THE GOVERNMENT is proposing a number of measures aimed at boosting the country’s export growth.
Among the measures are establishing a firm footprint in the lucrative halal market, strengthening the existing open and liberal trade and investment policy ecosystem, pressing ahead with a more ambitious agenda as Malaysia becomes the chair for Asean 2015 and leveraging on opportunities offered by China’s rapid urbanisation.
The government also plans to accelerate development beyond the Klang Valley and in growth corridors to capitalise on their respective strengths to promote downstream value-added activities and spur higher-value exports such as palm oil and cocoa.
“Further, embracing a forward looking trade and investment regime...continuous upskilling as well as targeted technical and advisory outreach services will transform the export structure and lift export performance,” it says in the Economic Report 2014/2015.
According to the report, Malaysia needs to increase its participation in the global supply chain to remain competitive and boost export growth.
Some of the initiatives that have already been carried out by the government to promote exports include starting a mid-tier companies (MTC) development programme in January this year, aimed at helping potential MTCs grow and expand into new markets.
The government also proposed zero-rate export of goods and services under the Goods and Services Tax once it is introduced in April next year.
At the same time, it also actively engaged in free trade agreements (FTAs) to expand trade and investment opportunities for Malaysian companies.
To date, Malaysia has signed 13 bilateral and regional FTAs covering major trading partners, while five are currently under negotiation.
For the first seven months of the year, gross exports increased by 10.7% to RM441.3 billion, from RM398.5 billion for the same period last year.
“The export performance bodes well for the Malaysian economy as it reflects strong domestic activity and future export capacity,” says the report.
“Going forward, the improvement in the external environment will be positive for trade, job creation and investment.”
The report also says that as the domestic market is small, it is necessary for businesses to venture abroad to boost earnings and shareholder value.
It acknowledges that the growth of the export market will not come without challenges.
There is a shortage of skilled workforce and a skill gap in major industries, and an over-dependence on foreign labour with insufficient motivation to further upgrade automation and technology.
The existing FTAs to boost exports and investments are also under-utilised, and Malaysia’s market share in Asean (excluding Singapore) has not grown in tandem with the region’s vibrancy.
This article first appeared in The Edge Malaysia Weekly, on October 13 - 19, 2014.