Helping businesses flourish in Malaysia

The private sector needs to be given every opportunity to flourish

IN my view, there are five key insights which should shape public policy on how best to get the private sector or businesses help drive economic transformation.

First, policy makers must realise that the private sector is the key driver of the economy. A key part of Malaysia’s economic transformation journey is to ensure that businesses in Malaysia are able to flourish. A major thrust of government policy and procedure is to ensure that they are given every reasonable opportunity to thrive and prosper to contribute to income growth.

The second insight is that business and government must be true partners in the economic and government transformation programmes which in our case are means for achieving a developed country status by 2020 – a per capita income of US$15,000 with inclusiveness and sustainability. Our Economic Transformation Programme ( ETP) was co- created by 500 Government and also private sector representatives in 12 labs full time over 8 weeks.

Government spending alone cannot do it – indeed government can only spend money if it gets revenue and if businesses do not do well, there will be less and less revenue to collect as our resources are finite.

The third insight is that policy makers must focus on the key economic sectors. For Malaysia, we have identified 12 high-growth areas and are putting our focus on this to accelerate economic growth and income.

Within the 12 areas of high growth which include sectors such as oil and gas, the greater Kuala Lumpur/ Klang Valley area, tourism, education, palm oil and healthcare amongst others, we have identified over 130 entry point projects to catalyse growth.

The fourth insight is that it is absolutely critical that public policies must be translated into concrete implementation programmes. In my opinion, the best way forward is to develop detailed “3 feet” implementation programme. With this, we can hold the implementors accountable, we can monitor progress at close range, we can problem solve issues and take remedial action. Under our ETP, we have detailed programmes for implementation.

Through the various National Key Economic Area ( NKEA) steering committees which are made up of government officials from the respective Ministries and other agencies as well as private sector players, we follow these projects and work towards removing hindrances and obstacles to facilitate a more conducive business environment. As challenges faced by these entry point project ( EPP) companies are solved, essentially what happens is that we create a better environment for other businesses to flourish as well. This applies equally to foreign and local businesses – we need them both.

In oil and gas for instance, we have 13 entry point projects which include enhanced oil recovery programmes with investment worth US$ 13billion signed and committed in 2012, developing small fields through innovative solutions, unlocking premium gas demand in Malaysia and transforming Malaysia into a regional oil field services and equipment hub. This NKEA alone will result eventually in gross national income of over RM130 billion and over 50,000 jobs by 2020.

The fifth insight is that it is critical to have key performance indicators ( KPI) to monitor progress. In our case, the results so far of these KPI have been very encouraging. For example, private investment growth for Malaysia has accelerated from an average of 6.7% between 2000 to 2010 at the start of the transformation programme to 12.2% in 2011, hitting a remarkable growth of 22% in 2012.

Government institutions and departments are doing their best to foster businesses and this has seen a major jump in our international rankings in terms of doing business. The most recent World Bank’s Doing Business 2014 report puts Malaysia at number 6, taking us to the top 10 for the first time and a jump of six places from the previous ranking.

Many government departments such as Bank Negara Malaysia and the high-powered task force to address bureaucracy in businessgovernment dealings such as PEMUDAH are responsible for the continuous improvement in our ranking and we aspire to do even better in future.

In the Doing Business 2014 report, already we rank highest in terms of ease of getting credit and we have made significant progress in other areas. For instance, in terms of dealing with construction permits, our ranking rose from 96 to 43, a creditable performance which nevertheless leaves room for improvement in future.

In terms of starting a business, our rankings went up to 16 from 54, a considerable improvement which again ref lects the cooperation of many government departments and the increased response to private sector needs.

The number of business licences required has been systematically reduced through business process reengineering to expedite business licensing. By 2015, the government expects the remaining 548 licences to be consolidated into 323.

Among the strategic reform initiatives, we have over 50 policy measures grouped into six areas which include improving the competitive environment, raising the standards of public service delivery and better human capital development, all of which will have a direct bearing on enabling businesses to flourish.

But sometimes help is not the only way to increase business efficiency. It is necessary to expose our businesses to competition if they are to flourish in the longer term for protectionism tends to make them weaker the longer the measures are in place.

We cannot reasonably expect our businesses to do well overseas if they can’t even fight in their home markets without the benefit of protective measures. With the help that we give them and the facilitation, they must eventually be able to stand on their own two feet and fight with the best from anywhere.

For this reason, the government has introduced the Competition Act, liberalised sectors of the economy to open up participation and is actively promoting the adoption of standards and best practices in par with global standards.

While the government will do all it can to facilitate a conducive landscape for businesses to thrive, the private sector too will have to carry out its role to improve upon the quality of products and services offered so we are able to maintain our competitive edge as a nation.

( Datuk Seri Idris Jala is CEO of Pemandu, the Performance Management and Delivery Unit, and Minister in the Prime Minister’s Department. Fair and reasonable comments are most welcome at idrisjala@ pemandu. gov.my)