But qualified praise is due for the latest measures announced by MITI. Qualified praise because MITI is only considering these measures which, to the mind of this blogger, are very important measures that will boost Malaysia's economic competitiveness at a time when trade and investment is getting scarce in a contracting global economy.
I'm posting it up first. Analysis later:
Malaysia yesterday moved to cut red tape in the trade and investment sectors as it prepares itself for a possible lengthy period of weakness in the global economy.
Several pre-emptive measures were announced by the Minister of International Trade and Industry, Tan Sri Muhyiddin Yassin, to ensure trade and investments continue to flow into Malaysia and industries continue to operate.
Broadly, the measures included manufacturing sector liberalisation, lowering costs of doing business and facilitation of business operations and start-ups.
They included:
- automatic issuance of manufacturing licence;
- removal of import duty for 48 product lines of raw materials and intermediate goods;
- extension of approval for representative/regional offices;
- ensuring the private sector fully benefits from the Asean Free Trade Area (Afta) and free trade agreements (FTAs); and
- enforcement of mandatory standards on imported products to protect the environment and public health and safety.
Other measures touched on:
- the intensification of targeted trade and investment promotion activities;
- greater participation of the private sector in overseas promotion activities;
- expansion of matching grants for business start-ups;
- revision of business licence and fees for businesses; and
- a review on further liberalisation of the manufacturing-related services sector.
"The licence will be issued once for the lifespan of the business, and the fee has been eliminated effective June 1 2008," he told a news conference after chairing a meeting with trade associations on the measures in Kuala Lumpur yesterday.
This is the first package of measures prepared by the ministry in response to feedback received from trade and industry sectors.
Muhyiddin said the ministry would announce more measures after studying the impact of the crisis on industry sub-sectors and getting more input from the private sector.
He said that so far this year, the trade and investment figures are still encouraging, with total trade expected to reach RM1 trillion and total investment to be more than last year's.
"But the impact on the country's trade and industry sector next year is expected to be bigger.
"These are immediate steps taken to ensure that businesses, especially small- and medium-scale enterprises (SMEs), and the inflow of investment are not badly affected."
Further solid measures that MITI is reported to be considering, and should implement soonest possible are:
To further liberalise the manufacturing-related services sector, the Government is considering regional distribution centres (RDCs) be given flexibility to source raw materials/parts/components from any party.
Currently, RDCs are allowed to source only from related companies. The Government is also considering whether international procurement centres (IPCs) be given flexibility from the current requirement of the need to have a manufacturing operation in Malaysia.
With this flexibility, Muhyiddin said, an IPC could have the option for its manufacturing facility to be based locally or abroad.
The Government is also weighing whether an IPC/RDC be allowed to increase the proportion of its drop-shipment sales to the total annual sales turnover to 50%.
Currently, an IPC/RDC drop-shipment sales is limited to only 30% of its annual sales turnover.
Drop-shipment is a business practice in which an IPC/RDC does not keep goods in stock, but instead transfers customer orders and shipment details to suppliers, which then ship the goods directly to the customer.
To facilitate trading and business activities, approval for operation of representative office/regional offices will be given for five years compared with three years currently.
2 comments:
Actually how does allowing something to be done set a percentage x differ in final weighed result from allowing it to be done set at percentage 100?
It's like credit card allowed for purchases above fifty ringgit. When people can spend, that would make sense. But what are these times today? Global crunch. Every cent counts. Every incentive is important.
Once you move to maximum incentives, that's liberalisation, isn't it?
If done piecemeal, someone else may just up the bet and raise the stakes. Malu if have to relent later.
This global financial winter is the best time to open the market up for all those looking for new industrial and financial homes to come here.
And they are not here just to make and sell. They can also stir the very transformational change this country needs.
We have become a nation of dullards and siloheads. That is a bigger threat than anything else. The threat of tribalism.
Tribalism itself has two faces. If the threat is purely external, it can help shore up defenses. But if the threat is internal, tribalism only erects the very wall to keep the threat in to destroy all.
Our biggest threat is tribalism. Started by one, reflected by the others, ending in walls around the country, leading to decay.
That, if i may say, is the way to see incentives.
Ohmae may agree.
hi walla
I have always thought that the economic managers approach fiscal, trade and investment policies on the basis that Malaysia needs its best and brightest to be at their competitive best, then the policies will be responsive to economic needs per se.
From that position some tweaking can be done to accommodate socio-economic goals of certain "tribes". That way the deviation is recognised.
A classic case of economic policy gone awry are consumption subsidies like fuel and food. It's a crutch that prevents Malaysians from being competitive in pricing and production.
Now the dilemma of the economic managers is, how to remove the subsidies during a time of economic contraction. The subsidies should have been removed during the good times NOT during the bad times. This is poor economic management.
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