by JAGDEV SINGH SIDHU

HONG KONG: The time has come for the private sector to regain its role in driving the economy and it is hoped that the New Economic Model (NEM) would be the catalyst towards that.

Prime Minister Datuk Seri Najib Tun Razak said the NEM would be looking at boosting both domestic and foreign direct investments (FDI) in sectors that could drive the creation of more high-paying jobs in the future.

“The specifics will be announced when I make my speech at Invest Malaysia but suffice to say that the administrative reforms should make us more responsive to the needs of foreign investors,’’ he told a media conference here after delivering his keynote address at Credit Suisse’s 13th Asian Investment Conference 2010.

Najib said the Government had done its part to facilitate the economic recovery as most of the impetus for growth, on the back of the country’s massive stimulus packages, came from the public sector. In attracting FDI, he said the Government was more discerning now in terms of the types of businesses it wanted to attract.

“We don’t want the investments to be in labour-intensive industries. We want to look at backward linkage to the domestic economy and the creation of high value or paying jobs,’’ he said.

The Government is expecting FDIs to grow this year as economies around the world have recovered from the global crisis last year. Investments in the manufacturing sector dropped dramatically in 2009 as total approved capital investment by the sector fell 48% to RM32.6bil.

To increase the value of FDI, Najib said the Government had the capacity to offer customised incentives for high-impact investments and was in the process of looking at administrative reforms that would encourage FDI inflow into Malaysia.

Najib is in Hong Kong to tell foreign investors that Malaysia can be an attractive destination in terms of equity and capital market investment as well as FDI.

“The world is becoming more competitive. Malaysia was doing extremely well in the past but because the world has changed and we have gone through one Asian and one global crisis, we do need to reach out to the global community so they understand and appreciate some of the new initiatives we are undertaking in Malaysia,’’ he said.

Najib said the Government was seriously considering a global bond issue; not so much for a foreign presence or exposure than for actual funding needs.

“There is enough liquidity domestically for us if we require it. But if we were to decide (on launching a bond issue), it will be on the basis of getting the right kind of signals from the market,’’ he said.

“If the market is exuberant about it, then people will say it is good for Malaysia. But there are other factors to take into account such as cost and exchange rate fluctuation.”

On the delay in implementing a goods and services tax (GST), Najib said that while such a tax would be good for the country, the public needed to understand and accept such a plan. It was the same with the removal of subsidies.

The delay, however, had no impact on the Government meeting its deficit target of 5.6% of gross domestic product, he said, adding that the Government was on course to achieving its target and was keeping close tabs on its spending.

“Lately, revenue has gone up, which is a good sign,’’ he said.
On the issue of affirmative action and its gradual removal, Najib said there was a gradual review of such policy and the market should appreciate the steps that had been taken in liberalising the economy.

“The announcements we made last year were quite monumental. Rolling back the Foreign Investment Committee and liberalising the 27 sub-sectors; and some of the reviews such as (in the case of) approved permit holders are ground-breaking changes and I don’t think the market has really appreciated the initiatives taken, given the internal dynamics in Malaysia,’’ he said.

“When we unveil the NEM, we will look at how we can balance between the domestic requirements with the need to make the market accept the way forward in terms of affirmative action.’’

He also added that the Government was studying a proposal to introduce sports betting in Malaysia.