Much of the GNI impact of the NKEAs will be achieved through private sector investment and action.
However, delivery of many of the EPPs requires government action including policy and regulatory change, funding and investment in areas such as education or infrastructure.
Only about 15 percent of the EPPs do not request specific government funding or policy support.
About 70 percent of these required government enabling actions are specific to the individual EPPs. In addition, there are a series of required government actions that are common across multiple EPPs and across multiple NKEAs
. It will be more effective and efficient to coordinate these cross-cutting actions than solve them on an individual basis as they arise.
"In addition, these enabling actions will also support GNI growth resulting from the business oppurtunities in the NKEAs and in the non-NKEAs sectors"
This is important because the business opportunities in the NKEAs comprise 33 percent of the incremental GNI required to achieve the 2020 GNI target and the non- NKEA sectors account for an additional 26 percent. Without these broader policy enablers, it is unlikely that the GNI growth required will be delivered. Four categories of enablers are required: promoting private investment, growing human capital, improving the business environment and investing in infrastructure.
Promoting Private Investment
Private investment is at the core of the ETP. In many cases, delivering this investment will require some enabling support from the Government.
Some 66 of the 131 EPPs made a formal request for government assistance to promote private investment. These requests fall into two broad categories; more aggressive investment attraction to obtain both domestic and foreign investment and various forms of fiscal incentives.
The Government has already taken significant steps recently to attract both FDI and DDI, notably through the plans to revamp MIDA that were announced in the Tenth Malaysia Plan and to expand MIDA's mandate to include attracting domestic investment. The specific requests from the various EPPs will provide focus to these reform efforts.
"There are categories of investor attraction: Targetted outreached to potential investors and broader marketing campaigns"
The targetted outreach activities include identifying and negotiating with specific investors to participate in identified projects. MIDA will be responsible for working with industry to lead these investor outreach activities and will act to achieve the key milestones for the EPPs. In addition to these targetted activities, MIDA will also undertake broader marketing campaigns in relevant NKEAs in order to promote Malaysia as an attractive investment location to foreign investors.
Many of the EPPs require government financial support in the form of general tax credits and holidays, tax incentives that are directly aimed at increasing specific investment or other forms of non-tax fiscal support such as grants or soft loans. Rather than a blanket change to the tax code, the Government will empower MIDA, and other agencies as appropriate, to negotiate the requested incentives with the investors on a case-by-case basis. However, the Ministry of Finance will establish a common approach and framework to provide the basis for conducting these negotiations.
Growing Human Capital
Human capital is critical to the success of the ETP. About 32 percent of the EPPs, representing RM120 billion of GNI contribution, require direct investments in human capital.
In addition, almost all other EPPs will require human capital investments indirectly, as the majority of the 3.3 million jobs created are in middle and high-income categories. A review of skills requirements in the NKEAs show that, on current trajectory, there could be up to 1 million vacancies in 2020 that will be difficult to fill, ranging from relatively lower-skilled sales assistants to highly skilled positions, e.g. medical practitioners. To address the human capital needs of the various EPPs and business opportunities, the Government will take action to build the capabilities of existing talent in Malaysia, attract foreign talent to work in Malaysia and ease immigration rules to facilitate the entry of foreign talent.
Building domestic capabilities
The Government will deliver a coordinated approach to deliver the right level of training and education required by the NKEAs. The Ministry of Higher Education and the Ministry of Human Resources will coordinate with the relevant NKEA Lead Ministries to assess skills gaps and devise and deliver appropriate courses. Another important requirement for the success of the ETP is development of management and leadership talent for the NKEAs. In this regard, Talent Corporation, which is being established under the Prime Minister's Department, will be involved in building the capabilities of the top talent most needed for the NKEAs, such as pivotal leaders and specialised talent to lead the EPPs.
Attracting talent from overseas
The Government will act to attract Malaysians currently living and working in other countries to return to Malaysia as well as non-Malaysians to build their careers in Malaysia. The actions that will be taken include designing and implementing attractive expatriate packages (e.g. personal income tax incentives), designing and implementing marketing efforts (e.g. roadshows, targetted outreach) and assisting expatriates with applications to work in Malaysia (e.g. assistance with visas, work permits). Talent Corporation will lead these initiatives to attract, motivate and retain the required talent.
Removing restrictive immigration regulations
The Government will act to simplify immigration procedures and increase the ease of entry for skilled workers. In addition, a revamp of selected immigration policies is needed by some NKEAs to implement their EPPs. For example, for the Education NKEA, to raise the number of foreign students in Malaysia, the application process for foreign student passes needs to be accelerated and the ability for these students to work to fulfil practical training requirements will be reviewed. These will be negotiated on a case-by-case basis between the individual sector representations, their respective NKEA lead ministries and the Ministry of Home Affairs.
Improving the Business Environment
The general business environment in Malaysia is a source of substantial competitive disadvantage for Malaysia.
Consistent feedback from private sector investors indicates that the business environment is still a key factor constraining investment. Too often, Malaysian firms face a tangle of regulations that have accumulated over the years and now constrain growth. In light of the complexities the EPPs are facing, many of them have requested enablers that will improve the business environment, including liberalising their sectors and making it easier to do business. Beyond just the EPPs, improving the business environment is an important way in which to achieve the substantial increase in private investment in business opportunities and non-NKEA sectors required to achieve the 2020 GNI targets.
Specific ideas contained in the Tenth Malaysia Plan include a comprehensive review of regulations (led by the restructured Malaysia Productivity Corporation), further liberalisation of the services sector, regulatory exemptions for SMEs and streamlining government-to-business interfaces.
Substantial additional infrastructure investments are required to support the economic growth that will be delivered through the ETP.
Our focus will not be on providing infrastructure in a reactive manner. Rather, we will put in place forward-looking infrastructure development plans with a view to future-proof the Malaysian economy. Two types of infrastructure will receive particular attention due to their central role in driving GNI.
The Government's objective is to raise Malaysia's broadband penetration rate to 75 percent of households by the end of 2015 (from around 40 percent currently). This is being achieved through a combination of high speed broadband (up to 100 Mbps) in high economic impact areas (such as Greater Kuala Lumpur/Klang Valley) and broadband to the general population (below 5 Mbps) in semi-urban and rural areas. The Malaysian Communications and Multimedia Commission and Ministry of Information, Communications and the Arts will continue to work with telecommunications companies to widen network coverage, increase network speeds and further increase broadband affordability.
"The government will also amend the uniform building by-law 1984 to mandate developers to incorporate broadband facilities in residental and commercial areas"
To support the success of the ETP, we will upgrade existing infrastructure such as roads, ports and airports and construct new logistics infrastructure if there is a sufficient business case in order to facilitate the efficient movement of people and goods.
Improving logistical infrastructure will have far-reaching impact for the country beyond the NKEAs. For this reason, the Government has already committed to enhancing access and connectivity under the Tenth Malaysia Plan. Specifically, the Government has committed to building and improving roads (e.g. the East Coast Highway linking Kuantan and Kuala Terengganu), developing the rail network (e.g. extending the north–south electrified double-track railway line to Johor Bahru), upgrading maritime infrastructure (e.g. expanding capacity at Westport of Port Klang) and improving airports (e.g. building a new low-cost carrier terminal at Kuala Lumpur International Airport). The EPU will coordinate this programme of infrastructure investment.