In what ways does MIDA work within the greater national framework with regard to Malaysia’s New Economic Model (NEM) and Economic Transformation Programme (ETP)?
NORDIN: I think everyone is familiar with the National Economic Model (NEM), and the ETP, which aims to elevate Malaysia to a high-income economy by 2020. Fundamentally speaking, we need to attract investments. MIDA has to deliver growth and transformation. We do this by bringing in the right investments, whether they are domestic or foreign. In the course of doing this, we are also trying to re-brand Malaysia. Malaysia has been successful in the past decades, transforming itself from a commodity-based economy, to a manufacturing and knowledge-based economy. However, a large portion of the market still groups Malaysia together with other low-cost centers for manufacturing and assembly. We are a victim of our own success. We are trying to change this perception. This process of transformation provides us with a window to bring in the right investments.
What is MIDA’s ideal brand for Malaysia?
NORDIN: The right brand has been defined by the ETP. We want to be a high-income economy. We want to move up the value chain. We want to be a knowledge, content, and innovation-driven economy. This defines what we want to be. To deliver on this, we must have the right industries. The essence of the country must provide the right experience to our stakeholders. Having the right industries in Malaysia will help portray the brand that we want to achieve.
What are MIDA’s FDI targets for 2013?
NORDIN: MIDA is an instrument to deliver the Economic Transformation Programme. All of our targets are aligned to achieve the ETP’s goals. We must deliver RM1.4tn ($463bn) by 2020. Annually, that amounts to RM148bn ($49bn) of investment. 92% of this must come from the private sector. We do not set our own targets. The targets are set by the ETP.
Which Entry Point Projects (EPPs) are you currently promoting?
NORDIN: We are responsible for overall investment into Malaysia, so all of the 12 National Key Economic Areas (NKEAs) are relevant to MIDA. We have to deliver investment into those sectors. Some of the sectors are under the purview of different ministries and agencies, but MIDA is part of the team delivering investments to those sectors. There are specific sub-sectors assigned to MIDA directly, like the electronics industry.
How has Malaysia differentiated itself as an investment destination among regional neighbors?
NORDIN: Malaysia has been relatively successful in attracting investment. The economy has evolved as we have brought in investments from different parts of the world. Political stability, economic stability, advanced infrastructure, a sophisticated financial system, and an educated work force, are all factors that have assisted this. Moving forward, we must look at both the hard and soft infrastructure. The policies must be right. We have great policies, but we have to make sure they are current and relevant to the industries we are promoting in order to transform the economy. The workforce is the most important factor. We must make sure the workforce is equipped to absorb the new technologies we want to bring in. Intellectual property rights are important to bring in knowledge intensive, innovation-incentive industries that we are hoping for in the future. I think most of the hard infrastructure is fine. We have great highways in Malaysia. We have several ports that are among the leading ports in the world. We have international airports in Kuala Lumpur, as well as in Penang and Eastern Malaysia. Broadband is being strengthened. The government has recently been working with 4G companies. Connectivity is the most important aspect of the hard infrastructure that we need to develop.
To what extent are you focusing on balanced development across the different regions of Malaysia? Which development corridors have experienced the greatest degree of success thus far?
NORDIN: Malaysia is quite spread out geographically. The level of economic development in Malaysia differs from one part of the country to the other. The western part of Malaysia is a little more developed than the eastern part. When you include Sabah, and the northern part of Borneo, the environment is different. The ETP is trying to bring investments to all geographical regions, while taking into consideration their level of development and competitive advantages. Investments that may be relevant for the Klang Valley, or Penang, may not be relevant to parts of Eastern Malaysia, or the east coast of Peninsular Malaysia. Even though the investments that we bring to the lesser developed parts of the country may be agriculturally related, we still want them to have a high technology content. Whether they specialize in agriculture or plantations, they must have high technology. We cannot afford to provide cheap, abundant labor. We do not have that resource in Malaysia.
What are your specific initiatives for East Malaysia?
NORDIN: Malaysia has organized itself into five economic corridors. Each corridor has targeted sectors that take advantage of their own resources. For example, agriculture is strong in the east coast states. Oil and gas is strong in Eastern Malaysia and Northern Borneo. Different corridors have different targets, and different investment opportunities. All of the corridors are successful when you assess the goals we have set for them. For example, we have been taking advantage of the availability of resources in the eastern part of Peninsular Malaysia. We have been able to attract several biotech operations in that part of the country. We have also had huge investments into agriculture in other areas. Each corridor has achieved degrees of success. You have to measure them against the goals we set for them.
MIDA is an instrument to deliver the Economic Transformation Programme. All of our targets are aligned to achieve the ETP’s goals. We must deliver RM1.4tn ($463bn) by 2020. Annually, that amounts to RM148bn ($49bn) of investment. 92% of this must come from the private sector.
In what ways is Malaysia moving up the manufacturing and industrial value chain? How will this ultimately add to GNI?
NORDIN: There are two groups of companies. The first group is the companies new to Malaysia, and the second group is the companies that have been here for decades. The operations of companies that have been in Malaysia have evolved over the years. During the 1970s and 1980s, Malaysia was purely manufacturing and assembly. Now they are leveraging on Malaysian talents to do development work, such as design and research. That has evolved well. Many of the labor-intensive operations of these companies have moved out of Malaysia. They are still here, but there is little resemblance to the way they were in the 1970s and 1980s. When new companies come here, we tell them that we are not the place for low cost assembly and operations. Malaysia is the place for companies with high value activities.
What are some of the main challenges facing Malaysia as it aims to move higher up the value chain?
NORDIN: The main challenge is perception. Many western companies are not familiar with Asia. There is a misconception that Asia is China and India, and nothing else. The rest of Asia is grouped together with them. The challenge for us is to differentiate ourselves from the rest, and highlight the advantages that Malaysia can offer to potential investors. It is not so much about the product itself, but how to make the market aware of the product that is Malaysia.
What role are education institutions playing in meeting the demands that companies have?
NORDIN: The role of higher education institutions will be the most important aspect of reaching the ETP’s goals. Human capital is one of the main advantages that we have to offer for these new investments. We believe that we have that capacity. In the electronics industry, many of the multinational companies here are now being helmed and managed by Malaysian talent. Many of the state-of-the-art products being offered to the market are designed here in Malaysia, by Malaysian talent. We have a lot of talent in Malaysia. More importantly, much of this talent is being educated by Malaysian institutions.