PM’s reform to attract investments has significant impact on Malaysia, Asia

PM’s reform to attract investments has significant impact on Malaysia, Asia

11 Jul 2024

Prime Minister Datuk Seri Anwar Ibrahim’s efforts in attracting high-value sectors like semiconductor fabrication and digital technology, expedite foreign direct investment approvals, and improve the ease of doing business have significant implications for both Malaysia and the broader Asian region.

Forbes quoted the University of Reading’s Henley Business School leadership professor Benjamin Laker as saying that significant investments have been attracted in high-value sectors such as semiconductor fabrication and digital technology.

“By focusing on sectors with high growth potential and technological advancement, Malaysia aims to ascend the global value chain and foster a more dynamic and competitive economy,” he said in a commentary published by the magazine on its website yesterday.

Measures to boost investment quality focus on labour productivity through automation and increased spending on research and development.

“These initiatives are designed to create a more innovation-driven economy — reducing reliance on low-skilled labour and enhancing overall productivity. These reforms have significant implications for both Malaysia and the broader Asian region,” Laker said.

He also commended Anwar’s measures on the cost optimisation front, especially the rationalisation of subsidies and managing civil service costs.

“Transitioning new civil servants to the Employees Provident Fund scheme — projected to reduce long-term pension costs — was a significant step.

“This move aimed to alleviate the financial burden on the government by shifting future pension liabilities to a more sustainable model,” Laker said.

Additionally, the enactment of the Public Finance and Fiscal Responsibility Act institutionalised prudent fiscal management with targets for a three per cent fiscal deficit and a 60 per cent debt-to-Gross Domestic Product ratio.

This legislative framework is intended to ensure that Malaysia’s fiscal policies remain sustainable in the long run, providing a stable economic environment conducive to growth, he wrote.

Nonetheless, he said challenges persist, sighting potential setbacks, like the attempt to retarget petrol subsidies and high living costs linked to other recent subsidy cuts.

Yet Laker opined that Malaysia’s journey could set a precedent for other nations navigating similar post-pandemic recoveries and structural transformations.

Source: Bernama