To realize its vision of becoming a leading economic power in the Southeast Asia region, the government of Malaysia embarked on a series of aggressive movements that are aimed at making the country a “force” to be reckoned with in the world’s economy by offering a comprehensive investment scheme for the newcomers, spurring local consumption, and instilling a state-of-the-art technology culture in the country.
What lies at the root of these measures is a rejuvenated focus on high technology industries, more precisely, on semiconductor manufacturing and green energy. Tax incentives are being offered for the two industries and the government has also eased the regulatory process. The aim of this is to ensure that companies in these sectors, which are the very engines of economic growth, play a major role in innovating and in creating high-value jobs.
The Ministry of International Trade and Industry (MITI) has noticed an upsurge in inquiries related to investment directly from foreign companies, so much so that MIDA has reported a notable increase in foreign direct investment inquiries” particularly from loss in the supply chain of the Chinese companies. The scenario, with the strategic location of Malaysia and the trained manpower, is postulated to be a significant booster of the country’s attractiveness rating among the regions in the field of investment.
Positive that making the digital economy a priority is a good idea, the government not only established the comprehensive Digital Malaysia initiative but also started its implementation. The initiative is intended to fasten the digital adhesion across the whole economic chain sector with the sectors ranging from SMEs to large corporations and government agencies.
Digital Malaysia is big on creating several new tech hubs around the country. The tech hubs will offer a home for start-ups and another meeting ground for firms in the tech industry to build and innovate. The government has allocated a lot of money for this project. They have promised to grant up to 70% of the funds for research and development. Additionally, subsidies will be provided for those who will relocate to the new areas.
The banking industry is also in the midst of revolutionary changes ushered in by these new economic initiatives. Explicitly detailed Bank Negara’s intentions to award a number of digital banking licenses, thus, they are to be issued in the upcoming months. This action is anticipated to promote rivalry in the banking sector and at the same time, it will bring about new concepts in financial services, particularly in areas such as mobile payments and digital lending.
While the government is also deep in the idea of investing in infrastructure to boost the digital economy, the launch of a nationwide 5G platform would be accompanied by abundant human resources to bring high-speed internet to 80% of the population by the end of 2025. This digital infrastructure is indispensible for the e-commerce, remote work and other digital-first business models that are expected to boom as well.
Along with the increasing awareness of the importance of environmental, social, and governance (ESG) issues in investment decisions, Malaysia has proclaimed quite ambitious goals for carbon emission reduction and sustainability development. A master plan that the government has revealed is a Green Technology Master Plan. It proposes to encourage companies to embrace green practices and invest in renewable energy generation through tax incentives.
It is like the energy sector was never a key element in the Malaysian investment stage since it is a branch of the economy giving the impulse. Simultaneously, this fact is taking place while Malaysia does not abandon the suggestions of its petrochemical future and demands the utilization of other sources of energy. While petronas, the government-run oil and gas company, is telecasting its plans for increasing the oil over the next three years, it is also hailed for its investment in renewable energy projects.
Tourism, a significant source of Malaysia’s revenue, is also the main focus of several economic initiatives that gained prominence again. A new tourism campaign has been funded by the government, intending to showcase the diversity of Malaysia’s cultural and natural environments. Moreover, visa requirements for several target markets have been eased in order to attract more international visitors.
Malaysian authorities have taken measures to address the structural inadequacies of the economy that have always acted as a barrier to the growth of the economy. A measure to revise labor laws is currently in the pipeline whose intention is a more elastic and competitive labor market. Moreover, scaffold structures are being dismantled, and the business process becomes a one-stop center, which will make it easier for indigenous and foreign companies to start a business in Malaysia.
These new economic initiatives will also underscore the importance of education and skills development as core areas of focus. The Government of Malaysia has understood the necessity of having a skilled workforce to meet the high-value sectors, thus allocated additional funding to the technical and vocational education programs. Furthermore, the cooperation is in progress with leading universities and IT companies to keep the Malaysian workforce competitive in the global knowledge economy.
To bolster these several schemes, the government has revealed plans to revamp the tax system. It is expected that the reforms will cover tax base broadening components and targeted incentives in the various growth sectors while the warnings are still pending. They are also talking about the reintroduction of an inheritance tax, though there has been a mixture of opinions from the public and business community.
Even as its policy of economic reforms is under way, Malaysia is keen on bringing everyone on board as a requisite for ensuring inclusive growth. It is planned that the available support tools for small and medium-sized firms, especially the ones in remote locations, will be extended. Besides these, a series of campaigns are to be introduced by the women labor force to allow them to join the workforce better and to offer parallel opportunities for such marginalized societies.
While the public showed more than a fair amount of support for the launch of these policy decisions, some snags in the process still require consideration. The government is to work cautiously to balance the short-term public debt required for infrastructure and outsource driving with the increase in capital investment. Furthermore, the rising political disputes and immeasurable economic ambiguities around the world are threatening the possibility of Malaysia to stay at the pedestal of an export-dependent economy.
Despite these limitations, one cannot help but feel hopeful about the future of the Malaysian economy. Malaysia is a country that has ease of access to its strategic location, diversification of the economy, and a visionary set of the country’s policies. Therefore, Malaysia is among the countries that are most active and resistant to the process of capitalist development from Southeast Asia, which makes them the leading one in that region.