After years of drifting in the doldrums, in the afterglow of the mega initiatives of the past, like Putrajaya, Cyberjaya, Petronas Twin Towers and KL Sentral, Malaysia is trying to force itself free and start sailing again. And to ensure the success of this effort, Prime Minister Najib Tun Razak has decided to do exactly what former prime minister Mahathir Mohamed had done before him — hit the grandstand.
Early last month, Najib formally announced plans for a $16 billion, 156-km mass transit railway network for metropolitan Kuala Lumpur. Dubbed “My Rapid Transit” (MRT) and scheduled to be finished by 2020, the project is the biggest single infrastructural initiative ever undertaken in the country and is viewed as the cornerstone of the government’s ambitious new programme to transform the economy.
A mass transit system to serve the capital region has become a pressing need. Traffic jams in Greater Kuala Lumpur are frequent and severe, while the larger Klang Valley, in which Kuala Lumpur is situated, isn’t too well served by the existing transport systems. Investors see this as a big block in the way of new economic expansion. Najib sees billions of dollars in spin-off benefits arising from the MRT, mainly in the property sector and hopes it will help make Kuala Lumpur one of the top 20 most liveable cities in the world.
The first phase of the project will involve a 51-km line, with 31 stations, running northwest-southwest from Sungei Buloh to Kajang, passing through Kota Damansara, Kuala Lumpur and Cheras. The government wants to have this line going by 2015. Najib sees it as a trigger to release a massive new phase of private-sector-led economic development that’s expected to inject some $444 billion worth of new investments into the economy by 2020. By that time, he hopes, Malaysia will become a fully-developed nation and 3.3 million new jobs will have been created.
Even as most of the investments are to be raised from the domestic private sector, Najib is banking on at least a quarter of them to come from abroad. The government itself, determined to reduce its role in business, wouldn’t come in for more than eight per cent of the stake. To prove that it does what it preaches, 33 government-owned companies have been marked for divestment and 21 of these are to be sold outright.
Several strategic reform initiatives were announced early last month to support the economic transformation programme and enhance the country’s global competitiveness. The initiatives cover a wide spectrum and include public finance, human capital development, public service delivery, international standards and liberalisation, and the narrowing of disparities among small and medium bumiputra (sons of the soil) industries. “We must try harder” is the government’s new development slogan.
Services, which currently account for about 57 per cent of the economy, are to be liberalised in phases. Restrictions on foreign equity in such areas as healthcare, education and business services are to go. For example, there would be no bar on foreign equity in specialised private hospitals offering a prescribed minimum number of beds. Entry restrictions on foreign specialists, like doctors and dentists, would be relaxed. Higher education would be considered an export commodity and no cap would be imposed on foreign students.
Twelve key national economic areas have been identified for special attention, of which Greater Kuala Lumpur/Klang Valley is one. Complementing these areas would be five economic corridors led by regional cities, including George Town in the north and Johor Baru and Iskander Malaysia in the south. Iskander Malaysia is a new metropolis north of Singapore being developed as a healthcare, education and financial centre, and is said to have attracted $23 billion in promised investment already, nearly half of it from overseas.
But Najib’s task won’t be easy. Mahathir’s success lay in a clever mingling of politics and business, based on large-scale government projects, which kept a coterie of Malay and Chinese businessmen happy. When Mahathir quit in 2008, the flow of mega projects stopped, economic growth weakened, and with Islamic conservatives gaining ground in Malaysian politics, many Chinese felt they weren’t getting as much benefits as before and left. It’s estimated there are some 700,000 Malaysians, mostly Chinese businessmen and professionals, presently working abroad. Najib has to earn their trust, reverse the drain and bring them back.
This task has been given to a new agency called Talent Corporation and attractive tax breaks are being offered. However, with Malaysia going to the polls in one and a half year’s time, one would be watching how far Najib can go in wooing the Chinese back. The recent violent protests in Kuala Lumpur over electoral reforms show political opposition remains a factor to reckon with. In the last general elections in 2007, such opposition had cost the ruling coalition, United Malays National Organisation, some valuable seats.
