• Contact Us
• Testimonials
• Track Records
• International Properties
• Project Highlights
• Services
• Articles
• About Penang
• About us
• Home

  Email this to a friend

Improving FDI Standing

The government’s move to quickly set up a special Cabinet committee to hasten the approval of high impact projects will significantly help to attract more foreign direct investments (FDIs).

However, it also needs to address other problems impeding FDIs, in particular improving the overall administrative delivery system, according to local and foreign economists.

Deputy Prime Minister Datuk Seri Najib Tun Razak said recently a special Cabinet committee had been set up to speedily approve investments in high-impact projects, especially for foreign investors.

Najib said normal investment projects would go through the usual process of approvals through the Malaysian Industrial Development Authority or other relevant bodies, while high-impact proposals would be forwarded to the committee by the National Implementation Directorate (NID) under the Economic Planning Unit.

“We want to give a positive signal to investors that we are very serious about increasing investments in the country,” he said adding that high-impact projects involving large capital, specific technologies were big in terms of job creation and would be given special consideration.

CIMB Securities Sdn Bhd head of economic research, Lee Heng Guie, said the recent World Bank-IFC report 2005/2006 ranking of business-friendly economies had highlighted the areas that Malaysia could improve to attract more FDIs.

“We are glad that our Government is taking note of the report and has acted promptly to improve our FDI standing,” he said.

In the report, Malaysia was placed 25th among 175 economies in the world, with Singapore beating the previous winner New Zealand for top spot, while the United States, Canada, Hong Kong (China), Britain, Denmark, Australia, Norway and Ireland were within the top 10 placing.

The bank report evaluated regulations facing investors in 10 categories, including starting a business, obtaining licenses, employing workers, registering property and investor protection.

It also reviewed regulations in credit, taxes, trading across and closing a business.

Lee said the Government was aware that it needed to do better to attract more FDIs and had identified one of the most effective ways to boost FDIs – hastening the approval of high-impact projects.

“It will definitely strengthen the economy and provide greater exposure and business opportunities to locals and foreigners,” he said.

However, Lee said besides fast approvals for high-impact projects, it was also important to have an efficient delivery system to ensure that resources, especially the workforce, were quickly mobilized to ensure the jobs were delivered on time and within the budget.

Lee also said that it was important for the Government to implement policies that were consistent and business-friendly to ensure foreign investors were confident of investing their funds here.

“The Government has a fine line to tread in developing policies that support local businesses while being business-friendly to attract more foreign investors in the country,” he said.

Lee said the authorities had made good strides in addressing some issues such as faster approvals for foreign visas as well as labour shortage occurring in sectors like the construction industry for low and high-end jobs.

“But more needs to be done to fast track our delivery system public and private,” he noted, adding that big-time investors flushed with funds were spoilt for choice for countries to invest in.

Lee said in further strengthening the overall administrative and delivery system, special emphasis and effort should be given to attract more investors.

“It should be made a top priority,” he said adding that if the Government needed to train its workforce to be more IT savvy, then the authorities should invest more in educating the workers.

He said it was interesting to note that Singapore was the top pick in terms of business friendliness in the report, which credited the republic’s on-line access to the Government as a major factor in its success.

A foreign economist based in the republic agrees with Lee.  He said Singapore shone because of its good online access, especially between government administrative departments.

“This allows foreign or local investors to make applications for licenses or register properties via the Internet, saving them time and money,” he said, adding that much of the mundane shuffling of papers between departments was automated.

The foreign economist said the Malaysian Government must identify jobs that should be automated to maximize human resources.

He said filing information for assessment for exemption or approval should be made easy and on-line if possible for investors.

“We are happy to hear that the Malaysian Government is taking steps to hasten the approval of high-impact projects by foreign investors.  This should have a substantial impact on the level of FDIs entering the country, if administered successfully,” he said.

Another economist said it was not the case of Malaysia being an unattractive place for investment.
“Malaysia is still a very attractive country to invest in the region because of its good infrastructure, political stability and attractive structure.  But due to rising competition from countries such as China, India and emerging markets like Thailand and Vietnam, Malaysia has to step up its foreign investment incentive package to compete with other economies,” she said.

She also said the Government needed to know which sectors of the economy had a comparative advantage with the rest of the world to provide stronger support for the growth of these companies in the various sectors.  This would help them develop into global players in their respective fields, via attractive tax exemptions, research grants or loans and other forms of incentive packages.

“At the same time, the authorities should also be more flexible with business opportunities via mergers and acquisitions between local and foreign companies wherever feasible, so long as benefits can be reaped by both sides,” she said.

Malaysian’s trade performance last year increased 9.9% to RM967.8bil, the second highest growth in the last five years.  In the first seven months of 2006, the country saw an increase of 11.7% in trade to RM603.2bil, and the trade volume was expected to exceed RM1tril by year-end.  Exports also grew 11.3% to RM330.1bil in the first seven months of this year, compared with the corresponding period last year.

Source: The Star Newspaper
~ 18th September 2006 ~