SPEECH BY HE DATO'S.THANARAJASINGAM, AMBASSADOR OF MALAYSIA TO FRANCE ENTITLED 'STRENGHTENING MALAYSIA-FRANCE RELATIONS' AT RENNES, BRITTANY

Speech by HE Dato? S. Thanarajasingam

Ambassador of Malaysia to France

 ?Strengthening Malaysia-France Relations?

Date               :           13 May 2008

Time               :           10h15

Venue            :           Rennes, Brittany

Distinguished Guests, Ladies and Gentlemen,

It is indeed an honour and privilege for me and the members of my delegation to meet all of you this morning.  Indeed this is our first road show for 2008 and and this is also the first meeting for me in Rennes.  I am sure there are many more to come as we together add substance to Malaysia-France relations. 

2.           My delegation and I are deeply grateful to the Bretagne International for working closely with us in organizing this meeting this morning.  Given the importance of this meeting, I have been joined by Ms. Balkish Yasin, Investment Counsellor, Mdm Aureen Nonis, Trade Counsellor, Mr. Jeffri Munir, Director Tourism Malaysia and Mr. Adlan Mohd. Shaffieq, Second Secretary. Also I have requested Madame Ungku Harlina and Mr.J.P. Poelmans to accompany me. They are business professionals who sell Malaysian batteries in France.

Ladies and Gentlemen,

3.           I am doing this road show as part of our efforts to make Malaysia better known in France. I am aware of the observation that Malaysia is not well known in France, especially outside Paris and outside the network of our French friends. This is also a follow-up to the last trade seminar in 2007 led by the Malaysian International Trade and Industry (Matrade).

4.           In March this year, we had our general elections, where the ruling party the Barisan Nasional under the leadership of Prime Minister Abdullah Ahmad Badawi was returned to power, attesting to continuity in our business friendly policies. 

5.           Last year in 2007, Malaysia celebrated 50 years of independence and also commemorated five decades of Malaysia-France diplomatic relations. In fact, France was one of the 16 countries with which Malaysia immediately established diplomatic ties following Malaysia?s independence in 1957. Overall, we have excellent relations between our two countries. Our relationship continues to deepen and to broaden in all areas including students? connectivity and defence cooperation. Our first submarine fleet is very French influenced.

6.           The business relationship between Malaysia and France has grown over these 50 years, with strong linkages and cooperation in investment and trade. This is evident through the increasing number of French companies investing in Malaysia, including:

·        Lafarge,

·        Alcatel,

·        Carrefour,

·        Danone, and

·        L?Oreal

·        Airbus (EADS)

·        Technips ? latest investment to set up and plant valued at more than ?100 million

·        French banks

Ladies and gentlemen,

7.           Malaysia under the leadership of Prime Minister Abdullah Ahmad Badawi has a strong and open economy as well as a Government committed to international competitiveness in terms of trade and investment.  In 2007, Malaysia was ranked the 19^th largest exporter and the 25^th leading importer in the world. Malaysia is among the top 20 trading nations offering the international community a variety of world class products.  The region where we are situated, i.e., South East Asia or ASEAN with over 550 million inhabitants, is an important and strategic trading partner where Malaysia?s exports in 2007 was recorded at RM 155.5 billion (?33.1 billion), representing 26% of Malaysia?s total exports.

8.           Malaysia?s total trade reached RM1.1 trillion (?236.2 billion), with exports continuing on an uptrend to RM605.2 billion (?128.8 billion), and imports at RM 504.8 billion (?107.4 billion). 

9.           The openness of the Malaysian economy and our dependence on the well-being of the international grid is demonstrated in the following facts:

Malaysian Product Ranking

·        Rubber Products Sector

o   Rated as the world?s number one producer of dipped goods for both volume and quality.

o   World?s leading producer and exporter of natural rubber medical gloves, catheters and latex thread.

o   Supplies 55% of the world?s market for rubber gloves, 80% for catheters and 70% for latex thread.

·        Food Manufacturing Sector

o   Largest cocoa processing centre in Asia.

o   Ranked 5^th in the world.

·        Oil Palm Products Sector

o   World?s leading producer and exporter of palm oil.  Malaysia currently accounts for 51% of the world palm oil production and 62% of world exports.

o   World?s leading producer and exporter of oleochemical products.

o   World?s leading producer of basic oleochemical products with a share of about 25% of the global production of natural fatty alcohol and fatty acids.

·        Wood and wood products Sector

o   World?s third largest exporter of medium density fibre-board.

·        Electrical and Electronics Sector

o   As one of the leading exporters of electronics in the world, Malaysia markets electronics components, consumer electronics and industrial electronics.

o   Among developing countries, ranked second largest exporter of semi-conductor devices, used in a diverse range of industries, such as automotive and telecommunications.

o   Among the world?s 5 largest exporters of home air-conditioners and semi-conductor devices such as memories, microprocessors, micro-controllers and logic and analogue devices.

·        Textiles and apparel

o   Backed by vast experience, superior quality and reasonable prices, Malaysian textiles and apparel, one of the country?s leading export sectors have gained a strong foothold in the global markets.

o   Malaysian textile manufacturers have always had an excellent reputation for quality, reliability and prompt delivery, making their products a favoured choice in competitive markets such as the US, Hong Kong and Japan.

o   By using processes such as CAD/CAM (computer aided design/computer aided manufacturing) Malaysian companies can easily meet clients? rigid production time-frames and requirements for prompt delivery. These qualities ensure that Malaysia remains an attractive outsourcing destination for international brands, such as Adidas, Guess, Gucci, Ralph Lauren and Timberland to name a few.

·                                Investment

10.       In 2007, Malaysia was the 14^th preferred destination for FDI according to UNCTAD. It was the 2^nd largest in stock and flows of FDI as a percentage of GDP according to Heidrick & Struggles and the Economist Intelligence Unit. Malaysia ranked 16^th in the FDI Confidence Index , 23^rd out of 70 countries in the Globalisation Index, and 3^rd in the Global Services Location Index according to AT Kearney. Furthermore, Kuala Lumpur was ranked 6^th cheapest place in the world out of 137 places for rents according to DTZ Research?s Global Occupancy Cost Survey.

During 2001-2007, 45 projects were approved in the manufacturing sector in Malaysia with participation from France, with investments totalling US$344.8 million.

·                    Tourism

11.       In terms of tourism, Malaysia was ranked 12^th in the Global Ranking of Top Destinations in the World, (1^st France, 2^nd Spain, 3^rd USA, 4^th China).  For Asia Pacific, Malaysia is second behind China (3^rd Hong Kong, 4^th Thailand).

?       Incentives

12.       Malaysia has continued to improve the business environment to attract foreign investments.  Some of the measures introduced are:

·         allowing 100 percent foreign equity for all new, as well as expansion / diversification projects in the manufacturing sector.

·         allowing automatic approval of up to 10 expatriate posts (including 5 keys posts) for manufacturing companies with foreign paid-up capital of US$2 million and above.

o        establishment of Immigration offices in MIDA and the Multimedia Development Corporation (MDeC) to facilitate approvals and expedite issuance of visas.

o        customised incentives for projects which are capital and technology-intensive and that have significant impact on the economy.

o        reduction in corporate tax: from 27% in 2007 to 26% in 2008 and 25% in 2009.

13.       In addition, the necessary business and investor-friendly policy measures and initiatives were introduced by the Government to improve the business environment in the country, including:

(i)           implementation of new strategies and fine-tuning of the existing policies based on the feedback from the private sector, both foreign and local;

(ii)          improvement in the Government's delivery system;

(iii)        intensive marketing of Malaysia as an investment destination in capital exporting countries;

(iv)        targeting potential companies in Malaysia and globally;

(v)         the provision of customised incentives for quality investments proposed by both domestic and foreign investors.

14.       In manufacturing, Malaysia:

(i)           is no longer a cost competitive location for labour intensive manufacturing operations.

(ii)          over the years, the Malaysian workforce has acquired skills and knowledge to move up the value chain.

(iii)        the foundation for growth and development of skills and knowledge-based industries have already been laid:

                             i.                Multimedia Super Corridor Malaysia.

                            ii.                specific regions to develop the biotechnology industry.

                           iii.                Penang's dominance in the E&E sector to further integrate with the global E&E value chain.

Development Plans

15.       Malaysia also launched the Ninth Malaysia Plan (2006 ? 2010) on 31 March 2006.  One of the objectives is to position the country to achieve developed nation status in 2020. And we are working for 2057, underlying our desire to think strategically for the long term as well. In this regard, the Government allocated US$53.4 billion for development expenditure.  Our manufacturing sector is projected to grow by 6.7 percent per annum with emphasis in:

             i.                high-technology

            ii.                knowledge-based

           iii.                skills-intensive activities

          iv.                services sector

16.       Under the Ninth Malaysia Plan, five new growth regions