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| StanChart Research: Start of journey to competitiveness |
| Written by Joseph Chin | |||
| Friday, 03 July 2009 11:20 | |||
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Standard Chartered Global Equities Research (StanChart Research) is positive about the government’s latest measures and expects more measured reforms on the cards in the medium term, but not in the “big-bang, shake-the-tree-up approach”. “Malaysia is making some headway in enhancing its appeal to foreign investors, although this is only the start of a lengthy journey in improving Malaysia’s competitiveness,” StanChart Research said yesterday. Despite the latest initiatives, the near-term outlook of foreign direct investment (FDI) was less promising due to the weak external environment. FDI into Malaysia in 2009 is expected to be halved from 2008 level (inward FDI was RM24.1 billion in 2008 which was already 17% lower compared to 2007). StanChart Research said Najib, after being in office for less than 100 days, had already announced liberalisation measures within 27 services sub-sectors and the increasingly important financial industry. It said the latest liberalisation measures targeted at capital markets further enhanced Najib’s credentials to push through reforms and appeal to foreign investors while helping to develop the private sector. At Invest Malaysia 2009 on Wednesday, Najib announced measures that included changes to the 30% bumiputera ownership equity rule, increasing the foreign ownership limit on unit trust companies and brokerages, and paring down the Foreign Investment Committee (FIC) regulatory oversight. StanChart Research said even as Malaysia tried to cushion the economy from the sharp fall in exports, credit tightening and the softening of private spending with the RM67 billion stimulus measures, it had also embarked on reforms to address its long-term competitiveness issues. A beneficiary is likely to be the Iskandar Development region which in turn would complement Malaysia’s push to further develop capability in various industries including manufacturing, education and logistic services. StanChart said as Malaysia’s population was still growing, the country was not facing the same challenge as Singapore of an ageing workforce. It said Malaysia’s “brain drain” could lead to a severe shortage of skilled manpower in the future. Najib had said in a CNBC interview on Tuesday that the measures were unlikely to help FDI inflows into Malaysia this year as the global economy continued to feel the impact of the current recession, but “the benefit is likely to flow in the long term”. StanChart Research said the fact that the prime minister was willing to tackle issues that had been around for decades in a pragmatic fashion should improve investor confidence that change would abound in the coming years. This article appeared in The Edge Financial Daily, July 3, 2009.
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