THE 21ST CENTURY VISION OF A HI-TECH ECONOMY

Introduction

A knowledge-driven society, where expansion and stability are the order of the day, has lured American companies to the extent that there is currently a U.S. presence in virtually every Malaysian industry. The challenge now is to consolidate this growth by attracting further foreign investment

Building on solid foundations. The Kuala Lumpur City Center is a symbol of Malaysia’s sky-high ambition.

Malaysia is looking towards the future, and one thing is clear: the country is in strong and capable hands. As if the spectacularly successful transformation of the country’s economy over the last 30 years and a remarkable recovery from the 1997-98 economic crisis were not enough, the country’s political and financial leaders are determinedly mapping out medium and long-term strategies which will see Malaysia’s economy into 2020. To quote Governor of the central bank (Bank Negara), Dato Dr. Zeti Akhtar Aziz, “the strong financial position of the government is one of the strengths of the Malaysian economy.” This optimism is shared by Jose Lopez, President of the Malaysian International Chamber of Commerce, who claims that “the numbers speak for themselves.”
From the early 1980s through the mid-1990s, the Malaysian economy experienced a period of broad diversification and sustained rapid growth averaging almost 8% annually.

Coming out of the recession, growth in 1999 was 6.1% and a strong 8.3% in 2000, supported by rising domestic expenditure and a substantial growth in exports (in particular, electronics) to the U.S., Malaysia’s principal trade and investment partner. In 2001, the economy was adversely affected by the global economic slowdown but managed to avert the recession affecting neighboring nations, due in large part to a combination of strong governmental intervention, which included $1.92 billion in fiscal stimulus packages.

Thanks to its prudence in managing foreign debt, coupled with strong govern-mental intervention, Malaysia has avoided the recession affecting neighbors.

Governor Zeti elaborates, “the current account surplus is forecasted at 6-7% for 2001, inflation is now at 1.5% and we are confident it will remain below 2%. Malaysia has been very prudent in managing external debt as well, and during the good years in 1999 and 2000, we repaid debt. Lastly, we have to have a comfortable level of reserves and, right now, our reserves are $27 billion which is about 5.7 times our short-term debt.” The Malaysian economy is expected to reach growth levels of 4-5% in 2002, as the U.S. economy regains momentum.

Malaysia’s eighth master plan, released in 2001, aims to develop a knowledge-driven economy, transform the manufacturing sector, and further immunize the domestic economy against global economic shocks. One of the main attractions for foreign companies in recent years has been the growing sophistication of Malaysia’s hi-tech infrastructure and workforce.
Indeed, Prime Minister Dr. Mahathir has personally encouraged this trend by backing the key Multimedia Super Corridor (MSC) development. As Minister of Trade and Industry Datuk Seri Rafidah Aziz confirms, “we have the education and stability that is conducive to a growing and expanding economy.”

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