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PUTTING MALAYSIA BACK IN BUSINESS AND MALAYSIANS BACK
TO WORK WITH RM50.3 BILLION
WORTH OF INCENTIVES, INVESTMENTS AND FUNDS OVER THE
NEXT 5 YEARS

 

Speech by
THE HONOURABLE MR LIM GUAN ENG
MINISTER OF FINANCE, MALAYSIA

 

60th PAA Steering Committee Meeting 2019
13 November 2019 (Wednesday)
Cyberview Resort & SpaCyberjaya, Malaysia


 

YBhg Datuk Samsul Husin
Executive Deputy Chairman of Dagang NeXchange Bhd
Executive Chairman of Dagang Net Technologies Sdn Bhd

Mr Tse Kam Keung
Chief Executive Officer of Tradelink Electronic Comm Ltd
Chairperson of Pan-Asian E-Commerce Alliance (“PAA”)

Distinguished Guests

Members of the Media

Ladies and Gentlemen

Good afternoon and Salam Harapan,

INTRODUCTION

1. Let me thank Dagang Net Technologies Sdn Bhd for inviting me to officiate the 60th Pan Asian E-Commerce Alliance (”PAA”) Steering Committee Meeting.

OVERVIEW OF TRADE FACILITATION IN MALAYSIA

2. Trade processes involve a lot of document exchanges. Previously, documentation was done in a tedious physical manner. Manual processes require duplicate documents be made and provided to different authorities and agencies for approval. This slowed down operations tremendously and raised the transaction cost of doing business.

3. With the introduction of e-Services in trade facilitation, such exchanges between businesses and approving authorities can now be done electronically, thus saving time and cost.

4. On a larger scale, digitalisation increases the ease of doing business and competitiveness of an economy. Progress made in Malaysia has raised the country’s ranking from 15th in 2019 to 12th place in 2020 according to the latest World Bank’s Ease of Doing Business index.

5. The backbone of such electronic-based trade ecosystem is the National Single Window (“NSW”) for Trade Facilitation. It is a one-stop trade facilitation system linking the trading community with relevant Government agencies and various other trade and logistics parties through a single window. This enables a seamless and transparent process to exist and be used.

6. Moving forward, all sectors in the country must be ready for a digital transformation underpinned by the Fourth Industrial Revolution (“IR 4.0”), an inevitable phase of industrial revolution that is set to change the way we live and work.

DIGITALISING AND FUTURE-PROOFINGMALAYSIATHROUGH MEASURES WORTH RM50.3 BILLION OVER THE NEXT 5 YEARS

7. According to the Department of Statistics Malaysia, the digital economy comprised 18.5% of the Malaysian GDP in 2018. Government efforts will push the share higher, with the International Data Corporation expecting it to reach 21% by 2022.

8. The Government of Malaysia is aiding the digitalising and future-proofing of the economy by investing heavily in digital infrastructure, reforming the broadband market, and encouraging small and large businesses to make the leap towards Industry 4.0.

9. We are investing RM21.6 billion through Public-Private Partnerships (PPP) over 5 years from 2019 to 2023 in the National Fiberisation and Connectivity Plan (NFCP). The NFCP will widen the coverage of high-quality high-speed broadband internet nationally while providing Malaysians with affordable services. This will lay the groundwork for a comprehensive implementation of 5G in Malaysia, and give Malaysia a first-mover advantage in the era of Industry 4.0.

10. Earlier in 2018, the Government has successfully reformed the broadband market by addressing monopolistic practices with the implementation of a Mandatory Standard on Access Pricing (MSAP). The market reform has made broadband market more competitive, with internet broadband access cost being cut by at least 30%. The World Bank notes the MSAP has led to the total fixed broadband subscribers, with speeds of more than 100 Mbps, rising by a factor of eight to 1.2 million subscribers by the end of 2018.

11. Starting next year, the Government is executing a plan to provide RM20.7 billion worth of cash and non-cash incentives over 5 years. We hope these incentives and loans will be able to assist our companies to transition to industry 4,0 to successfully compete with digital companies. After all, either you digitalise, or you will not survive. This is the reality that we have to face. If we look at the total amount announced in the 2020 Budget, both fiscal hardware as well as the software, it amounts to RM50.3 billion over 5 years. This is a huge sum by any standards, and we hope that this will allow Malaysia to be established as an entrepreneurial hub.

12. While public sector led initiatives are important, the private sector should lead initiatives on their own to raise their competitiveness that will benefit the entire country.This is why we advocate the 4P partnership, involving the Public sector, the Private sector, the Professionals, and the People, and such collaboration will benefit not only enhance the outcomes, more importantly it gets everyone involved. We believe for the economy to be propelled forward, it needs to be private-sector led. That is why the Government is advocating these partnerships , we give the necessary incentives, no longer full grants, but matching grants. So we can work together but led by the private sector. We have given the opportunity to benefit from the Government’s new approach with some matching grants, but it’s up to the private sector to decide. The days of Government knows best is over, we should give the professionals and experts the freedom to do what they do best.

13. In this regard, Malaysia will continue to support the development of arules-based multilateral trade framework that is free, while providing a level-playing field and market access that protects smaller players.

TRADE WAR AND THE RESILIENCE OF THE MALAYSIAN ECONOMY

14. As a trading nation, Malaysia cannot avoid being affected by external factors such as the trade war between China and the United States.However, the Malaysian economy has performed more resiliently than others. In the second quarter of 2019, Malaysia’s GDP grew 4.9% year-on-year, which is faster than the 4.5% growth in the previous quarter. For the whole of 2019, the Government projects the Malaysian GDP to expand at 4.7%.

2020 BUDGET MEASURES FOR TRADE FACILITATION

15. Since the audience today comprises representatives from key players in trade facilitation and logistics sector in the region, I would like to take the opportunity to highlight several of these key improvement projects included in our recent 2020 Budget Speech.

16. Port Klang is currently the 12th busiest container port in the world and is expected to reach full capacity in the next five years. For the next phase of growth, the Government is undertaking an in-depth feasibility study on the development of Carey Island. This is to make Port Klang a regional maritime centre and cargo logistics hub combining manufacturing, distribution, cargo consolidation, bunkering and ship repairs. Additionally, repair and maintenance of roads leading to Port Klang will continue.

17. The Government is commencing a feasibility study on the Serendah-Port Klang Rail Bypass for cargo shipments and the Klang Logistics Corridor. Both the Serendah-Port Klang Rail Bypass and the Klang Logistics Corridor are estimated to cost RM8.3 billion (or USD 2 billion).

18. And to better facilitate trade movement through our ports, the Royal Malaysian Customs Department (“RMCD”) will introduce a deferred payment facility to expedite the clearance process of cross-border transactions. This will significantly reduce the time and cost for cross-border trade.

CLOSING

19. As the operator of Malaysia’s National Single Window for Trade Facilitation, I hope that Dagang Net will hopefully continue to be actively involved in industry initiatives such today’s PAA, aimed at overall improvement of the industry and enhancing greater collaboration and also advocating a multilateral trade framework and e-commerce platform.

20. I would like to congratulate Dagang Net for hosting the 60th PAA Steering Committee Meeting in Malaysia and also turning 30 years old. Thank you to PAA for choosing Malaysia as your Steering Committee Meeting venue this year and may we have more such.

Thank you.