PETALING JAYA: An economist has urged Putrajaya to meet the needs of firms that have been booming since the Covid-19 pandemic in order to keep them in Malaysia.
Commenting on reports that Malaysia was close to surpassing Singapore’s market value, Rajah Rasiah of Universiti Malaya said the government should aim to prevent the island republic from staging a “latecomer capture” of glove, mask and ventilator manufacturers.
Speaking to FMT, he said the international trade and industry ministry should upgrade its incentives and coordination capabilities to meet the needs of these manufacturers.
He said many of these companies might consider relocating south of the causeway, where corporate taxes are lower, if Singapore were to offer more incentives.
“Singapore has continued to show greater policy agility and swiftness in handling the needs of firms,” he warned.
“Besides, there are likely to be new entrants into glove manufacturing that will likely absorb away the massive profits currently enjoyed by these companies.”
He said Malaysia needed to improve the provision of grants and the quality of its logistics sector and to upgrade its services to match Singapore’s capabilities.
“These are possible if we are willing to make performance the overwhelming target when approving licences, incentives and grants.”
Malaysia’s stock market value has surged by 41% since a March low to hit US$379 billion as the coronavirus pandemic boosted demand for medical gloves.
That puts Malaysia about US$4 billion away from surpassing Singapore’s market capitalisation for the first time in more than 16 years, according to data compiled by Bloomberg.
Another economist, Yeah Kim Leng of Sunway University, said a bigger stock market would be more liquid and would attract more local and foreign investors.
He said the high-technology, digital and healthcare sectors would be key sectors to promote in the post-Covid-19 landscape.
He added that ESG (environment, sustainability and governance) was currently also a key factor.
“Given the rising global investment trends towards ESG, listed companies and potential listings embracing ESG will find ready global investors,” he said.
Rasiah said Putrajaya needed to look towards integrating technology in industrial sectors such as steel and rubber product manufacturing instead of just enjoying the benefits of newly emerging sectors.
He noted that initiatives to broaden the nation’s digital infrastructure started in 2010 and that local firms such as Dreamedge and Aerodyne had emerged to integrate technology in industrial sectors.
“What we need now is action to execute these developments,” he said. “For example, Malaysian universities, airports and tourist parks can benefit enormously from driverless, solar-powered buses if we quicken the spread of Industry 4.0 technologies.
“We can also reduce the use of foreign labour with the introduction of drones and robots in farming.”