Malaysian trade minister on industry and globalization

July 25, 2007

In this exclusive interview with Malaysia's Dato' Seri Rafidah Aziz, Honourable Minister of International Trade and Industry, Minister Aziz shares perspective with VentureOutsource.com on regional and global forces shaping the electronics contract manufacturing sector in Asia; Malaysia's role in industry, trends in industry, thoughts on free trade, and more. Transcripts from that discussion follow.

VO: The economies and infrastructure for many Asian countries are expanding. Rapidly for some countries. Can you please share with our readers some of the things Malaysia is doing to attract and secure successful business engagements with multi-national companies (MNC) interested in doing business in the greater Asia region while, at the same time, other countries in the region such as India and Vietnam have also begun to compete to attract some of the same MNCs? What would you list as two (2) of the primary characteristic that help differentiate Malaysia's value proposition the most from other Asian countries?

Minister Aziz: Malaysia achieved its best performance attracting investments in the manufacturing sector in 2006. A total of 1,077 manufacturing projects were approved with investments amounting to US$12.5 billion. Of this, US$5.5 billion (43.9 per cent) were from foreign investments. The sustained inflow of foreign investments contributed toward achievement of the investment target we set under the Third Industrial Master Plan (IMP3), 2006-2020, at US$7.5 billion per annum.

Based on the IMD World Competitiveness Yearbook 2006, Malaysia's overall competitiveness, for countries with populations greater than 20 million, improved to the 8th position in 2006 from the 10th position in 2005. Malaysia's position in the four key competitiveness factors were Economic Performance (6th position), Government Efficiency (5th), Business Efficiency (6th), and Infrastructure (11th).

Despite competition intensifying, Malaysia has managed to maintain its position among leading global trading nations. According to WTO International Trade Statistics, Malaysia was the world's 19th largest exporter in 2006, accounting for 1.3 percent of global merchandise exports. This places Malaysia ahead of some developed countries such as Switzerland, Sweden, and Australia, and developing countries such as India, Thailand, and Brazil.

Malaysia Minister of Trade - Datu' Seri Rafidah Aziz

Datu' Seri Rafidah Aziz
Honourable Minister of International Trade
and Industry of Malaysia

Foreign investors continue to show confidence in Malaysia through new investments and expansion / diversification in the country. Malaysia's political and economic stability and its educated, hardworking, and multi-lingual workforce are some of the primary reasons for foreign investor confidence.

Malaysia's success in industrial development is also due to the government's pro-business policies and its ability to respond to investor needs by ensuring facilities and incentives for investments are in place to support smooth business operational activities in Malaysia. The government is giving greater emphasis to the continued improvement of the public sector delivery system in order to ensure the cost of doing business in Malaysia remains competitive.

Other measures introduced by the government to further promote investment include the reduction of corporate tax from 28 percent in 2006 to 27 percent in 2007 - to 26 percent in 2008.

The government has been encouraging MNCs to move up the value chain into technology-intensive industries and to undertake research and development; design and development, distribution, and marketing activities. MNCs have responded to these initiatives with many having expanded; restructured, and upgraded their operations in Malaysia.

Competition for foreign direct investments (FDI) has intensified with the emergence of China, India, and Vietnam in this region of the globe. We are, however, of the belief Malaysia has its own strength to continue to attract quality investment in areas we have targeted in the Industrial Master Plan, IMP3, launched last year.