The prime minister of Malaysia, Najib Tun Razak, was in Hong Kong yesterday on a mission to explain the appeal of his country to investors. "It's a good story to tell," he said.
He highlighted the new Government Transformation Programme, announced in April 2009, which aims to make the administration more effective and raise the standard and quality of life for all Malaysians. And he looked forward to the unveiling of the country's New Economic Model (NEM) ahead of the formulation of the 10th Malaysia Plan in late June.
The objective is to become "a wealthy and fully-developed country by 2020", he said.
Najib was speaking at a meeting with the media at the 13th annual Credit Suisse Asian Investment Conference in Hong Kong. The meeting followed a lunch with investors that was hosted by John Major, the former British prime minister who is now a special adviser to Credit Suisse.
Notably, Najib was keen for Malaysia to attract overseas portfolio investments into the country's equity and bond markets, in addition to foreign direct investment. This was in sharp contrast to a previous long-serving leader, Mahathir Mohamad, who berated foreign speculators and imposed capital controls in response to the Asian financial crisis more than a decade ago.
But, Najib, who is also Malaysia's finance minister, recognised that the "world has moved on and is more competitive", especially following the global recession last year, and that it is important "to reach out". He seemed to be on a marketing mission, acting as Malaysia's top ambassador to "communicate his country's story-line".
Najib understands that investors can only be attracted by high-quality companies, and that they insist on high levels of corporate governance. He emphasised the liberalisation of large parts of Malaysia's services sector in April last year, which included discarding a 30% Bumiputera (native Malaysians) affirmative action ownership requirement for investment in some enterprises. He believed that this move, which he described as "ground-breaking", hadn't received the attention or credit that it deserved.
Further liberalisation should be expected, but it is necessary to balance that with domestic considerations, he said. So there needs to be "a gradual review".
Foreign direct investment remains important to Malaysia's development, he said, and incentives will be offered for projects of major importance. The government is prepared to form "partnerships for innovation" with foreign firms, and lend its help at "tipping points" when necessary to finalise deals. But, promoting domestic investment is also a priority.
Proposals for the privatisation of some state-owned-enterprises (SOEs) are being examined and will be revealed in the NEM, he added, and Khazanah Nasional, the government's investment holding arm, will be encouraged to make more strategic investments abroad in order to earn higher returns and import new technologies.
Analysts have already noticed that Malaysia is busy courting investors. Bank Negara was the first central bank in the region to normalise its policy interest rates, and has allowed the currency to appreciate. By flagging possible divestments of SOEs, the government has caught investors' attention and inspired their confidence too, as revenues from sales would reduce the country's fiscal deficit.
So, Malaysia's story is a compelling one, and Najib said that he is "very pleased" with the response from fund managers. This will be a critical year for reform and for the revelation of the country's future strategy. Investors will be watching very closely.
Photo provided by AFP.