Still Broad Scope for Increasing Economic Relations
|The Honorable Abdullah Ahmad Badawi, Prime Minister of Malaysia|
The Government of Malaysia will continue to provide a national environment which is conducive for doing business in the country.
The Honorable Abdullah Ahmad Badawi, Prime Minister of Malaysia expressed this outlook in a keynote address held at the "Malaysia-Korea Business Forum" in Seoul on August 23, 2004.
At the forum, he stressed that a key component of building a business friendly environment is to reduce the cost of doing business in Malaysia, which includes cracking down on corruption, improving the public service delivery system and reducing bureaucracy. As an example, the procedures under the Foreign Investment Committee (FIC) have been further liberalized to include the principle of self-disclosure.
The Securities Commission has also streamlined its rules and supervisory responsibilities. The Prime Minister said, "At the same time, we continuously seek to improve investor protection. Recent amendments to our securities laws have allowed for better safeguarding of investor interests and further enhancement of corporate governance standards". A high-level commercial crimes committee is also being formed for more effective enforcement.
Malaysia is not only a good place to do business but also a very good place for Koreans, other expatriates and their families to live and work. Prime Minister Badawi asserted told his audience that "The country is peaceful and politically stable, the people are friendly, the lifestyle is cosmopolitan and what's more, you will love the food in Malaysia!"More than 200 Companies with Korean Interests
With regard to trading and investment, the linkages between Malaysia and the Republic of Korea are already strong. These two areas have contributed much in providing substance to the bilateral relations between the two countries.
Presently, there are more than 200 companies with Korean interests operating in Malaysia. They operate in various fields including manufacturing, trading, construction, engineering services, ICT and in the Labuan International Offshore Financial Centre (LIOFC).
Large Korean companies which have invested in Malaysia include Samsung, LG, Hyundai, Kia, Ssangyong and Daewoo. Since the 1980s, the Republic of Korea has consistently been among the top 10 investors in the Malaysian manufacturing sector. Korean investments are mainly in non-metallic mineral products, electrical and electronics products, basic metal products and fabricated metal products.
Prime Minister Badawi notes, "Small and medium Korean enterprises have also found Malaysia a viable location for their manufacturing projects", adding that there is scope for Malaysian and Korean SMEs to promote joint ventures, technology transfers, technology tie-ups and training.
Bilateral trade between Malaysia and the ROK has increased at a significant pace over the years. For the period 1990 to 2003, trade between the two countries expanded by 5 times from US$1.5 billion in 1990 to US$7.6 billion in 2003. In 2003, the Republic of Korea accounted for 4% of Malaysia's global trade and Korea was: *Malaysia's 8th largest trading partner; *Malaysia's 9th largest export market; and *Malaysia's 5th largest import source.
The trend of trade between Malaysia and the ROK is very encouraging for the period January to June 2004; bilateral trade was worth US$ 4.8 billion, an increase of 37.1% compared with the same period last year.
Electrical, electronics products and components constitute the bulk of current bilateral trade. The Republic of Korea is a major buyer of Malaysian crude petroleum and natural gas. It is an important supplier of ships, boats and motor vehicles to Malaysia.
There is still much scope for increasing economic relations between the Republic of Korea and Malaysia because of the strengthening economies and the complementarities between them, as Prime Minister Badawi pointed out.
The Malaysian economy is fundamentally strong-with low inflation, low unemployment, strong current account surplus, strong reserves and a resilient banking system. The Malaysian economy grew by 7.6% during the first quarter of this year following a GDP growth of 7.6% in 2003. In line with favorable developments globally, the Malaysian economy is forecast to grow by 6.0% to 6.5% in 2004.
The Swiss-based International Institute for Management Development (IMD) in its 2004 world Competitiveness Yearbook, rated Malaysia as follows: *Malaysia was the 16th most competitive nation among the 60 countries surveyed: *Malaysia was the 5th most competitive among countries with a population greater than 20 million; and *Malaysia was the most competitive among nations with a GDP of US$10,000 and below.
It is this competitiveness which has enabled Malaysia to continue attracting FDI into its manufacturing and other sectors despite the intense level of global competition. In 2003, manufacturing investments valued at US$7.7 billion were approved, compared with investments totaling US$4.7 billion in 2002. Foreign investments accounted for 54% of the total investments approved in 2003. There are now more than 5,000 foreign companies operating in Malaysia.
Prime Minister Badawi applauds, "Koreans and Malaysians have indeed set a fine example of how business can be mutual beneficial and contribute to the enhancement of friendly relations between our two countries". Malaysia has provided Korean companies with a cost-competitive location for their manufacturing operations while benefiting from the capital, technology and market access that Korean companies bring with them. Malaysia: A Gateway to a Much Larger Regional, ASEAN Market
Malaysia would certainly welcome more Korean companies to invest in Malaysia either in joint ventures with Malaysian partners or on their own, the Prime Minister said.
Currently, Malaysia is promoting investments in high value-added and high technology products and activities that will support the development and upgrading of the sector as well as diversify the sources of growth for the economy. These include industries in which the Republic of Korea has its strengths, such as automotive/automobiles, electronics, machinery and equipment and ICT.
Further, the Prime Minister added that Malaysia is an attractive location for the establishment of regional corporate centers such as operational headquarters, regional distribution centers, international procurement centers and regional and representative offices. Foreign companies locating in Malaysia can take advantage of Malaysia's multi-racial society with its multi-lingual capabilities, including English language skills and other Asian language competencies, its competitive cost structure and skilled manpower.
In particular, the Malaysian Prime Minister states, "Malaysia would like especially to invite Koreans to be our partners in the development of our ICT industry since the Republic of Korea is the world's leader in broadband penetration. Malaysia's multimedia super corridor (MSC) provides a most conducive environment where the world's leading ICT companies may expand their businesses, undertake research, develop new products and technologies, and export their products. As a regional technological hub, the MSC also serves as a springboard to markets in ASEAN and the Middle East. To-date, a total of 1,087 companies have been awarded MSC status.
Besides, there are many other spheres where Korea and Malaysia could cooperate each other. Prime Minister Badawi said he hoped that, "Malaysia would like to collaborate with Korea in the construction sector by partnering in joint projects to tap the market in third countries". Malaysian companies have undertaken projects in markets such as the Middle East, India, Africa, South Asia and ASEAN.
Malaysia is also striving to be a centre for education in the region. In this connection, the Prime Minister said that Malaysia would like to offer the Korean educational community opportunities in the growing number of private higher education institutions. Likewise, Malaysia wishes to expand cooperation with Korea in the development of tourism.
Prime Minister Badawi didn't forget to say that he would like to ask Korean businessmen to see Malaysia as a gateway to a much larger regional, ASEAN market. Malaysia now accounts for 24.7% of total intra-ASEAN trade, making Malaysia its second largest contributor. The liberalized tariff environment under the ASEAN Free Trade Agreement (AFTA) offers opportunities for Korean companies to locate in Malaysia and market their products in ASEAN, which has a combined population of more than 530 million and GDP totaling US$750 billion.
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