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
Todays 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