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Showing posts with label global competitiveness. Show all posts
Showing posts with label global competitiveness. Show all posts

Tuesday 13 February 2018

Malaysia needs structural reforms says global investor

Middle-income trap, brain drain and high public service spending among Malaysia’s risks

Cheah(pic) thinks the local stock market could go up by between 5% to 10% this year while the ringgit, which has mostly been on an uptrend in recent times, is “still down quite a lot”, against the US dollar.

Middle-income trap, brain drain and high public service spending among Malaysia’s risks

KUALA LUMPUR: A renowned global investor has called for structural reforms in Malaysia, saying that the country faces “very real” structural issues.

Penang-born Datuk Seri Cheah Cheng Hye (pic) who left Malaysia decades ago counts the middle-income trap, brain drain and high public service spending as current risks to the country.

Based in Hong Kong as the chairman and co-chief investment officer of fund and asset management group Value Partners Group for over two decades now, Cheah who helps manage over US$16bil in funds, however concedes that Malaysia remains a country with huge potential and opportunities.

“I don’t think we should underestimate the importance and attractiveness of Malaysia but what I am saying is that if we don’t want to be stuck forever (being) a so-called middle-income country, we need structural reforms,” he told StarBiz in a recent interview.

“Or maybe... we do want to be stuck because it is a comfortable position and because then, we can make a lot of compromises.”

“ (If that’s the case), we should be frank and say it, don’t pretend that we want to be an advanced country because that requires certain sacrifices.”

“The reality is that we are getting less and less competitive, we ranked number 23 in the latest Global Competitiveness report ,behind France and Australia which are developed countries. (Number 23) is not good enough for a developing country,” said Cheah, who recently made it to the top 40 richest Malaysians list.

Emphasising the issue of brain drain, Cheah, a former financial journalist and equities analyst said Malaysia could perhaps emulate India in this area where the concept of an Indian national overseas card has been introduced.

“I am told there are more than one million Malaysians overseas – (people like) entrepreneurs, these are exactly the type of people we want to stay here but they are not.

“We could introduce a new type of card called the Malaysian national overseas card for Malaysians who have chosen to leave the country and become citizens elsewhere.”

This card will give these Malaysian-born individuals no voting rights but will allow them to come back to work and invest here like everyone else, he said.

Cheah said this could help re-attract talent and there will be no political price to pay, because these people cannot vote here nor transfer this card to their children who would likely be foreigners.

“Some may actually come back, because it is not always greener on the other side... but you must make it easy enough (for them to come back).”

Cheah also pointed out that the amount Malaysia spends on public service is “very high” by any standards.

“Quoting from memory, about 30% of government spending is on civil service salaries and 16.5% of all employment in this country comprise civil servant jobs.

“No matter how you explain it, this is abnormally high ; something that I have learnt from my stay in Hong Kong is, keep the government as small as possible.”

He said although the civil service segment here appears to be bloated, it would be “unrealistic” to fire civil servants.

“Instead, maybe we can consider freezing and redeploying resources.

“Like any corporation, if you have too high a headcount, you freeze hiring and you redeploy people to where they are needed,” Cheah said.

Separately, Cheah, whose investments are mostly China-centric believes that Myanmar could be the next big thing.

“Nowadays, I like Myanmar because it is still cheap.

“It has about 55 million people but its gross domestic product (GDP) is only about US$65bil, Malaysia’s GDP is probably about US$320bil.

“Myanmar has enormous potential, at last they are emerging , gradually reconnecting with the world, they have (a lot of ) raw materials and are in a good position as one of the significant Belt and Road countries, China will go out of its way to invest there.”

Cheah said he would like to set up a Myanmar fund to invest in the country and is in the process of studying this possibility.

Among markets in Asia, Malaysia to Cheah, is “moderately attractive”.

He said consumer sentiment here was finally improving after it took a beating largely due to the implementation of the Goods and Services Tax (GST) back in 2015 plus there are some “interesting corporate restructuring taking place.”

Also, it is General Election year which going by history, tends to send the market higher, he said.

“I think there are good arguments why the Malaysian market is good this year but the arguments are not strong enough to result in a very strong market - and there’s also a global environment that’s not as good as last year.”

“I think the US administration is now focusing on globalisation and world trade and it seems to be moving in the direction of conflict with China over trade.

“If there is a China-US trade war, Malaysia will suffer collateral damage because we are a medium-sized player in a global supply chain, so it will be very disruptive,” Cheah said.

Upside for the Malaysian market could also be limited this year, he said, because its current valuation is relatively high at over 16 times price to earnings.

Cheah thinks the local stock market could go up by between 5% to 10% this year while the ringgit, which has mostly been on an uptrend in recent times, is “still down quite a lot”, against the US dollar.

The local unit appreciated by 8.6% against the dollar last year after losing some 4.5%, a year earlier.

At last look, it was traded at 3.9395 against the greenback.

By Yvonne Tan The Staronline


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World Bank: Malaysia needs structural reforms - Business News



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Saturday 30 May 2015

China's plan to lead the globe?

As tensions in the South China Sea between the US and China continue to rise, the US Navy and Air Force are quietly gearing up to fight a war in the disputed region.

If necessary, that is. Both sides say they don’t want any military confrontation on China’s extensive coastal waters, but both are acting as if a military conflict is increasingly likely.

Optimists say that a peaceful resolution of China’s rise as a great power is achievable. The economies of the two powers are so enmeshed that a war sounds unthinkable.

Such is the thesis of an important new book just out, “The China Dream,’ by Professor General Liu Mingfu (px), a leading Chinese military thinker and commentator who speaks with the voice of China’s military.

US-China trade accounted for $579 billion last year. Beijing holds $1.2 trillion of US Treasury securities, thus financing a big part of America’s massive trade deficit. China claims its low-cost exports to the US saved American consumers $600 billion in recent years.

China only wants its place in the sun, say its strategists, using the same words as German strategists did before World War I. It’s time for a multi-polar world. The age of American world empire is over, writes Liu Mingfu, words that will not endear him to Republican hawks and neoconservatives.

Pessimists retort that Britain and Germany fought two world wars even though they were major trading partners. History is replete with examples of rising powers eventually going to war with the status quo powers resisting their rival’s economic and military growth. The Franco-British-Russian alliance against Germany prior to World War I is a perfect example.

One need not be a swami to see that China’s surging power will soon clash with that of the American hegemon. The battle lines are already drawn: China’s aggressive claims to the South China Sea – viewed by the US Navy as an American lake. Taiwan. Tensions over Burma. Korea. China’s access to the open seas.

According to Prof. General Liu, the days of America’s world domination, or hegemony, as he terms it, are just about over. By 2030, China will be the world’s largest economy in absolute terms (today it rivals the US in purchasing power parity), regaining the geopolitical primacy it formerly enjoyed until the 1500’s when it was the world’s leading economic power.

The US must find a way to accommodate China’s growing power, a point also made for many years by this writer. A policy of containment is not likely to work unless India becomes a principal participant. My first book “War at the Top of the World” deals with the scenario of a future India-China war in the Himalayas, Karakoram and Burma. India has been very cautious in joining any American-sponsored alliance against China.

Liu writes that America must quietly cede some of its power to China in the same manner that the British Empire did to the United States after 1900. The United States and China must share power and jointly rule the world as benign hegemons.

He insists that China has no territorial ambitions and never will. “China suffered 470 foreign invasions within 65 years from 1840 to 1905,” asserts Liu, though incursions would be a more accurate term. During this period, China was raped and pillaged by the western colonial powers and Japan. Hatred of Japan seethes throughout Liu’s book, as it does among most Chinese.

One could argue that China’s annexation or ‘reunification’ of Tibet and Sinkiang were aggressions. China considers them part of historical China, along with truant province Taiwan.

Liu points out that China never invaded or seized its smaller neighbors Korea, Burma, Thailand, or Laos.

Instead, China’s emperors always preferred to dominate without aggression so that its smaller neighbors respected the will of China and acted respectfully – rather as the United States in the 20th century with Latin America. China, writes Liu, wants peace and prosperity in order to keep growing its economy. China remains an inward-looking colossus, content to be the Middle Kingdom.

America, according to the undiplomatic Liu, is a paranoid giant, afraid of the outside world and addicted to the need for enemies abroad. “Americans feel lost without any enemy.” Washington’s occupation and despoliation of so many countries, notably in the Muslim world, generates endless enemies and a war psychosis. America, he claims, is a half-democracy: democratic at home but promoting dictatorships abroad. He seems to believe that China is as democratic at home as the US – a claim that defies reality.

Liu asserts that China is devoted to peaceful relations, non-interference in other nations, and the desire to help build world prosperity, not just its own power or political system. What’s more, Liu modestly asserts, China should lead world development since Chinese are more intelligent and cultured than any other people and heirs to a 5,000-year history!

Interestingly, Liu depicts the 1950 Korean War as a major victory for China because it showed that an Asian nation could fight off the world’s greatest military power. He claims that the US did not invade North Vietnam out of fear of the Chinese People’s Liberation Army after its bloody experience in Korea.

Will Washington back off and allow China to be the master of Asia? It seems highly doubtful. But unless some kind of modus vivendi is found, a military confrontation is likely to follow, one that the US might very well loose. China would be fighting virtually at home or just off its coast. The US, by contrast, would fight thousands of miles across the Pacific from its distant bases. The US might even win, but China would undoubtedly come back for more.

The “China Dream” thesis has been actively taken up by China’s communist leadership. But two things might derail China’s rise to world domination. First, China’s history is replete with example of internal strife, civil wars, and regionalism. This “Chinese curse” could come back to haunt Beijing.

Second, as I read Liu’s panegyric to Chinese greatness and peaceful humanism, I kept recalling Lord Acton’s wise maxim about absolute power corrupting absolutely. It happened in Washington, and there’s no reason why it might not occur in Beijing.

 By Eric S. Margolis who is an award-winning, internationally syndicated columnist. His articles have appeared in the New York Times, the International Herald Tribune the Los Angeles Times, Times of London, the Gulf Times, the Khaleej Times, Nation – Pakistan, Hurriyet, – Turkey, Sun Times Malaysia and other news sites in Asia. http://ericmargolis.com/

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Thursday 31 October 2013

World Bank ranks Malaysia the world's 6th ease of doing business


KUALA LUMPUR: A World Bank report has ranked Malaysia as the sixth friendliest country in the world to do business, beating developed nations such as South Korea, the United Kingdom and Australia.

In a survey of 189 economies, the “Doing Business Report 2014” saw Malaysia jumping from 12th place last year, and up from 25th when it first joined the survey in 2007.

Countries with high rankings, according to the World Bank website, meant that their respective regulatory environments made it better for local firms to start up and operate.

Business-friendly reforms im­­proved a country’s standing, which Malaysia was noted for.

These included the reducing of company registration fees, which made starting businesses here less costly.

The report said Malaysia also made it easier for people to deal with construction permits by coming up with a one-stop shop. Even getting electricity was a factor.

“Malaysia made getting electricity easier by increasing the efficiency of internal processes at the utility and improving its communication and dialogue with contractors,” it said.

The report included Malaysia as a case study for electronic tax filing and payments.

Despite initial public reluctance, the report said, more people used the e-filing system over time, with businesses aided in the process.

“The time that businesses need to comply with Malaysia’s tax regulations fell from 190 hours in 2004 to 133 hours in 2012,” it said.

The report also found Malaysia ranking highly along specific rankings.

Ranking first in the world, Malaysia tied with Britain for “Getting Credit”, and earned fourth and fifth places for “Protecting Investors” and “Trading Across Borders” respectively.

The report’s findings were welcomed by International Trade and Industry Minister Datuk Seri Mustapha Mohamed, who said the country had aimed to be in the report’s top 10 list by 2015.

“Soon after Prime Minister Datuk Seri Najib Tun Razak assumed office, Malaysia was in 23rd place.

“The rise to sixth place is testament to his stewardship and a result of the economic and government transformation programmes,” Mustapa said in a statement.

He added that the ranking helped to reinforce Malaysia’s position as a preferred destination for trade and investments among local and foreign investors.

Singapore was ranked first in the World Bank’s list followed by Hong Kong, New Zealand, the United States and Denmark.

Contributed  by Patrick Lee The Star/Asia News Network

A Malaysian global ambition realised

PEMUDAH or The Special Task Force to Facilitate Business Malaysia’s ambition to be ranked among the top 10 in the world was realised when Malaysia was ranked 6th in the World Bank Ease of Doing Business Report 2014 (DB 2014), up from 12 in 2013 and 25 in 2007 when Pemudah was established.

Pemudah is a partnership between public and private sectors established in 2007 to improve the ease of doing business in Malaysia and to enhance the nation’s competitiveness.

This achievement is very significant as Malaysia competed with 189 economies to be counted among the best in a race where competition was intense and benchmarks were high.

I would like to share the 6-year journey from 25th to 6th rank in the DB rankings. Pemudah was set up by the then prime minister, Datuk Seri Abdullah Ahmad Badawi mainly to address weaknesses in public service delivery and continuous civil service “bashing” in the media.

He wanted to adopt a fresh approach and saw the value of a joint private-public sector committee in improving public service delivery.

A small group of 23 leaders from both the private and public sectors was appointed to the task force which was co-chaired by the then Chief Secretary to the Government, Tan Sri Mohd Sidek Hassan and me. The vision adopted at the first meeting was to have “a globally benchmarked, customer-centric, innovative and proactive service in support of a vibrant, resilient and competitive economy and society”.

This vision was underpinned by the following values: A sense of urgency, proactive public-private sector collaboration, facilitation, not hampering; no more regulation than necessary; zero tolerance for corruption. We announced our aim was to be among the top 10 most competitive economies globally.

How did Pemudah deliver on the promise? A shared vision, a common multi-agency platform, commitment and clear rules of engagement contributed to delivering the outcomes. Meetings were scheduled at the beginning of the year, fixed on the last Friday of each month, except when parliament was in session when meetings were convened on Tuesdays.

Setting meeting dates early ensured high attendance at meetings where no alternate members were permitted.

The commitment of members was not only confined to the monthly meetings of the task force as Pemudah worked through two main working groups (WG) and more than 10 focus groups (FG) which focused on specific areas.

Each group was chaired either by the public or private sector and reported progress on a monthly basis to the main task force. No allowances of any kind were paid and members contributed voluntarily for the common good.

The WG on Efficiency Issues focused on operational efficiency including licensing, e-payments and immigration-related matters. The WG on Policy Issues deliberated on national competitiveness issues like FIC, liberalisation, education, FTAs, etc.

The FGs covered specific issues like paying taxes, registering property, enforcing contracts, business processes, DBKL to name a few. While membership in Pemudah was confined to appointed members, membership in the WGs and FGs was wider.

To enhance awareness by the business community and citizens, the secretaries-general/heads of ministries/agencies wrote articles in the press and publicised their email addresses to enable direct communications to be direct and instantaneous and the media used to publicise improvements made.

Pemudah was supported by a strong secretariat in the Ministry of Trade and Industry (Miti) that issued minutes of meetings within 48 hours to facilitate quick follow-ups to decisions made.

The key improvements to public service delivery were varied with significant gains registered in many areas. A case in point is the issuance of construction permits, ranked 137th in 2007.

Datuk Arpah Abdul Razak, then director-general of Local Government Department and currently the secretary-general of the Housing and Local Government Ministry, set up one stop centres which allowed concurrent submission of all applications.

The centres then obtained approvals from all technical agencies within a stipulated time-frame. Kuala Lumpur mayor Datuk Seri Ahmad Phesal Talib further streamlined the procedures/timelines.

Timelines for approvals were reduced from 420 days to 100 days while procedures declined from 39 to 10. Malaysia’s rankings in construction permits leapfrogged to 43rd in DB 2014.

Another area of significant improvement registered was Trading Across Borders. Miti secretary-general Datuk Dr Rebecca Fatima Sta Maria chaired a multi-agency FG comprising Customs, Transport Ministry, Finance Ministry and permit issuing agencies to reduce time taken to import and export though pre-clearance of cargo and reducing documentation for such transactions.

The work of this FG improved Malaysia’s rankings from 46th to 5th in the six years.

In streamlining processes to start and close a business, credit is due to former Companies Commission of Malaysia (CCM) chief executive Datuk Abdul Karim Abdul Jalil and his team. Today, you can start a business in one hour compared to three days in 2007. In addition, the introduction of the Malaysian Corporate Identity by the Malaysian Administrative Modernisation and Management Unit has also contributed to Malaysia’s ranking improving from 71st to 16th in 2014.

The ranking will strengthen further with the impending introduction of a new Companies Act by CCM chief executive Mohd Naim Daruwish that will further reduce costs and improve efficiency.

Malaysia’s ranking in Paying Taxes was 49th in 2007, 15th last year and 36th in DB 2014. Several initiatives were implemented by former Inland Revenue Board (IRB) CEO Tan Sri Hasmah Abdullah and current CEO Datuk Dr Mohd Shukor Mahfar to facilitate electronic services, prompt refunds of overpaid taxes and enhance transparency of the tax process.

Hasmah reported that she received more than 500 messages on the day her email was made public and a special mechanism was set up to allow her to reply to each of them. Such was the commitment of this former civil servant.

Businesses used to complain about the backlog of court cases and often commercial contracts included provisions for determining courts to be in Singapore.

Former Chief Justice (CJ) Tun Zaki Tun Azmi and current CJ Tun Ariffin Zakaria were instrumental in motivating their team to clear the backlog. They also took up Pemudah’s proposal for new commercial courts to be established with a client charter of resolving all new commercial cases within a nine-month period – a timeline that is world class by any standards.

The transformation and improved rankings from 81st in 2007 to 30th in DB 2014 was the subject of a special report by the World Bank on Malaysia as a best practice. Rankings will improve further as the focus moves to the enforcement of judgements.

We have experienced the speed of issuance and renewal of passports, due largely to the work of past and present Immigration directors-general, including Tan Sri Mahmood Adam, who subsequently assumed the position of Home Affairs Ministry secretary-general. He also adopted and adapted Pemudah’s point system for evaluating eligibility for permanent residence and made it easier for foreign spouses and expatriates to work here.

When the proposal to disband the FIC was presented to Prime Minister Datuk Seri Najib Tun Razak, he was decisive. The decision has contributed significantly to improving the investment climate for Malaysia.

The 6-year journey of Pemudah is evidence that with the right focus and right commitment by the right parties, our rankings in world benchmarked public services can be even higher. It also indicates the power of public-private sector collaboration as a common and effective platform in moving the Malaysian development agenda forward.

I wish to congratulate all members of the civil service, past and present and to thank my private sector friends who have contributed to the incredible journey of Pemudah.

A special word of thanks to the former chair, Mohd Sidek, for his strong leadership and for throwing the challenge to be top 10 at us – we have done it in partnership with everyone.

I am confident that Chief Secretary to Government Tan Sri Dr Ali Hamsa and the new private sector co-chair, Datuk Saw Choo Boon will be successful in maintaining or improving Malaysia’s ranking with the continued support of the private and public sectors.

- Comment by Tan Sri Yong Poh Kon
Tan Sri Yong Poh Kon stepped down as co-chair of Pemudah in September 2013. He is the current president of the Federation of Malaysian Manufacturers and the managing director of Royal Selangor.

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