Enhancing investment opportunities
17 Feb 2024
AS the unity government under Prime Minister Datuk Seri Anwar Ibrahim progressively consolidated its power last year, a new series of blueprints and measures had been rolled out with the aim of driving Malaysia towards a higher growth path and sustainable prosperity.
These fresh initiatives are said to reflect the unity government’s intention to sharpen the country’s focus on new growth areas such as green and renewable energy, and the digital economy.
They are also expected to create greater investment opportunities in Malaysia, and attract an increase in investment flows from the private sector to help drive growth.
New growth era
Laying the foundation for the “new structure” of the future for Malaysia is the Madani Economy framework.
Unveiled on July 27, 2023, the ambitious framework outlines seven main targets that will be achieved in the next 10 years to catapult Malaysia into a leading Asian economy, while elevating the quality of the rakyat’s life.
These targets include making Malaysia one of the Top 30 largest economies in the world and top 12 countries in the global competitiveness index; increasing the percentage of labour income to 45% of total income and the female labour force participation rate to 60%; ranking Malaysia among the top 25 countries in the world in the Human Development Index as well as among the top 25 in the Corruption Perceptions Index; and achieving fiscal sustainability with a fiscal deficit to gross domestic product (GDP) ratio of 3% or lower.
Immediately following the launch of the Madani Economy framework is the rollout of the National Energy Transition Roadmap (NETR) Phase 1 on the same day, and Phase 2 on Aug 28, 2023.
The roadmap charts Malaysia’s shift towards becoming a green and sustainable economy, with net-zero emissions by 2050.
To facilitate the shift, the NETR focuses on six energy transition levers, namely energy efficiency; renewable energy (RE); hydrogen; bioenergy; green mobility; and carbon capture, utilisation and storage (CCUS). These, in turn, have been strategically structured into 10 flagship projects, which are expected to attract investments exceeding Rm25bil.
Further, the responsible transition (RT) initiative, a key component of the NETR, is expected to yield investment opportunities worth RM1.2 trillion to RM1.3 trillion by 2050.
This trajectory foresees an additional contribution of Rm220bil to the country’s GDP and highlights the great potential in Malaysia’s energy sector.
In September 2023, the government introduced two other blueprints that will create even more investment opportunities in Malaysia.
These include the New Industrial Master Plan 2030 (NIMP 2030) to bolster the nation’s manufacturing sector and the 12th Malaysia Plan (2021 to 2025) Mid-term Review (12MP-MTR), which involves making modification and creating a transition for sustainable development.
The NIMP 2030 outlines six key goals to elevate Malaysia’s economic standing.
These include increasing economic complexity; creating high-value jobs opportunities; extending domestic linkages; developing new and existing clusters; improving inclusivity and enhancing environmental, social and governance practices.
Under the seven-year plan, nine mission-based projects have been identified to catalyse high value-added activities across key sectors in Malaysia through initiatives such as launching a locally-manufactured electric vehicle (EV) and transforming 3,000 factories into smart factories by 2030.
Essentially, the NIMP 2030 seeks to nurture high-value and innovation-driven sectors such as electrical and electronics (in particular, the integrated circuit design and wafer fabrication activities); specialty chemicals; aerospace; pharmaceutical; and medical devices.
The government also targets four additional growth sectors, namely, advanced materials, EVS, RE, and CCUS.
Importantly, the NIMP 2030 emphasises inclusivity and balanced development, with an aim to stimulate economic growth across all states based on their respective unique strengths.
From mineral-rich states such as Perak, Terengganu, Kedah, Pahang and Kelantan to renewable energy hubs such as Sabah and Sarawak, the potential of every state will be optimally harnessed.
Meanwhile, the 12MP-MTR outlines 17 “big bold” measures, covering important strategies and initiatives that will serve as the main catalyst in accelerating the efforts to reform the socioeconomic development of the nation in line with the Madani Economy framework.
Among these “big bold” measures are developing high growth high value (HGHV) industries, enhancing fiscal sustainability, retargetting subsidies, accelerating energy transition, advancing digitalisation and technology as well as empowering micro, small and medium entreprises.
The HGHV agenda will cover the digital and technology-based industries; electrical and electronics; agriculture and agro-based activities; rare earth; and energy transition.
In line with the national ambition, Budget 2024, unveiled on Oct 13, 2023, further introduced measures to support the implementation of key blueprints such as the NETR and NIMP 2030.
Among these initiatives are tax incentives to spur investments by both new and existing companies to transition to a low-carbon economy; an allocation of RM200mil as initial fund for the implementation of certain NIMP 2030 programmes; and a reinvestment tax incentive to encourage existing companies to plough back their capital into high-value activities.
Source: The Star
