Malaysia booms as Najib beats growth goal with investment

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TAN Sri Chua Ma Yu, a Malaysian billionaire who made his fortune in the stock market, had big ambitions in 2008, when his CMY Capital Sdn Bhd agreed with partners to build the 48-story St Regis Kuala Lumpur.

The country’s first six-star hotel would feature 208 rooms and 160 apartments with housekeepers, butler service and a chef-in-residence. Two years later, the tycoon was still struggling with paperwork to start construction, Bloomberg Markets magazine will report in its September issue.

Chua met with Datuk Seri Idris Jala, the man in charge of Prime Minister Datuk Seri Najib Razak’s plan to lift Malaysia into the ranks of Asia’s wealthiest nations. Jala says he saw the St Regis as a way to spark spending in tourism, one of 12 areas Najib, 61, was targeting for growth with tax incentives and expedited reviews. Jala helped streamline the paperwork, and Chua, 61, got approvals two weeks later. The government went on to create a one-stop center to handle development applications.

“Investment is a precursor to economic growth,” said Jala, who heads the government’s Performance Management and Delivery Unit, or Pemandu, which oversees Najib’s economic transformation program. “If there is no investment, there are no new jobs and no growth.”

While Najib’s government has already attained some goals since launching the economic program in 2010, others are more far-reaching.

In the first quarter of 2014, gross domestic product increased 6.2 per cent, surpassing the average of six per cent annual growth Najib wants to register through 2020. Per capita gross national income rose to US$10,060 last year, crossing the US$10,000 threshold for the first time.

That’s still a long way from US$12,746, the latest World Bank definition of high income, and the US$15,000 the prime minister wants to achieve by 2020.

Najib’s plan involves diversifying Southeast Asia’s third-largest economy beyond oil and gas. He wants to foster skilled workers with improved education and increase investment to US$444 billion in the 12 areas his economic plan focuses on to add 3.3 million jobs by his self-imposed 2020 deadline. So far, RM219.3 billion (US$69 billion) has poured in, 84 percent from private companies.

The country is heading in the right direction, says Frederico Gil Sander, World Bank senior country economist for Malaysia.

The nation moved to No 6 in the organization’s “Doing Business 2014” report on business-friendly nations, up from No 12 in 2013 and No 25 in 2007. The index, measuring 189 countries, covers everything from starting a company to dealing with permits.

“With the new economic model, there is now a road map for needed reform,” Gil Sander says.

Malaysia’s improving outlook is helping investors overcome perceptions that the country can be a difficult place to find talent, says Zainal Amanshah, CEO of InvestKL, a government agency created to lure global companies.

InvestKL has induced 38 multinational firms to set up regional headquarters around Kuala Lumpur – more than a third of his goal of 100 by 2020. International Business Machines Corp, the world’s biggest computer services company, announced a plan to invest RM1 billion in 2011 in a technology center outside the capital. IBM debated whether it would find the right workers and transportation.

“The shortcomings are no longer in play,” says Paul Moung, managing director of IBM Malaysia, who is satisfied with the decision.

Najib wants to lessen Malaysia’s dependence on oil and gas — even as state-owned Petroliam Nasional Bhd is expanding amid a five-year, 300 billion ringgit capital-spending effort. Petronas, as the company is known, has awarded contracts to Petrofac Ltd and others to develop marginal fields.

CMY Capital’s Chua says he’s seen progress, too. Since he got his approvals, Chua’s St Regis is adding its silvery profile to Kuala Lumpur’s skyline and will open in November 2015.

“A lot of bottlenecks have been removed,” Chua says. “People find it easier to invest.” — Bloomberg