* Malaysia unveils $444 billion 10-year investment plan
* Says will help double national income per capita by 2020
* To create 3.3 million new jobs by 2020
* No new incentives for business to invest
By Royce Cheah
KUALA LUMPUR, Sept 21 Malaysia on Tuesday
unveiled ambitious plans to boost its economy by mobilising
hundreds of billions of dollars of private investment, although
questions remained over whether the money would materialise.
The plans ranged from a new mass transit system to relieve
congestion in the capital, Kuala Lumpur, to building a huge oil
storage facility next to neighbouring Singapore to form a
regional oil products trading hub.
A government thinktank said it had identified investments
worth $444 billion over 10 years, of which 60 percent would
come from the private sector, 32 percent from government-linked
companies and 8 percent from government.
The investment aims to double per capita income and push
Malaysia into the ranks of "developed" nations by 2020,
rebalancing Asia's third most export-driven economy towards
domestic demand and the service sector.
"The plan does not provide a clear sense of where the money
is coming from. A lot of these numbers are pie in the sky,"
said Bridget Welsh, a Malaysia specialist at Singapore
Malaysia is competing for investment with other
fast-growing countries in Southeast Asia and neighbouring
Indonesia recently unveiled plans to boost infrastructure too.
For a factbox on the investment areas [ID:nSGE68E0B0]
For an earlier analysis on the reforms [ID:nSGE687090]
For a graphic of foreign direct investment trends:
For a PDF of political risks in Malaysia:
In the past 10 years, private companies invested just 535
billion ringgit ($172.4 billion), according to official data
and Malaysia's private investment rate of around 10 percent of
gross domestic product (GDP) is among the lowest in Asia and a
third the level it was before the 1998 Asian financial crisis.
The government, which in 2009 ran its biggest budget
deficit in 20 years as a percentage of GDP, contributes around
half the investment in Malaysia and the minister in charge of
presenting the investment plans said the new targets were
"I don't think the government would publish a document that
thick if there is no political will. It's a risky strategy to
expose yourself so publicly when you have no plan to do it,"
Idris Jala told a public presentation on the plans.
The plan relies heavily on domestic capital as foreign
direct investment in this country which in the early 1990s
accounted for almost 40 percent of the Southeast Asian total
accounted for just 3.8 percent in 2009, according to United
Malaysian companies like leading bank CIMB (CIMB.KL) and
telco Axiata (AXIA.KL) have started building a regional
presence in large, fast growing countries, such as Indonesia.
Economists warned without a new policy framework to
encourage investment the Malaysian plans would be hard to
"It will be difficult to achieve the private investment
growth target set by the government if there are no additional
tax incentives given to the focus sectors," said Gundy Cahyadi,
regional economist at investment bank OCBC.
MOVE INTO SERVICES, CHALLENGED BY EDUCATION
The plans aim to create another 3.3 million jobs by 2020,
many in the high-value service sectors such as Islamic finance.
Idris said 46 percent of the new jobs would be "middle-class".
Despite churning out tens of thousands of graduates,
Malaysia's education system has failed to deliver and is
becoming increasingly polarised by arguments over language
between the majority Malay population and minorities such as
the large ethnic Chinese population.
The government thinktank that designed today's investment
plan said that in 2003 Malaysia had just 21,000 finance and
accounting professionals qualified to be employed by
multi-national companies compared with 341,000 in India and
127,000 in the Philippines.
"How can you create middle-class jobs when you do not have
an education system that works," said Singapore Management
There is also policy risk in Malaysia. Recent plans for a
radical overhaul of the country's costly subsidy regime
proposed by the same thinktank that outlined the investment
plans were shot down by government politicians who feared
($1 = 3.103 Malaysian Ringgit)
($1 = 8,976 Rupiah)
(Additional reporting by Razak Ahmad; Editing by David
Chance and Sugita Katyal)