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Malaysian Economic & Political Update - by The Economist


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Malaysia: A fork in the road - Economic prospects and business outlook

Doing Business With Malaysia Forum - 26 October 2009

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Malaysian Economic & Political Update - by The Economist

  1. 1. Malaysia: A fork in the road Economic prospects and business outlook October 2009 Sudhir Vadaketh Associate director Economist Corporate Network [email_address]
  2. 2. Stabilisation, recovery next year Source: EIU Growth at market exchange rates Real GDP growth (% change y-on-y)
  3. 3. Long-term plan <ul><li>Vision 2020 – a developed nation by 2020: </li></ul><ul><ul><ul><li>PM Najib aims to double per capita income in 10 years </li></ul></ul></ul><ul><li>Escaping the “middle income trap”: </li></ul><ul><ul><ul><li>Pushing economy up value chain </li></ul></ul></ul><ul><ul><ul><li>Raising productivity, competitiveness </li></ul></ul></ul><ul><ul><ul><li>Encouraging knowledge, innovation </li></ul></ul></ul>
  4. 4. Leading “emerging Asia” Source: EIU Per capita GDP (purchasing power parity to US$)
  5. 5. Lagging “Asia’s tigers” Source: EIU Per capita GDP (purchasing power parity to US$)
  6. 6. FDI: a sorry story Source: EIU Net foreign direct investment inflows (US$m)
  7. 7. Challenges: competitiveness <ul><li>Global Competitiveness Index </li></ul><ul><li>Country Rank </li></ul><ul><li>Singapore 5 </li></ul><ul><li>Japan 9 </li></ul><ul><li>Hong Kong 11 </li></ul><ul><li>South Korea 13 </li></ul><ul><li>Taiwan 17 </li></ul><ul><li>Malaysia 21 </li></ul><ul><li>China 30 </li></ul><ul><li>Thailand 34 </li></ul><ul><li>India 50 </li></ul><ul><li>Indonesia 55 </li></ul><ul><li>Vietnam 70 </li></ul><ul><li>Philippines 71 </li></ul>Source: World Economic Forum (2008) Ease of Doing Business Survey Country Rank Singapore 1 Hong Kong 4 Japan 12 Thailand 13 South Korea 23 Malaysia 20 Taiwan 61 China 83 Vietnam 92 India 122 Indonesia 129 Philippines 140 Source: World Bank (2009)
  8. 8. Challenges: Education and innovation World Ranking of Asia’s top universities 2008 (ex Japan, Australia) Source: THES – QS World University Rankings 2008 250 University Kebangsaan Malaysia 124 National Taiwan University 230 University of Malaya 113 Fudan University, China 229 Zhejiang University, China 95 KAIST, South Korea 203 Yonsei University, South Korea 77 Nanyang Tech University, Singapore 188 Pohang University, South Korea 56 Tsinghua University, China 174 Indian Institute of Tech, Bombay 50 Seoul National University 166 Chulalongkorn University, Thailand 50 Peking University 154 Indian Institute of Tech, Delhi 42 Chinese University of Hong Kong 144 Shanghai Jiao Tong University, China 39 Hong Kong Univ of Science & Tech 143 Nanjing University, China 30 National University of Singapore 141 University of Science & Tech of China 26 University of Hong Kong Rank Rank
  9. 9. Challenges: Corruption Source: Transparency International Corruption Perception Index 2008 (10 = highly clean, 1 = highly corrupt)
  10. 10. Challenges: Integration Singapore
  11. 11. Stability: Yes and No <ul><li>Macro-economic stability : </li></ul><ul><ul><ul><li>Stable, transparent policy </li></ul></ul></ul><ul><ul><ul><li>Government finances in OK shape…for now </li></ul></ul></ul><ul><li>Political instability : </li></ul><ul><ul><ul><li>A two-party system? </li></ul></ul></ul><ul><ul><ul><li>Federal vs State </li></ul></ul></ul><ul><ul><ul><li>Ethnic tensions </li></ul></ul></ul><ul><ul><ul><li>Will “money politics” ever end? </li></ul></ul></ul><ul><ul><ul><li>BUT! Moving to a better place.. </li></ul></ul></ul>
  12. 12. Which way will Malaysia go? <ul><li>SE Asian basket cases </li></ul><ul><li>Widespread corruption </li></ul><ul><li>Political instability </li></ul><ul><li>Crony capitalism </li></ul><ul><li>Reliant on low-cost labour and resource exploitation </li></ul><ul><li>Deficient infrastructure </li></ul><ul><li>Haphazard urbanisation </li></ul><ul><li>Poor public services </li></ul><ul><li>East Asian tigers </li></ul><ul><li>Good governance </li></ul><ul><li>Political stability </li></ul><ul><li>Transparent capitalism </li></ul><ul><li>Firms compete internationally with tech and innovation </li></ul><ul><li>Decent infrastructure </li></ul><ul><li>Well-planned cities </li></ul><ul><li>Good public services </li></ul>Malaysia