Luncheon Address On "Business Opportunities In Malaysia" Hong Kong Sar, Monday, 30 May 2006
Over the past year, I have been to Hong Kong three times, beginning with the Trade and Investment Mission in April 2005, then the 38 th General Meeting of the Pacific Basin Economic Council in June and finally, the Sixth WTO Ministerial Meeting last December. This shows the strategic importance of Hong Kong in the arena of international trade and business particularly for East Asia. The Malaysian trade and investment delegation with me today comprises 80 representatives from the government and private sector. This mission is part of the on-going initiatives to deepen and widen collaborations in trade and business between both our countries, and to keep the business community in Hong Kong advised of the latest developments in Malaysia. The economies of the Asia Pacific region continue to be important trading partners for Malaysia. East Asia, including ASEAN is set to be the driver of the global economy in years to come. Deeper integration between countries of East Asia is the key to economic growth. For Malaysia, Hong Kong is a strategic partner not only for trade but also investments. OPPORTUNITIES AND PROSPECTS IN MALAYSIA Malaysia as an outsourcing partner To remain competitive in this highly globalised world, there is an increasing trend for companies to outsource part or whole of their production processes and services to counterparts in foreign markets. Malaysia is fast gaining recognition as a preferred outsourcing location especially in the areas of shared services, banking and ICT services. This creates avenues for joint collaboration and partnerships between both economies. Multinational companies which have set up operations in Malaysia include: · Dell (call centre). · BMW and Hong Kong Bank (data centres). · Standard and Chartered Bank, DHL, Shell and Citibank (back office operations). Malaysia is today a world leader in the Shared Services and Outsourcing industry. AT Kearney ranked Malaysia as the world's third most attractive location for Shared Services and Outsourcing – behind India and China. With its unique blend of world-class ICT capabilities and infrastructure, the Multimedia Super Corridor Malaysia is a choice location for the world biggesy companies to set up their regional/global outsourcing base. There are currently 73 shared services and outsourcing companies operating in the Multimedia Super Corridor Malaysia which also houses 250 call centres. Among the Multinational Companies with operations in the MSC Malaysia include Malaysia has received recognition from prominent analysts like Gartner, Deloitte, Frost & Sullivan and NeoIT as a choice location for outsourcing and ICT services. Malaysian companies have been listed in the Global Services 100 List 2006. Malaysia has become and will continue to be a prime location for offshoring in the Asia Pacific region in years to come. Therefore, Hong Kong companies especially those in offshoring and shared services are encouraged relocate their operations to the MSC Malaysia to benefit from the growing competitive advantage. Malaysia as a Regional Hub for Manufacturing-Related Services Malaysia is experiencing significant growth in the area of manufacturing related services. Malaysia's strategic location with its well developed and modern infrastructure, competitive operational costs, multilingual and trainable human resources as well as a stable business and political environment, makes it an increasingly popular choice for establishing regional operations. The availability of global connectivity is an added advantage from the many international flights that service the Malaysian routes. Currently there are a total of 2,097 regional establishments that have been approved which include: · 90 Operational Headquarters. · 164 International Procurement Centres. · 7 Regional Distribution Centres. · 514 Regional Offices. · 1183 Representative Offices. Many fiscal and non-fiscal incentives are available to encourage more foreign companies to set up regional establishments in Malaysia. Among the incentives offered include full income tax exemption of 10 years for Operational Headquarters, International Procurement Centres and Regional Distribution Centres. So far, it appears that Hong Kong companies have not fully taken advantage of the incentives offered by Malaysia, with only nine companies having set-up regional establishments in Malaysia. Offshore Financial Services The Labuan Offshore Financial Services Authority (LOFSA), established almost 16 years ago has shown encouraging progress. Currently there are 5,152 active offshore companies operating from over 80 countries. Of this, 193 or eight per cent of total offshore companies originate from Hong Kong. The operations of these Hong Kong companies include banking, insurance and insurance related businesses, fund management, money brokering and trading. The business-friendly environment, well-regulated legal framework, favourable tax structure and low operating costs of doing business in Labuan IOFC are the key elements that continue to draw international interests, and I hope to see greater number of Hong Kong investors in Labuan. The depegging of the Ringgit with effect from 1 July 2005, provides greater flexibility for overseas investments. Hong Kong fund managers should take the opportunity to register mutual funds in Labuan International Offshore Financial Centre. This would enable prospective clients to invest in such funds. In addition, fund managers would be able to take advantage of the Labuan International Financial Exchange (LFX) to cater for listings and trading of the instruments. MALAYSIA - GATEWAY TO ASEAN With the full implementation of ASEAN Free Trade Area (AFTA), ASEAN with a population base of almost 550 million people and with a combined GDP exceeding US$750 billion is an attractive market. Hong Kong companies seeking to expand their activities in ASEAN can leverage on Malaysia's strategic position and the linkages and network already established in the region. The progressive liberalisation of the ASEAN market is expected to further accelerate the economic growth of ASEAN countries by capitalising on their complementarities. Within the region, Malaysia is a major contributor to intra-ASEAN trade accounting for 26 per cent of total trade. ASEAN is now accelerating the deepening of regional economic integration to establish the ASEAN Economic Community (AEC) by 2020, with the services sector targeted to be phased in by 2015 and the priority services sectors (healthcare, tourism and e-ASEAN) by 2010. The AEC will be characterised by a single market and production base with free flow of goods, services, investment, skilled labour and capital. The implementation of ASEAN-China FTA will create the world's largest FTA for developing countries, with 1.7 billion consumers and a regional GDP of about US$2 trillion. The agreement on Trade In Goods (TIG) has been implemented since July 2005 and on-going negotiations are being carried out on services and investments. ASEAN is currently pursuing FTA negotiations with Japan, Korea, India, Australia and New Zealand, to strengthen its trade and investment ties. UPDATE ON THE MALAYSIAN ECONOMY The International Institute for Management Development (IMD) in its 2006 World Competitiveness Report has ranked Malaysia as the 23 rd most competitiveness nation in the world, an improvement of five positions from the 28 th position in 2005. With this ranking, Malaysia surpasses Germany, Thailand, France, South Korea and Italy. In 2005, Malaysia sustained its position among the top 20 exporting nations in the world, showing the significance of the external sector to Malaysia. Malaysia will continue to enhance its export competitiveness through improved market access vis-à-vis free trade agreements (FTAs) negotiated bilaterally and at the ASEAN level. FTAs completed and being negotiated are comprehensive and cover not only tariff reduction or elimination but also liberalisation of the services and investment sectors, as well as, trade facilitation activities and cooperation in capacity building . In December 2005, Malaysia entered into an Economic Partnership Agreement (EPA) with Japan which will be implemented in July 2006. On-going FTA negotiations that will be completed in 2006 include Pakistan, Australia and New Zealand, while FTA negotiations with the USA scheduled to commence in June and India later this year. Malaysia's economy continued to strengthen in 2005 with Gross Domestic Product (GDP) growing by 5.3 per cent. This robust growth was driven by strong external demand and high domestic consumption. Expansion was recorded in all major sectors of the economy. For 2006, growth is expected to continue on its upward momentum, supported by favourable economic expansion in most of Malaysia's major trading partners. The external sector is envisaged to be a major contributor to Malaysia's economic performance. Real GDP has been projected to expand by 5 to 6 per cent in 2006. In the first quarter of 2006, total exports remained robust, expanding by 11.5 per cent while imports grew by 13.7 per cent. With this performance, Malaysia will be able to maintain its position as one of the top 20 exporting nations in the world. In a recent development, Malaysia launched its Ninth Malaysia Plan in April this year, a blueprint which contains the strategies, programmes and allocation, designed for national development for the period 2006 to 2010. This forms part of the development objectives to guide Malaysia towards its Vision 2020 of becoming a fully industrialised and developed nation by 2020. The Ninth Malaysian Plan focuses on creation of value and knowledge-intensive activities in the information and communication technology (ICT), biotechnology and services sectors. Emphasis is also given to the development of human capital so that Malaysia can become a global player in the knowledge-based economy. In June 2006, Malaysia will be launching the Third Industrial Master Plan which will establish the foundation and direction of industrial growth over the next 15 years. The focus of the Plan: · sustain the manufacturing sector as a major source of growth. · nurturing and facilitating the growth of the services sector. · improving Malaysia's competitiveness. · ensuring a conducive investment environment including improving the public delivery system. · improvements in the economic foundation such as human resources, infrastructure and logistic support. Business Relations T rade Over the last decade, trade with Hong Kong increased almost 3-fold expanding from US$3.7 billion in 1995 to US$11.1 billion in 2005. Since 1990, Hong Kong has constantly been among Malaysia's top ten export destinations. In 2005, Hong Kong was Malaysia's: Malaysia's exports to Hong Kong in 2005 totalled US$8.2 billion. Major exports to Hong Kong include: Although Malaysia's direct trade with China has been growing significantly with exports valued at US$9.3 billion, Hong Kong continues to remain as an important conduit for Malaysia's trade with China. According to Hong Kong SAR trade statistics, about 84 per cent of Malaysia's exports to Hong Kong in 2005 were re-exported to China. Investments The European Intelligent Unit (EIU) has ranked Malaysia ahead of other major economies in Asia such as South Korea, Japan, Thailand, China, the Philippines, Indonesia and India in terms of attractiveness as an investment destination. This ranking was based on the business, political and institutional environment in the country. In 2006, Malaysia improved its rankings in terms of government and business efficiency from the 26 th and the 25 th position, respectively, to the 20 th position. The improvements of these rankings are indications of Malaysia's efforts to enhance and sustain business competitiveness. The improvement in ranking for government efficiency is consistent with the continuous efforts by the Malaysian government to improve its administrative and delivery systems. In the business front, higher productivity growth, declining Unit Labour Costs and improvements in business environment were the principle factors that have led to this higher ranking. In 2005, Hong Kong was 15 th largest source of foreign investments for Malaysia with total investments of US$27.6 million in 17 projects in Electrical and Electronics, Textiles and Chemical Products. From 1980 to 2005, 366 projects with interest from Hong Kong has been implemented with investments of US$524 million. Malaysia welcomes more investors from Hong Kong to take advantage of the investment opportunities available. TOURISM Malaysia is a tourism paradise. In 2005, more than 77,528 tourist from Hong Kong visited Malaysia with an average length of stay of up to 6 nights. There were 16.4 million tourist arrivals in 2005. The year 2007 has been declared as the ‘Visit Malaysia Year', to coincide with Malaysia's 50th Independence celebrations. We would like to take this opportunity to invite you to visit country and join us in the year-long celebrations. Malaysia - MY second home programME Malaysia welcomes more residents from Hong Kong to take up the offer under the ‘Malaysia-My Second Home Programme'. Currently, 11 Hong Kong citizens are participating in this programme. Under this Programme, people from all over the world can stay in Malaysia on a social visit pass with multiple entry visa. The social visit pass is given for a period of 10 years and is renewable. The Programme is open to all foreigners, regardless of age and they can bring along their dependents.
<; LINE-HEIGHT: 13pt; TEXT-ALIGN: justify" align="justify"> Malaysia has received recognition from prominent analysts like Gartner, Deloitte, Frost & Sullivan and NeoIT as a choice location for outsourcing and ICT services. Malaysian companies have been listed in the Global Services 100 List 2006.
Malaysia-Hong Kong