Malaysia cannot depend on low-cost structures to compete, says Ahmad Husni
UPDATED @ 06:07:44 PM 30-11-2010By Boo Su-Lyn November 30, 2010
KUALA LUMPUR, Nov 30 — Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah has called for Malaysia to cut its dependence on low-cost structures in a bid to compete internationally.
Ahmad Husni highlighted a growing competition for trade and investment as international players attempt to move up the value chain.
“Malaysia can no longer depend on a low-cost structure to remain competitive internationally,” said Ahmad Husni in a speech read by Deputy Finance Minister Senator Datuk Donald Lim Siang Chai at Malaysian Institute of Economic Research (MIER)’s National Economic Outlook Conference 2011-2012 today.
Malaysia’s economy depends on exporting goods and services and relies heavily on cheap foreign labour.
Malaysia now has approximately 1.9 million foreign workers spread across sectors such as manufacturing (39 per cent), construction (19 per cent), plantation (14 per cent), housemaids (12 per cent), services (10 per cent), and with the rest in agriculture.
In April, Home Minister Datuk Seri Hishammuddin Hussein had announced that the government plans to reduce the number of foreign workers to 1.5 million in three years.
Today, Ahmad Husni warned Malaysia to closely monitor its efforts in getting out of the middle-income trap as regional neighbours were similarly reviving their economies.
“We must also not forget that as a result of the global economic crisis, the name of the game among many of our regional neighbours is ‘economic transformation’. Vietnam, for example, is moving ahead strongly and is becoming more competitive,” said Ahmad Husni.
“Malaysia too needs to be extra vigilant in its transformation efforts so as not to be left behind,” he added.
Ahmad Husni also called on the private sector to expand its role in transforming Malaysia to a high-income economy.
“Considering the government’s fiscal constraints, the private sector needs to play an increasingly crucial role in efforts to propel Malaysia into the ranks of high-income countries,” said the second finance minister.
“To achieve the 6 per cent per annum real GDP growth target during the 10th Malaysia Plan (10MP) period, a considerable leap in investment activities by a more dynamic revitalised private sector is necessary,” he added.
Ahmad Husni pointed out that outdated business regulations would be abolished and a comprehensive review of business regulations would be made to energise the private sector.
“Processes and procedures would (also) be improved to increase the productivity and competitiveness of our major economic sectors,” he said.
Ahmad Husni further highlighted five strategies to achieve Malaysia’s goal of becoming a high-income nation by 2020.
“To achieve the objectives and targets set in the 10MP...design government philosophy and approach to transform Malaysia using NKRA (National Key Result Areas) methodology, create a conducive environment for unleashing economic growth, move towards inclusive socio-economic development, develop and retain a first-world talent base, and build an environment that enhances quality of life,” said Ahmad Husni.
He pointed out that such initiatives were crucial in empowering Malaysia to face economic giants like China and India.
“These five key strategic thrusts are absolutely necessary if Malaysia is to successfully face the emergence of countries like China, India and countries in the region,” said Ahmad Husni.
He also noted that the government aimed to reduce the country’s fiscal deficit from 5.3 per cent of the GDP this year to less than 3 per cent in 2015.
“The conduct of monetary policy will continue to balance the need to contain inflation with that of ensuring an economic environment supportive of economic growth,” said Ahmad Husni.
He added that resilient domestic demand, particularly private expenditure, was expected to spur the economy.
“It (the Malaysian economy) is expected to grow 7 per cent this year and between 5 and 6 per cent next year,” said Ahmad Husni.
MIER has forecast a 5.2 per cent growth for 2011, down from its forecast growth of 6.8 per cent for 2010. MIER also predicted slower exports in 2011.
Bank Negara said recently that the country’s economy grew just 5.3 per cent in the third quarter after a strong first half, attributing the 40 per cent dip from previous quarters to slowing external demand.
The economy had expanded by 10.1 per cent in the first quarter and 8.9 per cent in the second quarter. In terms of a quarter-on-quarter basis, the economy grew 2.4 per cent in the third quarter.
Today, Ahmad Husni predicted high growth in the manufacturing and services sectors.
“We expect the growth to be broad based, led by strong expansion in the manufacturing and services sectors,” he said.
MIER, however, noted today that such sectors moderated in the third quarter of the year.
The manufacturing sector eased to 7.5 per cent, down from 16 per cent in the first quarter.
The services sector grew by 5.4 per cent, compared to 7.3 per cent in the first quarter.
Today, Ahmad Husni predicted that inflation would remain below 3 per cent.
“Prices are expected to be stable, with inflation below 3 per cent,” he said.
Ahmad Husni pointed out that the country’s financial sector was healthy while Malaysia’s macroeconomic policies were usually timely and pragmatic.
“We have high forex reserves and our financial sector is healthy, largely unaffected by the US sub-prime contagion,” he said.
Ahmad Husni also underscored the importance of Prime Minister Datuk Seri Najib Razak’s New Economic Model (NEM) in achieving Malaysia’s goal of joining the ranks of developed nations by 2020.
“To realize Vision 2020, it is crucial that the NEM succeeds,” he said.
Malay rights groups led by Perkasa, however, have voiced strident views against the NEM for its aims at making affirmative action more market-friendly until Najib was forced to backtrack and call the policy a “trial balloon”.
The second part of the NEM has yet to be unveiled since its launch months ago in March this year.
KUALA LUMPUR, Nov 30 — Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah has called for Malaysia to cut its dependence on low-cost structures in a bid to compete internationally.
Ahmad Husni highlighted a growing competition for trade and investment as international players attempt to move up the value chain.
“Malaysia can no longer depend on a low-cost structure to remain competitive internationally,” said Ahmad Husni in a speech read by Deputy Finance Minister Senator Datuk Donald Lim Siang Chai at Malaysian Institute of Economic Research (MIER)’s National Economic Outlook Conference 2011-2012 today.
Malaysia’s economy depends on exporting goods and services and relies heavily on cheap foreign labour.
Malaysia now has approximately 1.9 million foreign workers spread across sectors such as manufacturing (39 per cent), construction (19 per cent), plantation (14 per cent), housemaids (12 per cent), services (10 per cent), and with the rest in agriculture.
In April, Home Minister Datuk Seri Hishammuddin Hussein had announced that the government plans to reduce the number of foreign workers to 1.5 million in three years.
Today, Ahmad Husni warned Malaysia to closely monitor its efforts in getting out of the middle-income trap as regional neighbours were similarly reviving their economies.
“We must also not forget that as a result of the global economic crisis, the name of the game among many of our regional neighbours is ‘economic transformation’. Vietnam, for example, is moving ahead strongly and is becoming more competitive,” said Ahmad Husni.
“Malaysia too needs to be extra vigilant in its transformation efforts so as not to be left behind,” he added.
Ahmad Husni also called on the private sector to expand its role in transforming Malaysia to a high-income economy.
“Considering the government’s fiscal constraints, the private sector needs to play an increasingly crucial role in efforts to propel Malaysia into the ranks of high-income countries,” said the second finance minister.
“To achieve the 6 per cent per annum real GDP growth target during the 10th Malaysia Plan (10MP) period, a considerable leap in investment activities by a more dynamic revitalised private sector is necessary,” he added.
Ahmad Husni pointed out that outdated business regulations would be abolished and a comprehensive review of business regulations would be made to energise the private sector.
“Processes and procedures would (also) be improved to increase the productivity and competitiveness of our major economic sectors,” he said.
Ahmad Husni further highlighted five strategies to achieve Malaysia’s goal of becoming a high-income nation by 2020.
“To achieve the objectives and targets set in the 10MP...design government philosophy and approach to transform Malaysia using NKRA (National Key Result Areas) methodology, create a conducive environment for unleashing economic growth, move towards inclusive socio-economic development, develop and retain a first-world talent base, and build an environment that enhances quality of life,” said Ahmad Husni.
He pointed out that such initiatives were crucial in empowering Malaysia to face economic giants like China and India.
“These five key strategic thrusts are absolutely necessary if Malaysia is to successfully face the emergence of countries like China, India and countries in the region,” said Ahmad Husni.
He also noted that the government aimed to reduce the country’s fiscal deficit from 5.3 per cent of the GDP this year to less than 3 per cent in 2015.
“The conduct of monetary policy will continue to balance the need to contain inflation with that of ensuring an economic environment supportive of economic growth,” said Ahmad Husni.
He added that resilient domestic demand, particularly private expenditure, was expected to spur the economy.
“It (the Malaysian economy) is expected to grow 7 per cent this year and between 5 and 6 per cent next year,” said Ahmad Husni.
MIER has forecast a 5.2 per cent growth for 2011, down from its forecast growth of 6.8 per cent for 2010. MIER also predicted slower exports in 2011.
Bank Negara said recently that the country’s economy grew just 5.3 per cent in the third quarter after a strong first half, attributing the 40 per cent dip from previous quarters to slowing external demand.
The economy had expanded by 10.1 per cent in the first quarter and 8.9 per cent in the second quarter. In terms of a quarter-on-quarter basis, the economy grew 2.4 per cent in the third quarter.
Today, Ahmad Husni predicted high growth in the manufacturing and services sectors.
“We expect the growth to be broad based, led by strong expansion in the manufacturing and services sectors,” he said.
MIER, however, noted today that such sectors moderated in the third quarter of the year.
The manufacturing sector eased to 7.5 per cent, down from 16 per cent in the first quarter.
The services sector grew by 5.4 per cent, compared to 7.3 per cent in the first quarter.
Today, Ahmad Husni predicted that inflation would remain below 3 per cent.
“Prices are expected to be stable, with inflation below 3 per cent,” he said.
Ahmad Husni pointed out that the country’s financial sector was healthy while Malaysia’s macroeconomic policies were usually timely and pragmatic.
“We have high forex reserves and our financial sector is healthy, largely unaffected by the US sub-prime contagion,” he said.
Ahmad Husni also underscored the importance of Prime Minister Datuk Seri Najib Razak’s New Economic Model (NEM) in achieving Malaysia’s goal of joining the ranks of developed nations by 2020.
“To realize Vision 2020, it is crucial that the NEM succeeds,” he said.
Malay rights groups led by Perkasa, however, have voiced strident views against the NEM for its aims at making affirmative action more market-friendly until Najib was forced to backtrack and call the policy a “trial balloon”.
The second part of the NEM has yet to be unveiled since its launch months ago in March this year.
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