Malaysia’s prime minister, Abdullah Badawi, has vowed not to launch any significant economic initiatives during his second term, as he intends to focus on consolidating reforms announced since he took office in 2003. Mr Abdullah’s National Front party, which has ruled Malaysia since independence in 1957 but suffered a setback at the polls this spring, envisages the coming years as a period of aggressive implementation of current policies. Top of the agenda is to take forward the ‘economic corridors’ that are planned to play a vital role in the country’s future growth.
Corridors of power
Five of these corridors are now in operation or in the development stage. Stretching across 51% of the Malaysian peninsula, the East Coast Economic Region (ECER) is the biggest of three launched by the government since 2006. It includes north-east states Kelantan, Terengganu, Pahang and northern Johor. About $34bn has been earmarked for developing the corridor’s agriculture, energy, education, tourism, infrastructure and manufacturing sectors. Private investors are expected to fund a fifth of the spending.
The master plan, prepared by state oil firm Petronas, has lined up 227 projects to be implemented in the next 12 years. They are expected to create about 560,000 jobs and raise substantially the incomes of nearly four million people – 15% of the country’s population. Total GDP growth in the ECER will be raised to 7.2% by 2020 from 5.7% in 2005, according to government estimates.
The Northern Region Development Plan covers the four states of Penang, Perak, Kedah and Perlis. This northern corridor will build up modern food-processing zones by focusing on adding value in manufacturing and strengthening tourism. Investment of $51.2bn will come from the public and private sectors in the period to 2025, with the government financing one third of the outlay. This corridor aims to create 500,000 jobs by 2012, rising to one million by 2018, besides increasing the region’s GDP from RM52.7bn ($16.2bn) in 2005 to a targeted RM214bn by 2025.
As part of this plan, Penang port will be deepened and expanded to service Thailand and Sumatra, in Indonesia, its air cargo centre will be expanded and a double-track rail link will connect the northern town of Ipoh to Padang Besar on the border with Thailand.
The objective of the Southern Region Development Plan blueprint is to harness mostly private capital to turn 850 square miles of the southern state of Johor into an industrial and tourist zone. The region has road links to Singapore and air and sea links to Indonesia. About $1.16bn has been allocated for the region under the Ninth Malaysia Plan (2006-2010) and state-owned entities are expected to make investments worth $919m in various projects. Known as the Iskandar Development Region (IDR) project, the plan envisages raising capital globally and hiring foreign workers, hoping to draw investment of $105bn over 20 years.
Iskandar is Malaysia’s highest-profile investment zone, whose 856-square-mile development area makes it one of Asia’s largest special economic corridors and the focus of huge property investment and development. Iskandar is poised to be a location with considerable activity in the property sector. More than 25 developers have submitted plans for housing, commercial and mixed development projects.
Two more corridors are on the cards, one each in the Malaysian states of Sabah and Sarawak on Borneo island. Sabah is a $32.4bn, 18-year development project. The state is rich in natural resources, such as oil, natural gas, timber, palm oil and cocoa. Deals amounting to $4.95bn were signed at the launch, which include construction projects, development of palm oil and jatropha estates and agro-tourism ventures.
The government plans to spend about $1.54bn in Sabah, which it has already budgeted for in the Ninth Malaysia Plan. The plan calls for a total of $32.4bn in state and private investment over 18 years, with the creation of 900,000 jobs. Agriculture, food production and tourism are key focus areas, with some of the funds earmarked to build roads.
The Sarawak Corridor is expected to attract RM334bn in investments by 2030, with the government accounting for 15% of this outlay. According to the Sarawak Corridor of Renewable Energy (SCORE) master plan launched by the prime minister, the corridor will be developed in the central region, covering more than 44,000 square miles in the Bintulu, Kapit, Sibu, Mukah and Sarikei divisions. So far, the central region’s potential has not been developed, largely due to its sparse population.
The government has also unveiled a RM5bn allocation for high-impact projects for the development of the SCORE. So far 13 memorandums of understanding (MoUs) have been signed between the Sarawak government and companies taking part in the SCORE. The MoUs involved the state government, Sarawak Energy, Cahaya Mata Sarawak and Rio Tinto Aluminum for the supply of energy of between 900 megawatts (MW) and 1200MW for an aluminium smelter in Similajau with an investment value of RM5.25bn.
Tanjung Manis, a port whose hinterland is resource-rich, will become a manufacturing and small-industries centre. It is targeted to become a major regional port city by 2030. Similajau will be an industrial city underpinning a new industrial centre, housing heavy industries such as oil and gas, aluminium, steel and silica, with a deepwater port set to be built there.
With the full implementation of the SCORE master plan, Sarawak is expected to achieve a GDP growth rate of 7% by 2030 compared with 5% now. In this period, 1.6 million high-value job opportunities will be created throughout Sarawak, about half of them in industries emerging in the score.