New growth en­gine needed

The Sun (Malaysia) - - SPEAK UP -

I Fthe Malaysian econ­omy is a car, its old en­gine of growth – ex­ports of goods and ser­vices – is now close to stalling, the World Bank’s short-term forecast is­sued ear­lier this month sug­gests. In Oc­to­ber 2016 the World Bank trimmed, by 20 ba­sis points, its es­ti­mated growth for the Malaysian econ­omy to 4.2% this year – slower than the 5% ex­pan­sion recorded last year. Growth is likely to be an equally tepid 4.3% next year and 4.5% in 2018. If these pre­dic­tions ma­te­ri­alise, the Malaysian econ­omy’s short­term out­look ap­pears unin­spir­ing.

Pre­vi­ously the pow­er­house of Malaysia’s eco­nomic growth, ex­ports of goods and ser­vices have lost their dy­namism, the World Bank data shows. Lower prices of oil and palm oil as well as softer de­mand for man­u­fac­tured goods are ex­pected to cause ex­ports of goods and ser­vices to con­tract by 1% this year.

Although ex­ports of goods and ser­vices will turn pos­i­tive in the next two years, growth will re­main anaemic; 2% next year and 3.5% in 2018.

Ad­mit­tedly, Putrajaya has al­ready iden­ti­fied sev­eral new en­gines of growth en­cap­su­lated in the 12 Na­tional Key Eco­nomic Ar­eas (NKEA) in the Eco­nomic Trans­for­ma­tion Pro­gramme.

In­stead of fo­cus­ing on man­u­fac­tur­ing goods, at­ten­tion has shifted to the ser­vices sec­tor. While the 12 NKEAs are a step in the right di­rec­tion, one en­dur­ing prob­lem is the gap be­tween bold pol­icy con­cep­tion and hap­haz­ard im­ple­men­ta­tion.

An ex­cel­lent ex­am­ple is tourism, which in­cludes those vis­it­ing this coun­try for ed­u­ca­tional and health pur­poses.

The Higher Ed­u­ca­tion Min­istry’s tar­get is to in­crease the num­ber in­ter­na­tional stu­dents to 200,000 by 2020 – a sharp jump from the 151,979 in­ter­na­tional stu­dents study­ing in this coun­try last year.

Although 882,000 tourists came to this coun­try for health care in 2014 this was 1% higher than the pre­vi­ous year. More­over, Malaysia’s 3% share of Asia-Pa­cific med­i­cal tourism is dwarfed by Thai­land’s eye­ballpop­ping 50% por­tion.

Sched­uled to be tabled in Par­lia­ment to­mor­row, Bud­get 2017 could con­tain tax and other in­cen­tives as well as ex­pen­di­ture al­lo­ca­tions aimed at turbo-charg­ing growth in tourism re­ceipts. Fis­cal mea­sures alone may be in­suf­fi­cient. What is needed is a re­vamp of Malaysia’s tourism eco-sys­tem.

Ac­cord­ing to World Tourism Or­gan­i­sa­tion (WTO) data, 25.7 mil­lion tourists vis­ited this coun­try last year – well be­hind China’s 56.9 mil­lion tourists but slightly less than Thai­land’s 29.9 mil­lion and Hong Kong’s 26.7 mil­lion.

A ma­jor con­straint to at­tract­ing more tourists to this coun­try is flights. While flights con­nect­ing Kuala Lumpur to East Asian cap­i­tals are plen­ti­ful, con­nec­tions be­tween Penang, Malacca, Sabah and Sarawak and sec­ond tier Chi­nese cities like Guangzhou, Hangzhou and Ji­nan are ei­ther sparse or non-ex­is­tent.

Another po­ten­tial bot­tle­neck is visas. Although the process of ap­ply­ing for visas has been eased sig­nif­i­cantly for China tourists, com­pet­ing coun­tries like In­done­sia and Thai­land of­fer visas on ar­rival.

Yet another off-putting fac­tor is the KL In­ter­na­tional Air­port (KLIA). Apart from two break­downs in the aero­train on April 8 and May 14 this year that af­fected hundreds of trav­ellers, another fre­quent source of com­plaint is the long wait at im­mi­gra­tion coun­ters.

This could be re­solved by re­or­gan­is­ing the queu­ing sys­tem. In­stead of tourists form­ing a sin­gle line and be­ing chan­nelled to any im­mi­gra­tion counter that is avail­able – as in Hong Kong – tourists in KL have to de­cide which queue to join.

Ad­di­tion­ally, im­mi­gra­tion staff that deal with Malaysian trav­ellers are often free but don’t help to process for­eign­ers – un­like the norm in Sin­ga­pore and sev­eral other coun­tries.

Fur­ther­more, as I have sug­gested pre­vi­ously, im­mi­gra­tion staff should be ros­tered based on the num­ber of flights and pas­sen­ger ar­rivals. This sug­gests the prob­lem isn’t lack of im­mi­gra­tion staff but their in­ef­fi­cient de­ploy­ment.

If Malaysia hopes to at­tract more ed­u­ca­tional and health tourists, it shouldn’t at­tempt to du­pli­cate what ed­u­ca­tional in­sti­tu­tions and hos­pi­tals in Sin­ga­pore and else­where of­fer. In­stead, Malaysia should aim to pro­vide unique dif­fer­en­ti­ated health and ed­u­ca­tional ser­vices.

To fa­cil­i­tate the growth of the Asean Eco­nomic Com­mu­nity (AEC), Malaysian col­leges and uni­ver­si­ties should of­fer cour­ses on re­gional his­tory, lan­guage and cul­ture, the econ­omy and business struc­tures.

How can closer link­ages within the AEC be forged amid a mi­asma of ig­no­rance about neigh­bour­ing coun­tries’ his­tory and busi­nesses? While US-based Wal­mart is a name fa­mil­iar to many Malaysians, how many are aware that Mata­hari Depart­ment Store is the big­gest re­tail chain in In­done­sia?

Ad­di­tion­ally, will reg­u­la­tors al­low Malaysian uni­ver­si­ties, col­leges and in­sti­tu­tions to prof­fer one to three-month business man­age­ment cour­ses that will en­able highly-paid ex­pa­tri­ates to op­er­ate more ef­fec­tively in this re­gion?

Sim­i­larly, Malaysian hos­pi­tals should con­sider set­ting up treat­ment cen­tres of­fer­ing tra­di­tional medicine while a re­lated growth area is man­u­fac­tur­ing in­ter­na­tional stan­dard tra­di­tional herbal sup­ple­ments. A multi-cul­tural coun­try, Malaysia is rich in herbal cures from the mul­ti­plic­ity of eth­nic groups.

In short, in­stead of con­tin­u­ally look­ing west, Malaysia should re­fo­cus its at­ten­tion east­wards.

Opin­ions ex­pressed in this ar­ti­cle are the per­sonal views of the writer and should not be at­trib­uted to any or­gan­i­sa­tion she is con­nected with. She can be con­tacted at siok­choo@the­sundaily.com

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