Towards high-income economy

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Liberalisation of nation’s services sector key to achieve objective, says Miti

KUCHING: The liberalisation of the services sector, announced by the government in April last year, aims at bringing Malaysia into becoming a high-income economy given its significant contributions to the country’s gross domestic products (GDP).

A TOKEN OF APPRECIATION: Shahabar (right) receives a memento from Ismawi.

A TOKEN OF APPRECIATION: Shahabar (right) receives a memento from Ismawi.

According to the Ministry of International Trade and Industry (Miti), the government has targeted investments of RM45.8 billion a year for the services sector, under the nation’s Third Industrial Masterplan 2006-2020 (IMP3).

The masterplan also stated its aim to attain overall growth of 7.5 per cent throughout the plan’s period.

“There are two ways to explain the liberalisation of the services sector. One, we open up our market, where foreigners will come here to invest. Another way is that we are also seeking for other markets to open up our services, so that we can export our services. It’s a two-way process,” said its services sector development division’s senior director Mohamed Shahabar Abdul Kareem yesterday, adding that the sector recorded an overall investment of RM23.04 billion for the first nine-month period of last year.

Within the investment, domestic investment comprised the biggest portion, amounting to RM22.1 billion whereas foreign investment was RM0.94 billion.

He said this underlined the sector’s significant portion in the country’s GDP.

“In just one month after taking office, Prime Minister Datuk Seri Najib Tun Razak stated that the government intended to tap the sector’s full potential to raise its contribution to 60 per cent of GDP by 2020. This shows the significance of the sector.

“Only agriculture and manufacturing are not included under this sector. Everything else is considered services.”

Shahabar was present as part of the government’s mission to disseminate information regarding the services sector, particularly in Sabah and Sarawak.

“The services sector has its own different kinds of impact to these states (Sabah and Sarawak). This is simply because of certain constitutional rights that both states have,” he said in a briefing session held at Wisma Bapa Malaysia near here yesterday.

The session, which included a number of senior officers from the state’s government, marked the mission’s first stop in its nationwide tour.

Also present for the briefing was State Economic Planning Unit (SPU) director Datu Ismawi Ismuni.

In his opening remarks, Ismawi pointed out that one of the first ‘thrusts’ of the services sector’s liberalisation was to move up the value-chain.

“If you think that we can be competitive, productive and strong by continuing to be what we are, without moving up to the value-chain, we’ll be trapped in this middle-income bracket. Currently, we are not even fully in the middle-income level. I believe there are many of us who are still in the lower-income group. It is this situation that we are trying to avoid because it is not good for the economy.

“What Miti is trying to do today is to try and explain why we need to expand our services sector through liberalisation,” he said.

Shahabar added, “I believe Sarawak has a lot to offer, mainly because it has very large coastal areas, where logistics are involved. Towns outside Kuching have to be serviced, plus the state’s oil and gas industry which is a very service-oriented industry.

“There are also a number of foreign universities here, all of which can be promoted under the services sector as ‘education and training’.”