His Excellency Dato' S. Thanarajasingam, Ambassador of Malaysia to France gave a television interview by TV5Monde on 23 March 2009 for the show '24 Heure Chrono de l'International'. TV5Monde is a global television network, broadcasting several channels of French language programmes. The interview went as follows:
Could you present in a few words, the main aspects of the Malaysian economy, and what are the most dynamic sectors?
Let me begin with the big picture.
The Malaysian economy has come a long way in the last 50 years. From a two commodity – rubber and tin – based economy, the Malaysian economy has been transformed. Today it is a diversified economy with the largest sector being the services sector making up 53% of the total economy. This is followed by the manufacturing (28%), mining (8%), agriculture (7%) and construction (3%). Malaysia has posted steady economic growths averaging 6-7% for the past 30 years. Today, Malaysia is the 19th largest trading nation in the whole world. Malaysia’s target is to now decrease further its dependence on manufacturing and boost the services sector to 70% by the year 2020.
The most dynamic sector is the services sector which has become the nation’s driver of growth particularly in the new growth areas in finance, business services and communications, upstream oil and gas sector. Malaysia has seen exponential growth in the area of Islamic finance where Malaysia continues to be a pioneer and a world leader in terms of expertise. Whereas for business services, the wholesale and retail trade sub sectors has seen continued growth due to the increasing domestic demand for goods and services as well as the increase in tourist arrivals.
Malaysia had posted good growths in the tourism sector as well with over 20 million tourists having visited the country in 2008 making Malaysia the 11th most visited country in the world. Remember our tourist promotion motto “Malaysia Truly Asia”.
Malaysia will continue to move forward towards knowledge and capital intensive economy through the sourcing of IT services and expansion of telecommunications, petrochemicals, pharmaceuticals and medical devices.
The Malaysian manufacturing and construction sector also deserves a mention. The bulk of Malaysian manufacturing is in electrical and electronic products which also represent the bulk of Malaysia’s exports. It is important to note that Malaysia while being a small economy is the 19th largest trading country in the world.
The construction sector has played an important role in building infrastructure, buildings and facilities to cater to the increasing economic growth of the country. There is always something new being built somewhere in Malaysia.
In summary, Malaysia has a well diversified economy where capital and knowledge intensive sectors are currently the main growth areas as Malaysia heads towards being a developed nation by 2020.
What is the strategy of the country and incentives to attract foreign and especially French investments in Malaysia?
There are a number of incentives to attract foreign investments in Malaysia particularly as I mentioned before investments in capital and knowledge intensive sectors. These sectors are in biotech, electronics, petrochemicals, pharmaceuticals, medical and ICT. Other sectors such as the manufacturing of intermediate goods and resource based industry such as the halal industry are also major targets of the country. For these sectors, Malaysia offers various incentives such as corporate tax exemption of 70-100% for a period of 5-10 years, import duty exemption and flexibility on rules governing expatriate posts. Malaysia also offers incentives for foreign companies which wish to establish their operational centre, regional office and distribution centre in Malaysia.
Malaysia has designated 5 areas for its development corridors. Each development corridor is distinct, focusing on certain sectors which can benefit from its different geographical locations. For each corridor, the Government of Malaysia is eager to attract foreign investments and will offer more incentives for foreign investments in these development corridors.
For example, the Iskandar Development Region situated in the south of the Peninsular bordering Singapore and launched over two years ago has now attracted USD12 billion from the targeted USD13 billion. Foreign investors who wish to invest in the Iskandar Development Region will be offered corporate tax exemption for 10 years, exemption from certain rules that restrict foreign ownership of land and assets and allowed to source capital globally as well as employ foreign workers without restrictions. In line with the overall strategic aim of the country, the Iskandar Development Region aims to attract investment in creative industries, educational services, financial advisory and consulting services, healthcare, logistics and tourism related activities.
Although we had no colonial historical links with France, France today is a well established brand in Malaysia. Malaysians are familiar with Louis Vuitton, Chanel, Carrefour and Thomson. We are aware of France’s expertise in biotech, aviation, etc.
France is a significant trading and investment partner of Malaysia. Among the EU, France is Malaysia’s 4th largest trading partner and the 5th largest foreign investor in Malaysia. Whereas Malaysia is the 2nd largest trading partner of France in the Southeast Asia region. It shows Malaysia’s track record with France and that French business do have the interest and confidence to have business dealings whether it be trade or investment with Malaysia.
French companies which wish to invest in Malaysia could contact the Malaysian Investment and Development Agency office here in Paris which will provide all the necessary information and assistance to the specific interests.
What are the main assets and reasons why a French company which target the ASEAN region, should consider an investment in Malaysia?
With a population of 575 million people, ASEAN’s total GDP is valued at USD1.2 trillion. ASEAN offers as a lucrative market for any investor. ASEAN itself has seen tremendous growth over the last 2 decades. Last year, ASEAN, for the first time, adopted its Charter. ASEAN has decided to establish an ASEAN Community by 2020 on the basis of three pillars – the ASEAN Economy Community, the ASEAN Security Community and ASEAN Socio-Cultural Community. Doing business with and within ASEAN would be simplified and made easy. Malaysia with a population of 25 million is strategically located and is the natural gateway to ASEAN.
Why go through Malaysia? Let me give 6 reasons.
Firstly, Malaysia is politically stable, with an open economy, dynamic democracy with a vibrant multicultural society. Indeed we pride ourselves with the motto ‘Malaysia truly Asia’. In many ways, we represent the dynamism and diversity of Asia.
Secondly, Malaysia upholds the rule of law. French business can rest assured that contracts with Malaysian companies will be legally upheld in the court of law.
Thirdly, Malaysia has an open and resilient economy with a strong banking system, high savings rate and a dynamic corporate sector. Malaysia has continued to post large trade account surplus and is in a better position to weather uncertainties.
Of course with an open economy, Malaysia has not been spared by the current global economic climate. I don’t think any economy; even the few closed economies. Nonetheless Malaysia remains better prepared to withstand the current global economic down-swing. More recently, the government had announced the second stimulus package worth RM60 billion targeting investment in education and technology strengthening the country’s capacity to lead in information technology, renewable energy and emerging sectors of the new economy.
Fourthly, Malaysia offers world class infrastructure and facilities. Our ports and airports are world class. We have already 2 world class airlines in MAS (national and premier airline) and AirAsia (low-cost). Furthermore, Malaysia has highways that link the north, south, east and west of peninsular. Whereas in Eastern Malaysia in Borneo, there is an abundance of raw materials and a huge untapped market.
Fifthly, a Malaysian work force which is highly capable and motivated. There is a high level of competency in the English language, though not yet the French language. Even in this I must say the seeds have been planted – more than 400 students studying here. Efforts to establish closer collaboration with French education institutions are certain to grow. Malaysia will continue to invest in education and technology, opening opportunities for many companies especially French which are well known for their hi-tech capabilities and good education system. This will in-turn create an upward cycle of increasing quality of workforce and thus providing benefits for companies that do invest in Malaysia.
Sixthly, Malaysia has one of the lowest corporate tax rates in the region at 25%, part of our business-friendly tax structures and regulatory policies.
Embassy of Malaysia
Paris
23 March 2009