Malaysia: National Economic Outlook Conference 2006-2007

To guarantee rising living standards and economic prosperity, Malaysia has no choice but to remain competitive in this era of globalisation and trade liberalisation. Although nations don’t compete, companies that compete internationally are shaped by the environment in the country they operate. Malaysia has been actively putting in place policies that will enable domestic firms to compete effectively in the global market. Measures have also been introduced to make the public machinery more efficient and transparent.

The World Competitiveness Yearbook 2004 has rated Malaysia as the fifth most competitive economy in the Asia Pacific region after Singapore, Australia, Hong Kong and Taiwan. However, international competition is getting stiffer and domestic competition is also rising as trade barriers are lowered. Malaysia is trying to move away from low value-added labour-intensive industries to high value-added technology and skill-intensive manufacturing. This calls for increased science and technology (S&T)-related investment in human capital and research and development (R&D) activities. Some of the new industries that Malaysia can venture into include biotechnology, photonics, nanotechnology, and high-density data storage. The relatively low number of researchers and scientists in the country is the major obstacle in promoting R&D capabilities. What else can be done to entice Malaysian scientists abroad to come home? How do we attract foreign talents from abroad? How can we encourage R&D in local companies?

Malaysia does not want to compete head-on with China or India. It is wiser to aim to be complementary to China and treat it as an opportunity rather than threat. As for India, Malaysian companies could pursue joint ventures with well-known Indian companies in the areas of business process outsourcing (BPO). The A.T. Kearney’s Location Attractiveness Index 2004 has ranked Malaysia third after India and China as investment destinations for outsourcing. The rising number of companies setting up operations in the Multimedia Super Corridor (MSC) is evidence that Malaysia is an attractive location for information technology (IT) services. How do we increase business ties with China and India? Do we have enough manpower and infrastructure needed for BPO investment? What can be done to attract more BPO investment?

The manufacturing sector will continue to remain a vital engine of growth for the Malaysian economy. To stay competitive, the manufacturing sector has to move up the value chain, by producing technology-intensive goods, engaging in R&D activities, and improving productivity. Meanwhile, the services sector has become an increasingly important sector in the Malaysian economy with the growing demand for tourism activities, manufacturing-related services, education, and financial services. Can the manufacturing sector evolve fast enough to move up the value chain? Is the cluster concept still relevant for the manufacturing sector? What else can be done to assist local manufacturers? How competitive is Malaysia’s services industry? What policies should be in place to encourage strategic alliances and in which sectors?

The government is trying to reinvent the agriculture sector by promoting the application of technology and mechanisation in the sector. One of the areas being targeted is the production of high value-added downstream agri-based products. This will also include the promotion of halal food processing to make Malaysia a major halal food base for the Muslim world. Nonetheless, Malaysia is losing competitiveness in the production of primary commodities due to escalating costs of labour and land. With further trade liberalisation, can the agriculture sector compete? How far is the progress in the halal food industry?

The development of the small and medium enterprises (SMEs) is important in helping diversify the economic base and in increasing the resilience of the Malaysia economy in the face of rising external challenges. The SMEs accounted for 29.1 per cent of the country’s manufacturing output, and 32.5 per cent of manufacturing employment in 2003. A high-level National SME Development Council has been set up to map out new strategies for SMEs. The Prime Minister himself chairs the Council. A SME bank is already in the pipeline. How competitive are our domestic SMEs? What more can be done to make them competitive in the global market?

Malaysia has fared well on some measures of competitiveness, but there is certainly a lot more room for improvement. To stay competitive and ensure future growth, Malaysia has to, among others, search for new growth areas, promote S&T, and boost productivity. Facing competition from all sides, the task ahead will be daunting. More importantly, it is already recognised that human capital is becoming more crucial than physical capital. It is encouraging that Malaysia has invested a large sum in education, training and skill development to bolster its competitiveness. These and other related issues concerning the nation’s competitiveness will be discussed in the National Economic Outlook 2006 Conference to be organised by the Malaysian Institute of Economic Research (MIER) on 6-7 December 2005.

PROGRAMME (tentative)

Tuesday, 6 December 2005

8.30-9.00 a.m. Registration

9.00-9.30 a.m. OPENING CEREMONY

Welcoming Remarks
YBhg Tan Sri Dato’ Mohd Sheriff Mohd Kassim,
Chairman, Board of Trustees, MIER

Address and Official Opening
YAB Dato’ Sri Mohd Najib bin Tun Haji Abdul Razak, Deputy Prime Minister of Malaysia
(To be confirmed)

9.30-10.00 a.m. Tea Reception

10.00-10.30 a.m. KEYNOTE ADDRESS

Dr Masahiro Kawai,
Head, Office of Regional Economic Integration,
Asian Development Bank ADB), Manila

10.30-1.00 p.m. SESSION I: Economic Outlook, 2006-2007

10.30-11.15 a.m. World Economic Outlook
Dr Akira Ariyoshi,
Director,
Regional Office for Asia and the Pacific
International Monetary Fund (IMF), Tokyo

11.15-12.00 noon Asian Economic Outlook
Dr Frank Harrigan,
Assistant Chief Economist,
Macroeconomics and Finance Research Division, Economics and Research Department (ERD), Asian Development Bank (ADB), Manila

12.00-12.45 p.m. Malaysian Economic Outlook
Emeritus Professor Dr Mohamed Ariff,
Executive Director, MIER

12.45-1.00 p.m. Q&A

1.00-2.30 p.m. Lunch
LUNCHEON ADDRESS

1.30-2.00 p.m. Enhancing Competitiveness through Strategic Alliances
YBhg Datuk Jon Chadwick,
President, Malaysian International Chamber of Commerce and Industry (MICCI)

2.30-5.00 p.m. SESSION II: Insights from Abroad

2.30-3.00 p.m. China as the Factory of the World: Internal Dynamics
Dr Lai Pingyao,
Senior Research Fellow, Institute of World Economics and Politics,
Chinese Academy of Social Sciences (CASS), China

3.00-3.30 p.m. Seeking Competitiveness: India's Software Success
Professor Pulapre Balakrishnan,
Indian Institute of Management Kozhikode, India

3.30-4.00 p.m. The Mother Goose Role of Japan in East Asia
Mr Daisuke Hiratsuka,
Director,
Regional Integration Study Group and Director, APEC Study Center,
Institute of Developing Economies-Japan External Trade Organisation (IDE-JETRO), Japan

4.00-4.30 p.m. Competitiveness of Korean Industries: Micro Perspectives
Professor Kee-Young Kim,
Sangnam Professor of Operations Management,
School of Business Administration, Yonsei University, Korea/Affiliate Professor of Operations Management, School of Business, University of Washington, USA

4.30-5.00 p.m. Q&A

5.00-5.15 p.m. Refreshment

5.15 p.m. Adjournment

Wednesday, 7 December 2005

9.00-10:45 a.m. SESSION III: Productivity Trends in Malaysia

9.00-9.30 a.m. Tracking and Understanding Productivity Trends
Professor Dr Rugayah Mohamed,
Faculty of Management and Human Resource Development,
Universiti Teknologi Malaysia (UTM)

9.30-10.00 a.m. Export Competitiveness: Evaluating the Capability of Malaysian Exporters
Professor Dr Mohammed bin Yusoff,
Department of Economics, Kulliyyah of Economics and Management Sciences,
International Islamic University Malaysia (IIU)

10.00-10.30 a.m. Promoting Productivity
Puan Nik Zainiah Nik Abd Rahman,
Director General, National Productivity Corporation (NPC)

10.30-10.45 a.m. Q&A

10.45-11.00 a.m. Refreshment

11.00-12.45 p.m. SESSION IV: Sectoral Issues and Challenges

11.00-11.30 a.m. SMEs: A New Engine of Growth?
YBhg Datuk Mustafa Mansur,
President, Federation of Malaysian Manufacturers (FMM)

11.30-12.00 noon Manufacturing-related Services: Mapping the Landscape
Dr Sieh Lee Mei Ling,
Director, Southern Bank Berhad, and
Dr Ong Fon Sim,
Associate Professor, Faculty of Business and Accounting, Universiti Malaya

12.00-12.30 p.m. Re-inventing the Agriculture Sector: Moving up the Value Chain?
Encik Azizi Meor Ngah,
Chief Executive, Malaysian Palm Oil Association (MPOA)

12.30-12.45 p.m. Q&A

12.45-2.30 p.m. Lunch

2.30-4.15 p.m SESSION V: Drivers of Competitiveness

2.30-3.00 p.m. Competitiveness through Outsourcing: The Case of the Multimedia Super Corridor
Mr Rob Cayzer,
Senior Manager, Shared Services and Outsourcing, Multimedia Development Corporation Sdn Bhd

3.00-3.30 p.m. Foreign Ownership, Technological Intensity and Economic Performance in Malaysian Manufacturing
Professor Dr Rajah Rasiah,
Deputy Executive Director, Asia-Europe Institute (AEI), Universiti Malaya

3.30-4.00 p.m. Boosting Competitiveness through Reverse Investment
Dr Pang Teck Wai,
Chief Executive Officer, POIC Sabah Sdn Bhd

4.00-4.15 p.m. Q&A

4.15-4.30 p.m. Closing Remarks
Emeritus Professor Dr Mohamed Ariff,
Executive Director, MIER

4.30-5.00 p.m. Refreshment

5.00 p.m. Adjournment