Written by PEMANDU
Kuala Lumpur, 25 October 2010 – The Economic Transformation Programme (ETP) has gotten off to a strong start with eight early wins announced at its roadmap launch today.
“The ETP is already delivering results. These early wins show that by focusing on action, results will flow. We will announce more confirmed investments over the next few months,” said Dato’ Seri Najib Tun Razak, Prime Minister of Malaysia.
“Based on our tracking, 53 Entry Point Projects with a total investment value of USD97 billion, almost 45 per cent of the total investment targeted, are already in various active stages of engagement,” he added.
The eight early wins include an initial investment of RM214 million to relocate and set up a wafer fabrication plant by German firm LFoundry in Kulim Hi-Tech Park, Kedah. The company plans to invest a total of RM1.9 billion in five plants over the next five years, including the first facility. Mydin, a large local wholesale and retail player, has committed to invest in 14 new branches over the next three years valued at about RM1.0 billion, and also assist the small sundry shops via Project TUKAR.
A 208-room hotel and 160-unit residence, to be managed by St.Regis, an international six-star hospitality brand, will be built on a 2.2-acre site in KL Sentral. This RM1.2 billion investment will have a total development area of 1.4 million square feet. Schlumberger, a renowned oilfield services player, recently opened their Eastern Hemisphere Global Financial Services Hub in Bandar Utama. This is part of the Greater KL/Klang Valley initiative to attract 100 new MNCs to relocate its operations in Kuala Lumpur by 2020.
Malaysia Airports Holdings Berhad has awarded a 25-year concession to WCT Berhad to build and operate an integrated complex at KLIA2. The RM486-million complex will comprise a transportation hub for taxis and buses, one block of retail mall and car parks. Premium Renewable Energy will build five bio-oil plants over the next five years. The first plant costing RM124 million will be located in Lahad Datu, Sabah.
A Genting and Simon Property Group joint venture will invest in the Johor Premium Outlet, valued at approximately RM150 million. Mubadala will collaborate with 1MDB to develop the KL International Financial District (KLIFD), valued at RM26 billion, on a 34-hectare site located near Jalan Tun Razak.
ETP governance structure in place
Najib also announced that a four-tier ETP governance structure has been activated to ensure the timely execution and monitor the progress of the initial 131 Entry Point Projects and conversion of the 60 Business Opportunities into new projects.
While the project owners from the private sector as well as relevant government ministries and agencies have on-going engagements at the working level, problem-solving and progress-monitoring sessions are conducted at the respective National Key Economic Area (NKEA) Steering Committee level, chaired by the lead minister.
An investment committee headed by the Malaysian Investment Development Authority (MIDA) runs parallel to the NKEA Steering Committee to consider and approve investment applications.
One level up, the Economic Council chaired by the Prime Minister and comprising various economic-related ministers, meets weekly to monitor NKEA updates and resolve major issues. Finally, the Prime Minister is committed to also engage project owners directly twice a year to obtain first-hand feedback from the working level.
“A clear governance structure is absolutely critical for the success of the ETP. On my part, I will personally ensure that my ministers monitor the performance of their Entry Point Projects and investments, and this is part of their Key Performance Indicators. In fact, I have already conducted two rounds of performance reviews sessions with all my ministers and this will continue,” said Najib.
Six unique features of the ETP
The Prime Minister emphasised that the ETP is an unprecedented initiative with six unique features.
“This is a Programme, not a Plan. It has specific projects and action items, complete with timelines, project owners and targets. It is not merely a strategic intent, document or blueprint. It contains 131 Entry Point Projects, 12 lab reports, 60 Business Opportunities, all aimed to create 3.3 million incremental jobs. It is ready for action,” he said.
The ETP is also measurable as it is anchored on Gross National Income (GNI). With a clear roadmap, it aims to achieve US$15,000 per capita GNI in 2020. Over the next 10 years, the 131 Entry Point Projects and the 60 Business Opportunities will generate incremental GNI of US$138 billion and US$112 billion respectively. Combined with the organic growth from both NKEAs and non-NKEAs, the total GNI in 2020 is projected to hit US$523 billion.
In addition, the ETP is co-created by the private sector, based on an open and transparent approach, which is market-friendly as well as merit and needs-based. It underwent a 1,000-person workshop and a 500-person two-month lab, and hence, is co-created by the private sector, completely from the ground up.
Further, the ETP shifts the role of the government from one of a financier to a facilitator to reduce public sector expenditure. 92 per cent of the investment is expected to come from the private sector, of which 73 per cent will be sourced from Domestic Direct Investment.
The ETP will also create new and higher paying jobs. From the total of 3.3 million new jobs to be created, 63 per cent will be in the middle and higher income segments compared to 43 per cent currently. 46 per cent of these jobs will require vocational and diploma qualifications. 600,000 people will be moved out of the lowest income segment and the bottom 40 per cent of population will enjoy higher income levels. To retain and attract the best talent for Malaysia, the Talent Corporation has been mooted and is expected to be operational in early 2011.
“Most importantly, the ETP is for all Malaysians. The 131 Entry Point Projects are spread all across the country. 68 Entry Point Projects will impact Sarawak while 71 Entry Point Projects will impact Sabah. 106 of these Entry Point Projects benefit mainly the urban communities while 25 benefit the rural communities with 323,596 new jobs, in line with our urban-rural population ratio. It will also benefit the Native Customary Rights land owners, particularly in Sabah and Sarawak,” Najib added.
Failure is not an option
To achieve high-income nation status, Malaysia needs to grow its Gross Domestic Product by no less than six per cent per annum over the next 10 years. For several years now, the government has been the main driver of the economy. This is neither prudent nor sustainable and the private sector has to reclaim their effective role as the main engine of growth for the economy, in line with the strategy of the 10th Malaysia Plan.
For a start, about RM6 billion has been allocated to facilitate the Entry Point Projects under the 2011 Budget. This is part of the eight per cent public funding commitment that will catalyse a further 92 per cent private sector investment.
“We must grow the economic pie substantially. However, Malaysia can no longer be driven by past strategies based on labour intensive models. We need to take the high-skill, high-income route quickly to become and remain competitive in the global economy. Transformation is critical. Failure is not an option,” said Najib.
The ETP is driven by 12 NKEAs: Oil, Gas and Energy; Palm Oil; Financial Services; Wholesale and Retail; Tourism; Business Services; Electrical and Electronics; Communications Content and Infrastructure; Healthcare; Education; Agriculture; and Greater Kuala Lumpur/Klang Valley. NKEAs are drivers of economic activities that can contribute directly and materially to the economic growth of the country. These 12 NKEAs will contribute 73 per cent of the GNI required to achieve high-income nation status in 2020.