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Saturday, July 4, 2009

Sharpening the competitive edge

As developing countries around the world try to outdo each other to attract foreign investments in the aftermath of the global financial crisis in the coming months, competition is expected to heat up in all spheres of the global economy.

Right in Malaysia’s backyard, there are already tough competitors vying for the foreign dollars. Vietnam, dubbed the little China, is attracting substantial foreign interest as the country has very liberal rules for foreign investors.

Others that are also making big headway include Thailand, Indonesia and the Philippines.

Although with the latest liberalisation measures announced by Prime Minister Datuk Seri Najib Tun Razak, the country’s investment and property landscape for foreigners has become rosier overnight, there is still much to be done to catch up with the rest of the world.

The Federal Government should be commended for being decisive in heralding the policy initiatives to further sharpen Malaysia’s competitive edge and attract foreign direct investment (FDI) to the corporate and real estate arenas.

As in all government policies, the success of the measures will depend on the efficacy and expediency in their implementation. Unless the whole government machinery, both at the federal and state level, moves in tandem with a single-minded focus, nothing much can be achieved.

This is especially true in the case of the liberalisation of property purchases by foreigners as all land-related matters, including real estate ownership transfers, are under the purview of the state governments.

Under the latest liberalisation of the property market, approval from the Economic Planning Unit (EPU) in the Prime Minister’s Department will only be required for transactions involving a dilution of bumiputra or government interests for properties valued at RM20mil and above.

Foreign interest acquisition of commercial property and industrial land valued at RM500,000 and above will not require approval.

However, from Jan 1, 2010, the minimum threshold of residential units that can be sold to foreigners will be doubled from the current RM250,000 to RM500,000.

If the measures are implemented smoothly and expeditiously, the measures should promote greater foreign funds inflow into the property sector.

Industry players however lament the absence of incentives for local property buyers in the latest government measures.

As most foreign investors are still mired in their own problems back home, it will take some time before they finally “nibble at the carrots” offered in the latest government liberalisation measures to promote foreign investment in property.

For foreigners to come in significant numbers, the global economy should already be back on its feet and on its growth path again.

There’s also many fire sales in renowned real estate cities like London and Dubai, so foreigners may not be lining up to come in to Malaysia just yet. While waiting for them, local buying activities will keep the market going and it’ll be beneficial to offer local investors some incentives as well. Hopefully in the spirit of 1Malaysia, all Malaysians will team up as a united force to face a more competitive new world order after the global crisis. To reap their full benefits, all the governing authorities should implement the measures with zest and conviction.

Time and tide wait for no man. So is the world that is going through unprecedented changes and will not wait for Malaysia to be ready.

Besides making it more lucrative for inflow of FDIs, it is also important to have in place more enabling policies to promote a more level playing field for Malaysian entrepreneurs to thrive and contribute to national growth.

Instead of competing on the lower rung of the economic chain that involve labour-intensive activities, it is certainly timely for Malaysia to revamp its whole economic structure and move up the value chain to ensure greater sustainability and growth in the coming years.

By encouraging business and manufacturing activities that compensate higher wages, there will be more wealthy Malaysians to ensure domestic demand will drive and sustain the country’s economic growth. This will be a prerequisite of sorts to place Malaysia on a high growth trajectory.

As Vision 2020, when Malaysia will be joining the ranks of other developed nations, is less than 11 years away, it will be crucial to look at ways to harness and develop the people’s potential.

It will certainly help to start with the country’s education system to promote more creativity and problem-solving abilities among our students.

Instead of memorising past achievements of long gone civilisations, it will be more useful for our young Malaysians to sharpen their creativity and problem-solving skills as they will need much of these skills to do well in life, if the latest unravelling of global financial turmoil is an indicator of more challenges to come.

If all qualified students who performed well in their examinations are assured of places in the local universities to pursue courses of their choice, it will go a long way to build up a pool of highly qualified professionals to meet the needs of the country’s different economic sectors. The country can certainly do with a few more public universities to meet the needs and aspirations of Malaysian students. Many bright students have to put their studies on hold and join the workforce because their families could not fork out the high cost for them to study at the private institutions.

As the saying goes, charity begins at home. Until our public universities are able to meet the needs of our own students, the places should not be opened up to other foreign students yet.

·Deputy news editor Angie Ng hopes that the Prime Minister will make it his next priority to allocate funds for more public universities to be built for all qualified Malaysian students to have the opportunity to pursue tertiary education.

By The Star (by Angie Ng)

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