Business Traveller (Asia-Pacific)
2020 VISION
Malaysia’s capital is at the heart of plans to make the country a major world player – in just seven years, reports Jenny Southan
Jenny Southan investigates Kuala Lumpur’s ambitious development plans from now until 2020
Less than a one-hour flight from Kuala Lumpur is the Malaysian island paradise of Langkawi. Life is simpler here than in the big city, with the primary sources of income being tourism and agricultural endeavours such as rice growing, fishing and rubber tapping. Yet these time-tested pursuits are key to the government’s plans to build a new economy.
On a bike ride across the island, I stop to observe a local worker harvesting sap from a plantation of rubber trees. The bark on one side of each trunk has been cut away to form shallow diagonal channels, allowing the latex to trickle down into an awaiting cup. I’m told that for every kilo of latex the woman collects, she earns RM4 (US$1.2) – in a week, she might pocket the price of a cocktail at a luxury hotel.
On a macro scale, natural rubber, which is used to make products such as tyres, gloves and condoms, is big business. According to the Malaysian Rubber Board, the country is the largest condom producer on the planet – in 2011, 4.37 billion of them were exported with a total value of RM285 million (US$90 million). By 2020, experts forecast that rubber’s contribution to gross national income (GNI) will more than double, to RM53 billion (US$16 billion).
Although demand for raw latex continues to rise, Malaysia is competing with India, Thailand, Vietnam and Indonesia in the market so it can’t afford to be complacent. But, then, that’s not a characteristic of the local population here. “People in this part of the world work damn hard and make sacrifices,” says Tony Collingridge, director of trade and investment for the British High Commission.
It’s a quality shared by the government, too, it would seem, as it tries to shunt the nation from “middle-income” status to “high-income” by 2020. This means boosting annual GNI per capita by 6 per cent a year – from RM23,700 (US$7,239) to more than RM48,000 (US$14,661). Its Economic Transformation Programme (ETP) cites rubber as one of many sectors that will help it achieve its ambitions. Other pillars of the economy identified include palm oil production – another staple commodity – energy, gas, tourism, financial services, education, retail, electronics, business services, healthcare, communications and infrastructure.
Core to achieving high-income status is the city of Kuala Lumpur itself – a teeming metropolis accounting for a third of Malaysia’s GDP. Life is visibly different from in
Langkawi. At a respectful distance from the iconic Petronas Towers, great skyscrapers rise from the earth – many of them are under construction and, looking up, you see tiny workmen soldiering perilously close to the raw ledges, and great bundles of steel being hauled by giant cranes.
Money seems to flow outwards from the 450-metre-tall twin spires, which are home to a buzzing ecosystem of shops and offices housing companies such as Bloomberg, Boeing, IBM and Microsoft. Splayed out in the path of the building’s double shadow is the KLCC Park, the manicured grass of which is so green, it’s almost fluorescent. Children run and splash around a huge stateof-the-art outdoor playground and paddling pool.
Greater Kuala Lumpur has a population of about six million people, though in only seven years this is anticipated to rise to ten million, with many people moving in from rural areas. But with an influx of migrants in search of jobs, it is essential for business opportunities to open up at the same time, and for quality of life to be improved, not impaired.
‘Natural rubber, which is used to make tyres, gloves and condoms, is big business’
“In all of history’s episodes of rapid economic growth, cities have come under strain,” reads the ETP’s document Developing Greater KualaLumpur/KlangValleyas an Engine of Economic Growth. “From the squalor of Industrial Revolution London to the slums and congestion of 1980s Mexico City, or the pollution of modern-day Beijing, citizens’ lives have often been impacted. The aspiration is to drive rapid growth in parallel with upgrading the city’s liveability. Rarely, if ever, has this been achieved, but it is our priority for Malaysia’s next decade.”
It adds: “People vote with their feet. In today’s global and mobile economy, professionals can choose where to live and work. The war for talent is not between nations, but between cities. Cities that are vibrant and liveable are magnets for highly skilled people… Therefore, while urbanising intensively, Greater KL [and the] Klang Valley must also focus on improving liveability.”
While Christine Lagarde, managing director of the International Monetary Fund, has praise for Malaysia’s ETP, she also recognises the associated problem of inequality. “When a country develops very fast, as it would be for Malaysia in the next seven to eight years, you don’t want to leave people behind. You want everybody to be carried by the growth path,” she was reported as saying in the
NewStraitsTimes last November. Collingridge agrees: “KL on its own has probably already reached the GNI average of US$15,815 a head, but there is more work to be done in rural areas, there is no doubt about that.”
Rapid urbanisation puts a huge strain on city infrastructure, too. Trying to get around downtown KL during rush hour, especially the area closest to the Petronas Towers, can be a nightmare. One rainy evening, I had to wait three hours for the person I was meeting to show up as the congestion was so bad, and when leaving my hotel at 6pm, my car pulled out of the driveway only to be forced to sit on the road, bumper to bumper, for 30 minutes without moving. In the end, I walked.
Thankfully, there are a number of solutions on the way. In addition to the KLIA Express train, which opened in 2002 and connects Kuala Lumpur International Airport with KL Sentral station in about 30 minutes, an MRT light rail system serving the city and its suburbs is being built. With 141 km of track, three lines and RM36 billion (US$11 billion) of investment, it will be able to transport 1.2 million people a day by its first-phase deadline of 2017. By 2020, it is expected to be moving two million passengers a day and be responsible for 64 per cent of travel in and out of the centre.
Also in the pipeline is a highspeed rail link between KL and Singapore – it was given the go-ahead in February and, when complete in seven years, will be whizzing people back and forth in only 90 minutes (the 300 km journey currently takes six hours by rail or four by road).
The teeming metropolis of KL accounts for a third of Malaysia’s GDP
At the moment, 40 million people fly in and out of the airport a year, but plans are under way to expand the hub to 100 million passengers annually – again by 2020. Once complete, there will be five runways, two “mega-terminals” linked to satellites, a convention centre, shopping mall and hotels, and even golf courses, hiking trails, a theme park and wetland nature reserve in the vicinity. A monorail link to the F1 circuit in Sepang has also been proposed.
The new KLIA2 airport extension is scheduled to open by the end of the year. Initially, it will have a 30 million-person capacity (this will increase to 45 million people), and will be dedicated to low-cost carriers – a market that is rapidly expanding in the region. These will include Air Asia, Lion Air, Tiger Airways and Zest Airways. The terminal will also be connected to downtown by a two-kilometre extension of the Express Rail Link.
All of this bodes well for the 36 million visitors expected to be entering the country by 2020. “In terms of income, whether you are a hotel, a taxi driver, a convention centre or just doing business, it’s huge,” says Robert Dallimore, general manager of the Malaysian capital’s new 412-room Grand Hyatt hotel (http://kualalumpur. grand.hyatt.com), which opened in August, making it the first high-end property to be unveiled in the past decade.
Starwood also opened a 482-room Aloft in March, and is due to follow that with a 200room St Regis in December, and a 150-room W in 2016. Pullman, meanwhile, is opening a 513-room hotel in the city in October, and work has begun on a Four Seasons with 230 rooms and apartments – due in 2017. Further ahead, the world’s first seven-star Harrods hotel is scheduled to arrive in 2018 at a cost of RM1 billion (US$317 million), with between 250 and 300 rooms.
Malaysia is one of 10 Association
of South East Asian Nations (Asean) member states aiming to achieve regional economic integration by 2015. The others include Brunei, Laos, The Philippines, Cambodia, Indonesia, Myanmar, Singapore, Thailand and Vietnam. This union is going from strength to strength, bringing benefits to the economies of the countries involved. Asean nationals, for example, constituted 76.4 per cent of total tourist arrivals into Malaysia in 2011, and interAsean trade generated an impressive US$598,242 million for the region in the same year.
In a bid to attract the likes of Fortune 500 and Forbes 2000 companies to the capital, government agency Invest KL was set up in 2011. So far, it has pulled in 17 multinational corporations, creating more than 15,000 jobs over the next few years. It aims to add another 83 companies to the list by 2020.
What makes the capital a good bet? A spokesman for Invest KL says: “There is a rising cost of living that comes with upgrading the infrastructure, but we are still one
‘Rapid urbanisation puts a huge strain on the city’s infrastructure’
of the most affordable places in the region to do business. Singapore has done a good job of positioning itself but it’s getting very expensive so we make a good alternative.
“People can use KL as a gateway to the region – a trading hub. Residence passes for expats are valid for ten years and spouses can now work – this helps with encouraging multinationals. There are also no visa requirements or landing forms at the airport.” So the question is, when are you going to touch down in Malaysia? Visit http://etp.pemandu.gov.my; http:// ukti.gov.uk or http://investkl.gov. my for further information about this dynamic, rapidly developing destination.