OUTSTANDING issues, including those of migrant workers and political stability, must be addressed for the government’s National Investment Aspiration (NIA) to succeed, said experts and political leaders.

They also suggested that the government review the nearly 10-year-old list of strategic investors to keep up with current market conditions.

On April 21, the government approved the NIA, a forward-looking growth framework that will form the basis for reforms for Malaysia’s investment policies.

Socio-Economic Research Centre (SERC) executive director Lee Heng Guie said while the NIA is important, the government should also pay attention to stimulating domestic investments.

“Malaysia needs to be strengthened in terms of competitiveness and how to stimulate investments on both sides (foreign and domestic),” he said.

He said the success or failure of the relevant framework will depend on the government’s policies and incentives.

Some strategies to focus on are not directly related to investment policies, such as human resources and migration policies, he said.

“Even if it is to reduce dependence on foreign labour, we must have a clear plan, because they (investors) will worry about whether there will be a continuous supply.”

Although Malaysia wants to reduce reliance on migrant workers, it must be understood that this cannot be reduced across the board, he said.

“Taking Singapore as an example, there are still some industries that need migrant workers.”

He said in the past, merchants’ feedback on pain points in business includes the incoordination of policies between the central, state and local governments.

Merchants had also brought up delays in the approval process due to multiple different agencies being involved, he said.

Regulatory reforms should resolve the little problems that hinder investment, he said.

“The Malaysian Investment Development Authority unit, called the Project Acceleration and Coordination Unit, must do a good job in this aspect before it will have results.”

He also suggested reforming the regulatory system to reduce compliance costs, and government departments and agencies need to make good use of electronic services to reduce red tapes.

Good politics first

PKR’s Subang MP Wong Chen said that Malaysia has lost its cost competitiveness compared to other Asean countries.

“So the only way is to repackage Malaysia as an investment location with a good political climate and legal system.

“First of all, we need to lift the state of emergency and resume parliament.

“Investors may not be politically inclined, but they will not turn a blind eye to the protection that good politics brings to investment.”

He said Malaysia should aim to attract foreign high-tech and green technology investments.

“For domestic investments, we should focus on better mechanisms and the production of more value-added products.”

DAP’s Bangi MP Ong Kian Min said that the government needs to update its investment guide and list of strategic investors because this list was updated in 2012.

He believes that the digital economy industry is indispensable because it is currently under the authority of the Communication and Multimedia Committee and not within the scope of the International Trade and Industry Ministry.

“This includes data centres, big data investments etc.”

In addition, he believes that it is necessary to integrate the Investment Promotion Agencies (IPA) at the federal government level to avoid overlapping effects that create high cost and confuse investors.

Regional competition

Wong Chin Yoong, associate professor in economics at Universiti Tunku Abdul Rahman (UTAR), said it is difficult to determine which industries to strive for because Malaysia has no clear guidelines on investment before.

For example, he cited Taiwan which had issued a white paper to attract capital outflow from China to clarify the main cross-departmental policies such as funding, land, foreign labour and talent supply.

“We need to have a good package and a proactive strategy.”

In addition, he believes the need for a clear goal and not good to explore one by one.

“We are going to explore which companies need to relocate, and we need to have good contacts before we can get in touch.”

On whether customised investment incentives will have a better effect, he said that different investing countries may have different responses.

“Perhaps China will be more optimistic about such flexible and changing policies, but Japanese and U.S. investment may be different.”

He said the Malaysia must stand out among its regional competitors.

“We are not the country that offers the largest incentives, so the tax may be lowered, and this may also affect the subsequent finances.

“If the foreign capital attracted by the deducted tax is not large enough, and the tax is undercharged, it will have an impact on the finances.”

Speaking of big data industry, Wong said that population is an important consideration for investment.

“People have an advantage in population to develop big data and related technologies.”

Tapping young talent

The two lawmakers also said Malaysia was gradually lagging behind neighbouring countries in the technological competition and must do a good job in cultivating and retaining talents.

Wong Chen pointed out that Malaysia can become a major investment centre geographically, but it needs to be able to retain local talents to strengthen its influence.

“We can only do this if we have a better salary structure and better democracy to promote innovation and independent thinking.”

And Ong said that the main consideration in attracting foreign investment is to ensure having good human resources.

However, talents produced by local colleges and universities seemed difficult to match and meet the needs of enterprises which is a long-standing problem, Ong added.

“This is not a topic that can be easily solved in the short term, but it should be discussed in this investment plan.”

Wong Chen also pointed out that this year’s economy will be better than last year, which means that the government’s taxation will return to normal.

And with international oil prices also better than the government’s forecast, it means that the government will have new revenue, he said.

However, he reminded that attention should be paid to the ageing population and income reduction in the next five to 10 years.

For example, after the ageing population, it also means that the government’s medical expenses will increase, and income tax may also decrease.

In addition, after signing some cross-border economic and trade agreements, tax adjustments may be required, which will actually affect government revenue, he said.

“What we want to solve is not a short-term problem, but a tax reform to deal with the structural problem of the fiscal deficit.”

International Trade and Industry Minister Mohamed Azmin Ali announced on April 21 that the cabinet had approved the NIA framework to revitalise Malaysia’s investment environment, attract high-quality investments and create high-income jobs. – May 3, 2021.