Malaysia to lead regional integration

Malaysian Prime Minister Najib Razak, left, presents the Kuala Lumpur declaration to ASEAN Secretary General Le Luong Minh in the Grand Ballroom of the Kuala Lumpur Convention Center in Malaysia, on Nov. 22, 2015. The declaration, signed by the leaders of the 10 ASEAN member states, detailed the establishment of the ASEAN Economic Community. / Courtesy of ASEAN Secretariat

By Kim Jae-kyoung

Malaysia will play a leading role in the integration of the ASEAN Economic Community (AEC) by pushing for more reforms and liberalization in the region, according to Malaysian Prime Minister Najib Razak.

“Our aim is not simply to talk about measures that have to be taken, but to lead by example and deliver on the actions we are asking our fellow member states to take,” Razak told The Korea Times.

“If you look at Malaysia’s record, we have been one of the most proactive states in terms of creating the right environment for the private sector to operate in a free and competitive market.”

He said that Malaysian people are believers in the liberalization of the economy and are taking steps in this regard, including the introduction of various reforms.

“We want to see these measures duplicated across ASEAN, not only at the state level, but across our community,” he said. “This will allow, for instance, a business in Indonesia to consider investing in Malaysia and vice versa. The fact is that the broader economy benefits when this happens.”

The AEC, launched at the end of last year, is an agreement among 10 ASEAN member nations to create a single market with a free flow of goods, capital and skilled labor in the region by 2025.

Through liberalization and reform drives, the prime minister aims to make Malaysia join the league of developed economies by 2020.

To that end, he vowed to place top priority on making its economy more competitive on a global scale by creating a more business-friendly environment.

“2015 has been a year of unprecedented challenges for our country. As such, strengthening the resilience of the economy, managing the impact of external vulnerabilities and safeguarding the interests of the people are the government’s core priorities for 2016,” he said.

“However, looking ahead, it is our vision to become a developed country by 2020,” he added. “Since assuming office in 2009, my administration has introduced several measures aimed at making the economy competitive.”

Between 2009 and 2015, Malaysia’s gross national income has increased by nearly 50 percent. Foreign direct investment has been growing at more than 22 percent per annum.

Malaysia, the third-largest economy in ASEAN, is now one of the fastest-growing countries in the region, with its economy growing 4.9 percent in 2015 despite slowing global economy.

Last year, Malaysia rose to 18th out of 140 countries in the World Economic Forum’s Global Competitiveness Report. The World Bank ranked Malaysia as the 18th easiest place to do business out of 189 economies in 2015. It was listed the fourth in the world for Investor Protection by the World Bank Doing Business Report 2016.

“The above statistics and achievements are the result of our economic plan and of the government’s continuous efforts to make Malaysia a business-friendly environment,” he said.

“They are the result of our strong commitment to strengthen, liberalize and open up our economy,” he added. “The figures show that the international community continues to have confidence in Malaysia.”

The following is an excerpt from the interview.

Q: AEC made its debut at the end of 2015. What would the implications of the AEC be to the world and Malaysia?

A:

The formation of the AEC in 2015 is one of ASEAN’s most significant achievements. While these are still early days for the AEC, it has already started delivering tangible benefits for Malaysia, the ASEAN community, as well as the wider region.

By progressively reducing the barriers to trade and investments, ASEAN is increasingly becoming an integrated market, which has led to improved connectivity and an enhanced business environment. This has led to increased competition, which benefits consumers, and a narrowing of the development gap _ thereby improving the overall well-being and quality of the people in the region. Thanks to this, the AEC is increasingly attracting the attention of global investors, who rightly see ASEAN as a market with huge potential.

At the same time, it is important to note that this integration is not confined to members of the ASEAN community itself, but stands true of ASEAN and its relationship with other countries as well.

We have entered into free trade agreements (FTA) and comprehensive economic partnerships (CEP) with Korea, China, Japan, India, Australia and New Zealand, and are continuously seeking to expand these and enter into new agreements. All of this is allowing our countries, including Korea and Malaysia, to work together in order to increase and sustain our own growth as well as contribute positively to global economic growth.

Q: ASEAN is one of the fastest growing areas in the world. What do you think are key drivers that will lead the regional prosperity in the coming decade?

If you look at ASEAN’s growth in recent years, it’s gone side by side with the closer integration that we’ve pursued across the region. The AEC is a core component of this and will lead to even greater inflows of FDI into the region, which in turn will provide a strong base for the development of local businesses ― both big and small, and lead to new employment opportunities.

I am determined to work with my counterparts in other ASEAN member states to strengthen our economic links. We will do this by continuing to dismantle restrictions, especially in the services sector, which has been identified as the engine of growth. This will allow companies to choose their location based on comparative advantage and open up new opportunities for cities, and people, across the region.

In addition, with 75 percent of the population being below the age of 35, a large part of our growth will be driven by the emergence of this demographic. It is now up to all of us, each of the member states, to ensure that we harness their potential to the best of our abilities by providing the right education opportunities and skills development.

Q: There are a lot of remaining challenges in the ten member bloc. What are the most pressing issues you want to address straight away?

Broadly speaking, the business environment in ASEAN is very good.

However, there are some areas that present challenges, and the fact that the cost of doing business in the region is increasing is something that we need to look at closely. However, there are steps we can take to address this. First of all, ASEAN has to deal with the issue of non-tariff barriers in a more systematic way, which will help eliminate unnecessary restrictions and barriers. Secondly, we need to improve our productivity. The combination of these elements, the removal of barriers and increased productivity, will bring positive benefits and ensure that the cost of doing business in the region remains competitive.

More broadly, we still have some way to go to truly integrate our markets. Again, we have identified the measures that need to be taken in this regard, with the AEC 2025 Blueprint outlining over 90 strategic measures that need to be taken with respect to closer integration over the next ten years. I am encouraged by the commitment of other governments toward this goal and am confident that we will get there in due course.

Q: Malaysia is a country with great potential. What do you think are key factors that set Malaysia apart from other ASEAN member nations?

The Malaysian government has always believed in providing the right environment for business to thrive. Introducing business-friendly policies has been one of the key factors of our success. Since 2009, our administration has taken several bold steps to reduce unnecessary bureaucracy and reform the economy.

As a trading nation, we recognize that Malaysia cannot solely rely on its traditional markets. This is why we have encouraged and led the development of the AEC, participated in the Trans-Pacific Partnership Agreement (TPPA), are exploring the establishment of a Regional Comprehensive Economic Partnership (RECEP) between ASEAN and the six states with which the community already has free trade agreements, and are currently negotiating with the EU with respect to potential trade agreements.

We offer a cost-competitive location for investors intending to set up offshore operations, including for the manufacture of advanced technological products for regional and international markets. We have a dynamic business environment, an educated and highly skilled workforce, one of the best infrastructure systems in the region, and excellent travel links with the world.

Furthermore, we put great effort into attracting investments that add high impact to our economy, for instance by offering customized incentives to companies operating in this space.

I believe it is due to these factors and efforts that Malaysia has, to date, attracted more than 5,000 foreign companies from more than 40 countries to establish their operations in the country. Indeed, many of them have also expanded and diversified their operations in the country, reflecting their confidence in Malaysia as a site for their business ventures.