Q: The United Nations Conference on Trade and Development recently recognised Malaysia as one of south-east Asia’s top trade performers in its World Investment Report. What were the factors behind your country’s strong performance, and what role has Kuala Lumpur played in this growth?
A: Our political and economic stability, competitive costs and skilled and educated workforce are combined with a government that is committed to maintaining a business-friendly environment – as an example, the government fine-tuned its fiscal and non-fiscal incentives to attract high-quality investments in the manufacturing and selected services sectors. All of these factors led Malaysia’s total trade to increase by 4.5% to RM1360bn [$434.29bn] last year.
Kuala Lumpur has played an important role by offering firms compelling investment opportunities. Functioning as the hub for the oil and gas industry, Greater Kuala Lumpur provided natural resources firms with a complete ecosystem for upstream and downstream activities. Multinational firms such as Shell and ExxonMobil have [moved to] the city and they continue to make big-ticket investments due to this ecosystem.
Additionally, Kuala Lumpur is rapidly transforming into a top-class city with many projects that have enhanced facilities and infrastructure, including the Mass Rapid Transit project as well as the River of Life project, which is cleaning and transforming the Klang River into a vibrant and liveable waterfront with high economic value. Multinational companies therefore continue to see Kuala Lumpur as a principal hub of operations.
Q: Are you worried that the Association of South-east Asian Nations [Asean] Economic Community [AEC] could erode Kuala Lumpur’s competitive edge? Some have questioned whether the AEC may place Malaysia in a ‘middle’ trap, as its infrastructure is not advanced enough to compete with Singapore, yet Kuala Lumpur’s labour and office space are not cheap enough to compete with Myanmar or Laos.
A: A study of the economic impact of the AEC by the Economic research Institute for Asean and East Asia revealed that Malaysia will experience a large increase in its GDP growth rates from trade liberalisation. The Asean economic union will open more opportunities for investors to look at Greater Kuala Lumpur, as Malaysia will be the chair of the AEC in 2015. This puts Kuala Lumpur in the spotlight, and it will be a good way to highlight its dynamic business ecosystems, its advantages and its world-class infrastructure.
So I believe that Kuala Lumpur has a broad edge over other Asean cities in terms of infrastructure, logistics and trade facilitation. Greater Kuala Lumpur is an ideal location for factories and regional headquarters to serve the growing 600 million-strong market in Asean, and it offers a very business-friendly environment.
Q: What are the constraints that businesses face when doing business in Kuala Lumpur, and how is the Ministry of International Trade and Industry [MITI] working to address them?
A: Businesses require a large number of approvals, licences and permits, and at times there can be delays in getting approvals. The MITI, through Pemudah [the ministry's special task force to facilitate business], has developed an online business licensing facility called the Business Licensing Electronic Support System, and it provides information for companies to apply for licences or permits to start operating a business in Kuala Lumpur or any other part of Malaysia. It is a virtual one-stop service centre that assists companies to obtain business licences efficiently and in an organised manner.
We have also worked to develop initiatives to reduce the number of documents and time taken to import and export goods. While the overall cost of doing business has been increasing, Malaysia is still among the cheapest countries in the world to do business.