD IPR 2013.

“In pursuit of the transformation agenda, we will focus on:

• Promoting investments both domestic and foreign in high value added

activities and niche areas;

• Liberalizing the services sector and promoting the development of key

sectors in order to enhance its contribution to the economy;

• Creating an environment for innovation, research and development;

• Reducing regulatory barriers in order to improve the environment for

businesses;

• Enhancing entrepreneurial skills and promoting the development of SMEs;

• Attracting skilled talent from abroad to sustain growth of a knowledge-

based and innovative economy; and

• Promoting regional growth and inclusiveness.”

Where are we today?

OECD Executive Summary

“Malaysia was an early leader in export-led development … but has

had difficulty sustaining momentum over time.

1.The government is aware of the challenges and has begun to

address them … reforms in Malaysia have traditionally been

gradual and pragmatic.

2.Reducing socio-economic imbalances has been central to

Malaysian development strategies for four decades … but

redistributive policies are evolving.

3.Malaysia still maintains restrictions on foreign investment in many

services … but progressive liberalisation has begun.

4.Government-linked companies are prominent in many services.”

Traditional Investment Facilitators

Natural Resources

Regional Market Size

Low Cost Labour (productivity immaterial)

Political and Social Stability

Educated Workforce

Quality of Life

Engagement Environment

Today’s Investment Limiters

Natural Resources

Regional Market Size

Low Cost Labour (productivity

immaterial)

Political and Social Stability

Educated Workforce with

acceptable communications skills

Quality of Life

Engagement Environment

Natural Resources - Limited

Small Local Market

Increasing Cost of Labour (without

corresponding productivity)

Challenge to Stability

Lack of Skilled Workers, poor

Communication Skills

Security, Crime, Corruption

Engagement Deteriorating

Optimising Immediate Strategies

Remember : Strategy is a high level plan to achieve one or more

goals under conditions of uncertainty.

Strategy is important because the resources

available to achieve these goals are usually limited.

What Can We Change?

Natural Resources

Regional Market Size

Low Cost Labour (productivity

immaterial)

Political and Social Stability

Educated Workforce with

acceptable communications skills

Quality of Life

Engagement Environment

Natural Resources - Limited

Small Local Market

Increasing Cost of Labor (without

corresponding productivity)

Challenge to Stability

Lack of Skilled Workers, poor

Communication Skills

Security, Crime, Corruption

Engagement Deteriorating

What Can We Change?

Increasing Cost of Labour (without

corresponding productivity)

Key Issue : inability to manage human capital limits

business ability to absorb higher costs without losing

competitiveness - a better balance needed

Key Issue : modernising labour legislation is resisted by

government - holistic review required.

Key Issue : Narrow government engagement with wide

cross section of business on labour issues - engage wider

cross section of opinion.

What Can We Change?

Lack of Skilled Workers, Poor

Communication Skills and Poor Attitude

Key Issue : graduate communications skills

remain below par - emphasise practical

communication skills.

Key Issue : restore emphasis on high-end trade

skills training and review sectoral responsibility

for vocational training.

What Can We Change?

Deteriorating Engagement

Key Issue : Historic high quality government

engagement with business is deteriorating -

formalise a wide spectrum platform for policy

debate.

Key Issue : Private sector institution fragmentation

limits ability to provide clear policy support -

strengthen private sector institutions.

Conclusion

Current efforts to attract investment work, but are

insufficient in light of increasing global competition.

Limited resources means choosing the optimum areas

for action so as not to dilute efforts.

3Es, Education, Employment and Engagement

offer areas for concentrated action that can offset

inertia and the ‘drag’ factors and allow accelerated

investment growth.

Thank You