Malaysia – Strengthening the ASEAN region

In 1967, Malaysia, Singapore, Thailand, Indonesia and the Philippines founded the Association of Southeast Asian Nations (ASEAN). Fifty years later, ASEAN is a diverse community of ten member countries with a combined population of 630 million. The economically dynamic region is on a path towards greater integration through strong regional trade ties, interconnectivity and a shared vision for the next fifty years.

‘On the occasion of the fiftieth anniversary of ASEAN, we can say state the inspiring vision of our founding fathers for ASEAN, is as true today as it was back then’, says Ambassador Jojie Samuel, Director-General of the ASEAN – Malaysian National Secretariat. With the establishment of the ASEAN Community (AC15) in 2015, the region has seen economic, security and cultural progression. Last year. ASEAN’s combined GDP stood at USD 2.55 trillion, with robust real GDP growth of 4.8 per cent’.

A country of diversity

With approximately the same growth rate as the entire ASEAN region (4.6%) and ranked third within the region for GDP per capita (US$ 28,870), Malaysia is a model for many ASEAN member nations. ‘Malaysia is a country of diversity’, explains Samuel. ‘It is a nation that cherishes its diverse races, religions, cultures, food, heritage and festivals and Malaysians live harmoniously in a country with no wars or conflicts among its citizens’.

The country’s role within the ten nation block has been significant. Since the first ASEAN Summit in 1976, Malaysia has held the rotating Chairmanship three times (1977, 2005 and 2015). Malaysia also established the ASEAN – East Asia Summit in 2005 and the AC15 in 2015.

‘ASEAN is the cornerstone of Malaysia’s Foreign Policy’, says Samuel. ‘I wish to highlight four key areas which Malaysia is spearheading in ASEAN:East Asia Summit (EAS), Moderation, the establishment of AC15 and our role as the country coordinator for ASEAN-US relations for the period 2015-2018’.

In 2005, the East Asia Summit (EAS) started in Kuala Lumpur and membership has grown from sixteen to eighteen nations with the addition of the United States and Russia.

The EAS plays a significant role in advancing closer regional integration and cooperation in East Asia especially since some of the largest investors in ASEAN are from East Asia: Japan (14.5 per cent), China (6.8 per cent) and South Korea (4.7 per cent).

The ASEAN Business Advisory Council Malaysia (BAC) has also played an important role in the region’s economic progress.

‘Our role is to initiate specific projects with the private sector aimed at driving ASEAN integration as businesses are in the best position to provide insights on key issues’,says Tan Sri Dr. Munir Majid, Chairman of ASEAN BAC in Malaysia.

The BAC, established in 2003 during the seventh ASEAN Summit,provides private-sector feedback and guidance to boost ASEAN’s efforts towards economic integration.

‘Some of the specific projects we launched in 2015 include the ‘Growth Accelerating Exchange’, says Majid. ‘This is an e-finance platform which gives small to medium-sized enterprisesaccessible financing, easy low-cost payment solutions and supply chain services which enable them to ‘plug-in’ to cross-border trade and production networks. The platform has made a difference to numerouscompanies and has acted as a catalyst to address financing challenges’.

Foreign direct investment and ASEAN deal flows

‘Inflows of foreign direct investment (FDI) to ASEAN reached US$96.72billion in 2016, 24.8 per cent of which was intra-ASEAN’, says Samuel.‘The top three sources of FDI inflows into the region are from the European Union, Japan and the United States. The service sector remains the largest recipient of FDI with investments reaching US$ 77.04billion last year’.

From 2010-2016, Malaysian companies completed fifty eight cross-border deals valued at US$10billion- Singapore completed 103 deals over the same period. The top five deals were from the medical, energy, financial services, agriculture and telecom sectors.

‘Malaysian companies have built an extensive network through their investment deals acrossthe region and more than one thousand Malaysian companies now operate in ASEAN’, says Samuel.

Malaysian companies such as Maybank, CIMB, AirAsia, Sime Darby, Petronas and Ingress Auto Ventures are active across the region.

Investment Opportunities in Malaysia

‘Companies from ASEAN member countries such as Singapore, Thailand, Indonesia and the Philippines are increasing their investments in Malaysia’, says Samuel.

In terms of doing business in Malaysia, this year the country ranked twenty three out of 190 countries for ease of doing business and ranked third globally for its protection of minority investments.

‘We have the legacy of British education, the country is multi-racial, diverse and politically stable’, says Dato’ Abdul Rauf Rashid, EY ASEAN assurance leader and Malaysia country manager. ‘We are blessed with natural resources but also possess economic diversity and we were the first in Southeast Asia to construct super infrastructure projects’.

Malaysia’s six economic clusters are spread across the country and each represent key sectors of development: Northern Corridor Economic Region, Greater Kuala Lumpur, East Coast Economic Region, Iskandar Malaysia, Sarawak Corridor of Renewable Energy and the Sabah Development Corridor.Infrastructure spending

ASEAN infrastructure annual investment estimates are valued at US$110billion per annum until 2025. HugeASEAN projects are planned in Digital connectivity, Energy security and Regional transport connectivity.

Malaysia is currently involved in the Kuala Lumpur to Singapore high-speed rail link (HSR) which willconnect both countries by 2026 and span 350km at a cost of US$15billion.

The ASEAN Roll-On / Roll-Off (RO-RO) Shipping Network and Short See Shipping initiative will connect Belawan in Indonesia, Penang in Malaysia and Phuket in Thailand.

Malaysia is also investing heavily in digital infrastructure. Malaysia’s High-Speed Broadband (HSBB) and Sub-Urban Broadband project (SUBB) is aimed at increasing download speeds from 20Mbps to 100Mbps.

AEC Blueprint 2025

At the 2015 ASEAN Summit in Kuala Lumpur, Malaysia, ASEAN leaders adopted the ‘AEC Blueprint 2025’. This initiative aims to create an ‘ASEAN Economic Community’ which, by 2025, is highly-integrated, well-connected, competitive and innovative.

‘As ASEAN Chair in 2015, the programs we initiated, particularly financing small to medium-size enterprises, have made a huge impact’, says Tan Sri Dr. Munir Majid, Chairman of the ASEAN Business Advisory Council Malaysia.

‘We have made significant progress during the Association’s fifty year history. With regional governments and the private sector continuing to work together, this region will surely prosper and integrate even more rapidly’.

As Malaysia celebrates sixty years of independence this year, the country will continue to be a regional dialogue partner with the ultimate goal of strengthening the ASEAN region.

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