China policy shift opens opportunities
MALAYSIA is set to benefit from China’s “new normal” mainly through trade, investment and strategic cooperation.
Local exporters have to be nimble and adapt to structural developments in the Chinese market to seize the opportunities.
The government, in complementing this, will continue to implement various strategies, programmes and initiatives to further promote a vibrant, competitive and resilient domestic economy.
China’s rebalancing of its economy from an export, manufacturingand investment-driven economy to one that is led by domestic, services and consumers could result in a lower growth rate compared with the double-digit expansions it had in the previous decades.
Although this poses downside risks in the near term, the shifting patterns in consumption and trade are expected to present significant opportunities for the Malaysian economy over the medium and long term.
Amid the economic restructuring, China outbound travellers continued to grow rapidly by 10 per cent to 128 million with a total expenditure of US$292 billion (RM1.2 trillion) last year.
A total of 1.7 million tourists from China made up 6.5 per cent of tourist arrivals to Malaysia last year, contributing RM5.7 billion in receipts.
Malaysia expects a substantial increase in inbound China tourists due to a more convenient visa policy, attractive holiday packages, and increased flights.
Additionally, higher imports of services and consumption goods by China will benefit exporters of consumer services such as tourism, health and other services in which Malaysia has competitive advantages.
As at end-June 2016, the accumulated China investments in Malaysia stood at RM4.4 billion, mainly concentrated in financial, insurance, and construction sectors.
China’s presence in Malaysia as a recipient of its growing outward investment is evident in the financing and construction of the second Penang Bridge, the Gemas-Johor Baru double-tracking rail project, the Malaysia-China Kuantan Industrial Park and the development of Forest City in Iskandar Malaysia.
Malaysia is also well-positioned to benefit from Asean’s free-trade deal with China — the Asean-China Free Trade Agreement — which will reduce tariffs close to zero on more than 90 per cent of products traded between Asean and China by 2020.
Recognising all these positive developments in China, the government has embarked on various initiatives to boost trade with the country via the National Export Council.
A special Malaysia Promotion Programme will be launched in Shanghai next month to intensify the branding of Malaysian products and services.
The government has also identified many potential areas for Malaysian exporters to tap.
These include healthcare, education and language training, environmental services, aerospace, robotics, automotive, halal industry, energysaving electrical and electronics products, building material and interior fittings, and lifestyle products (fashion/apparel, cosmetics, toiletries, green/organic goods, and agriculture produce).