Archives

by Chandani Jayatilleke

KUALA LUMPUR - A South East Asian country which has achieved unprecedented development in its economy in the recent past is Malaysia. The structural transformation of the country's economy over the last 30 years has been significant. The business-oriented and business-friendly environment has resulted in Malaysia being one of the largest recipients of foreign direct investment (FDI) among developing countries.

Over the last 10 years, the Malaysian economy achieved average annual growth rates of about 7 percent while gross domestic product (GDP) doubled to reach US$ 55.1 billion in 2000. Exports and imports have also almost quadrupled to reach US$ 98.1 billion and US$ 77.2 billion, placing Malaysia among the world's top 20 trading nations.

In this exclusive interview with the Daily News, N.Vasudevan, Principal Assistant Director (Bilateral Trade Relations), Ministry of International Trade and Industry speaks on what motivated Malaysia to achieve this success while emphasising the present and future trade and investment relations between Malaysia and Sri Lanka.

Excerpts of the interview:

Question: How best can you explain the present trade/investment relations between Malaysia and Sri Lanka?

Answer: Sri Lanka and Malaysia have had excellent trade relations in the past and we expect these relations to grow further with increased trade volumes in the future.

Malaysia considers Sri Lanka as one of its important trading partners. According to trade figures in 2001, Sri Lanka was Malaysia's third largest trading partner after India and Pakistan in the South Asian region. Total trade between the two countries in 2001 amounted to US$ 192 million with exports from Malaysia amounting to US$187 million and imports from Sri Lanka US$19 million. Malaysia was Sri Lanka's 14th largest trading partner after Iran and China.

In the first two months of this year, Sri Lanka exported goods to the value of US$ 3 million while Malaysian exports totalled US$ 146 million. The trade balance was US$ 143 million in favour of Malaysia.

Malaysian exports to Sri Lanka include petroleum oil, crude and crude oil, petroleum gases and hydrocarbons, lime cement and fabricated construction materials, palm oil and vegetable oils and fats, while Sri Lanka's exports include tea, electrical items, cotton fabrics, woven fabrics, electric power machinery and special transactions and commodities. There is an opportunity for Sri Lanka to increase its exports to Malaysia in the future.

Q: What are the major Malaysian investment projects in Sri Lanka?

A: Some Malaysian companies have already invested in Sri Lanka despite the domestic situation and related problems Sri Lanka. From 1999 to 2001, Malaysian companies have invested US$ 19 million in several projects. The present Malaysian investments are in projects such as hotel and real property sector, telecommunication and garments industry. Sri Lanka has also invested in a few projects in Malaysia. From 1996 to 2001, three manufacturing projects with Sri Lanka's participation were approved with an investment of US$ 1.6 million.

With Sri Lanka's new development in the political sphere, we hope that more Malaysian investors will explore investment opportunities in the future. However, it is the responsibility of Sri Lanka's Government and the private sector to promote its investment opportunities among the Malaysian business community. For instance, Sri Lanka can aggressively promote the Indo-Lanka Free Trade Agreement (FTA) to attract more investments from Malaysia.

Q: What has been the motivative factor in promoting foreign direct investment in Malaysia?

A: We have been successful in attracting foreign direct investments from around the world due to the Government's continued effort in promoting the country as a preferred investment destination in this part of the world. International Trade and Industry Minister, Ms. Rafidah Aziz undertakes on a regular basis aggressive trade and investment missions throughout the year to various parts of the world to promote the country as an attractive investment location. When the international media creates a wrong picture about the country, the government takes steps immediately to correct the situation. We also focus on certain products and services when it comes to promotions overseas.

To promote FDI, it is also necessary to carry out regular investment promotions and trade exhibitions abroad. At present, the biggest investors in Malaysia are US, Japan, China and the EU. In 2001 Malaysia attracted US$4.82 billion. Malaysia is the 18th largest importer and exporter in the world. Total exports in 2001 amounted to US$ 80.7 billion and imports US$ 73.9 billion.

In the past, Malaysia was labelled as a cheap labour destination for FDI. But, we are no longer a country which provides cheap labour. Instead we offer good infrastructure facilities and a quality workforce for potential investors. Most of the investors are expanding and reinvesting in projects in Malaysia. That's how new investments are continuing here.

However, our new strategy on investment is to attract small and medium sized companies in specialised areas. Malaysia identifies itself as the distribution and service hub of South East Asia.

We started with Free Trade Zones and later developed industrial parks.The government also developed a 10-year Industrial Master Plan (IMP) to chart the direction for industrial development in the country. Now we have the 2nd IMP (1996- 2005). Emphasis is also given to less developed regions in the country. We have offered specific incentives to attract foreign investments to this regions.

Q: What lessons would you think a country such as Sri Lanka could learn from the experiences in Malaysia?

A: We cannot advise Sri Lanka to follow certain guidelines in this regard. However, to attract more FDI, Sri Lanka's investment promotion agency (Board of Sri Lanka) should continue its efforts to attract major investments from the region and other countries which Sri Lanka has strong ties with. Sri Lanka also stands a good chance in promoting the country as a preferred investment location in the ASEAN region.

Also, you have to identify the major industries and sectors which can be based in the country and priority areas prior to promotions. You must also develop your people's abilities and skills. The private sector and the Government should work closely to earn the confidence of investors and show them a great degree of efficiency when it comes to the documentation process. Attractive incentives and policies alone would not bring any results. The Government will have to create and provide the environment through cooperation, greater efficiency and productivity. In Malaysia, we the Government have regular discussions with investors and the private sector where their problems can be addressed almost immediately.

Q: How has privatisation helped to develop Malaysia's economy?

A: Malaysia has allowed the private sector to develop many large-scale development projects on the basis of BOT (Build, Operate and Transfer) in the country. If the Government is to continue such projects it will be costly and time consuming. Allowing the private sector to do such projects may be expensive, but it is a boost to the economy. That's how we have got such a fine road network. The Malaysian Highway Authority supervises and executes the design, construction, regulation, operation and maintenance of inter-urban highways in Malaysia.

These expressways link all major townships and potential development areas and have catalysed industrial growth by enabling efficient transportation. The country's successful privatisation program has also induced more highway development projects in the last few years.

Malaysia also has much experience in developing infrastructure (roads and highways) and power sector projects. These could be two major areas where Sri Lanka would like to invite Malaysian investors.

Q: Are there employment opportunities open to foreign workers?

A: Malaysia's unemployment rate was 3.7 percent as at 2001. The country also employs foreign workers in the construction, plantation, service (domestic servants, workers in the hotel industry, trainers and instructors) and manufacturing sectors. However, only Cambodian, Indonesian, Myanmar, Philippines, Sri Lanka and Taiwanese nationals are allowed to be employed.

There are certain guidelines in the process of employing foreign workers. The government also allows foreign workers with specialised skills to be employed in the country.

News | Business | Features | Editorial | Security
Politics | World | Letters | Sports | Obituaries |

Produced by Lake House
Copyright 2001 The Associated Newspapers of Ceylon Ltd.
Comments and suggestions to :Web Manager