Malaysia continues to power on as an Asian tiger, serving as a junction point for the region, both on the economic and political fronts. In this first edition of The report Malaysia, OBG explores the events shaping the scene in 2005-06 with insightful analyses, as well as interviews with and viewpoint articles from key players, including Prime Minister Abdullah bin Haji Ahmad Badawi, former Prime Minister Mahathir bin Mohamad, Bank Negara Malaysia Director Zeti Akhtar Aziz, Bursa Malaysia CEO Yusli Mohamad Yusoff, and Petronas President Hassan Marican.
TABLE OF CONTENTS
COUNTRY PROFILE
POLITICS
The first chapter of this introductory volume provides a straightforward introduction to the Malaysian political scene. It opens with an overview of how the country has served as a regional mediator and leader, as well as a forging a link to its fellow Muslim-majority nations. An interview with Prime Minister Abdullah bin Haji Ahmad Badawi and a viewpoint article from Nigel Evans, UK MP, provide first-hand perspectives. The article finishes with a look at how Malaysia has kept a lid on terrorism.
THE ECONOMY
The chapter opens with an overview on how oil and high-tech exports are expected to continue to fuel economic expansion throughout 2006, as well as how inflation and the Ninth Malaysian Plan will also shape growth. Articles that explore topics such as privatisation, jobs provided by foreign investment, the value of free trade agreements, and immigration offer in-depth analyses for the potential investor. Interviews with Second Minister of Finance Nor Mohamad Yackop, Hamad Kamah Piah, President and Group Chief Executive of PNB, and Michael Yeoh, CEO of the Asian Strategy and Leadership Institute and viewpoint articles from former Prime Minister Mahathir bin Mohamad and Marc Mealy, US-Malaysia Business Council Senior Director are also included.
BANKING
This section begins with a discussion of Malaysia’s ambition of becoming a banking hub – namely for Islamic finance – as well as how to phase out protectionist measures and encourage mergers of local banks while bringing in foreign players. In-depth analyses on offshore tax haven Labuan and on Islamic financial products follow. Perspectives presented by interviews with Zeti Akhtar Aziz, Governor of Bank Negara Malaysia and Amirsham Aziz, President and CEO of Malaysia Banking, as well as a viewpoint article from Ahmed Hariri, Director of Islamic Development Bank’s regional office, round out the chapter.
CAPITAL MARKETS
An overview of how the Kuala Lumpur stock exchange has sought to revitalise itself after the Asian financial crisis of the late 1990s opens up the chapter, followed by articles further delving into offshore investment centre Labuan and the sector’s fight against unscrupulous investors complete OBG’s analysis. Viewpoint articles from Eugene Lai, Managing Director of JP Morgan Malaysia and Mohd Farid Nawawi, Senior General Manager of Avenue Securities are included, as well as an interview with Yusli Mohamad Yusoff, CEO of Bursa Malaysia. OBG’s capital markets partner, Avenue Securities, rounds out the chapter with share and data analyses of six key Malaysian stocks: Genting, Malayan Banking, MISC, SIME Darby, Telekom Malaysia and Tenaga Nasional Industrial.
INSURANCE
This chapter examines how the growing size and maturity of the country’s insurance sector is upping pressure for consolidation. A look at the nationally run pension scheme Employees Provident Fund and the controversy surrounding it finish off this unique analysis.
TRANSPORT
The need to take full advantage of the country’s existing infrastructure to stimulate growth in the transport sector is the focus of this chapter. An analysis of changes happening at national carrier Malaysia Airlines and an interview with MISC President and CEO Shamsul Azhar bin Abbas finish off the chapter.
ENERGY
This outlook on Malaysia’s energy sector opens with an overview on how the hydrocarbon sector is being revived with intensive exploration methods of both onshore and offshore reserves. The chapter then goes on to take a look at the energy sector’s search for skilled new graduate hires, followed by how palm oil is becoming a source of bio-fuel and reactions to possible subsidy reductions. The chapter is rounded out with an electricity sector analysis and an interview with Hassan Marican, President of Petronas.
TOURISM
Despite coming off of a major advertising campaign, growth in Malaysia’s tourism sector has levelled off recently. This chapter’s overview examines strategies for the sector, such as infrastructural improvements and services. Articles further detailing upgrades to Malaysia Airlines’ fleet and the burgeoning MICE sector in Kuala Lumpur follow, as well as an interview with Tourism Minister Tengku Adnan Tengku Mansor.
CONSTRUCTION & REAL ESTATE
Sure and steady growth in the construction overview is the theme of the chapter’s opening article, with an outline of small projects envisaged by the Ninth Malaysia Plan. Included in the chapter are articles on how Kuala Lumpur developments are proving to be high-value investments and how infrastructural development will help spur the sector. An interview with Ishak bin Imam Abas, CEO of KLCC Holdings and Chairman of Putrajaya Holdings, ends the chapter.
TELECOMS & IT
The telecoms chapter takes a look at ways the sector can develop while already having three mobile providers. An article on discount telecoms provider REDtone follows. Analyses that include strategies for training the workforce to improve export quality, the technopreneur port Multimedia SuperCorridor, and how Malaysian software firms are looking to prove themselves on the international market finishes off the section.
INDUSTRY
The chapter opens with an overview, focusing on strategies Malaysian industry can take to keep up with lower-cost Asian rivals like Thailand and China. A profile on the rubber industry follows, topped off by how the national auto manufacturer Proton can hold up to an influx of foreign vehicles on the market. A discussion on the electric and electronics industry and the steps it should take to specialise rounds out OBG’s analysis. Interviews from International Trade and Industry Minister Rafidah Aziz and viewpoint articles from R. Karunakaran, Director General of MIDA, as well as Peter Wentworth, CEO of BP Companies in Malaysia provide further insight.
PLANTATIONS
This definitive outlook touches on Malaysia’s cherished plantations sector and describes the role palm oil is playing in agricultural output, and how the crop, as well as rubber, will need to have a broadened downstream industry. An interview with Plantation Industries and Commodities Minister Peter Chin completes the section.
AGRICULTURE
Strategies for how farmers and downstream industries can best increase efficiency are the centrepiece of the chapter’s opening overview article. A salute to the tea crop, a national tradition and an exclusive interview with Agriculture Minister Muhiyddin bin Haji Mohd Yassin follow.
RETAIL
Branding and mall expansion have formed the cornerstone of Malaysia’s retail sector, constantly developing to satisfy an increasingly sophisticated market. A further look at subsequent changes in the sector is the focus of the chapter overview. Co-operative markets and their emphasis on local, fresh produce is also included in OBG’s analysis.
MEDIA & ADVERTISING
A multitude of languages and cultures is a consideration with which media moguls and advertisers alike must contend when developing methods for engaging the Malaysian populace. In addition, a discussion of the rapid consolidation of the industry completes the overview chapter. The Industry Committee for Print Audience Research and its quest for standards in media surveys is examined in further depth, as well as the latest in the advertising sector follow. Included is an interview with Abdul Rahman Ahmad, Group Managing Director of Media Prima.
HISTORY
This chapter takes a look at the colonial era and how it has shaped the port of Malacca (present-day Melaka). The discussion begins with the Portuguese, Dutch and English presence and reveals the trials and tribulations of the spice trade and how it created the flavour of the city.
THE BUSINESS GUIDE: ACCOUNTANCY
Ernst and Young, OBG’s accountancy partner in Malaysia, provides an over-arching guide to investing in the country, including outlines of changes in tax regulations and incentives for foreign investors. A viewpoint article from See Huey Beng, Country Managing Partner at Ernst and Young, rounds out the analysis.
THE BUSINESS GUIDE: LAW
OBG’s legal partner in Malaysia, Zaid Ibrahim and Co., has outlined legal topics pertinent to foreign investors. How to establish a foreign business, employment law, and real estate legislation are covered, as is the Banking and Financial Institutions Act. The section also includes a viewpoint article from Chew Seng Kok, Managing Partner at Zaid Ibrahim and Co.
THE GUIDE
The chapter opens with a tribute to Malaysia’s star of the produce stand, the oft-maligned durian. A guide to Malaysia’s top hotels follows. OBG then shifts focus to the endangered sea turtles, once flourishing along Malaysia’s coasts, followed by reviews of some of Kuala Lumpur’s prime restaurant options. The chapter wraps up with a profile of the world-famous Malaysian Philharmonic Orchestra and its vital community outreach programmes.
LISTINGS
OBG offers a comprehensive directory of government offices, trade associations, foreign missions, consultancy and accountancy firms, media outlets, hospitals, emergency numbers, car hire services and useful web links.
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