Spending wisely

Q What strategies are you planning to deploy to ensure a speedy economic recovery?

A These are hard times for people across the world. I am focused on providing leadership to lift us out of this economic crisis and unleash Malaysia’s full potential. In fact, mitigating the worst of the crisis and positioning Malaysia for renewed growth once the crisis is finished have been the predominant themes of my premiership so far. This has involved a combination of well-placed stimulus spending, sweeping reforms and plans for investment in human capital to allow for future growth.

First, we have taken some very immediate and direct measures to stimulate the economy. On November 4 last year, the government announced a first stimulus package of RM7bn ($2bn). On March 10, we announced a second package of RM60bn. The RM60bn alone is the biggest stimulus package in our history. Combined, this accounts for 9% of Malaysia’s gross domestic product. I consider these two stimulus packages so crucial to our economic well-being that I am personally overseeing the implementation.

Second, we are positioning Malaysia as the destination of choice for investors once the global economy revives. We have recently announced aggressive measures to create job opportunities and liberalise the services and financial sectors. Through these reforms, Malaysia can attract more foreign investment, generate higher employment and further strengthen the resilience and competitiveness of our companies.

Third, we are making sure Malaysia will have the human capital and infrastructure for sustained growth in the years to come. The country will invest in education and technology as well as strengthen its capacities to venture into the information technology sector and renewable energy.

Q What factors will drive Malaysia’s economic growth in the next five years?

A A business and regulatory environment that unleashes the full potential of the private sector is needed, together with a new economic model to transform the nation towards sustainable higher growth. We want to focus our efforts on areas such as medical tourism, information technology, renewable energy, and other emerging areas. My goal is to increase the service sector to 70% of GDP, from 54%, in an effort to establish a knowledge-based economy that will be less reliant on manufactured exports.

The medical sector, especially medical tourism, is a high priority to position Malaysia as a world-class healthcare services provider. The government will also invest in education and technology to further strengthen Malaysia’s capacity to lead in these new growth areas. There are many more opportunities out there in other industries waiting to be explored. The key is to make sure Malaysia’s regulatory environment is ready to support investment in these innovative industries.

A unified Malaysia that offers a fair chance to all Malaysians is a prerequisite to the country’s achievement of developed nation status. It is only by capitalising on all our human resources that we can take our place. It is time to show young Malaysians that they can find opportunities here.

Q What specific part do you think Malaysia has to play in the overall global economic recovery?

A The world’s economic recovery will depend on concerted and co-ordinated efforts by economies large and small, and we in Malaysia will play our part. However, much of the recovery will depend on the twin juggernauts, Europe and the US, making their way back to financial good health. In the meantime, it will be necessary for us all to look for alternative sources of growth, both from our own domestic economies, and from trade within our own and in other underutilised regions.

While the markets in the developed world are shrinking, we can explore ways and means to further increase and deepen economic co-operation among ourselves. For instance, Malaysia’s trade with non-aligned movement countries totalled $125bn last year, or 35.3% of its total trade, compared to trade with the US, our major trading partner, totalling $41.8bn or 11.8%. By looking for regional and inter-regional trade opportunities we can help boost the global economy through alternate routes.

These new opportunities also give Malaysia a chance to embrace and build on its unique blending of communities and cultures and position itself as a natural destination for investment. Malaysia’s positioning as a sharia banking and investment centre makes us a natural partner for Middle Eastern investors seeking sharia-compliant investments. Malaysia also recognises its Asian neighbours as powerful new economic partners. On a recent trip to China, much of the discussion was of potential for investment. By discovering these alternate routes, we can hopefully see revived economic growth on a global scale.

Q What is Malaysia’s policy on protectionism?

A Our whole strategy is based on moving even further towards an open and free market. Far from throwing up barriers, we are dismantling those that were previously in place. We removed with immediate effect the 30% Bumiputra [ethnic Malay] equity requirement for 27 services sub-sectors. We also abolished the requirement for regulatory approval by the Foreign Investment Committee (FIC) on property transactions. Ownership in the wholesale segment of the fund management industry has also been fully liberalised to allow 100% foreign ownership for qualified and leading fund management companies to establish operations in Malaysia. And the legal profession has been liberalised to allow up to five top international law firms with expertise in Islamic finance to offer services in this field.

This liberalisation of the services sector has been pursued with the view of creating a condusive business environment to attract investment, technology transfers and higher value employment opportunities. Malaysia’s future is one of growth through open markets and openness to outside investors.

Q What plans do you have to capture your share of FDI flows into Asia?

A FDI flows worldwide this year are expected to be 50% to 60% less than what was available last year. We need to get a slice of that remaining FDI. The comprehensive deregulation of FIC guidelines announced in June was drawn up to strengthen Malaysia’s attractiveness as a place to do business and invest, for both Malaysians and foreigners. The liberalisation of the services sector announced earlier is also expected to create greater inflows of investment.

By the end of this year and early next year, we should see a steady global economic recovery. When that happens, Malaysia will be in a better position and much higher up on investors’ radar screens. Having said this, we know that our work is far from done. It is not a time for sentiment or half measures. And that is why we are putting in place new levels of transparency, to ensure foreign and domestic businesses are given a fair and level playing field and that government spending is done in a clean and efficient manner.

We are already putting in place measures to increase transparency in terms of assessing government service delivery, financial accountability, and allowing for greater public input through social media. For example, we are now in the process of setting key performance indicators for all ministers. We are also working to increase financial transparency. The government will ensure that a major portion of government procurement is made through open tenders.

The government has already increased transparency when it comes to spending money from the two stimulus packages and we will continue and expand this transparency for future government spending.

CURRICULUM VITAE

NAJIB RAZAK

2009Malaysia government

Prime minister

2004Malaysia government

Deputy prime minister and minister of defence

2000Malaysia government

Minister of defence

1995Malaysia government

Minister of education

1991Malaysia government