ETP TheEdge Pull Out

THE
Roadmap for Malaysia

A Special Report
2
Economic Transformation Programme: A Special Report
THEEDGE mal aysia | january 31, 2011
The Economic Transformation Programme is Malaysias roadmap to

becoming a high-income nation that is both inclusive and sustainable.
Private sector-led and government-facilitated, the ETPs starting
point is the implementation of concrete changes in specific areas of
the economy.
Managing the present by

standing in the future
by Chua Sue-Ann
In terms of investment size, the

largest chunk of it is oil and gas
n drawing up the ambitious Economic and financial services?
Transformation Programme (ETP) for Malaysia,

the Performance Management and Delivery
Unit (Pemandu) has been guided by the mantra
of achieving big results fast. Minister in the
Prime Ministers Department and Pemandu
CEO Datuk Seri Idris Jala says Pemandu has tried
to paint a vivid picture of what the Malaysian
economy will look like by the year 2020 so that
Malaysians know what needs to be done in order
to achieve the targets.
If you are very clear about what things will
look like in the year 2020, you will know what to
do now. I call it managing the present from the
future. You stand in the future and manage the
present, Idris tells The Edge in a recent interview.
The ETP has identified at least 131 Entry Point
Projects (EPPs) and 60 Business Opportunities
under 12 National Key Economic Areas (NKEAs)
which are expected to be a catalyst for Malaysia
to achieve high-income status and bring in a gross
national income (GNI) of
US$523 billion by 2020.
The NKEAs comprise
11 industry sectors oil,
gas and energy; palm oil;
financial services; tourism;
business services; electrical
and electronics; wholesale
and retail; education; healthcare; communications
content and infrastructure; and agriculture.
The 12th NKEA is the Greater Kuala Lumpur area,
which is envisioned as a multiplier for the other
11 NKEAs.The expected GNI contribution from the
Greater KL area is calculated separately from the
other 11 NKEAs to avoid double counting, given
that a portion of the income from the NKEAs will
be generated in the Greater KL and Klang Valley
areas, says Idris.
In this Q&A, Idris tells The Edge about the
main thrusts of the private sector-led ETP and
the mechanisms to anticipate global changes that
could impact the Malaysian economy.
The Edge: Of the 12 NKEAs, which are the

priorities?
Jala: First of all,the priority is the 12 NKEAs,and the

second priority is the projects within each NKEA
that give us the highest GNI and the most jobs.
Even within that, there are competing projects.
The projects that give us the most GNI and jobs
clearly remain our top priority. It is very important.
Based on what you have now, what are

your priorities?
Clearly, the oil and gas projects are the highest

priority if you follow the current list of projects.
There will be a lot more to come. There are many,
many projects in all the sectors, both big and
small projects. What you dont see on the list is
how it contributes in terms of spillover effects.
For example, the MRT is very, very big and has a
tremendous multiplier effect on the economy.We
believe that is a very high priority. When you talk
to most Malaysians, most of those who live in the
city really want better public transport. It is a very
big thing, not only from a GNI perspective but also
from a rakyat standpoint.
No doubt. If you take a look at our whole economy,

the bulk of it is in oil and gas. As it stands today,
more than 20% of GNI comes from oil and gas but
by 2020, it will be only 14%.Youll see the emergence
of financial services, which will contribute about
10% by 2020 from the current 7%. Palm oil and
wholesale retail will also contribute about 10% of
GNI. The other sectors will begin to rise and grow
bigger. There will be a shift in our economy.
We need projects with strong multiplier

effects, but the concentration appears to
be on oil and gas and financial services,
which are said to have fewer multiplier
effects but have a much higher value-add
to income. How do you explain that?
Jala: When you think about it, if all Malaysians

pull together and really start looking at the
positive things, we can get there
There are two types of benefits projects that will

give you direct contribution to GNI and those with
indirect contributions, but with high multiplier Most of the projects are private
as 3D dirty, dangerous or difficult. If thats the
effects. We will need both types of projects.
sector-mooted, what youve done is case, we must bring in foreigners. When we move
packaged the whole thing together?
to a higher-income economy, Malaysians will
And the potential for We need people to realise that to flourish in the want higher-paying jobs. So in the end, we have
future and have high income, it has to be driven to accept that some other people will do these
Greater KL is huge.
No question about that. by the private sector. The governments role is to jobs for us. Its okay.
The current thinking is facilitate, provide the infrastructure and ensure
that cities compete more that the human talent is there. Schools must How will the ETP projects cut through
vigorously than nations provide quality education and the universities the red tape in the system?
do. If your city wins, the must provide quality talent. Frankly speaking,you Actually I am very happy because I realise the
nation wins. If your city loses,youve got a problem. will not find the private sector going into public civil servants are responding quickly. The speed
So its very important that KL wins. In terms of schools. But there is a part the private sector of response is fantastic! How did we suddenly
livability,internationally,KL is ranked No 79.Its not can play to provide even higher quality talent get them to function and run so fast to deliver
good enough.We need to make KL at least No 20 by through private schooling.Through the EPPs, we this? Its because of the governance structure.
2020.Then well have more investment coming in. encourage a lot more private sector investment The prime minister wants this, the public wants
When we look at what the weaknesses are from in private colleges and private schools to cause this. We have problem solving meetings every
an investment standpoint, number one is urban this to happen.
Friday, which I chair. Every lead minister runs
public transport. There must be enough greenery
through steering committee meetings on each
and there must be enough entertainment. People How will Pemandu work with Talent NKRA every month.
must find that they can live here. It is also very Corp?
The beauty of it is this: if we fail in the ETP, it is
important that the city is friendly to investment. Talent Corp is very important. It is not trying to do because the private sector failed. It is their project.
Thats why we are creating InvestKL, a team that everybodys job, but trying to see where specific Our role in the government is to encourage them.
will be a friendly face to investors. By 2020, 100 areas of intervention are required to make it work. The people are responding. We have to just do our
more multinational companies will have made One of Talent Corps deliverables is to cut the red part.As I have said before, the results are there to
KL their hub.
tape for foreign professionals entering the country. speak for themselves and I would be very pleased
We have introduced the multiple-entry visa and if by the end of this year, we can talk about the
Has Pemandu taken into account that the resident pass for foreign professionals. With ETP in the same way we can talk about the GTP.
there are some factors beyond its control, the resident pass,we grant professionals entry for
We broke many,many records last year.We were
such as the recent liquidity crisis and the 10 years and we dont ask where they are working. planning to reduce overall crime by 5% and today
SARS (severe acute respiratory syndrome) For example, one company is investing a lot of it has been reduced by 15%. We were planning to
pandemic several years ago which affected money in the country and the managing director reduce street crime by 20% and as of last year, it
the world?
comes to Malaysia every month, we want to give was reduced by 35%. It is phenomenal considering
We take stock of what is happening in the world the guy a resident pass. Another thing is to allow that crime rises every year. Last year, we had the
and how it affects our economy.We have a monthly JPA scholars to work with the GLCs if they cannot most pre-school classes in any given year, when
steering committee meeting and a weekly economic get a job with the government. When you are so 55,056 children were brought into pre-school
council meeting. Monitoring is very important.All pedantic about the rules, its difficult. So Talent classes. Last year, we had the most rural roads
of the NKEA participants will have to keep an eye Corp has to break all this.
ever built since independence totalling 775km,
on developments and how they are responding
primarily in Sarawak and Sabah.
to competition. We will revise them and look at So for the ETP to work, how much
Something is happening out there on the
them in the context of whats happening. So in foreign talent is needed?
ground that gives us tremendous confidence. I am
the unlikely event that something happens, we First, we begin by asking Malaysians to fill the very pleased. If you had asked me at the beginning
will have to go back to the drawing board.
jobs. If Malaysians dont want to or if there are of last year whether I expected to get this kind
The key point is to recognise early signs that not enough Malaysians to do the work, then we of results, I would have said no. Im pleasantly
things are happening. Obviously, there may be encourage the Malaysian diaspora. If we dont have surprised. The credit goes to the civil servants.
occasions when the whole world gets caught I that,well bring in foreigners.We must learn from They have done a fantastic job. When you think
believe crisis is good, actually.When a crisis comes, other countries. Hong Kong and Singapore have about it, if all Malaysians pull together and really
it is those who rise quickly and capitalise on it that brought in a lot of foreigners to help build their start looking at the positive things, we can get
become winners. We in Malaysia must be ready economies.The other problem is that Malaysians there. Mesti boleh.
E
when the opportunity comes.
dont want to do certain jobs, which they perceive
3
THEEDGE mal aysia | october 26, 2010
ETP projects to help country generate RM1.7 trillion gross

national income by 2020
Escaping the middleincome trap
by Yong Min Wei

FD@bizedge.com
KUALA LUMPUR: The projects identified in
the Economic Transformation Programme (ETP)
will transform Malaysia into a high-income
economy with a gross national income (GNI) of
just over RM1.7 trillion in 2020 compared with
RM660 billion last year.
In the executive summary of the Economic
Transformation Programme: A Roadmap For
Malaysia, GNI per capita would rise from
RM23,700 (US$6,700) in 2009 to above RM48,000
(US$15,000) by 2020, in which, such level of GNI
per capita would correspond to the World Banks
current definition of a high-income economy.
It said the four largest National Key Economic
Areas (NKEAs) Oil, Gas & Energy, Financial
Services, Palm Oil and Wholesale & Retail, were
projected to generate 60% of the incremental
GNI growth from the 11 NKEA sectors.
The incremental GNI growth from the
initiatives in Greater Kuala Lumpur/Klang
Valley is calculated separately to avoid doublecounting, as some of the income from the 11
NKEA sectors will be generated in the Greater
Kuala Lumpur/Klang Valley area, the executive
summary pointed out.
It said of the GNI growth, up to 31% was
expected to be delivered by the entry point
projects (EPP) plus a further 10% through
multiplier effects. The roadmap added business
opportunities could deliver an additional 33%
while the remaining 26% of incremental growth
was expected to come from other (non-NKEA)
sectors.
A list of 131 EPPs has been identified through
the initiatives of the ETP Unit, a division of
the Performance Management & Delivery Unit
(Pemandu).
The roadmap notes that by 2020, Malaysia
would not only have the GNI per capita of a
high-income economy, but also a number of
similar characteristics, as the structure of
the Malaysian economy would have changed
significantly.
For instance, services would account for a
much greater share of the economy, accounting
for 65% of GDP in 2020 as compared to 58% in

2010. In addition, domestic consumption would
account for 69% of GDP by 2020 compared with
54% in 2009. This will bring Malaysia in line
with developed countries like Taiwan and New
Zealand.
Through the ETP, the roadmap said the
structure of the economy would become more
balanced with less dependence on resourceintensive industries such as oil and gas. It also
said the share of population living in urban
ares was expected to grow from 64% to 70% with
much growth concentrated in the Greater Kuala
Lumpur/Klang Valley.
The executive summary stressed that while
the Greater Kuala Lumpur/Klang Valley would
be a primary engine of economic growth, there
would also be growth opportunities elsewhere
in the country such as the development of a
solar industry in Sarawak, development of a
global biodiversity hub to attract tourists to
Sabah, commercialisation of padi farming and
improvements in palm oil yields.
It said Malaysia would have grown a number
of new national and regional champions by
2020, and that these companies would drive
long-term growth in areas including financial
services, business services and healthcare.
SMEs will play a more significant role
across the economy. For instance, in education,
agriculture and electronics and electrical,
SME participation will be actively encouraged
through financial support, better access to
research and technologies and improving
economies, the roadmap added.
In general, the executive summary said
investments in the Malaysian economy up
to 2020 would be driven by the private sector,
which would account for 92% of the RM1.4
trillion required for the NKEAs from 2010 to
2020 with public funding accounting for only
8%.
This will require an investment from the
private sector of around RM120 billion per year,
a significant increase from RM72 billion in
2010, it said, adding that the GNI growth of 6%
per annum would allow Malaysia to achieve the
targets set under Vision 2020.
Greater Kuala Lumpur/

Klang Valley
Oil, Gas AND Energy
The Greater Kuala Lumpur/Klang Valleys

(Greater KL/KV) NKEAs vision can be
summarised as 20-20 by 2020, that is to be
a city that simultaneously achieves a top 20
ranking in city economic growth and being
among the global top 20 most liveable cities
by 2020.
Its economic aspiration is to grow GNI
contributions from about RM258 billion to
RM650 billion per year. This should move GNI
share from about 30% of the nations GNI to
about 40%.
Additional aspirations include increasing
per capita GNI from RM40,000 to RM70,000
per year, achieving a top 20 ranking in the
EIU Liveability Index survey and growing the
population from six million to 10 million. It
will also focus on growing its foreign talent
base from 9% to 20% of the population.
Nine EPPs along four dimensions have been
identified to deliver the aspirations of Greater
KL/KV. Among them, dynamic and regional
multinational companies will be encouraged
to locate their global or regional headquarters
in Greater KL/KV, which will be supported
by internal and external immigration
programmes with a focus on higher-value jobs.
Regional connectivity will be accelerated
by developing a high-speed rail system to
connect Greater KL/KV and Singapore, while
intra-city connectivity will be improved with
a mass rapid transit system.
Greater KL/KV will require a cumulative
funding of RM172 billion from 2010 to 2020, of
which 34% is expected to come from the public
sector.
By 2020, Malaysia will have a more diversified

oil, gas & energy sector that remains vital to our
development, and that builds on the nations
competitive advantages. A key thrust will be to
intensify exploration and enhance production
from domestic reserves.
The sector will also develop strong regional
oil field services and equipment hubs, as well
as have a stronger presence in the regional
midstream logistics and downstream markets.
Moreover, Malaysia has the potential to grow
alternative energy sources such as nuclear, solar
and hydro to overcome the decline in domestic
natural gas production.
The oil, gas & energy NKEA targets to raise
total GNI contribution to RM241 billion by
2020 from RM110 billion in 2009. As the base
case projects a natural 2% decline in oil and
gas production, this GNI target will require the
NKEA to grow at an ambitious rate of 5%.
A total of 12 EPPs have been developed across
four themes to raise the sectors output and
meet energy demands over the 10-year time
frame. Among others, three EPPs will overcome
the projected decline of 1%-2% in domestic oil
and gas production by capturing value from
mature fields through enhanced oil recovery,
using innovative solutions to develop small
fields and intensifying exploration activities.
A funding of RM218 billion will be required
to achieve this NKEA target, of which less than
1% will be from the public sector. Additionally,
RM64 billion will be needed to offset the current
decline in oil production, while the tax rebates
to enhance energy efficiency will likely require
RM12 billion.
Financial Services
Malaysia aims to evolve its financial

services sector to serve the needs of businesses
and consumers in a high-income economy,
increase its depth and raise its regional and
global market share in select niches.
This NKEA targets to raise total GNI
contribution by RM121 billion to reach RM180
billion by 2020. Through this, an additional
275,000 jobs will be created, 56% of which
will offer an average income of RM4,000 per
month.
To achieve this vision, a portfolio of EPPs
have been identified for the financial services
sector along four strategic thrusts. Among
others, the sector will encourage financial
institutions to go on the offensive and tap
external markets for their continued growth.
This will develop regional champions and
make Malaysia an indisputable global hub for
Islamic finance.
To grow the financial services sector by
three times by 2020 will require cumulative
funding of RM211 billion over the next 10
years, for which the public is expected to
provide 4%.
Wholesale and Retail
Malaysia aims to increase the importance

of retail as a driver of domestic consumption
by targeting to more than double its GNI
contributions by 2020. The retail NKEA is
expected to raise GNI contribution by RM108
billion to reach a total contribution of RM165
billion per annum by 2020.
This NKEA will also create about 370,000
new jobs over 10 years, comprising 7,800 senior
management posts, 11,600 managerial, 19,000
professional and technical, 19,000 executive,
37,000 supervisory, 18,000 clerical and the rest
being operational posts. In addition, business
opportunities will create about 225,000 jobs.
five themes to deliver the GNI growth. Among
others, the NKEA will support the expansion of
large retail businesses like hypermarkets, malls
and big box boulevards and is expected to give
special attention to large local retail companies
in their efforts to expand domestically and
overseas.
The total funding requirement for the retail
NKEA will amount to RM255 billion, of which
almost 100% will be funded by the private sector.
4
Palm Oil
Electronics and
Electrical
Palm oil will remain a major contributor

to the Malaysian economy over the next 10
years, building on a core set of advantages
which include rising relative demand globally
versus substitutes, continued high oil-yield per
hectare, distinctive edge in yield and quality
over competitor nations such as Indonesia, and
a conducive regulatory environment.
The palm oil NKEA targets to raise total GNI
contribution by RM125 billion to reach RM178
billion by 2020. To achieve this, an additional
41,000 jobs will be created, of which 40% will
be high-skilled jobs, with an average monthly
income of RM6,000.
This NKEA plans to implement eight core
EPPs that will span the palm oil value chain.
These EPPs will, among others, target capturing
the lucrative downstream segment where
Malaysia has little presence today by focusing
on developing finished segments that generate
high value, including oleo-derivatives and
selected food and health based segments, and
commercialising second generation biofuels.
Achieving the palm oil NKEA aspiration
will require funding of RM124 billion over
the next 10 years, with 98% of the funding
coming from the private sector. The total public
funding for capital expenditure is expected
to be RM2.9 billion, with an additional RM2.7
billion in the form of tax incentives, soft loans
and cash incentives to promote private sector
development in the downstream sector.
Malaysia plans to strengthen the Electronics

and Electrical (E&E) capabilities across the
value chain, particularly in higher value-added
upstream activities. The E&E focus will be to
attract more leading multinational companies
to operate in Malaysia and to create more
Malaysian champions.
It is expected to increase GNI by RM53 billion
to reach RM90 billion by 2020 and provide an
additional 157,000 jobs, both high-skilled and
medium-skilled. The NKEAs will focus on 15
EPPs across four geographical clusters namely
Northern Corridor, Greater KL/KV, Johor and
Sarawak.
The E&E focus also has five target subsectors, namely semiconductors, solar, lightemitting diodes, industrial electronics and
electrical home appliances.
As an example for semiconductors, the
NKEA will follow a strategy of building on
strong foundations in mature technology
semiconductor fabrication and expanding
into advanced design of integrated circuits
as well as supporting the growth of substrate
manufacturers.
In enabling growth for E&E, the total
cumulative funding requirement from 2010 to
2020 is RM78 billion with 12% coming from the
public sector and the remaining 88% from the
private sector.
Business Services
Tourism
Malaysias growth in tourism has mostly

relied on growth in arrivals rather than yield,
with 75% of the growth from increased arrivals
and 25% from increased yield. To attract the
higher yield segment, the country will need
to both improve and upgrade its offering and
services, as well as enhance connectivity to its
key priority markets.
The tourism industry is targeted to raise
total GNI contribution by RM67 billion to reach
RM104 billion by 2020, which will require the
sector to triple the RM37 billion in 2009.
six themes to deliver significant results within
a 10-year time frame. They include positioning
Malaysia as a shopping destination, growing
shopping receipts as well as business tourism,
which currently represents a small part of the
industry.
Achieving the tourism NKEA aspiration
will require RM204 billion in funding over the
next 10 years of which only 2% is expected to
come from the public sector. The NKEA has also
identified four sector-wide enablers, namely
increasing and focusing marketing in priority
markets, reintroducing selective visa on arrival,
ensuring adequate supply of qualified human
capital and improving tourism environment by
improving offerings and accessibility.
By 2020, Malaysia would like to have moved

closer to the benchmark of developed markets
like the UK where the business services
sector contributes about 20% of both GDP and
employment and 14% of exports.
Malaysia aims to grow GNI contribution of
the business services sector by RM59 billion to
reach RM79 billion in 2020. This incremental
increase will be driven by six EPPs and three
business opportunities that will deliver an
additional 246,000 jobs by 2020.
A total of six EPPs have been developed
across two themes to deliver significant results
within a 10-year period. The themes are to
accelerate the growth of differentiated sectors
and to develop future growth segments.
Achieving Malaysias aspiration in this NKEA
will require RM41 billion in funding over the
next 10 years, only 9% of which is expected to
come from the public sector.
The NKEA has also identified one sector-wide
enabler critical to unleash the full potential of
the sector increasing the skill of our workforce
to meet the needs of our services sector.
It is recommended that a set of actions be
initiated to focus on increasing the relevance
of skills education and training to industry
demands, attracting global talent and
increasing the participation of skilled women
in the services workforce to 45%.

Communications

Content AND
Infrastructure (CCI)
The
Communication
Content
Infrastructure (CCI) NKEA aims at
driving continued high growth in
communications and enabling the
paradigm shift from infrastructure
to applications and content. Malaysia
expects to raise GNI contribution by RM36
billion in 2009 to reach RM58 billion by
2020.
The incremental increase will be
driven by 10 EPPs that will deliver RM16.6
billion in incremental GNI and four
business opportunities that will deliver
RM11.7 billion in incremental GNI. In
achieving this, an additional 43,000 jobs
will be created.
The 10 EPPs have been developed
across three themes to deliver significant
results within a 10-year time frame.
Among others, the sector will address the
paradigm change of shifting profit pools
to content and services by strengthening
Malaysias
domestic
value-add
in
advanced
applications,
particularly
content
creation
and
platforms,
payments and electronic commerce and
connectivity applications.
Achieving this NKEA aspiration will
require RM51 billion in funding over
the next 10 years, of which only 2% is
expected to come from the public sector.
Education
The focus of the education NKEA

will be on strengthening the private
education services sector by increasing
private consumption and investments as
well as expanding education exports.
The NKEA envisions a 2020 where
education will be a big business that
delivers significant, widespread and
sustained GNI impact while raising
standards and widening access.
The target is to raise total GNI
contribution by RM34 billion to reach
RM61 billion by 2020. As public sector
growth is expected to be limited, the goal
will be to require the private education
sector to grow six-fold.
A total of 13 EPPs have been developed
across three themes to raise overall
education
standards
and
deliver
significant results within a 10-year time
frame.
Achieving this NKEAs aspiration will
require RM20 billion in funding over 10
years, of which only 6% constitutes new
public funding.
Agriculture
By 2020, agriculture will have been

transformed into agribusiness, moving towards
a model that is inclusive but simultaneously
anchored in market needs, economies of scale
and value chain integration.
Malaysia will focus on large global markets
with high growth potential, such as aquaculture
and premium processed foods, while
maintaining a strong presence in strategic subsectors such as padi and livestock to ensure food
security.
The agriculture NKEA is targeted to raise
total GNI contribution by RM34 billion to reach
RM49 billion by 2020.
The NKEA will create an additional 75,000
jobs, mostly in rural areas where it is expected
to increase income of farmers participating in
agriculture initiatives by two to four times.
This NKEA plans to bridge the gap through
15 EPPs that catalyse the establishment of
market-driven, industrial-scale and integrated
agriculture-related businesses along four
themes.
Achieving the agriculture NKEAs aspiration
will require cumulative funding of RM22 billion
over the next 10 years, with 62% coming from
the private sector.
Healthcare
The healthcare NKEA aims to grow three

sub-sectors within healthcare, namely
pharmaceuticals, health travel and medical
technology. There is significant opportunity
to move from being a net importer to being
a significant player in the RM422 billion
prescription and pharmaceutical drug industry.
Malaysia will also develop the more
profitable medical sub-sectors such as medical
devices, diagnostic equipment and healthcare
information technology.
Malaysia aspires to generate RM35 billion in
incremental GNI contribution to reach RM50
billion by 2020 for the healthcare NKEA. It also
plans to welcome one million health travellers,
as well as conduct 1,000 clinical trials, all of
which is expected to result in about 181,000
new jobs.
The projects represent an aggressive export
campaign, an upgraded services platform and
a commitment to provide better healthcare for
Malaysians with six EPPs categorised into three
themes for this purpose.
The healthcare sector will require RM23
billion cumulatively from 2011 to 2020 to fund
growth. Of this sum, only 1% will be from public
funds while the remaining 99% will be from the
private sector.
5
Economic Transformation Programme
Progress Update 1 (25th Oct 2010)
On the 25th of October, in conjunction with the ETP Roadmap

launch, Prime Minister Dato Seri Najib Tun Razak announced several
early wins, projects that had been confirmed and were in progress.
These projects were expected to generate over RM5.3 billion in
investment and over 13,000 jobs. The ETP is already delivering
results. These early wins show that by focusing on action, results will
flow. We will announce more confirmed investments over the next
few months, said the Prime Minister.
Off to a
Strong Start!
RM150 million investment in Johor
Premium Outlets
RM1 billion investment by Mydin

Holdings
Located in Genting Indahpura, Johor, the

Mydin Mohamed Holdings Bhd plans to open
Premium Outlets will offer a wide selection of 14 more branches nationwide within two years
designer fashions at substantial savings off regular in a bid to build a more dynamic retail market.
retail prices and will be the first of its kind in
Southeast Asia.
Investment:
RM1 billion
RM100 million in GNI from Asia
Investment:
e-University
I had a dream; my dream is to see Malaysian
Asia e-University has been selected by the RM300 million
retailers standing side by side and being able
Ministry of Higher Education as the Gateway
The Economic Transformation Programme
to compete equally with foreign retailers. In
University for international education for distance
will put Malaysia on the worlds retail tourism
business it is not about winning or losing but
and online learning.
map.
it is the perseverance of our Malaysian retail
entity.
GNI Contribution:
Dato Justin Leong, Director,
RM100 million
Genting Simon Sdn Bhd
Dato Ameer Ali Mydin,
Managing Director, Mydin Holdings
We believe it is a tremendous opportunity
for local universities to participate in the fastest
growing online education space.Lets go global! Over 6,200 jobs, RM1.2 billion
Professor Dato Dr Ansary Ahmed,
President/CEO, Asia e-University
400 jobs, RM300 million investment by

Schlumberger
investment by St. Regis
The six-star St. Regis Kuala Lumpur will be

built on a 2.2-acre site, with a total development
area of 1.4 million square feet, at KL Sentral. It will
feature 208 rooms, 200,000 sq ft of convention
facilities, 160 units of hotel-managed residences.
It is targeted to be completed by the end of 2014.
Schlumberger established a new Global

Financial Hub and Shared Services in Bandar Investment:
Utama as part of the Greater KL EPP that is tasked RM1.2 billion
to attract 100 new MNCs to relocate its operations
in Kuala Lumpur by year 2020.
Potential Jobs:
Over 6,200
Investment:
RM300 million
The St. Regis project is an integral part of
the Greater KL Master Plan and will contribute
Potential Jobs:
to job creation and multiple economic activities
400
during the construction period between 20102014.This project will create a new benchmark
The companys decision to open the Finance
in the hospitality industry and service sector, in
Centre Hub in Malaysia is primarily driven
addition to being a new landmark in Malaysias
by the companys long term commitment
international tourism promotion.
in Malaysia and the strong belief in the
government Economic Transformation
Tan Sri Chua Ma Yu,
Programme.
Chairman, One IFC Sdn Bhd
Ainul Jamal,
Chairman, Asia, Schlumberger
6,500 jobs, RM1.9 billion investment

by LFoundry Malaysia
RM124 million investment by Premium

Renewable Energy
Premium Renewable Energy (Malaysia) Sdn Bhd

will set up a bio-oil plant near Lahad Datu, Sabah,
capable of producing 30MW of energy. It is also
committed to invest in 29 bio-oil plants by 2020.
Investment:
RM124 million
In the programmes breadth and depth, the
ETP has also not forgotten green technology
which is key to a sustainable economy and the
future for Malaysia.This just goes to show how
inclusive and well thought out the ETP is.
Anand Selvaratnam,
Managing Director,
Premium Renewable Energy (Malaysia) Sdn Bhd
1Malaysia Development Berhad
LFoundry Malaysia Sdn Bhd will build a 2001Malaysia Development Berhad is the Master
mm wafer fab in the Kulim High-Tech Park (KHTP). Developer for the Kuala Lumpur International
The wafer fab should start production of analogue, Financial District. 1MDB will collaborate with the
mixed-signal and high-voltage devices on a 130- private sector to execute its Master Plan for KLIFD.
nm to 110-nm process technology.
KLIFD is a critical component in enhancing
Potential Jobs:
how the worlds business community will see
6,500
and value KL. It will provide Malaysia with new
sources of growth that can help the country
Investment:
graduate to a high-income economy.
RM1.9 billion
Shahrol Halmi,
Since Malaysia is already on track to elevate
1MDB Chief Executive Officer
the semiconductor industry and take its place
as a global player, it makes business sense to
establish LFoundry Malaysia Sdn Bhd, a synergy
derived from the joint venture of renowned
leaders LFoundry GmbH and QT Hightech.
Dr Hans Dudenhausen,
CEO, LFoundry Malaysia
RM486 million investment by Malaysia

Airports Holdings Berhad (MAHB)
MAHB has invested in a new Low-Cost Carrier

Terminal (LCCT) in Sepang which will feature
a landside shopping mall. This would be ideal
attraction for both travellers and casual retail
shoppers.
Investment:
RM486 million
The KLIA Retail Hub project will transform
KLIA into a premier business, retail and
entertainment hub which will drive retail
activities contributing towards the economic
growth of Malaysia
Tan Sri Bashir Ahmad,
Managing Director, Malaysia Airports Holdings
Berhad
For more info, log on to

www.pemandu.gov.my/etp
Visit our blog at
www.pemandu.gov.my/
etp/blog
Follow us on
Twitter @etp_roadmap
6
Greater Kuala Lumpur/Klang Valley
Vision is to transform the Greater KL/KV area into one of the top 20
cities in the world
GNI contribution to
increase by RM650b
by Melody Song
FD@bizedge.com
KUALA LUMPUR: The governments vision
for the Greater Kuala Lumpur and Klang Valley area is to deliver RM649.6 billion in gross
national income (GNI) via nine entry-point
projects (EPPs), three business opportunities,
baseline growth and various multiplier effects
by 2020.
The vision is to transform the Greater KL/
KV area into one of the top 20 cities in the world
in terms of GDP growth, while being one of the
worlds top 20 most liveable cities according to
the EIU Liveability Index Survey by 2020.
The Greater KL/KV area, which spans 10 municipalities and includes important sites such
as the Kuala Lumpur International Airport
(KLIA), is one of the 12 National Key Economic
Areas (NKEAs) identified to drive Malaysias economic growth for the next 10 years.
According to the Economic Transformation Programme (ETP), the government hopes
that the Greater KL/KVs GNI contribution will
grow by 2.5 times to RM650 billion per year from
about RM258 billion currently. By then, Greater
KL/KVs share of the countrys GNI would have
grown from 30% to 40%.
Meanwhile, growth in economic activity in
the Greater KL/KV area is expected to raise total
employment in the area to 4.2 million by 2020
from 2.5 million in 2010.
Under the governments plan for Greater KL/
KV, nine EPPs, which have the potential to add
RM193 billion in GNI, along with four dimensions requiring public funding of RM4 billion,
have been identified.
The four dimensions are attracting multinational companies (MNCs) to set up offices in
the Klang Valley, employing high intra-city connectivity, upgrading and enhancing new residential areas, and addressing basic services like
walkways.
Some of the challenges the Greater KL/KV
lab expects include fierce competition from
other cities in the region in terms of attracting
foreign companies and its liveability lag, inadequate public transport and the cleaning up
of untapped natural assets, such as the Gombak
and Klang rivers.
Meanwhile, the three business opportunities
identified in the Greater KL/KV area are the reinvigorating of the administrative capital, Putrajaya, where much of the basic infrastructure
is already in place but is under-utilised; providing the right mix of housing (moving from 81%
of upper middle cost housing in 2009 to 85% by
2020); and to improve basic water and sewerage services by accelerating the development
of water treatment facilities for both phases of
Langat 2.
Transformation to include boosting

connectivity to and within Greater KL/
KV
Attracting MNCs and better talent mix
Under the first aspiration of attracting foreign talent to Greater KL/KV, the government
intends to attract 100 of the worlds most dynamic companies within priority sectors in
addition to having the right mix of internal
and external talent.
The funding requirements for attracting the
100 firms will amount to RM82.2 billion and is

expected to create 234,000 jobs by 2020. This is
expected to generate additional GNI of RM41.4
billion per year.
Five priority economic sectors have been
identified for attracting foreign MNCs
financial services, business services, education, tourism and retail.
Initiatives that have been identified to attract companies include providing attractive
incentives, such as proactive marketing to
priority MNCs, the strengthening of the local
talent base through the Industrial Skills Enhancement Programme and reducing the cost
of doing business, for example by introducing
a single window licensing process through eGovernment portals and by reducing necessary
procedures to three steps within three days.
Attracting the higher-quality talent mix is
expected to cost RM18 million from 2011 to 2020
to fund the establishment of Malaysian Halls
and other one-stop centres in international cities. This is expected to generate RM118.2 billion
in additional GNI per year by 2020.
Boosting connectivity
Meanwhile, connectivity to and within the
Greater KL/KV will be boosted with a high-speed
rail system connecting the area to Singapore,
while intra-city connectivity will be amplified
via the proposed RM36 billion mass rapid transit (MRT) project.
The high-speed rail system is expected to
cost RM16.5 billion and may generate RM6.2
billion in additional GNI, while creating 29,000
jobs.
Preliminary estimates for the MRT project
indicate a cost of RM47 billion RM36 billion
for infrastructure costs, RM2 billion for land
acquisition, and investments of RM9 billion for
operating assets such as rolling stock.
The GNI impact from the MRT is estimated
to be about RM21.3 billion annually by 2020, decade, and is expected to generate RM1 billion
with 20,000 new jobs created both directly and in GNI annually while creating 3,000 new jobs.
indirectly.
The repositioning of KL as a global city with
heritage attractions by establishing a heriRevitalising the Klang River,
tage triangle walking museum linking Masjid
creating new icons
Jamek, Merdeka Square, Dayabumi and Central
As part of the plan to regenerate and improve Market, the transformation of Central Market
high-potential residential and commercial ar- into a live arts studio complex, as well as the
eas, the Klang River will be revitalised into a transformation of Pudu Jail into a mixed develheritage and commercial centre for Greater opment will cost RM240 million, half of which
KL/KV, meaning that more areas will see more will be sourced from private investors. This will
green spaces and new iconic places and attrac- have a potential GNI impact of about RM460
tions will be created, such as the old Pudu Jail million annually, with some 13,500 new jobs
gate, Chinatown and the old KTM railway sta- created in the next decade.
tion.
The redevelopment of the Klang River is 45km pedestrian walkway in KL city, more efslated to be managed by a small but highly pro- ficient waste management
fessional statutory authority established under
Enhancing public amenities is also a priorFederal legislation, and will be formally es- ity under the ETP as the population in Greater
tablished by end-2011, subject to the legislative KL/KV is expected to increase by more than 65%
timetable. This is estimated to have a capital over the next decade.
expenditure (capex) of RM17.9 billion, of which
As part of the move to upgrade services, a
RM14.3 billion has been identified as the private comprehensive pedestrian walkway is to be creinvestment component in real estate develop- ated, in addition to the development of an effiment. The river project is expected to generate cient solid waste management ecosystem.
RM4.3 billion in GNI annually by 2020, with
By end-2011, the Kuala Lumpur Municipal
17,000 new jobs created.
Council (DBKL) will have completed two sets
Meanwhile, the greening of Greater KL/KV to of walkways. The first will link Berjaya Times
raise the amount of green space to 16 sq m per Square to Pavilion KL, while the second will link
person according to World Health Organisation Jalan Perak and Pavilion KL with Crowne Plaza
(WHO) standards from 12 sq m at present will and Jalan P Ramlee, and Jalan Sultan Ismail
require a capex of RM149 million over the next with Jalan Pinang.
Other key agencies, companies and

organisations
A long-term plan by DBKL is in the works to

deploy a 45km full pedestrian network across
the city, implementation for which will begin
in 2012 and completed by 2014.
The plan will be implemented in three
phases, with the first being a 3km spine from
Merdeka Square to Jalan Tunku Abdul Rahman,
which will end in Chow Kit. The second phase
will be 14km of primary walkways for high pedestrian traffic between major areas and transit nodes, and the third phase will be 9km of
secondary routes connecting key walkways, as
well as a 16km extension of pedestrian coverage
throughout the city. This EPP would require a
capex of RM105 million from 2011 to 2020, while
its potential impact on GNI contribution is estimated to be RM6 million annually.
Meanwhile, the development of the solid
waste management ecosystem is estimated
to require total investment of RM3.5 billion, of
which a significant portion will be through
private sector investment from privatisation
initiatives of collection and waste treatment
functions. The potential GNI impact from this
initiative is estimated to be RM157 million annually.
E
Oil, Gas & Energy

THEEDGE mal aysia |November 15, 2010
The Economic Transformation Programme is Malaysias roadmap

towards becoming a high-income nation that is both inclusive and
sustainable. Private-sector led and government facilitated, the ETPs
starting point is the implementation of concrete changes in specific
sectors and areas of the economy.
Powering the economy
by Yong Win Wei

engerang,located on the southeastern tip
of Johor, is little-known to Malaysians.
But that is set to change with a RM5
billion project which will turn the town
into a regional oil storage and trading
hub by the year 2017.
The independent deepwater petroleum terminal
project is a public-private partnership between the
Johor state government,Vopak Asia Pte Ltd and local
oil and gas player Dialog Group Bhd. Vopak is the
worlds largest independent tank terminal operator.
Under the Economic Transformation Programme,
the project is one of 12 entry-point
projects (EPPs) identified by the
Performance Management and
Delivery Unit (PEMANDU) for the
oil, gas and energy (OGE) sector.
The sector, one of 12 National Key
Economic Areas (NKEAs) outlined in the 10th
Malaysia Plan,is a major contributor to the economy,
accounting for 19% percent of GDP in 2009 with
export revenue totaling RM56 billion.
The target for the oil, gas and energy NKEA
is 5% annual growth from 2010 to 2020, which
translates into an increase of RM131.4 billion
during the 10-year period. Against the backdrop
of a natural 2% decline in oil and gas production,
it is, as PEMANDU acknowledges in Economic
Transformation Programme: A Roadmap for
Malaysia, an ambitious goal.
According to the roadmap, to achieve the target,
the government and the industry will focus on
four thrusts: sustaining oil and gas production;
enhancing downstream growth; making Malaysia
the No 1 Asian hub for oil field services; and building
a sustainable energy platform for growth.
Enhancing downstream growth

The Pengerang terminal is one of two EPPs
under enhancing downstream growth thrust. In
Southeast Asia, Singapore has traditionally had a
strong presence in the oil storage industry, with a
total of 10 million barrels of independent storage
capacity (capacity owned by third party operators
and contracted out to oil companies, refiners and
traders), says the ETP roadmap.

But with port locations on major shipping routes
for crude oil and refined products,close proximity to
Singapore, land availability, and deepwater marine
accessibility,Malaysia is well-placed to complement
Singapore in this industry, adds the roadmap.
Pengerang is a 45-minute to one-hour boat ride
from Changi, and the Johor state government has
approved the site 500 acres of reclaimed land
for a 60-year lease.
The roadmap envisages that Together,Malaysia
and Singapore could operate to form a hub like
Amsterdam-Rotterdam-Antwerp which complement
each other in areas of refining capacity,independent
storage and blending capacity as
well as access to markets.
The Pengerang terminal which
requires private investment
of RM4.8 billion is expected to
generate RM1.6 billion GNI by 2020.
Dialog is investing RM2.3 billion in the project, of
which 30% would come from equity and 70% from
project financing.
The ETP roadmap estimates that 800 new jobs
will be created from the venture, excluding spinoffs
from other sectors. Overall, the roadmap envisages
an additional 52,300 jobs will be created in the oil,
gas and energy NKEA,with a significant proportion
being highly-skilled jobs with an estimated 21,000
(40%) for qualified professionals such as engineers
and geologists, drawing monthly salaries in the
region of RM5,000 to RM10,000.
Hub for oilfield services

With its burgeoning domestic oil and gas industry,
proximity to oil fields and shipping lanes, a costcompetitive workforce as well as its strategic
position in the Asia-Pacific region, Malaysia is
well-placed to become an OFSE hub for Asia, the
third thrust under the ETP. Three EPPs have been
identified under this thrust.
By increasing competitive pressures in the
domestic market, there is potential for Malaysian
companies to emerge as domestic champions and
subsequently,as regional champions as the country
captures a larger slice of the regional market, says
the roadmap.
Making Malaysia a hub for oilfield services and

forging regional champions is something that
appeals to oil and gas services players like Dialog
and Tanjung Offshore Bhd.
In the second stage of development for the oil,
gas and energy sector, the government needs to
come up with policies to transform domestic oil and
gas servicing companies into giants in an effort to
compete for jobs globally and be among the worlds
best, said Dialogs executive chairman and group
managing director Ngau Boon Keat.
Tanjung Offshore managing director Omar
Khalid said the government has done a good job in
promoting the oil, gas and energy sector through
Petronas. However, oil majors in Malaysia and
Malaysian service providers should in the long
term be given a chance to take on larger contracts
which are more sophisticated and challenging
so they could move higher up the value chain,
he added.
He noted that collaboration with foreign partners
and transfer of competencies and technologies was
the first step towards the goal.
Oil majors should also give more opportunities
to local providers by ensuring that there is real
transfer of technologies and competencies from
foreign players or principals. Otherwise, the local
players will always be merely acting as agents to
the foreign players, he said.
Omar suggested a mechanism to ensure that
foreign providers continue to pass on technical
competencies to the Malaysian workforce.
Both Omar and Ngau recognise Petronas success
and its role going forward. But, as Ngau noted,
although the government has created Petronas to
be a very successful national oil company, Malaysia
still lacks huge oil and gas reserves.
The role of Petronas and the issue of energy
security are addressed by the other two thrusts
under the oil, gas and energy NKEA.

Under sustaining oil and gas production,Petronas
will play a pivotal role in the three EPPs identified.
To build a sustainable energy platform for growth,
the roadmap has identified four entry point projects
aimed at securing energy security and efficiency.
Altogether, the oil, gas and energy NKEA expects
to deliver a GNI impact of RM131.4 billion RM47.1
billion from the 12 EPPs and an additional RM61.2
billion from business opportunities and baseline
growth.
To deliver GNI growth targets, the total
cumulative funds that will need to be invested by the
oil,gas and energy NKEA from 2010 to 2020 amounts
to RM217.6 billion. About 99% of the investment
required for the 12 EPPs will come from the private
sector.
Dialogs Ngau said the group is honoured to be
involved in this once-in-a-lifetime opportunity
to be part of the national transformation process,
he said. Through its investment in the Pengerang
deepwater oil storage terminal, Dialog hopes to
see the formulation of strategies for Malaysia to
establish a strong base for oil and gas servicing which
includes upstream services,downstream processing,
manufacturing and logistics. Such a strategy would
create highly-skilled and knowledge-intensive jobs
that would outlast the nations oil and gas resources,
Ngau added.
As Prime Minister Datuk Seri Najib Tun Razak
said in the roadmap, after decades of oil and gas
production, Malaysias domestic resources will
inevitably start to deplete. To prepare for this, we
will strengthen other value creating activities in the
oil and gas value chain and ensure that we have a
sustainable energy platform for the future, he said.
The roadmap for the oil, gas and energy NKEA
lays out just how the government intends to do
that, with the involvement of the private sector.
E
Four thrusts and 12 EPPS

Sustaining oil and gas
production
EPP 1: Rejuvenating existing fields
through enhanced oil recovery
Will add about 166,000 barrels per day of
oil production in 2020. Total investment
needed is about RM68.6 billion and the
contribution to GNI is RM16.6 billion in
2020.
EPP 2: Developing small fields

through innovative solutions
To adjust the development framework
for small fields to increase Malaysias oil
production by about 55,000 barrels per day
in 2020. Total investment needed is about
RM13.3 billion and the contribution to GNI is
RM5.5 billion in 2020.
EPP 3: Intensifying
exploration activities
Will sustain oil and gas production in the
long run; hence production from any
new oil and gas discoveries will need to

come on-stream in a timely manner.
An estimated total of RM18.4 billion
investment is required by 2020.
sectors beyond OGE.
Enhancing
downstream growth
EPP 6: Attracting MNCs to bring

a sizeable share of their global
operations to Malaysia
EPP 4: Building a regional oil storage

and trading hub
Will see Pengerang terminal generate
RM1.6 billion GNI by 2020 through three
streams: charging of storage fees by
independent logistic players; additional
shipping volumes from availability of
storage, and trading of crude oil and
petroleum products.
Making Malaysia the

number one asian hub
for oilfield services
Will have considerable impact creating

over 20,000 jobs and almost RM6.1 billion
of incremental GNI by 2020.
EPP 7: Consolidating
domestic fabricators
EPP 5: Unlocking premium gas

demand in Peninsular Malaysia
Will translate to GNI impact of RM4.1 billion

and creation of 5,000 jobs.
Some RM4 billion of private investment
is required for internal efficiency
programmes.
Will see an estimated GNI impact of

RM10.6 billion of which RM2.4 billion will
be in the OGE NKEA. It will also create
27,000 new jobs by 2020 largely in other
EPP 8: Developing capabilities

and capacity through strategic
partnerships and JVs
Will see 15% gain of the shallow water and

50% of the deepwater market in AsiaPacific (vast majority in Malaysian waters)
by 2020. A contribution of RM4 billion in
GNI and job creation of some 15,000.
Building a sustainable
energy platform for
growth
EPP 9: Improving energy efficiency
Will effectively require estimated RM20.8
billion of funding, the bulk of which will be
from public sources used to fund importtax rebates on energy-efficient vehicles
(RM9.8 billion) and rebates for energyefficient appliances (RM1.3 billion).
EPP 10: Building up solar power

capacity
Overall GNI contribution from solar power
generation in 2020 to grow to RM460
million mainly from creation of 1,900 jobs.
GNI impact excludes additional impact
of the RM22 billion catalysing effect the

project will have on local manufacturing
and influx of FDI.
EPP 11: Deploying nuclear energy for

power generation
Construction of nuclear power plants
will have a temporary GNI impact in the
construction sector, with GNI contribution
of RM200 million from the creation of
2,600 jobs. Once operational post-2020,
the one gigawatt nuclear power plan will
generate GNI amounting to RM1.8 billion
per year from the electricity generated.
EPP 12: Tapping Malaysias

hydroelectricity potential
Creating 590 jobs and an estimated GNI
potential of RM5.7 billion in Sarawak by
2020. Most GNI will come from energyintensive industries operating in Sarawak.
8
What is it?
THE ECONOMIC TRANSFORMATION
PROGRAMME is a detailed programme
on what we need to do with the
Malaysian economy over the next
ten years, to achieve high-income
nation status. It is anchored on a
clear implementation roadmap with
strong performance management
and transparency.
How can we be sure that

these 12 economic areas are
the right ones? How about
other mainstream industries
such as manufacturing and
construction?
We gathered more than 1,000
of the nations top-notch leaders
from the corporate and government
sectors as well as non-government
organisations and civil society in a
hardworking workshop. Guided by
their experience and best macroeconomic practices, they arrived
at these 12 focused areas based on
income and job creation criteria.Other
industries such as manufacturing and
construction will enjoy the strong
flow of activities from the 12 sectors
and these too will grow in tandem.
10
Is there a problem with

our economy?
Until the late 1990s, Malaysia
was growing between eight to nine
per cent every year. However, since
the Asian financial crisis in 1997/98,
we have only grown between four to
five per cent over the last 10 years.
This was further aggravated by the
dotcom bust in 2000 and the global
financial crisis in 2008/2009. While
we were one of only 13 countries in
the world to have sustained growth
of over seven per cent for 25 years or
more since 1945, many countries have
forged ahead as our economic growth
remained sluggish.
competitive and resilient. When

successfully executed, it will make
us a high-income nation, namely
achieving an average per year income
per Malaysian of US$15,000. This is
the World Banks benchmark for a
high-income economy. In addition,
the Programme will also create more
than 3.3 million jobs by 2020.
What will it do for me?
By improving the economy,

you will enjoy a better quality
of life that comes with more jobs
(with majority being in the middle
and higher paying jobs), improved
transportation
links,
enhanced
education outcomes and more choices
of high quality goods and services. It
will also provide a solid foundation
for sustained development of the
country so that your children will
also continue to enjoy a high quality
of life. For businesses, there will be
stronger opportunities, a conducive
business
environment
and
a
domestic consumer market with high
purchasing power.

So, what is the Programme
all about?
The Programme is simple.
It focuses our finite resources on 12
economic areas where we are the
most competitive and best-equipped
to excel. This is to ensure we invest in
areas that earn us the highest possible
Is this why we need the

Economic Transformation
Programme?
Yes, because the cost of living
and doing business is increasing
much faster than the income
and profit we make from current
economic activities. This is also
known as the middle-income trap. If
we fail to do something quickly, we
will become even less competitive
as we are operating in a globalised
economy and our purchasing power
will further weaken. All these will
lead to a lower quality of life.
What will this Programme

do for Malaysia?
The Economic Transformation
Programme will basically improve
the Malaysian economy, by catalysing
change and transforming our
economic structure to make it more
income. That said, the other economic

areas will stand to enjoy the spillover
and multiplier effects from the 12
focused areas. So, everyone wins.
Whilst the Economic Transformation
Programme was co-created by the
private and public sectors, it relies
heavily on private-sector led growth,
with 92 per cent of the investment
coming from the private sector.
Research has shown that dynamic

cities compete more fiercely than
countries. As our nations capital city,
Greater Kuala Lumpur is currently
and will always be the heart of our
economic strength, but if it does not
keep stride with other cities,our entire
economy will suffer.
The entire
Greater Kuala Lumpur/Klang Valley
area needs to be made economically
stronger and more livable. There is
Does that mean it will be easy? still much to improve if we want
Kuala Lumpur to be mentioned in the
Simple does not necessarily
mean easy. We are talking same breath as Tokyo, London, New
about transforming the economy of a York or even Singapore.
country with 28.9 million people now
and an estimated 31.6 million people
in 2020. It will require tremendous
focus, determination and hard work
by all Malaysians, as a united nation,
to get us there.
So, what are the 12

economic areas?
The
12
focused
areas
are actually called National Key
Economic Areas, and each of these has
And which are the 11
the potential to directly contribute
industries?
a significant amount of economic
The economic areas that
growth to the country. They comprise are key to secure our future, in
11 industries and one geographical alphabetical order, are: Agriculture.
territory.
Business Services. Communications
Content
and
Infrastructure.
One geographical territory? Education. Electrical and Electronics.
Tell me more.
Financial Services. Healthcare. Oil,
That territory is the Greater Gas and Energy. Palm Oil. Tourism.
Kuala Lumpur/Klang Valley area. Wholesale and Retail.
The book
The Economic
Transformation
Programme - A
Roadmap For
Malaysia is now
available at leading
book stores nationwide.
For listing of stores and
to download soft copies
of the book please visit
www.pemandu.gov.my
Follow us on
Twitter/etp_roadmap
Or join our forums for
discussions on the
latest news in our blogs
about the Economic
Transformation
Programme (ETP) with
fellow Malaysians at
www.pemandu.gov.
my/etp-roadmap
Palm Oil


towards becoming a high-income nation that is both inclusive and
sustainable. Private-sector led and government facilitated, the ETPs
starting point is the implementation of concrete changes in specific
sectors and areas of the economy.
Deepening Malaysias
palm oil advantage
by Jenny Ng
riving through the Malaysian
countryside today, one would notice
how oil palms have replaced rubber
trees along trunk roads connecting
the smaller towns along the west
coast of the peninsula. The change
is in tandem with the growth of the palm oil
industry as oil palm took over rubbers position
as the countrys most important commodity crop.
Starting with less than 500,000ha in 1960, oil
palm hectarage in Malaysia has grown by leaps and
bounds to 4.7 million ha in 2009.The sector is also
now the fourth-largest contributor to the countrys
gross national income (GNI), at RM52.7 billion.
Under the Economic Transformation
Programme (ETP) Roadmap, the Minister of
Plantation Industries and Commodities Malaysia,
Tan Sri Bernard Dompok, has set an ambitious
GNI contribution target of RM178 billion by 2020
for the sector.
Although the palm oil sector has matured
over the years Malaysia was the worlds
largest producer of palm oil from 1995 until it
was dethroned by Indonesia in 2006 there is
obviously more growth to be tapped given the
ambitious target.
According to the ETP, the palm oil industry
is forecast to grow by 7.1% over the next 10
years, driven by gains in the fresh fruit bunch
(FFB) yield and oil extraction rate (OER), new
plantation expansion abroad and ventures further
downstream.
The increase in the palm oil sectors GNI will
be achieved through eight entry point projects
(EPPs) spanning the palm oil value chain in order
to capture the worlds growing demand for the
vegetable oil. Global demand for palm oil registered
an annual growth rate of 10% between 2000 and
2009.
According to the roadmap,the EPPs are expected
to generate RM47.1 billion in GNI in 2020 and the
business opportunities created will add another
RM74.6 billion (inclusive of a baseline growth of
RM17 billion). The incremental GNI also includes
RM3.6 billion from the multiplier effect created by
EPPs from other sectors.
As the palm oil sector is divided into the upstream
and downstream segments, the eight EPPs are
identified along two strategic thrusts: upstream
productivity and sustainability, and downstream
expansion and sustainability.
The key theme of the palm oil National Key
Economic Areas [NKEAs] is to increase productivity
by raising the national FFB yield per ha across
the board. Low yields have been an issue for
smallholders (independent and organised) who
account for 40% of palm oil production, but not
so much for the plantation companies.The major
problem for the plantations is labour, says an
industry player familiar with the palm oil ETP lab.
The palm oil lab was one of 12 labs conducted by
Pemandu to come up with the roadmap.
Indeed, independent smallholders account
for 12.8% of the Malaysian palm oil plantation
area and generate a lower FFB yield of 17 tonnes
per ha compared with 21 tonnes per ha and 23
tonnes per ha for organised smallholders and
plantations, respectively.
Their [smallholders] limited average plot size
of 3.9ha per family and lack of exposure to best
practices are the major factors directly impacting
yields, the ETP notes.

The second EPP improving FFB yield seeks
to address the issue of poor yields especially among
the smallholders.
It entails the implementation of four key
activities, namely the recruitment of TUNAS
(extension service to smallholders) officers,
clustering of independent smallholders around
their nearest mill, mandating one of the reference
industry best practices for all plantations and
implementing a yearly ranking of cooperatives
and smallholders to identify and replicate best
practices.
On mandating a reference industry best
practices for all, the roadmap says that most
large plantations are already applying at least
one of the reference good agricultural practices

consistently, which has led to yields of an average
25 tonnes per ha for the top 15 plantations. Some
smaller plantations have, however, lagged behind.
There is a high variability in FFB yields between
estates and different players.A lot can be achieved by
implementing better agro practices, says Khor Yu
Leng, a palm oil industry researcher who publishes
Khor Reports, a report on palm oil and related
strategic matters.
As Malaysia has run out of land for development
and planters are facing sustainability issues, to
expand output, they can only focus on achieving
higher yields and investing in worker productivity,
Khor adds.
She believes that the focus on yields is the
result of a combination of factors, such as the
ability to implement good agronomic practices,
planters use of high-yield seeds and clones, and
some reluctance to replant during periods of high
palm-oil prices.
There is also a need for more engagement
with the industry on the research side, she adds.
Khor supports the move to rate, rank and
benchmark cooperatives and smallholders. If
measured properly, it would be very helpful to
the industry, she says.
On the issue of labour productivity, the
Malaysian palm oil sector is facing a shortage
of skilled and unskilled labour in plantations
owing to the demanding nature of the work and
growing number of alternative job opportunities.
The shortage is estimated at 20% of the total
industry workforce.
The lack of mechanisation options has led to
an over-reliance on manual labour, where 80% of
the total industry workforce are foreign workers.
Foreign workers remit an average of 60% of their
incomes to their home countries, causing a direct
negative impact on the industrys GNI.
The third EPP tackles the issue of worker
productivity and worker shortage. One of the
core activities identified to improve worker
productivity is the use of Cantas, a motorised
harvesting pole.
Cantas can reduce FFB-cutting time and prunes
trees below 15ft, which account for 30% of oil palm
trees.This is expected to increase worker productivity
source: ETP: A Roadmap for Malaysia
by 85%.
However, critics say the equipment is costly
one using a China-made engine costs RM2,500 while
a more expensive one costs RM4,500.
According to the person familiar with the palm
oil ETP lab, efforts are being made to bring down
the price of Cantas to RM2,000 to RM2,500 each.The
Malaysian Palm Oil Board,which receives royalties
on Cantas, is expected to offer incentives for its
use, he adds.
In addressing the issue of labour shortage,
successful implementation of the third EPP is
expected to reduce the use of 110,000 foreign
workers by 2020. For the immediate term, however,
it is understood that the ministry is looking into
the problem of labour shortage while plantations
seek alternative sources of foreign labour.
The use of palm by-products is also covered
by the fifth EPP, which aims to develop biogas at
palm oil mills from palm-oil-mill effluent (POME)
waste. The treatment of POME is accompanied
by the production of biogas containing methane.
The objective of this EPP is to ensure that mills
capture the methane gas to generate electricity
to be supplied to the national grid, or for their
own use.
The roadmap encourages mills to start
developing biogas plants immediately to capture
additional income from incentives offered by
the Clean Development Mechanism (CDM)
programme before it expires in 2012. However,
given the lengthy process of the CDM certification,
industry players say it needs to be streamlined.
This EPP has an ambitious target of developing
biogas plants at the 500 mills in the country over
the next 10 years. Of these, half have the potential
to supply electricity to the national grid by 2020.
Mill owners stand to increase their income
as the electricity tariff for the Renewable Energy

Power Purchasing Agreement must be increased
from the current 21 sen per kWh to 35 sen,
according to the ETP roadmap.
Downstream, the sixth EPP aims to shift the
focus on the production of basic oleochemical
products such as fatty acids, fatty alcohols, methyl
esters and glycerine to higher-value oleo derivatives
with higher profit margins.Currently,higher-value
oleo derivatives constitute only 1% of the palm
oil non-food downstream production; the ETP is
aiming for 40% by 2020.
Production of second-generation biofuels using
oil palm biomass, such as empty fruit bunch, takes
centre stage with the seventh EPP,whose objective
is to fast-track its commercialisation.
The production of bio oil using biomass-toliquid technology is one of the best possible highvalue utilisations of biomass generated at mills,
according to the ETP roadmap. Bio oil is used for
generating electricity and can be converted into
green transportation fuel.
Malaysia is set to have its first bio oil plant in
Lahad Datu, Sabah, by 2012. A memorandum of
understanding to build the plant was signed in
July between Felda Group, one of Malaysias largest
palm oil producers, and Premium Renewable
Energy Sdn Bhd, one of the lead initiative owners
for this EPP.
Aside from creating high-skilled jobs,successful
implementation of the EPPs will raise the average
salary of the 161,000 low-income independent
smallholders by a significant 47% in 2020, in line
with the vision of transforming Malaysia into a
high-income economy. With the private sectors
leading role in the palm oil NKEA and government
support, the sector looks set to continue its
E
dominance in the Malaysian economy.
Eight EPPs to grow incremental GNI of RM47.1 billion

Upstream productivity
and sustainability
EPP 5: Developing biogas at palm oil mill
Will generate an estimated RM2.9 billion in GNI in

2020 while creating 2,000 jobs and not requiring
Will generate an additional GNI contribution of RM4.6 any incremental government funding.
billion in 2020.
EPP 1: Accelerating the replanting of oil palm
EPP 2: Improving fresh fruit bunch yield

Will generate RM10.2 billion of incremental GNI,
create an additional 1,600 jobs and improve the
annual income of 161,000 independent smallholders
by 47%.
EPP 3: Improving worker productivity

Will generate an estimated RM1.7 billion in GNI by
2020, and create 28,000 local jobs (in addition to
reducing 110,000 foreign workers).
EPP 4: Increasing the oil extraction rate

Will generate an additional RM13.7 billion in GNI and
create 10,000 local jobs mostly due to the opening
of 84 new mills to meet increased supply of FFB in
2020.
Downstream expansion and

sustainability
EPP 6: Developing oleo derivatives
Will generate an additional RM5.8 billion in GNI and
create 5,900 local jobs.
EPP 7: Commercialising second-generation

biofuels
Will generate RM3.3 billion in additional GNI and
create 1,000 local jobs.
EPP 8: Expediting growth in food- and

health-based downstream segments
Will generate RM4.9 billion in additional GNI and
create 74,900 local high-skilled jobs.
10
Electronics & Electrical


to becoming a high-income nation that is both inclusive and
sustainable. Private sector-led and government-facilitated, the
ETPs starting point is the implementation of concrete changes in
specific areas of the economy.
Restoring E&Es spark
by Nadia S Hassan
alaysias electronics and electrical
sector, once the driving force of
the economy, has in recent times
found it hard to move up the value
chain.Chinas emergence as a lowcost base powerhouse has led to
the countrys previously vibrant E&E sector losing
some of its lustre.
While local E&E companies have achieved
success, the sector is facing a number of critical
challenges. E&Es contribution to Malaysias
exports and the economy has been declining,
from 59% in 2000 to 41% in 2009. In addition, the
concentration of activity in Malaysia is mostly
in assembly, which is of lower value-add, says
the ETP: A roadmap for Malaysia.
However, that is set to change under the
ETP, which sees not only a move upstream but
also the refining of existing operations and the
tapping of new growth sectors.The aim is for the
E&E sector to contribute some RM90 billion to gross
national income by 2020 and create 157,000 jobs.
The focus will be on four geographic clusters
the Northern Corridor, the Klang Valley, Johors
Iskandar Malaysia and Sabah and Sarawak
and four subsectors semiconductors, home
appliances, industrial electronics and new
technologies like solar and light-emitting diodes
or LEDs.Penang and the Northern Corridor,already
the hub for semiconductor players, are seeing a
growing cluster of solar and LED manufacturers.
While the ETP is looking to grow the Klang
Valley as a think tank, Johors strength lies in its
strong intermodal logistics infrastructure and
connectivity, which allows it to build upon its
proximity to Singapore.
Sarawak will leverage its abundant natural
resources and renewable energy to create
value in the upstream silicon supply chain
while Sabahs strong agriculture and eco-tourism
base provides platforms for specialised applications
like precision agriculture via wireless sensor
network technologies.
Attracting more MNCs

The roadmap outlines 15 entry point projects (EPPs),
with the Malaysian Investment Development
Authority (Mida) in the driving seat for 11 of
them. In broad strokes, Mida has been tasked
with attracting more MNCs and their technology
to serve as a jumping-off point.
For the semiconductor sector in particular,
Mida, working with a consortium, targets to build
a number of semiconductor fabrication plants.
The total funding needed for this EPP is RM10.2
billion in private investment and RM100 million
in public investment over the next 10 years.
Instead of pursuing a leading-edge strategy
for wafer fabs, we will pursue a smart-follower
strategy in which we target the establishment of
fabs that use mature technology focused on niche
applications, says the roadmap.
This move into fabs is seen as positive by
semiconductor player Unisem (M) Bhds managing
director John Chia.
Many of our fabless customers, such as the
integrated design houses, would be able to source
their requirement for wafers here instead of being
totally dependent on the likes of TSMC and UMC
of Taiwan.
The major foundries typically look after the
bigger customers and if there are local foundries
here, the medium and small players will find
them an attractive source. It would be convenient,
having sourced their wafers locally, to do their

back-end assembly and test with houses like
Unisem, he says.
Dufu Technology Corp Bhds financial controller
John Loh says bringing in more MNCs will boost
second-tier E&E companies.
If more MNCs are brought in, they would look
to companies such as Dufu to help frame their
operations and add value. That will prove a good
growth catalyst, he says.
One of the biggest problems facing the sector
now is a lack of engineers, which is an issue that
needs to be addressed, say both Chia and Loh.
Four subsectors and 15 EPPs

Semiconductors
EPP 1: Executing a smart follower of strategy
for mature technology fabrication
The focus will be on semiconductor fabrication
plants (fab). A consortium has been formed to
acquire fab assets in high-cost countries and
relocate the fab equipment to Malaysia. The first fab
will start operations in 2011, and four more fabs will
be built by 2020.
EPP 2: Developing assembly and test using

advanced packaging technology
The positive thing is that the proliferation of

wafer foundries will attract greater engineering
talent, which Malaysia has lost in recent years to
other countries, says Chia.
However, Loh says more needs to be done to
revitalise the sector. Chia concurs, saying that
it is insufficient to only offer pioneer status
and tax breaks to attract new investments as
other countries are doing the same. Still, Loh
acknowledges that it is early days yet.
Solar and LEDs

Given Malaysias experience in semiconductors,
it is no surprise that solar and LEDs are tipped to
be the new growth areas for E&E. The roadmap
notes that the solar value chain has stages that are
similar to those of the semiconductor value chain.
US-based Sunpower Corp is among a handful
of solar companies with facilities in Malaysia.
The roadmap intends to help boost the solar
value chain by increasing the number of silicon
and solar module producers, and growing wafer
and cell producers.
In terms of silicon producers, Mida has already
identified several names that it would like to bring
into Malaysia.As for increasing the number of solar
module producers, the government will work to
improve Johors attractiveness as a manufacturing
base in general.
We will also assess the potential for partnerships
with Singapore to attract solar investments
spanning both countries. Singapore is attempting
to build up solar cell production capabilities,which
would complement module production capabilities
in Johor, says Pemandu.
As for the LED segment, Pemandu is looking to
fill the gap in the supply chain to strengthen its
hold on the solid state lighting (SSL) market. In
addition to creating a thriving ecosystem of SSL
companies, the roadmap plans the expansion of
LED packaging and equipment.
The final piece of the strategy is to grow
downstream activities. Pemandu aims to turn
Malaysia into a test and measurement hub. In
this, it has US-based Agilent as the anchor to
bring in more sophisticated products and share its
technology to help grow the local vendor ecosystem.
Agilent will also be a beacon for other companies
going forward.
The ETP also seeks to groom local brands in the
area of electrical home appliance manufacturing
and help them grow an international distribution
network.
E
Discussions are ongoing with a company to bring

an advanced packaging service to Malaysia. If
successful, it would help attract more companies.
The success of the fab strategy would drive existing
demand for advanced packaging services.
EPP 3: Developing integrated

circuit design firms
EPP 9: Expanding LED packaging and

equipment
Mida will facilitate the provision of low-cost land,
infrastructure and financial incentives for lighting
MNCs already in Malaysia to expand capacity and
also attract new ones to set up operations here.
EPP 10: Creating local solid state lighting

champions
A LED certification centre will be established by 2012
to verify the compliance of Malaysian products to
global standards and increase global awareness.
SME Corp will grant working capital loans to SSL
companies to help them expand.
Industrial electronics
EPP 11: Building a test and
measurement hub
There are ongoing discussions with several IC

(integrated chip) design companies to set up in
Malaysia, with a target of 50 companies by 2020.
Mida, with a major T&M player, will work to build

a complete test and measurement hub in the
Northern Corridor, with the latter helping to bring
the manufacturing of advanced and sophisticated
measurement products to Malaysia, among others.
EPP 4: Supporting the growth of substrate

manufacturers and related industries
EPP 12: Expanding wireless communication

and radio frequency identification (RFID)
Sarawak will be the focus for this industry, with a

target of one substrate plant in the state by 2012
and another by 2014. At least another two more
wafer substrate manufacturers will be brought in.
The aim will be to grow the ecosystem of local

outsourcing service providers in two-way radios.
The ecosystem will initially serve a leading global
wireless company in Penang, but eventually will
make the Northern Corridor a more attractive site
for other wireless communication MNCs.
Solar
EPP 5: Increasing the number of silicon
producers
The goal is to attract one or two selected major
companies each year to increase the amount of
silicon produced from six kilo tonnes currently to
around 170 kilo tonnes in 2020. In addition, Malaysia
will develop two domestic silicon companies.
EPP 13: Growing automation equipment

manufacturing
Malaysia will be promoted as a manufacturing,
rather than just an assembly, site to leading
automation equipment manufacturers such as ABB
and Siemens. The target is for two more automation
equipment MNCs to manufacture here by 2015.
EPP 6: Growing wafer and cell producers

The goal is to increase current production capacity
by 10 times to 23 gigawatts in 2020 to become the
second largest producer of solar cells globally.
EPP 7: Increasing solar module producers

Johor will be promoted as a hub for module
production. The ETP will assess the potential
for partnerships with Singapore to attract solar
investments spanning both the island and Johor.
Light-emitting diodes
EPP 8: Developing LED front-end operations
Mida will aggressively target front-end materials
and substrate suppliers and epitaxy manufacturers
to bring one of each to Malaysia by 2014. In addition,
it will attract at least one new global company to set
up wafer fabrication operations here by 2015.
EPP 14: Building transmission and distribution

companies
The aim is to build a cluster of transmission
and distribution manufacturers, attracting
multinationals such as Siemens and ABB, as
well as growing local companies such as Tenaga
Switchgear. One of the key enablers will be the
establishment of a high voltage testing lab.
EPP 15: Building a home appliance

manufacturing hub and international
distribution network
This will be led by a top Malaysian-owned
electrical home appliance company, together with
other investors. The first part is to build a strong
international market by targeting fast-growing
Asean and Middle East markets on a multi-brand
marketing platform. To support sales growth in local
and new international markets, the second part will
focus on building a manufacturing hub to host the
entire supply chain.
11
Progress Update 2 (30th Nov 2010)
Close on the heels of the nine Entry Point Projects (EPPs) announced
under the Economic Transformation Programme (ETP) on 25 October
2010, nine more projects were announced on 30 November 2010 by
YAB Dato Seri Najib Tun Razak, Prime Minister of Malaysia. Some of
the National Key Economic Areas (NKEAs) outlined in the ETP will
see tremendous growth as a result of these projects, which in turn
will encourage overall growth in Gross National Income (GNI) and more
potential jobs to drive Malaysia towards achieving a high income nation
status in 2020.
Surging Ahead
us the opportunity to champion and work with
other industry leaders to improve the quality of
education, service professionals and increase the
countrys tourist appeal.
Tanjong Agas Supply Base & Marine Services Sdn

Bhd (TASBMS) will develop the Tanjong Agas Oil &
Gas and Logistics Industrial Park in Pekan,Pahang.
The 4,260-acre Tanjong Agas Industrial Park will
accommodate the operations and activities within
the oil and gas, and maritime industries such as
shipyards, fabrication yards, supply/logistics bases,
a crude oil & petroleum storage terminal and an
LNG/gas receiving and storage terminal. It will also
introduce support services and facilities such as
The Ministry of Education, in collaboration with port and marine services, a centralised Integrated
SEGI College,DiKA College,Taj International College, Utility Waste Management Plant, an Oil & Gas
Institut Teknologi Info-Sains Mahir, MCS College, College, 5-Star Mariners Centre and Business Park.
Institut Perkembangan Awal Kanak-Kanak, Kolej
Uniti,Thames Technology,Iras Mewah and Institut Total investment:
Megatech will be conducting pre-school teacher RM3 billion between 2011 - 2012
training in 10 states. This is all part of the upscaling of pre-school teachers in Malaysia to meet The ETP will help transform the Tanjong Agas
the increasing enrolment of children in pre-schools Oil & Gas and Logistics Industrial Park in Pekan,
as well as the need to upgrade quality of pre-school Pahang into a state-of-the-art hub that caters
teachers.This is the first time the government has to the regions enormous and rapidly growing
outsourced teacher education to the private sector. upstream and downstream of Oil & Gas Exploration,
The selection of these Private Tertiary Institutions Exploitation and Production Activities.
(IPTS) and training centres, in line with the criteria
set out by the Ministry of Education was made via Encik Mohd Faidzal Ahmad Mahidin, Managing
competitive bidding and was open to all training Director,
centres and IPTS.
Tanjong Agas Oil & Gas
Cisco will transfer its manufacturing process and Dato Peter Ng, Chairman,
skills for a wide range of routing and switching UCSI Group
products. With funds granted by the Malaysia
Investment Development Authority,Cisco will equip
1,000 Malaysians with the necessary knowledge,
skills and awareness of Cisco technologies and
applications to support the transfer.
The support and training will encourage the
development of highly-skilled employees and
knowledge-based workers critical to support the
nations growth and technology progression.
The ability to manufacture high-end technology
products will strengthen Malaysias position as
the preferred manufacturing hub in the region.
Ms Anne Abraham,
Managing Director, Cisco Malaysia
Business Tourism is one of the key sectors that

will shift a greater focus on high yield visitor traffic.
The funding would provide a significant boost to
Malaysias business tourism industry.
Technology Park Malaysia (TPM), along with

Universiti Tenaga (UNITEN) and Malaysia
Multimedia University (MMU) aim to drive
innovation and serve as an enabler for collaborations
within the private sector. This will be done by Total investment:
focusing on research to transform advanced RM11.4 million
engineering and IT education sectors.
We feel proud to be a part of the national agenda
Total investment: RM374 million
in shaping the future of pre-school teachers and
also the future of the children whom in years to
TPMs mandate is to nucleate,nurture and provide come will be our future leaders.
the appropriate platform for technology-based startup companies to test ideas, prove scientific and Dr Hajjah Roswati Binti Rahmat, Director, Regulatory
technological concepts that have the potential to Affairs, SEGI College
become international brands,thereby contributing
to national GDP.
Dato Haji Mohd Azman Haji Shahidin, President/
CEO, TPM
- Encik Zulkefli Hj Sharif,

CEO, MyCEB
PETRONAS has sought the Economic Councils

endorsement of new tax incentives to be
incorporated in Petroleum Income Tax Act (PITA)
to promote development of new oil resources,
incentivise development of technically- challenging
resources and further stimulate domestic
exploration activity. These incentives are set to
bring additional petroleum revenue into Malaysias
economy.
GNI Contribution:
Approximately RM50 billion over 20 years
A burgeoning and thriving Oil Field Services (OFSE)
sector will also indirectly benefit the domestic Oil &
Gas sector by providing a competitive and capable
industry support to our operations.
Dato Shamsul Azhar Abbas,
CEO, PETRONAS
YTL Hotels is to build the Majestic Hotel on a 3.2

acre site on Jalan Hishamuddin in Kuala Lumpur.
The new Majestic will feature two buildings, the
original and fully restored five-storey building and
an all-new 15-storey block, for a total of 320 rooms
The 1.2 million business tourists in 2009 had and suites, full-service restaurants, meeting rooms
generated an estimated RM10 billion spending to and a ballroom.
the local economy. RM50 million per annum will
be allocated to MyCEB over the next two years Total investment: RM250 million
and raised to RM100 million per year by 2020 to
support the growth of business tourism arrivals The Majestic Hotel Kuala Lumpur provides the
from five percent to eight percent of the overall hospitality industry with an asset to facilitate the
tourist arrivals, which translates to an increase Governments objective to transform this nation
from 1.2 million to 2.9 million visitors by year 2020. into a fully developed and high income economy.
Tenaga Nasional will invest in several large scale

projects including a large coal power plant in Total investment: RM50 million per annum for Dato Mark Yeoh, Director,
Perak under the Manjung Extension Development, two years and RM100 million per year by 2020 YTL Corporation
as well as new hydroelectric power plants in
Ulu Jelai, Perak and Hulu Terengganu. One of
the projects also seeks to ensure power supply
reliability throughout Malaysia by reinforcing
power transmission infrastructure in locations
such as Salak South-Mahkota Cheras, South Pantai
and Puchong Perdana-Olak Lampit.
UCSI will construct a Faculty of Hospitality and

Management, and create a purpose-built five star
hotel in Sarawak, an international convention
centre and a resort hotel in the Greater Kuala
Lumpur/Klang Valley.This is to increase both quality
and quantity of hospitality and tourism graduates
to support the industrys ambitious growth and
profit goals.
Total investment: RM4 billion
Total investment: RM650 million
These projects are vital to support our economy as

it continues to grow.Increased capacity is needed to
UCSI University is committed to strengthen provide energy to businesses and also the growing
Malaysias position as an international centre population of our nation.
for Hospitality and Tourism Education as well as
a prominent tourist destination. This EPP gives Dato Sri Che Khalib Bin Mohamad Noh, CEO, TNB
12
Wholesale & Retail

THEEDGE mal aysia | DECember 6, 2010
The Economic Transformation Programme is Malaysias roadmap to becoming a

high-income nation that is both inclusive and sustainable. Private sector-led and
government-facilitated, the ETPs starting point is the implementation of concrete
changes in specific areas of the economy.
Retail a key driver of growth
By Max Koh
hopping malls and
retail outlets have been
mushrooming in the Klang
Valley in the past few years,
indicating that the retail
and wholesale sector is
alive and well in the country.
This is not surprising as the retail
sector is one of the key contributors to
gross national income (GNI).According
to the Department of Statistics, the
retail sector contributed about RM57
billion to GNI in 2009 and created almost
500,000 jobs.
However, according to
AT Kearneys Global Retail
Development Index, the
Malaysian retail sector
has slipped to 17th position
from 10th in 2009 and 8th in
2008, indicating that there
is room for growth from a
global perspective.
Therefore, the retail sector has
been designated one of the 12 National
Key Economic Areas (NKEAs) under
the Economic Transformation
Programme: A Roadmap For Malaysia.
Wholesale and Retail NKEA to

contribute RM165 billion
According to the roadmap, the
government is aiming for the Wholesale
and Retail NKEA to contribute RM165
billion per annum to GNI by 2020 from
Of the incremental RM107.8 billion,
RM40.4 billion will be contributed by
13 entry point projects (EPPs) across
three themes. Another RM45.2 billion
will come from business opportunities
and baseline growth while RM22.2
billion will come from the multiplier
effect. It is estimated that some 30% of
the multiplier effect will come from
Wholesale and Retail NKEA.
The EPPs are expected to create
370,000 jobs over the next 10 years,
including 7,800 senior management
posts, 11,600 managerial, 19,000
professional and technical, 19,000
executive, 37,000 supervisory, 18,000
clerical and the rest operational.
Business opportunities will create
another 226,000 jobs.
The roadmap has identified 13 EPPs
that will be developed across the three
themes of modernise, globalise and
revolutionise. In addition to these
13, there are two EPPs that will be
disclosed at a future date.
Growing retailers
locally and overseas
Under the ETP, the government plans
to increase the number of large format
stores in Malaysia. Currently, there are
121 hypermarkets, 113 superstores and
133 department stores run by local and
foreign players.
According to the ETP roadmap, large
format stores are needed to promote
competitiveness in the subsector, drive
down prices and create jobs.Thus, one of
the EPPs has to do with the setting up
of 61 hypermarkets, 163 superstores and

356 supermarkets within department
stores by 2020.
To assist the local players, funding
in the form of commercial loans, asset
buyouts or leasing may be provided.
Also, government-linked investment
companies could come in as equity
partners.
Some of the large retailers that could
benefit from this are Carrefour, Giant,
Jusco, Mydin, Tesco.
This will certainly benefit local
retail players as they are expected to see
smoother approval procedures from the
government in their expansion plans,

says an analyst.
One of the EPPs will develop
1Malaysia Malls that are similar to
1 Utama Shopping Centre and Mid
Valley Megamall in selected markets
in Vietnam and China. These malls
will also help promote local brands as
they will be populated by at least 50%
Malaysian retailers.
Fashion retailer VOIR Holdings
Bhds managing director Ham Hon
Kit applauds the initiative as it will
help its overseas partners leverage their
expansion plans.
Besides establishing our names in
the overseas markets, this initiative will
help us expand our overseas markets
and ultimately channel profits back
into Malaysia, he says.
Modernising the
small retail player
The EPPs will ensure that the small
retailers are not ignored. One of them
will help modernise small retailers via
the Small Retailers Transformation
Programme.
Mydin is one of the retailers that has
agreed to participate in this programme.
Under the 13 EPPs, the government
will also strive to develop large Pasar
Komuniti, increase the quality and
service level of automotive workshops
and develop makan bazaars.
According to the roadmap, a total
of 10 makan bazaars will be built in
the next 10 years that will be about
9,000 sq m in size and have a seating
capacity of 3,500.
The government will also create
virtual malls and facilitate local players
to acquire stakes in foreign retail
companies and remove import duties
on selected products.
According to an analyst, the online
market is one that can be tapped as
more Malaysians become Internetsavvy and purchase items online.
Internet retailing has been on the
rise over the years as disposable income
increases and broadband services
improve. Recognising this under the
Wholesale and Retail NKEA is good as it

should spur more SMEs and retailers to
participate in online retailing, he says.
According to the roadmap, the
Internet retail business in Malaysia
was valued at RM4.2 billion in 2009 and
could potentially reach RM12 billion
in 2020.
In line with this initiative, national
courier Pos Malaysia Bhd recently
launched its online shopping portal
PostMe.com.my that offers 6,000
products, from apparel and toys to
cosmetics and appliances, from 60
merchants.
The government is also planning
to set up wellness resorts, organise
unified Malaysia sales, transform the
Kuala Lumpur International Airport
(KLIA) into a retail hub and develop
large integrated retail outlets called
big box boulevards (BBBs).
Malaysia Airports Holdings Bhd
(MAHB) is tasked with creating a
retail hub with 55,000 sq m of space
in addition to developing KLIA2. The
government has also identified Nusajaya
to develop the first BBB which will
comprise 10 to 12 large-scale retail stores
on one site.
Among the 13 EPPs, there are some
common enablers for retailers, such
as easier access to finance, sector
liberalisation and the upgrading of
transport and infrastructure.
The government will ensure there
is growing human capital to fill the
370,000 new jobs that will be created
by the Wholesale and Retail NKEA by
increasing the number of graduates in
retail studies and tapping alternative
sources of workers.
Almost all of the RM67.1 billion in
investments for the 13 EPPs will be
funded by the private sector while less
than 1% will come from the public sector.
According to Ham of VOIR Holdings,
this is not a problem. As we have
invested so much in our businesses, it
is not really a problem for us to invest
further as we are committed to it.
However, it will be a good incentive if
access to financing is improved.
He adds that more initiatives are
needed to promote Malaysia as a
shopping destination for tourists.
The move to remove import
duties on 300 items is a good move
but the government needs to advertise
this to the world to draw tourists. It
should work with tour groups to have
shopping time in their itineraries,
Ham observes, adding that Malaysia is
an ideal destination as the hotel rates
here are relatively cheap.
The Wholesale and Retail NKEA
is a right step for the government as
there is a lot of growth potential in
the sector, says an analyst. There is
room for more large-scale stores to be
developed in the country. The lifting
of import duties will definitely spur
consumer spending. The 1Malaysia
Malls should also benefit the local
retailers. The question, at the end of
the day, is whether these initiatives
E
can be put in place.
Three themes and 13 EPPs

Modernise
EPP1: Increasing the number
of large format stores
This EPP calls for the setting up of
61 hyperstores, 163 superstores and
365 supermarkets within department
stores in the next 10 years. This will
increase floor space by 50% to 2.1
million sq m that will be occupied by
both local and foreign retailers.
parties will develop a virtual mall that

will be fully implemented by 2012 and
recruit SMEs and retailers.
EPP8: Facilitating local businesses

to acquire stakes
in foreign retail businesses
Local retailers have identified stakes in
two foreign hypermarkets as potential
acquisition targets.
EPP2: Modernising via TUKAR
Revolutionise
The goal is to assist at least 10% of

50,000 small retailers to modernise
and remain competitive via TUKAR.
This is expected to help small retailers
improve sales by up to 30% and will
require RM5.2 billion of private funding
and investment.
EPP9: Making Malaysia

duty-free
The abolition of import duty on some
300 items was announced in Budget
2011. The EPP will involve RM6.7
billion of private investment and will
contribute RM3.3 billion a year to GNI
and create 31,100 jobs.
EPP3: Developing pasar komuniti

The goal is to transform the pasar tani,
pasar malam, pasar minggu and pasar
tamu into one called pasar komuniti
with proper amenities.
EPP4: Transforming automotive

workshops
The goal is to improve the quality
and service level of automotive
workshops in Malaysia. MDTCC will
assist workshop owners to obtain
loans at reduced interest rates and
tax allowances for imported modern
workshop equipment.
EPP10: Setting up wellness sector

Wellness resorts will be established in
strategic locations and are expected to
attract 500,000 tourists and 30,000
local customers a year.
EPP11: Organising unified Malaysia

sales
There are more opportunities to build
awareness of and involve more retailers
in the three annual sales events. The
private sector will invest RM4.7 billion,
which will deliver an incremental RM1.8
billion a year to GNI and create 14,300
jobs by 2020.
EPP5: Developing makan bazaars

The EPP aims to gather the best street
hawkers in one-stop food centres that
are supported by other established
food outlets and attractions. Wesria
Food Sdn Bhd will privately manage
the venture to build 10 makan bazaar
outlets in major cities by 2020.
Globalise
EPP6: Developing 1Malaysia Malls
This EPP will see the development
of more than 20 shopping malls at
selected locations in Vietnam and China,
populated by at least 50% Malaysian
retailers.
EPP7: Developing a virtual mall

Teras Teknologi and other equivalent
EPP12: Transforming KLIA into

a retail hub
MAHB will create a retail hub as a spinoff of the development of KLIA2, with
55,000 sq m of retail space in addition to
43,000 sq m in KLIA2.
EPP13: Developing big box

boulevards
This EPP will see the development
of very large, integrated retail outlets
from various categories within single
locations called big box boulevards. The
first of these will be in Nusajaya.
In addition to the 13 EPPs, two
confidential EPPs will be announced at a
future date.
13
Education

The Economic Transformation Programme is Malaysias roadmap to becoming a high-income nation

that is both inclusive and sustainable. Private sector-led and government-facilitated, the ETPs
starting point is the implementation of concrete changes in specific areas of the economy.
Becoming a regional education hub
Rapid scale-up initiatives

EPP 1: Scaling up early childcare and
education centres
Will contribute RM3.9 billion to GNI in 2020

and create 78,000 jobs.
EPP 2: Improving early childcare and

education training
by Yantoultra Ngui Yichen

ituated right next door to Singapore and
therefore competing with the republics
Global Schoolhouse concept,Malaysia
faces stiff competition in becoming a
regional education hub.
Technologically, economically
and in terms of academic standards, Singapore is
considerably ahead of Malaysia.
But Malaysia shares some similarities with its
southern neighbour,being one of the few countries
in the region to have a strong English language-based
education system, notably in the private colleges
and universities.
Malaysia also has one key advantage over
Singapore, as well as other developed nations
cost. The cost of obtaining quality education in
Malaysia is a fraction of that in developed countries.
These are the strengths Malaysia is set to build
on in the coming years.
Under the Economic Transformation Programme
(ETP) Roadmap,Deputy Prime Minister and Minister
of Education Tan Sri Muhyiddin Yassin has set an
ambitious target for the education sector: total
gross national income (GNI) contribution of RM60.7
billion by 2020.
The Education National Key Economic Area
(NKEA) aims to rebrand Malaysia from a stopover
location for education to a major centre of choice
and pivotal hub in the global network.
With limited growth in the public education
sector where public universities face perception
and capacity issues the NKEA is focusing on
growing the private education sector fast.
The 13 EPPs require RM19.86 billion in
investment over the next 10 years, of which only
6% constitutes new public funding.
An additional 535,000 jobs will be created by
the initiative, with the majority of them in the
professional and technical fields, while foreign
student enrolment will almost triple from around
77,000 currently to 200,000 by 2020. The ETP also
places emphasis on skills training (entry point project
or EPP 5) and the creation of a research hub (EPP 9).
Although Malaysias goal to become a regional
education hub is lofty, it may be achievable.
The countrys private education sector has
undergone remarkable growth since the 1980s and
is recognised today in international circles as one of
the most innovative and progressive in the region.
The industry has established extensive tie-ups,
or twinning programmes with leading foreign
universities, enabling students to obtain overseas
accredited degrees at reasonable costs.
Today, Malaysias private education players are
making a name for themselves not only on the
domestic scene but overseas as well.
HELP International Corp Bhd, for instance, has
successfully exported its own brand of degrees to
Vietnam, where over 1,000 students are currently
studying for HELP-accredited degrees at Vietnam
National University. It is also undertaking joint
ventures in China, Indonesia and other parts of
Indochina.
Despite its strong potential and recession-proof
qualities, investors are not generally drawn to the
education sector.This is due to the limited number of
listed players and their small market capitalisation.
But a little known statistic highlights the
importance of this key sector: Malaysia ranks as
the 11th top exporter of education globally. Under
the ETP, the target is to raise this ranking to be the
sixth highest exporter of education by 2020.
And now with the Education NKEA, Malaysias
private education sector could well rise another
notch.
The ETP gives us the opportunity to champion
13 EPPs
The development of private early childcare

and education centres will contribute RM338
million to GNI in 2020 and create 370 jobs.
EPP 3: Scaling up international schools
The initiative will contribute RM2.6 billion to

GNI in 2020 and will create about 10,000 jobs.
EPP 4: Expanding private teacher training
Will contribute an additional RM434 million to

GNI by 2020 and create 430 jobs.
source: ETP: A Roadmap for Malaysia
and work with other industry leaders to improve

the quality of education, service professionals and
increase the countrys tourist appeal, says UCSI
Groups chairman Datuk Peter Ng.
UCSI University, a member of USCI Group, is
entrusted with strengthening Malaysias position as
an international centre for hospitality and tourism
education as well as a prominent tourist destination
(EPP 10).UCSI has committed to invest RM650 million
over the next few years as part of the Education NKEA.
The group plans to create a purpose-built, fivestar teaching hotel in Sarawak, an international
convention centre and a resort hotel in Greater
Kuala Lumpur/ Klang Valley.
DiKA Colleges executive director Arthur Ng

concurs. In a paradigm shift, the government has
adopted a very transparent and open approach
involving the participation of the private sector in
the ETP, he says.
Apart from DiKA College, SEGi College, Taj
International College,Institut Teknologi Info-Sains
Mahir, MCS College, Institut Perkembangan Awal
Kanak-Kanak,Kolej Uniti,Thames Technology,Iras
Mewah and Institut Megatech have been chosen by
competitive bidding by the Ministry of Education
to conduct pre-school teacher training in 10 states.
This is part of the upscaling of pre-school teachers
in Malaysia to meet the increasing enrolment of
children in pre-schools as well as the need to upgrade
the quality of pre-school teachers.
We feel proud to be a part of the national agenda
of shaping the future of pre-school teachers and also
the future of the children,who in years to come,will
be our future leaders, says SEGi Colleges regulatory
affairs director Hajjah Roswati Rahmat.
The private education sector is all excited about
making Malaysia a regional education hub with the
rollout of the Education NKEA.
However, there are many challenges ahead,
notably from other governments in the region
which also recognise the potential and are aiming
to create education hubs.
Singapores Global Schoolhouse project aims to
attract 150,000 foreign students by 2015.
Even though this initiative has not been without
its problems,including the failure of the University
of New South Wales to attract a significant number
of students, it has the edge over Malaysia. However,
Malaysia has a substantial cost advantage.
Besides Singapore, Thailand is also aiming to
become a higher education hub for the Greater
Mekong sub-region by 2016 and a hub for Southeast
Asia by 2026.
Malaysia recognises the fact that its neighbours
will be competing for foreign students.
Although the country is the 11th largest exporter
of education globally, the ETP report notes that

the rise of education hubs, for example in China,
Singapore,Thailand and Qatar, could challenge its
ability to maintain this position.
Despite the challenges, education experts and
investors have highlighted Malaysias regulatory
environment for private education as among the
most open in the region.
Indeed, the sector has an increasingly
international orientation, with high-profile
international institutions such as Monash University,
Swinburne University,Curtin University,Nottingham
University and Newcastle University establishing
branch campuses in Malaysia.Malaysia has also been
able to attract renowned UK independent schools,
such as Marlborough College and Epsom College,
to open branch schools here.These are expected to
enrol students from around the region.
One area where Malaysia is well positioned to
become an international hub is Islamic finance and
business education.
As Rushdi Siddiqui, global head of Islamic
finance at Thomson Reuters, puts it, Islamic
finance and business education, and especially
finance, is set to be a US$2 trillion industry in
the next half decade. Its credibility has been
strengthened since the recent global financial
turmoil left the industry relatively unscathed.
Philosophically, culturally and geographically,
Malaysia is poised to become a hub for Islamic
finance and business education. Situated close to
Indonesia, which has the worlds largest Muslim
population, there is a ready-made market on its
doorstep.And Malaysia is already a well-recognised
global hub for Islamic finance.
The country is also an attractive education centre
for students from the Middle East and North Africa
due to its strategic location and lower costs when
compared with Western countries that offer similar
courses.
Malaysia knows its strengths well.The seventh
EPP aims to elevate the countrys Islamic finance
and business education to the next level. The
International Islamic University Malaysia (IIUM)
and International Centre for Education in Islamic
Finance (INCEIF) will take the lead in developing
a harmonised undergraduate and post-graduate
curriculum that is endorsed by the International
Shariah Research Academy for Islamic Finance.
And once the curriculum is standardised, both
institutions will launch a marketing campaign to
build international recognition among potential
students in the Middle East.
Malaysias reputation as an international Islamic
finance and business education hub was recently
strengthened by Cardiff University Business School
announcing that it is poised to become the UKs hub
for Islamic finance education.
This came just after Cardiff University Business
School agreed to form a collaboration with Malaysias
Islamic Banking and Finance Institute and the
Islamic Banking and Finance Centre.
With the rollout of the ETP,the government aims
to transform the education sector into an engine
EPP 5: Scaling up private skill training

provision
Will result in a RM2.1 billion increase in GNI in

2020, and create about 12,400 jobs.
EPP 6: Expansion of international distance

learning
Will increase GNI by RM351 million by 2020
and create 3,900 new jobs.
Concentration and
specialisation initiatives
EPP 7: Building an Islamic finance and
business education discipline cluster
Will produce an incremental 2020 GNI impact

of RM1.2 billion and create 4,300 new jobs.
EPP 8: Building a health science education

discipline cluster
Expected to create an incremental GNI
contribution of RM2.87 billion and 11,800 new
jobs by 2020.
EPP 9: Building an advanced

engineering, science and innovation
discipline cluster
Projected to produce an incremental annual

GNI impact of RM636 million by 2020 as well as
create 4,300 new jobs.
EPP 10: Building a hospitality and tourism

discipline cluster
Will create an incremental GNI impact of
RM618 million by 2020 and 2,300 new jobs.
EPP 11: Launching EduCity@Iskandar
Expected to contribute RM1 billion to GNI by

2020 and create 1,100 new jobs.
Demand generation initiatives

EPP 12: Championing Malaysias
international education brand
Will generate an incremental GNI of RM2.8

billion by 2020 and create153,000 new jobs.
EPP 13: Introducing public-private

partnerships in basic education
Will contribute RM160 million to GNI by 2020

and create 1,000 new jobs.
of economic growth and use it to strengthen our

human capital.
Indeed, it is already an engine of growth. The
education sector contributed about RM27 billion to
Malaysias GNI in 2009, of which RM23 billion was
from government-funded education services alone.
But if Malaysia is to become a regional education
hub, the public and private education sectors have
to work hand in hand.As Muhyiddin says in the ETP
report: We believe that the public and private sectors
can no longer afford to work apart.Instead,both must
come together through innovative public-private
partnership models to jointly deliver government
objectives and growth targets.
E
14
Why has our economy

slowed down so much in
the last decade?
The costs of living and doing business has been
increasing faster than the income and profit
we derive from our economic activities. This is
known as the middle-income trap. Malaysia has
already fallen behind some of our neighbours
in the region and will continue to do so. The
Economic Transformation Programme (ETP)
was introduced in October 2010 to boost
Malaysia to become high-income nation and
remove us from this predicament by 2020.
So how does the ETP

affect my life?
WHY DO WE
need it?
What about opportunities

for Small and Medium
Enterprises (SMEs)?
Due to the inclusive nature of the ETP, additional
business opportunities will arise through
the implementation of the 131 Entry Point
Projects which will filter to other industries
including SMEs. The SMEs will benefit from
various initiatives under the NKEAs as the ETP
focuses on industry and geographical sectors,
and not just business segments. There are a
combination of direct SME initiatives such as
TUKAR (transformation of sundry shops) and
scaling up of early childcare/education centres
to the spill-over effects that arise as a result of
larger Electronics & Electrical, Communications
Content & Infrastructure and Tourism projects.
Coupled together, the SMEs stand to benefit
from the ETP as it progresses.
What will the ETP do for

Malaysia as a whole?
Why is the ETP led

by the private sector
and facilitated by the
Government?
Similar to other advanced economies, the
private sector in Malaysia needs to be the
engine of growth to ensure the success of the
Economic Transformation Programme (ETP)
and make Malaysia a high-income economy by
2020.The 131 Entry Point Projects (EPPs) were cocreated by the private sector and public sector
in the ETP labs, completely from the ground
up. Project ownership resides primarily with
the private sector as the public sectors role is
mainly to facilitate project implementation.
contd
Does this mean there will

be new job opportunities?
It is expected that by 2020, the ETP will generate
approximately 3.3 million job opportunities
directly from the 131 EPPs with 60% of them
being medium to high income jobs, but also
upgrade existing jobs to the higher income
group.

(ETP) is designed to propel Malaysia to a high
income economy by 2020. Every member of
the Malaysian workforce will see the creation
of well-paying new job. Over 60% of these jobs
will be middle-income or high-income jobs
within the 12 National Key Economic Areas
(NKEAs). The overall effect will be a significant
growth of jobs, a shift towards higher paid jobs,
a wide variety of employment opportunities for
Malaysians and strengthening of the skills base.
In addition to experiencing higher income,
Malaysians can look forward to an overall
better quality of life, be it in terms of education,
healthcare, housing, or public transportation
and infrastructure.

(ETP) will be a catalyst for economic change
in Malaysia, making it more competitive
and resilient. Malaysia will achieve a high
income economy to complement its first world
infrastructure. The ETP serves to grow our
economy at six per cent per year and increase
income per capita to RM48,000 by 2020, thus
propelling us to become a high-income nation.
This would be complemented by an increase
in foreign direct investment (FDI) as foreign
investors gain more confidence and are
encouraged by our steady growth.
92% of the RM1.4 trillion investment required

for the EPPs will be derived from the private
sector, with only eight per cent originating
from public funding. For every government
Ringgit spent, a seven-fold corresponding
investment from the private sector is expected.
This will allow the government to maximise the
return on its funding and focus its investment
in activities that will catalyse the greatest
economic multiplier effects. This will also
reduce dependency on public funds, and to
generate higher domestic direct investment
(DDI).
Although the Economic Transformation Programme (ETP) was
announced in October 2010, many would still like to know what

it is really about, why it is so crucial to Malaysia, and how it will
benefit Malaysia as a whole, as well as every Malaysian. Barely 100
days since its launch, the ETP is making remarkable waves locally
and internationally with the announcement of 37 projects and
developments within the total 131 Entry Point Projects (EPPs). Read
on to find out why business as usual is no longer enough, and how
the ETP will change Malaysias economic landscape forever.
For more info
www.pemandu.gov.my/etp
Stay updated
www.pemandu.gov.my/etp/blog
Follow us
@etp_roadmap
Does the ETP take social

and environmental issues
into consideration?
Malaysias growth measures will be sustainable
in both economic and environmental terms.The
Government is committed to the conservation
of our environment and resources by making
sure that it is properly priced into the cost of
development.
Most importantly,the Economic Transformation
Programme works in unison with the
Government
Transformation
Programme
(GTP). Whilst the GTP focuses on reducing
crime, fighting corruption, improving student
outcomes, raising living standards, improving
basic infrastructure and improving urban
public transportation, the ETP is a focused,
inclusive and sustainable initiative that will
transform Malaysia into a high-income nation
by 2020. Together these initiatives will ensure
that the additional GNI and growth is equitably
distributed amongst all Malaysians.
15
Business Services


Private sector-led and government-facilitated, the ETPs starting point
is the implementation of concrete changes in specific areas of the
economy.
Business services
An unrealised growth
catalyst
By Isabelle Francis
alaysias business services sector
is relatively small and in terms
of contribution to gross national
income (GNI), the sector is
lagging emerging economies.
H owe ve r, t h e c u r r e nt
situation provides plenty of room for growth.
Business services encompass a large number
of industries and professions, including
accountants, lawyers and tax experts who
facilitate and support an economys growth.
The sector contributed RM19.5 billion to GNI
in 2009, or just 2.9%. From 2000 to 2010, however,
the contribution of business services to gross
domestic product (GDP) grew by 7.9% a year,
making it the second-fastest growing sector
of the Malaysian
economy.
The Economic
T r a n s f o r m at i o n
Programme (ETP)
envisions the sector
growing at around
11% or more over
the next decade,
which is the growth rate forecast for emerging
economies like China and the Philippines. It
is hoped that by 2020, the sectors growth will
approach that of developed economies like the
UK where it contributes about 20% to both GDP
and employment, and 14% of exports.
Under the ETP, the aim is to grow the GNI of
the business services sector from RM19.5 billion
to RM78.7 billion in 2020.
To achieve this, Malaysia will have to deal
with a number of obstacles to growth. These
include a shortage of talent, bandwith cost, and
lack of a niche focus.
As the business services sector is knowledgeintensive, availability of high quality talent
is critical for success, observes The ETP: A
Roadmap for Malaysia. The roadmap points
out that Malaysia has a small pool of skilled
workers. For example, it has 83,000 finance and
accounting professionals compared with 2.3
million in India.
Bandwidth cost is a critical enabler of ITenabled business services such as data centres
and outsourcing services, observes the roadmap.
In fact, IT services and outsourcing is the
largest sub-segment of the business services
sector, contributing 37% of the sectors GNI. But
Malaysias bandwidth cost varies from RM96
to RM256 per megabit per second per month,
representing 30% of a data centres operational
costs. This is twice the cost in Singapore and
three times higher than Hong Kong.
As for the lack of a niche focus, the roadmap
observes that Malaysian business services
companies occupy an unsustainable middle
ground between low-cost providers in large
emerging economies and high-value competitors
in more advanced economies. The outsourcing
industry is a good example of this, it says.
Malaysian outsourcing companies are unable
to compete on cost, yet at the same time they lack
the specialised skills to compete in higher-value

segments such as knowledge process outsourcing,
adds the roadmap.
To meet the targets under the ETP, and given
the breadth of the business services sector, the
ETP is focusing on the sub-segments with the
highest potential to raise GNI impact and those
in which Malaysias products and services are
differentiated and can capture market share
abroad.
Six entry point projects (EPPs) spanning nine
high-potential segments have been identified.
For the six EPPs, some RM33 billion worth of
funding is required, of which 91% is expected
to come from the private sector.
A big chunk, 35% of the RM33 billion in funding
needed, will be taken up by the first EPP, which
entails growing the aviation maintenance, repair
and overhaul (MRO) sector,
led by MAS Aerospace
Engineering (MAE),
the engineering and
maintenance division of
Malaysian Airline System
Bhd (MAS).
Improving the
industrys structure and
regulation is necessary if the MRO industry is to
grow. Key to this are an autonomous MAE which
will be free to set its own strategy, and improving
key civil aviation regulations. The latter will see
the corporatisation of the Department of Civil
Aviation (DCA) by the Transport Ministry and
the setting up of a governing board comprising
industry and government.
MAS Engineering and Maintenance division
executive vice-president Mohd Roslan Ismail
says the company is game to work to realise the
goals set under the first EPP.
The corporatisation of the DCA is a positive
step towards making Malaysia a key player in
the MRO field, he adds. This is because while
the aviation industry is a highly regulated field,
the business is continuously evolving and is
dynamic, he says.
We view DCA as a key partner in ensuring our
services meet regulatory requirements, coupled
with values that include being customer-focused
and excellence in delivery.
This element is indeed crucial to complete the
business, government and regulatory framework
to ensure Malaysia is a preferred MRO centre in
the region, if not the world, adds Mohd Roslan.
Beyond the EPPs, there are additional business
opportunities that were identified as potential
growth enablers to the industry.
In total, these business opportunities are
expected to contribute close to RM20 billion
incremental GNI by 2020 and create more than
100,000 jobs.
Business opportunities are additional
projects and undertakings that support, extend
and complement the effectiveness of the EPPs
under each National Key Economic Area (NKEA).
Pemandu hopes private sector organisations
will come forward to seize these opportunities
and in so doing, contribute to the development
of the Malaysian economy.
Six EPPs to deliver incremental

RM36.5 billion GNI
Accelerate growth of
differentiated sectors
Develop future growth

segments
EPP 1: Growing aviation maintenance, repair

and overhaul
EPP 4: Jumpstart green-tech industry
The goal is to make Malaysia a regional MRO

hub and build a RM13.4 billion-GNI industry by
2020 and in the process, create almost 21,000
jobs.
In the process of achieving this and creating

jobs in this fast-growing sector, the aim is to
generate substantial cost savings and reduce
Malaysias carbon footprint.
EPP 5: Growing engineering services

EPP 2: Building globally competitive
outsourcers
The goal is to create at least two globally

competitive outsourcing companies and in
the process, put in place policy incentives
and marketing initiatives to allow smaller
companies to flourish. Outsourcing revenue
to grow from RM3.5 billion in 2009 to
EPP 3: Positioning Malaysia as a world-class

data centre (DC) hub
The goal is to increase Malaysias DC floor

space to 2.5 million sq ft by 2015 and 5 million
sq ft by 2020 from 0.5 million sq ft in 2010. A
world-class DC hub in Malaysia will generate
about RM2.4 billion in incremental GNI by
2020.
One of the business opportunities identified

is the accounting sector. As markets deregulate
and global reporting standards converge,
opportunities exist to export accountancy services
in the future. To be able to capitalise on these
opportunities, it is vital for Malaysia to improve
on the quality of accountants and specialised
skill sets such as international taxation, forensic
accounting and carbon accounting, in line with
future growth areas, notes the roadmap.
One suggestion under the ETP is to introduce
a requirement that to qualify as a chartered
accountant, one would need to hold a professional
qualification such as ACCA and CPA. Currently,
the qualification is awarded automatically
to Malaysian graduates after three years of
experience in the industry. The requirement is
The aim is to create an aerospace engineering

services company and automotive engineering
services company that are globally competitive
and in the process, put in place market
conditions to attract high-value engineering
services work to Malaysia.
EPP 6: Develop Malaysia as global Islamic

finance KPO hub
The aim is to build on the countrys competitive

advantage in Islamic finance and set up a
consortium that will promote Malaysia as a
premier Islamic finance hub through provision
of high-value Islamic finance advisory and
consultancy services (I-facs). The long-term
goal is to have 10 banks from Southeast Asia
and Gulf Cooperation Council countries as
clients of I-facs by 2015.
to be introduced by mid-2012.
ACCA Malaysia welcomed the recommendation
but stressed that all players in the profession
would have to work together to achieve the
aspiration.
With a business world that is getting flatter,
a professional qualification is the passport to
flexibility and mobility in an accountants
evolution as a finance professional, says Jennifer
Lopez-Gomez, country head of ACCA Malaysia.
Including the business opportunities, an
additional RM8.1 billion in investment will be
needed, says the ETP Roadmap, bringing the
total funding to RM41.2 billion for the business
services sector.
E
16
Healthcare


Private sector-led and government-facilitated, the ETPs starting point
is the implementation of concrete changes in specific areas of the
economy.
Repositioning healthcare
as an engine of growth
BY Chua Sue-Ann
n global debates about healthcare, discussion
often centres around balancing the social
responsibility of providing high standards
of healthcare and managing the financial
burden of the population.
The Performance Management and
Delivery Unit (Pemandu) is attempting to reshape
the discourse by outlining a road map to turn
healthcare into a powerful engine of growth by
the year 2020.
Underpinning plans for the healthcare industry
in the Economic Transformation Programme
(ETP) is the notion that health and wealth are
not mutually exclusive.
Pemandu believes that focusing on healthcare
as an economic engine will directly impact
healthcare infrastructure, thus resulting in high
quality and faster care for the rakyat.
While it is easy
to develop a singular
focus on healthcare
as a cost, and view
managing these
costs as the critical
agenda, it is time for
Malaysia to reframe
the discussion. The
healthcare industry can be a robust economic
engine and one that indirectly creates significant
social impact, Pemandu says in its ETP framework.
At present, Malaysia spends about 4.8% of its
gross domestic product (GDP) on healthcare with
the government paying a significant portion of
the countrys total health expenditure.
Malaysias health expenditure is well above that
of many neighbouring countries, but significantly
lower than developed countries.
Although various initiatives are underway to
stem the expenditure trajectory, Pemandu notes
that there has been no coordinated plan to grow
healthcare revenues. Thus, the plan is now to
identify private sector opportunities to reframe
healthcare as an economic commodity while
ensuring better access for the rakyat.
This represents a shift from the traditional
growth trends of the healthcare industry,
which have been primarily driven by domestic
consumption of products and services.
Pemandu is looking at harnessing the potential
of three key high performing sub-sectors in the
healthcare industry pharmaceuticals and
biotechnology,medical technology and health travel.
These three sub-sectors have delivered stronger
growth performances relative to the larger, more
traditional economic sectors such as automotive,
agriculture and electronics, Pemandu says.
The plan is for Malaysia to migrate from a
primarily lower-value product strategy to a more
comprehensive strategy for products, services and
assets that better leverages current competencies.
Moving up the value chain in 10 years

Preliminary studies by Pemandu have found that
fundamentals in the three key sub-sectors are at
risk but there is opportunity to improve on the
current position in each.
Indeed, there are opportunities aplenty.
According to Pemandu, Malaysia is still a
net importer of generic products, despite the
realisation that prescription and pharmaceutical
drug patents valued at over RM422 billion are

slated to expire in the next decade.
A pharmaceutical industry source says the
move to position Malaysia as a quality generics
manufacturing hub is welcome and timely, given
that many major drug patents are expiring soon.
The rising cost of healthcare globally is prompting
governments to manage escalating costs, and
generic drugs are one way to overcome the burden
of expensive healthcare, says the source, who
declined to be named.
Malaysia is poised to be a regional
manufacturing force because domestic research
and development is relatively advanced, and
Malaysias drug control authorities have been
effective in their roles, he says.
He adds that Malaysia is a signatory to
the international Pharmaceutical Inspection
Cooperation Scheme (PICS), which enables
enforcement of high standards in pharmaceutical
manufacturing and
facilitates market access
to member countries.
However, the source
says the government
should work with the
existing local generics
manufacturers instead
of encouraging more
production facilities.This would enable Malaysia
to leverage its existing capabilities given that
production of generic drugs is all about economies
of scale and quality.
There are also suggestions for the companies
to be coordinated in terms of generic products
manufactured to reduce overlap and to stay
focused, adds the source.
Another strategic sub-sector that Pemandu
has plans for is medical technology, given that
Malaysian manufacturers are still focused on
lower-value products,mainly rubber-based medical
consumables.
Pemandu also warns that the Malaysian health
travel industry remains small and fragile,
having contracted 4% in 2009, given a lack of
clear positioning relative to regional competitors
and an insufficient network of partners for source
patients. It is, therefore, critical for Malaysia to
bounce back in the health travel industry to be
better positioned to compete with neighbouring
countries such as Singapore and Thailand,
Pemandu says.
KPJ Healthcare Bhd chief financial officer
Alvin Lee says the ETPs plans for the Malaysian
healthcare industry as a growth engine are
good for everybody as the programme outlines
participation from the private sector.
Our focus will be to help the tourism sector
via health tourism. The Malaysian healthcare
market is somewhat small so we have to look at
regional markets, Lee says.
Malaysia will have to go through a learning
curve over the next five years as the country
plays catch-up with Thailand and Singapore,
who already have health tourism programmes
in place, Lee says.
We should be able to see some growth over the
next few years, but we need to build momentum
steadily. Marketing and advertising is one thing,
but with healthcare people need to see for
themselves that they can come to Malaysia and
have this good work done, adds Lee.
Six EPPs, two business opportunities

for healthcare players
QUICK WINS
LONGER-TERM BETS
EPP1: Private health insurance for

foreign workers
EPP5: Building up the Diagnostic Services

Nexus (DSN) for eventual international
outsourcing
The plan is to make it compulsory for all

foreign workers to be covered by medical
insurance and to enrich the existing workmen
compensation scheme to improve the welfare
of foreign labour in line with our regional
neighbours.
EPP2: Building an ecosystem to grow clinical

research
A new entity, Clinical Research Malaysia, will be

established to support home-grown research
organisations as well as to ensure Malaysia
is seen as the Asian destination of choice for
clinical trials in the next 10 years. CRM will
support high performing clinical research sites
and groom investigators into regional or global
centres of excellence.
STRATEGIC OPPORTUNITIES
EPP3: Pursuing pharmaceutical export
opportunities
The target aims to make Malaysia a

major force in the export of generic
pharmaceuticals, and take a bigger slice of
the RM435 billion global drug market. This
strategy also will reduce Malaysias reliance on
imported medicines and increase local access
to quality medicines.
The DSN seeks to enhance domestic services,

focused initially on radiology and pathology,
to take advantage of international
outsourcing opportunities via telemedicine.
This EPP will reduce wait times by optimally
coordinating workload and utilising existing
resources via the DSN.
EPP6: Developing a health metropolis:

World-class campus for healthcare and
bioscience
Various academic institutions, hospitals and

private sector conglomerates are working
towards the creation of a medical ecosystem
that provides education, clinical care and
research in one economically self-sustaining
campus. The successful implementation of
this EPP will attract foreign medical talent and
also retain local talents.
BUSINESS OPPORTUNITIES
Business opportunity 1: Med tech
manufacturing
The aim is to attract multinational companies

to work with Malaysian companies in the
manufacturing of medical devices for the local
and export market.
EPP4: Reinvigorating health travel
The goal is to create a differentiated position

for Malaysia and broaden the customer base
beyond Indonesia, and attract more foreign
patients to receive secondary and tertiary care
in Malaysia. This is done via a more extensive
marketing strategy, enhanced customer
experience, across border-alliance and by
building both infrastructure and capacity in
niche specialities.
Business opportunity 2: Seniors living
The plan is to build a number of centres to

assist the elderly in going about their daily
activities independently. The plan will involve
getting property developers to adopt a buildoperate-transfer model.
paradigm shift from healthcare as a social service

and consumer of wealth to healthcare becoming a
private sector-driven engine of economic growth,
says Pemandu.
A point of focus to drive the healthcare

agenda
On the whole, Pemandu aims to grow the

healthcare industrys contribution to the gross
national income (GNI) to RM50.5 billion by 2020,
from RM15.2 billion in 2009.
It has set aggressive targets for each of the
key healthcare sub-sectors in order to achieve
the targeted incremental GNI growth of RM35.2
billion between now and 2020.
Pharmaceuticals: The goal of 22% GNI
growth rate to deliver RM16.6 billion GNI by
2020, will be driven by higher exports of generic
pharmaceuticals and enhanced generics as well
as more clinical research.
Services: The targeted 10% GNI growth which
will bring in GNI of RM27.8 billion by 2020, is
expected to be delivered via increased emphasis
on export-focused services such as health travel,
specialist care and senior living centres.
Medical technology: A moderate 8% growth
has been set with the next 10 years of growth
expected to come from continued export of
consumables to new markets. However, Pemandu
expects higher-margin industries to emerge
towards the end of the next decade as Malaysia
develops the capacity to manufacture highervalue goods.
To fund the expected growth, Pemandu says
the healthcare industry will require cumulative
investments of RM23.2 billion from 2011 to 2020, of
which 99% are to be sourced from the private sector.
The predominance of private investment for
the healthcare industrys growth is in line with the
The long-term plan is to establish a Health Industry

Development Corporation, which will be tasked
with driving the economic agenda for Malaysias
healthcare industry.
Although significant changes to regulatory
policies have been proposed, Pemandu says
creating more autonomous, commercially-focused
organisations and modifying regulation to drive
exports will be crucial for the success of the entrypoint projects (EPPs).
Pemandu stresses that the initiatives for the
healthcare sector rest on five common enablers:
(i) skilled human capital, (ii) efficient use of
infrastructure, (iii) regulatory reform, (iv) strategic
cross-border alliances and (v) targeted marketing
strategies.
According to Pemandus data, the healthcare
industry is forecast to double its human capital
count to 340,000 by 2020, from the 160,000 people
currently employed in the industry.
Although we will see a potential surplus in the
number of healthcare professionals,we expect the
current gap in specialists and sub-specialists will
continue into the foreseeable future, says Pemandu.
With 2010 drawing to an end, the clock is
fast ticking towards 2020, with 10 years left to
transform the healthcare industry.
To succeed, we must not only move faster
than our regional peers, but migrate beyond a
product-centric strategy to one centred on offering
services, Pemandu says.
For Pemandu,the choice is clear: We can either
aggressively participate in the global shift towards
Asia by becoming a major player in the regions
healthcare, or we can become marginalised as
less developed and less expensive countries play
E
larger roles on the Asean stage.
17
Progress Update 3 (11th Jan 2011)
AGRICULTURE
High-Value Herbal Plantation
GREATER KUALA LUMPUR /

KLANG VALLEY
Mass Rapid Transit
The East Coast Economic Region

Development Council (ECERDC) will
cultivate seven types of high-demand
herbs on 461 hectares of land in Pasir
Raja, Terengganu.
The MRT is projected to alleviate

congestion
and
increase
connectivity to transportation
hubs for dwellers inside and outside
the city. It is a pre-requisite to an
economically vibrant and liveable
Kuala Lumpur.
COMMUNICATIONS
CONTENT &
INFRASTRUCTURE
SelecTV: Hospitality IPTV
Talent Corporation
Hospitality IPTV aims to create a

cutting-edge platform to distribute
Malaysian content to local and
international hotels implemented
with SELECTV IPTV.
The Talent Corporation is tasked

to strategise and implement
initiatives to engage and attract
the best talents required to fill
the 3.3 million positions that will
be created by Malaysias economic
transformation.
BUSINESS SERVICES
Malaysia as a World-Class Data
Centre Hub
MyTelehaus, CSF Group and Teliti
Datacentres are developing new
facilities as well as upgrading existing
facilities in the bid to establish
Malaysia as a world-class data centre
hub.
EDUCATION
Skills Malaysia 2011
Skills Malaysia aims to raise
awareness and showcase vocational
opportunities for post-SPM education,
as an upgrade for unskilled workers
and offer it as an alternative to
mainstream education.
HEALTHCARE
Hovid: Generic Drug
Manufacturing
Damansara City 2
The Economic Transformation Programme (ETP) is going

into overdrive with 19 projects and developments. These
were announced on 11 January and will contribute an
additional RM36 billion to our nations GNI and create
35,000 new jobs. The projects which require up to RM67
billion in investment, are drawn from 10 National Key
Economic Areas (NKEAs):
OIL, GAS & ENERGY
ExxonMobil
ExxonMobil
along
with
PETRONAS Carigali will invest in
rejuvenating mature facilities and
Hovid, in collaboration with Sanofi- undertake enhanced oil recovery
Aventis, will develop, manufacture activities in the Tapis field, as
and supply generic drugs for diabetes well as the Telok gas development Shell Malaysia
and pain management.
project.
Shell Malaysia will upgrade, expand
and build facilities across Malaysia,
including expanding Shell MDS wax
University Malaya
Dialog Group: Independent plant in Bintulu,a new diesel processing
Health Metropolis
Deepwater Petroleum
unit at the Shell Refinery in Port
The Health Metropolis will be Terminal
Dickson, and the Gumusut deepwater
developed
and
positioned
by Dialog Group is leading a development offshore Sabah.
University Malaya as Malaysias consortium to develop a deepwater
premier integrated healthcare,bio- petroleum terminal at Pengerang
research and post-graduate education Johor which can store up to five Malaysia Nuclear
hub, benchmarked against Harvards million cubic metres of petroleum, Power Corporation
Longwood Medical Centre and positioning South East Johor as an The
Malaysia
Nuclear
Power
Stanfords Bio-X Centre.
Corporation was formed to study the
integrated oil and gas hub.
feasibility of deploying nuclear energy
to meet future demand and diversify
the energy mix for Peninsula Malaysia.
For more info, log on to www.pemandu.gov.my/etp

Visit our blog at www.pemandu.gov.my/etp/blog
Follow us on Twitter @etp_roadmap
Damansara City 2 in Pusat Bandar

Damansara will comprise two
office blocks, a retail block, a hotel
and serviced apartments. This
mixed development is set to be
the next iconic landmark that will
also support the MNC attraction
initiative.
ELECTRONICS &
ELECTRICAL
TOURISM
Teluk Datai Resorts
Teluk Datai Resorts Sdn Bhd (TDR), will
be developing 300 acres of land in Pulau
Langkawi as part of its development
plans for Teluk Datai. The development
will see the expansion and upgrading
of The Datai Hotel and the golf course,
as well as the development of various
premium hotels and luxury villas for sale.
AUO Sunpower
A new AUO Sunpower facility in
Melaka will continue construction
and ramp through 2013 to produce
high-efficiency solar cells capable
of generating more than 1,400
megawatts annually.
WHOLESALE & RETAIL

Mines Wellness City
Pulau Gaya Resort
The Pulau Gaya Resort, set amidst
rainforest, will consist of 132 hillside and
sea-front villas. It will feature traditional
Sabahan architecture, dining options
and the famed Spa Village, which is the
only one set on a mangrove shoreline.
The Mines Wellness City, which

expands on the current Mines
Resort City, is projected to serve
as a one-stop destination for
both modern and complementary
medicine.
18
Financial Services

THEEDGE mal aysia |JANUARY 3, 2011

the economy.
New growth for

banking industry
By Yong Yen Nie

alaysian financial institutions
have strengthened themselves
significantly following the
1997/98 Asian financial crisis
and the consolidation of the
financial sector in 2000.
The effort has clearly paid off.The consolidation
of 22 banks into nine anchor banking groups has
created sizeable and profitable institutions that
remained resilient throughout the recent global
financial crisis.
The strong capital position of the banks,
coupled with ample liquidity in the financial
system, provided a buffer against the global
downturn. Additionally, the levels of nonperforming loans held by commercial banks
declined in 2009.
Debt market activities have also remained
strong. Excluding Japan, Malaysia continues to
be the third-largest
domestic currency
bond market in
Asia. In 2009, total
corporate debt
issuance increased
22% y-o-y to RM61
billion. Of the total
issuance volume,
RM32 billion was
from the issuance of sukuk. Malaysia maintained
its dominant share in the global sukuk issuance
market, with a 47% market share.
(ETP) recognises that the countrys financial
services sector has enhanced its domestic
competitiveness and broadened its activities.
However, the financial sector faces several
challenges.
First, with a population of 28 million, the
domestic market lacks the critical mass to further
develop these segments. For example, Malaysias
total market capitalisation accounts for just 3.2%
of the MSCI Asia ex-Japan index.
The capital markets have also lost some
vibrancy. Compared with 1996, when Malaysia
was the third-most-liquid capital market in Asia,
it has dropped to 14th position in 2010.
We do not have to look far beyond our
shores to find established financial centres
that enjoy greater scale, visibility and liquidity,
such as Singapore and Hong Kong. Further,
foreign investor interest is currently directed
towards North Asia, while within Southeast
Asia, Indonesia is also beginning to attract
more investor attention, the Performance
Management and Delivery Unit (Pemandu) says.
Additionally, while the financial sector has
gone through a phase of consolidation, some
segments, such as investment banking and
brokerage, remain fragmented. Moreover, the
local commercial banks are still significantly
smaller than the regional powerhouses.
The solution is to look externally for growth
and to develop new engines of growth.
The Financial Services National Key Economic
Area (NKEA) aims to raise total gross national
income (GNI) contribution by RM121.5 billion by
2020. Of this, RM28.8 billion will come from 10
entry point projects (EPPs), RM72 billion from

baseline growth and other initiatives, and RM20.7
billion from the multiplier effect created by EPPs
from other sectors.
The largest source of the multiplier
effect on the Financial Services NKEA is the
Communications, Content and Infrastructure
NKEA, which is estimated to contribute to 26% of
the multiplier effect.This can be accomplished by
boosting online financial transactions, potentially
brought about by the expansion of broadband
access.
In addition, through the EPPs, 45,000 jobs will
be created, with 56% of them offering an average
income of above RM4,000 per month. Business
opportunities and baseline growth will result in
a further 229,000 jobs created.
An analyst says local financial institutions
have already begun to expand overseas in search
of new growth engines. This is because the banks
managements are also aware of the saturated
domestic market.
However, banks will
be given a harder
push from now on,
given that the plan
is formally outlined
under the ETP, he
says.
In terms of business
opportunities, the ETP
has focused on six areas commercial banking,
investment banking, Islamic banking, insurance
and takaful, asset management and wealth
management and other segments, including
development finance institutions (DFIs).
Under the ETP, it is projected that over the
next 10 years, the commercial banking segment
will maintain a moderate growth of 7% annually.
Most of the incremental GNI of RM29.6 billion
in 2020 is anticipated to come from baseline
growth, with contributions from innovation in
delivery of financial services, increased financial
inclusion via the national literacy programme
and the fast-growing personal finance segment.
Under the ETP, it is expected that business
opportunities will require RM64.9 billion in
funding, of which about RM61.2 billion will be
sourced from the private sector.
The growth of investment banking is expected
to be 15% per annum from 2010 to 2015, but to
slow down to 10% per year from 2016 to 2020.
The incremental GNI impact of RM5.2 billion in
2020 is expected to be derived from an increase
in initial public offerings (IPOs) due to a push
for innovation under the 10th Malaysia Plan
and increased merger and acquisition activities.
A banker says the investment banking
landscape is increasingly saturated, hence, players
will have to grow in size and go regional in order
to compete with other regional banks.
Over the medium term, it would not be
surprising if market-driven consolidation among
the smaller investment banks takes place to beef
up size, he says.
Similarly, Islamic banking is also expected to
see strong growth, given the new opportunities
regionally and globally.
Under the ETP, the Islamic banking segment
will see strong growth of 15% annually from
EPPs
Strengthen the core
EPP 1: Revitalise Malaysias capital markets
The Ministry of Finance will work with
government-linked investment companies
(GLICs) to pare down their stakes in listed
companies. Government-linked companies
(GLCs) will also be called on to package their
property holdings into REITs, given that some
of the GLCs own more than RM12 billion in
properties, of which 20% to 30% are suitable
for REITs.
EPP 2: Deepening and broadening the bond

markets
The government expects total outstanding

private debt securities to grow from about
RM270 billion in 2010 to about RM880 billion
by 2020.The Finance Ministry will review
the investment mandates of GLICs to allow
investment in A or BBB bonds and put in place
a framework for retail participation in the bond
market.
EPP 3: Transforming or rationalising

Development Finance Institutions (DFIs)
All DFIs will have clear and non-overlapping

mandates and operations and carry out their
developmental roles under an improved key
performance indicator and performance
management system. By 2020, the government
aspires to have non-performing loan levels lower
than 6% and cost-to-income ratio of 40%.
both conventional insurance and takaful

products.
EPP 6: Accelerating growth of the private

pension industry
By 2020, the government expects the private

pension industry to grow to RM73 billion, with
more than 2.7 million participants. The pension
review committee is finalising the proposed tax
incentives, which will include tax exemption
on private pension disbursements, additional
tax reliefs for contributions to private pension
funds (PPFs) and tax deductibility for employer
contributions to PPFs.
EPP 7: Spurring growth of the wealth

management industry
To carve a niche in Islamic wealth management,

the government will build syariah financial
planning capability and increase the number
of financial planners. It will also ease the
immigration process for the entry of foreign
talent.
EPP 8: Accelerating and sustaining the asset

management industry
The goal is to stimulate the industry through
outsourcing mandates. The government will
increase total GLIC mandates to external fund
managers from 5% to 15% of assets under
management.
EPP 9: Develop regional bank champions

EPP 4: Creating an integrated payment
ecosystem
By 2020, Malaysia aspires to become a chequeless economy and reduce dependence on cash
transactions to 63% of transaction frequency.
EPP 5: Insuring most, if not all, of our

population
The goal is to increase life insurance

penetration to 4% of GDP or 75% of the
population. Separate tax reliefs of RM6,000
each for EPF contributions and insurance
premiums will be introduced. This relief covers
2010 to 2015, and slower growth of 12% from

2016 to 2020. Growth will come from business
opportunities such as Islamic pawnbroking and
migration of money-lending to conventional or
Islamic banks, following proposed amendments
to tighten the money-lending business.
The government will undertake efforts to
educate the public on financial planning and
this will result in greater insurance take-up
and spur the growth of the insurance industry.
Industry growth for conventional insurance
and reinsurance is expected to remain stable
at 6% annually, while takaful and retakaful will
register stronger growth at 20% annually from
2010 to 2014, before slowing down to 15% annually
from 2015 to 2020.
The insurance industry is also expected
to undertake further consolidation and
rationalisation to create strong institutions
and platforms for growth.
The increasing number of wealthy Malaysians
will lead to the growth of asset management
and wealth management services. The segment
is estimated to contribute RM1.9 billion in
incremental GNI in 2020, driven by an average
8% annual growth from 2010 to 2020.
Opportunities that will raise the GNI include
increased access to funding for innovative startups, arising from the creation of the RM500
million Mudharabah Innovation Fund, as well as
from the creation of a RM20 billion public-private
partnership fund under the 10th Malaysia Plan.
Other opportunities would arise from
investment activities under 1Malaysia
Development Bhds business development fund,
as well as private equity and venture capital for
innovation and green financing.
To ensure that these business opportunities
are fully captured, human capital will be an
essential catalyst. The ETP highlights that there
Malaysian banks will increase the contribution

of overseas income to total profits from 16%
in 2009 to 27% by 2020. It is hoped that
Malaysian banks will be among the top three
banks in Asean by market capitalisation in 2020.
EPP 10: Becoming the indisputable global

hub for Islamic finance
Malaysia aspires to increase its share of global

Islamic banking assets to 13% in 2020 from 8%
in 2009. At least one Islamic financial institution
is targeted to be among the top 10 by asset size
by 2020.
is still inadequate supply of quality human

capital, especially in advanced areas such as
fund management, investment banking and
derivative trading.
Under the ETP, the government intends to
provide incentives to bring back Malaysian
experts from abroad and retain talent. This will
be executed via the Malaysia Talent Corporation,
which will maintain a national database to track
Malaysian financial services experts abroad and
notify them of domestic opportunities.
A world-class financial district is also needed
to attract higher-calibre financial talent to help
promote a vibrant financial services industry.
However, there is currently no financial district in
Kuala Lumpur, while Hong Kong and Singapore,
which already have financial districts, are
building new ones to complement their existing
ones.
Apart from the need to build human capital,
a competitive tax environment is also essential
to attract business operations and retain talent.
Compared with our regional competitors,
Malaysias personal and corporate tax rates are
relatively high, while only an estimated one
million people pay income tax, Pemandu says.
There is also a need for a concerted marketing
and promotion campaign, given that the
Malaysian story is still not well-known and
generally undersold internationally.
We also plan to cultivate a network of finance
businesses and professionals (foreign investors
or successful Malaysian businessmen abroad) to
become Malaysian ambassadors who will be kept
abreast of the latest developments in the sector
and promote Malaysia abroad, says Pemandu.
Given that the banking system is a function
of the economy, achieving the targets set under
the ETP will be crucial.
E
19
Communications Content & Infrastructure
THEEDGE mal aysia |JANUARy 10, 2011
The Economic Transformation Programme is Malaysias roadmap to become a high-income nation

that is both inclusive and sustainable. Private sector-led and government-facilitated, the ETPs
starting point is the implementation of concrete changes in specific areas of the economy.
EPPs
Serving Tomorrow
Communications content and

infrastructure: Focus on
vertical sectors
By Aishah Mustapha
he telecommunications sector
has contributed significantly
to the countrys gross national
income (GNI). It formed the bulk
of the communications content and
infrastructure (CCI) contribution of
RM22 billion to GNI last year.
However, as mobile and Internet penetration
steadily increases, laying out infrastructure and
enabling access to networks are fast becoming
a commodity for network operators. The next
step now, is to enhance the services that rely
on these networks and connectivities.
According to the Economic Transformation
Programme (ETP), Malaysia has achieved
high penetration rates for communications
services, with mobile penetration at around
106% compared with Southeast Asias
average of 76%.
Recent studies on developing
economies concluded that a 10% rise
in Internet penetration correlates with a
1% to 2% increase in GDP growth. Adding
10 mobile phones per 100 inhabitants
can boost GDP growth rates by 0.8%,
and every RM1 spent on mobile services
generates RM3 in related sectors such
as mobile devices.
The nine entry point projects (EPPs) laid
out under the ETP aim to capitalise on past
investments in cellular and data networks,
by building the vertical industries as the next
engine of growth.
The EPPs seek to kick-start the paradigm
change and aim to shift the focus from
infrastructure and access to applications and
content. These would be in areas such as creative
content creation and connectivity applications.
CCI is unique in that it enables and
accelerates growth in other industries such
as healthcare, business services and financial
services as part of its multiplier effect. Under
the ETP, CCI contribution to GNI is expected
to triple from RM22 billion last year to RM57.7
billion by 2020.
This growth is driven by the nine EPPs that
will deliver RM16.6 billion and four business
opportunities that will deliver RM11.7 billion
in incremental GNI.
The GNI impact includes RM7.5 billion
of contribution from the multiplier effects
created by EPPs from other sectors. The largest
source of the multiplier effect is from the
Wholesale and Retail National Key Economic
Area (NKEA), which will come from drivers
like increased usage of e-Payment and online
shopping services.
The roadmap projects the creation of an
additional 43,162 jobs, with more than 75%
being high-skilled workers earning more than
RM48,000 per year.
Some RM30.3 billion will be required for the
EPPs, of which 97% will be provided by the private
sector. The remaining 3% will come from public
funding, and will be mostly deployed to achieve
inclusiveness for the rakyat.
The EPPs centre around three themes.
The first is to develop Malaysias content and
applications industry.
This theme has three EPPs intended to

capture both the upstream and downstream
sectors in content and applications. There have
been a few successes in the creative content
sector, such as the hit animated TV series Upin
dan Ipin, popular locally and in Indonesia.
The first EPP involves nurturing the local
creative content industry in order to enhance
capacity and capability to create original, locally
produced content and develop competency in
content-related services to the regional market.
It also calls for a new industry-led public-private
collaboration to grow the export segment at 20%
a year and the domestic segment at 13% a year.
Multimedia Development Corporation
(MDeC) vice-president for creative industry
strategy and policy Kamil Othman applauds
the EPP for linking the disparate segments of
the creative content and applications sector.
The key element in any content and

application is creativity. The labs have proven
that the government is serious in getting
everyones feedback to ensure the development
of the creative content industry happens in a
structured manner. Looking at the ETP, a lot
of the feedback was considered. It has been
positive so far, he says.
The second theme, called Pushing
Boundaries Enabling Other Sectors, seeks
to lay the foundations for the multiplier effects
in sectors such as healthcare, education and
government services.
The common challenge under this theme,
according to the roadmap, is the need for
cohesive coordination between the public and
private sectors and between different public
sector entities.
REDtone International Bhd group CEO Zainal
Amanshah concurs.
The EPP is good in the sense that it gives
the private sector an opportunity to do projects
which appeared difficult in the past. Some of the
ideas that are part of the EPP are projects that
cater for the real needs of the people. But in the
past, some of the ideas were not given priority.
Under this EPP, a lot of ideas and concepts are
taken into account and now it is just a matter
of implementing them.
I hope Pemandu [the Performance
Management and Delivery Unit] will help to
facilitate some part of the process, for example,
getting the right parties to sit down and discuss
and facilitate approvals which proved difficult
in the past, he tells The Edge. REDtone is
involved in around five of the nine EPPs.
The e-learning EPP will generate incremental
GNI of RM1.5 billion and 800 new jobs by 2020.
Some 30% of families will be able to monitor
their childrens programmes and performance as
schools will be connected with broadband. The
number of connected devices used primarily for
e-learning will grow from half a million to

eight million.
Meanwhile, the launch of e-healthcare
solutions for the healthcare sector will generate
an incremental GNI impact of RM1.4 billion
and create 250 new jobs by 2020. The target is
to have 500 hospitals and at least 8,000 clinics
connected to the common network.
The e-government initiatives include
reducing counter services, developing a
paperless government and also unifying citizens
accounts in order to access e-government
services.
The final theme builds upon ongoing efforts
to enhance and expand the network in order
to support growth of the next generations
infrastructures. The key challenges for network
infrastructures are coverage, cost and quality. A
recent study by the Malaysian Communications
and Multimedia Commission (MCMC)
showed that more than 45% of the population
feel broadband prices are too high.
Slow speeds have plagued consumers
due to the mismatch between the growth
of Internet traffic and the growth of
capacity. Moreover, significant portions
of the population do not have access to
broadband. Suburban and rural areas are
generally under-served due to the high
costs associated with building infrastructure,
the roadmap noted.
There are four EPPs under the third theme
that will collectively generate GNI of RM10.7
billion in 2020 and create 10,728 new jobs.
First, the appropriate ministries and bodies
will see to it that broadband is an essential
service by the end of 2010 through amending
the Uniform Building By-Laws. This will make it
mandatory for developers to construct ducting
in all new developments for wired broadband.
For wireless broadband, MCMC will amend the
National Development Master Plan in all states
to gazette landed and rooftop sites for wireless
infrastructure by early 2011.
Second, it aims to extend the reach by driving
subscription levels in non-urban areas to as
much as 90% of households by 2020, resulting
in 3.4 million new broadband subscribers.
According to MCMC, the subscription level
in urban areas is the highest at 60%. But
suburban areas have only 25% subscription of
total households, while rural areas are at 20%,
and remote areas a mere 15%.
This can be achieved through network
operators lowering their costs through
infrastructure sharing, as well as building
backhaul and last-mile infrastructure to underserved areas.
Offering smart networks, where telcos will
provide tiered pricing plans based on priority of
services, can also mitigate issues of affordability
and low quality. This is an upgrade from current
plans based on speed and usage. Priority services
can prioritise each users traffic based on needs
and wants, thus lowering costs for those who
are not so data hungry.
Finally, there is a concern that Malaysias
data-hungry consumers might face a shortage
of bandwidth by 2020 due to the fact that some
80% to 90% of Malaysian Internet traffic travels
outside of the country.
EPP 1: Nurturing Malaysias creative

content industry
Nurture the domestic creative content

creation, services and distribution
and broadcasting sectors, eventually
transforming Malaysia into a regional hub
for digital content.
EPP 2: Connecting 1Malaysia
Drive the development and adoption of

value-added communication services and
applications for business, household and
government use.
Pushing Boundaries
EPP 3: Establishing e-learning for
students and professional training
Establish a common knowledge platform
for all students and incorporate professional
training into the same platform.
EPP 4: Launching e-healthcare
To enable remote scheduling, monitoring,

facilitating personal record keeping and
streamlining payments, and reducing wait
times.
EPP 5: Deepening e-government
Increase use of CCI technology to

improve the convenience, efficiency and
transparency of government services and for
trade facilitation.
Enhancing foundation
EPP 6: Ensuring broadband for all
Ensure all residences will have ready access

to CCI services.
EPP 7: Extending reach
Infrastructure will be built in suburban and

rural areas through shared infrastructure.
EPP 8: Offering a smart network
Address quality and affordability of services,

differentiated broadband packages will be
offered.
EPP 9: Extending the regional network
Additional international submarine cable

capacity will be laid and data centres will be
built to host content locally in Malaysia.
Internet protocol (IP) transit costs for

Malaysians are much higher than for Japan
and Hong Kong.
International bandwidth demand is
estimated to reach at least 4 Tbps by 2020. Today,
about 200 Gbps of capacity is used, while an
estimated 600 Gbps can be made available. To
close the gap, service providers will form a local
consortium in 2011 to acquire 3 Tbps of capacity
by 2020. To enable the capital expenditure, the
Economic Planning Unit and The Ministry of
Finance will provide a soft loan.
Beyond the impact of the EPPs, the CCI sector
will also grow through business opportunities
pursued by domestic companies and Malaysian
ownership of foreign companies not only in
Malaysia but also overseas.
Broadly, growth will be pursued in these
areas: fixed service, mobile services, courier,
post and broadcast, and regional operations.
These business opportunities will provide RM11.7
billion in incremental GNI and are expected to
create 17,265 new jobs by 2020.
The importance of CCI in becoming a highincome nation cannot be denied as it is an enabler
for growth in other sectors. Therefore, it is even
more imperative that this sector gets it right
with the EPPs proposed under the ETP roadmap.
E
20
Progress Update 4 (8th Mar 2011)
TOURISM
Marina Island Pangkor
International Resort &
Entertainment Extension Project
Globalports Sdn Bhd and Marina
Sanctuary Resort Sdn Bhd will partner
to spearhead the extension of the
Marina Island Pangkor man-made
islands. When completed, it will
support the nascent cruise line industry
in Malaysia, serving as a catalyst for
waterfront and urban renewal. GNI
impact: RM9 billion by 2020.
PROGRESS
UPDATE:
23
Purchase of AIRASIA X Aircraft

AirAsia X will invest RM1.86 billion to
acquire three A330-200 aircraft that
will contribute significantly to the
tourist arrival targets within the ETP.
GNI impact: RM560 million/year.
WHOLESALE AND RETAIL
Small Retailer Transformation
Programme (TUKAR)
The transformation of small retailer
shops (TUKAR) main objective is to
modernise these shops to increase
their level of competitiveness. To
date, three major retail chains,
Mydin Mohamed Holdings, Tesco and
Carrefour have signed up to participate
in this transformation project. GNI
impact: RM5.56 billion by 2020.
projects
Upscaling of Paddy Farming in the

MUDA Area
The Muda Agriculture Development
Authority
(MADA)
together
with Beras Nasional (BERNAS) is
spearheading initiatives to transform
current farming activities to a larger
scale, utilising best practices to target
much higher yields. These initiatives
will involve local farmers at all levels
of the value chain. GNI impact:
RM1.033 billion by 2020.
HEALTHCARE
Diagnostic Services Nexus
General Electric with local partners
REDtone International will develop
Diagnostic Services Nexus (DSN),
a diagnostic services hub for the
region. DSN will improve the quality
of radiological services increase
access for the people and lower the
cost of healthcare to all Malaysians
while offering radiologists more
opportunities to sub-specialise. GNI
impact: RM540 million.
ELECTRONICS AND ELECTRICAL
LED-SSL Certification Centre
The Northern Corridor Implementation
Authority (NCIA) and QAV Technologies
Sdn Bhd (QAV) will develop the Light
Emitting Diode-Solid State Lighting
(LED-SSL) Certification Centre. The
first outside of the USA, it will serve as
a platform to verify the compliance of
Malaysian products when compared
to global standards. In addition, it will
help local companies in developing
their test & certification procedures.
GNI impact: RM510 million by 2020.
OIL, GAS AND ENERGY

Developing Marginal Oil and Gas Fields
Following the ETP Progress Update
in November, Petronas has awarded a
risk service contract for its Berantai
field jointly to Petrofac Energy
Developments Sdn. Bhd., the project
leader, and Malaysian companies
Kencana Energy Sdn. Bhd. and Sapura
Energy Ventures Sdn.Bhd..In the initial
stage of development, the partners will
install a wellhead platform and drill
18 wells. A second platform will then
be installed and the two platforms
connected to a floating production,
storage and offloading (FPSO) vessel.
This project is expected to produce the
first gas by December 2011.
Intensifying Exploration Activities
Petroliam Nasional Bhd (Petronas)
has recently made a major oil and gas
(O&G) discovery after commencing
drilling works in offshore Sarawak.
The successful drilling of a well
in March 2010 and a subsequent
appraisal well, indicate an estimated
2.6 trillion standard cubic feet (tscf) of
net gas in place.
AGRICULTURE
Fragrant Rice Production for Nongranary Areas

MARDI will champion the initiative
to introduce fragrant rice cultivation
in non-granary (non-irrigated) areas
and to market it as specialty rice. The
success of this project will reduce
the importation of quality rice and
additionally increase the income of
paddy farmers. GNI impact: RM133
million by 2020.
Batam Dumai Melaka (BDM) Cable

System
A partnership between Telekom
Malaysia Berhad (TM), PT XL Axiata
Tbk and PT Mora Telematika, the BDM
Cable System will connect a distance
of 400 km between 2 countries with
2 routes, Melaka-Batam and MelakaDumai. It is hoped to increase the
resiliency of existing networks
and quality of the regions internet
connectivity.
GNI
contribution:
RM154.04 million.
LED Manufacturing Facility

Philips Lumileds Lighting will
be establishing a new LED
manufacturing facility in Penang.The
first in Malaysia to be designed with
100% LED lighting, this facility will
help reduce significantly the carbon
footprint and energy consumption.
This state-of-the-art facility will also
include a research and development
centre as well as a design centre.
PALM OIL
Capturing Biogas for Electricity
Generation
Felda Global Group will build biogas
(methane) capturing facilities at Felda
palm oil mills to generate electricity
for Feldas use and also supply the
national grid. By 2015, there will be 49
plants capable of replacing the use of
approximately 432,000 metric tonnes
of coal. GNI impact: RM182 million.
Improving Fresh Fruit Bunch Yield
The Malaysian Palm Oil Board has
been tasked to recruit additional
Tunjuk Ajar dan Nasihat (TUNAS)
officers, to cluster independent
smallholders into cooperatives and
to ensure implementation of best
practices by all plantations, organized
smallholders
and
cooperatives.
Additionally, 11 cooperatives have
been set up to encourage smallholders
to manage their requirements
and enhance the focus on oil palm
management.
Increasing Oil Extraction Rate

The objective of the Malaysian
Palm Oil Board is to increase the oil
extraction rate (OER) from palm oil
fruits to 23 percent by 2020. Palm oil
mills have been ranked based on their
individual OER performance and the
source of supply will be monitored
by enforcement officers. A total of
104 clusters have been identified
with various combinations of palm
oil mill category to be monitored for
enforcement officers.
Commercialisation of Pureprena
and Ekoprena
Felda Rubber Industries Sdn.
Bhd. (FRISB) and Mardec Rubber
Processing Sdn. Bhd. (MPSB) are
recipients of the technology to
commercialise the new generation
of latex grade specialty rubbers
which
include
epoxidised
natural rubber (Ekoprena) and
deproteinized
natural
rubber
(Pureprena). These are excellent
raw material to support highend rubber product industries
Accelerating Replanting of Oil Palm especially the manufacturing of
There is a total of 449,415 hectares eco-friendly tyres. GNI impact:
of non-productive and low yield RM1.3 billion.
plantation areas, which requires
replanting. RM297 million has been COMMUNICATIONS CONTENT
allocated to the Malaysian Palm Oil AND INFRASTRUCTURE
Board for replanting and new planting
schemes to help independent Cahaya Malaysia Cable System
smallholders to replant old and Telekom Malaysia Berhad (TM) and
unproductive oil palm trees, for NTT Communications Corporation
planted area size below 40 hectares.
(NTT Com) will lay the Cahaya
Malaysia Cable System to serve
Developing Oleo Derivatives
the Asia Pacific region. This
Emery Oleochemicals Group will state-of-the-art cable system will
invest in three sub-projects to provide Malaysia with 500Gbps of
develop and produce bio-lubricant capacity when it is put into service
and green polymer additive as well in mid 2012. At full capacity,
as surfactants for home and personal Cahaya Malaysia will be capable
wellness products. This initiative of carrying a total of five terabits
supports the ETPs push to capture the of bandwidth. Internet users
full potential of palm oil downstream will experience this improved
activities, especially in the finished performance
when
Cahaya
segments that generate high value, Malaysia is put into service next
such as oleo derivatives. GNI impact: year. GNI impact: RM538.33 million
RM155 million.
by 2020.

Regasification Plant
Muhibbah Engineering (M) Bhd,
together with Perunding Ranhill
Worley Sdn. Bhd., will construct a
liquefied natural gas (LNG) import
terminal off the coast of Malacca. The
facility will have a processing capacity
of 3.8 million tonnes per annum or
about 500 million standard cu ft per day.
Integrated Oil and Gas Hub
RG Gas & Chemical (M) Sdn Bhd will
convert Pulau Daat into an industrial
zone for an integrated oil and gas
hub. This hub will provide land-based
logistics and support services such as
tank farms, oil terminals, container
yards, fabrication yards as well as
complementing marine support
logistics in Labuan. GNI impact:
RM360 million for Phase 1.
Pajam Renewable Energy Park
Cypark Resources Berhad (CRB) will
spearhead an initiative to build a
Renewable Energy Park (RE Park)
on 26 hectares of remediated landfill
in Nilai, Negeri Sembilan. It will
integrate solar, landfill gas (biogas),
and waste (biocell) into a scalable
renewable energy project capable
of generating up to 10 megawatts
of power within the Pajam Landfill
alone. GNI impact: RM12.16 million.
Energy Performance Management
System
Faber Group Berhad will lead the
Energy Performance Management
System (EPMS), a project to audit the
energy usage at selected government
buildings located in the northern
states of Peninsular Malaysia. This is
to ensure the efficient use of energy
in government buildings and is in
support of EPP9- Improving Energy
Efficiency within the ETP. GNI impact:
RM18 million by 2020.
21
Agriculture

THEEDGE mal aysia |JANUAry 17, 2011

the economy.
Moving from agriculture

to agribusiness
by Joy Lee
efore the 1970s,the Malaysian economy
was predominantly agriculture-based.
The sector contributed close to 50% of
the countrys GDP back in the 1950s
but its significance had been reduced
to below 10% by 2009.
Excluding industrial crops such as oil palm and
rubber, the agriculture sector contributed RM20.2
billion or about 4% of Malaysias gross domestic
income (GNI) in 2009 with a compound annual
growth rate of 10.7%.
Nonetheless, the global demand for agriculture
produce is expected to expand rapidly with growing
population and rising affluence, and there are still
many riches to be made in the agriculture sector
given Malaysias abundant natural resources.
It is estimated that between 2010 and 2015,global
food demand will increase
by 10% while production will
increase by a mere 1.6%.
However, the agriculture
industry is not without its
challenges.
The countrys agriculture
trade deficit has been increasing. While Malaysia
has many advantages to capitalise on the growing
demand for food products, including its tropical
climate and strategic geographical location, the
performance of the countrys agro-food sector lags
that of neighbouring countries.
For example,Malaysias average yield per hectare
for paddy or rice production is only 3.7 tonnes,
compared with 4.9 tonnes in Vietnam and 4.7 tonnes
in Indonesia.And while Thailands yield of 2.7 tonnes
per hectare is below Malaysias,the country is better
known as the rice bowl of Asia.
According to the Performance Management
and Delivery Unit (Pemandu), should current
conditions remain, Malaysia will fail to capture
market opportunities and will have to continue
increasing its food imports amid rising food prices.
The solution is to address the issue of lack of
economies of scale and market centricity, and to
focus on high-value products in order to affect a
transformation in the industry.
Reports have noted that paddy,fruit and vegetable
cultivation in Malaysia is mainly by smallholders.
That means there is no economy of scale,making it
difficult for farmers to invest in technology.
Additionally,industry players say the agriculture
input cost is increasing and the transfer of funds to
farmers takes time.
The Agriculture National Key Economic Area
(NKEA) aims to double the agriculture sectors GNI
contribution to RM49.1 billion by 2020, through
16 Entry Point Projects (EPPs) and business
opportunities.
These achievements will involve capturing a
higher value for Malaysias produce and increasing
productivity.
Downstream investments in higher-value
activities will be catalysed for edible birds nest,
herbal products and processed food, enabling
Malaysia to capture up to 10 times the value today.
At the same time, there is a target to increase
the average yield for padi by 60%, seaweed farming
by 46% and temperate vegetable farming by 40%.
The 16 EPPs and 11 business opportunities that
have been identified will contribute to the increase
in GNI of RM28.9 billion by 2020.
This includes about RM7.4 billion of GNI from the

multiplier effect created by EPPs from other sectors.
The largest sources of the multiplier effect on the
Agriculture NKEA are the Palm Oil and Wholesale
and Retail NKEAs, estimated to contribute 37% and
27%,respectively.This also includes increased demand
for agriculture output via sales of food products in
new retail outlets.
The initiatives under the EPPs are categorised
under four themes.
The first,capitalising on competitive advantages,
is to leverage on Malaysias biodiversity, sheltered
pristine coast,native birds and its 4.7 million hectares
of oil palm plantations that can be tapped for crop
or animal integration. There are five EPPs under
this section.
The second theme,with four EPPs housed under
it,is to tap premium markets.Increasing consumer
affluence is driving concerns for health and food
safety.It is raising the demand
for variety and convenience
in food consumption, as well
as building awareness on
environmental sustainability.
Additionally,Malaysia has
developed successful models
in aquaculture and horticulture that can capitalise
on the increasing trend for products with food
security certification that can capture a premium.
The government is encouraging aquaculture,
but it is a challenge to source for suitable land to
carry it out. But under the ETP, they are working
out cash subsidies and that would help, says an
official from a major agri-based company listed on
Bursa Malaysia.The official adds that Pemandu is
very accessible and open to new viable projects,
which will help the industry.
Ensuring that food security objectives are
consistent with increasing GNI is the third theme,
with four EPPs aligned to it.
Pemandu notes that it is necessary for Malaysia
to ensure a certain level of self-sufficiency in rice
and key proteins. The NKEA targets to increase
domestic supply,enabling Malaysia to produce 85% of
domestic consumption in rice,40% of domestic beef
consumption and 5% of domestic milk consumption
by 2020.
While there are key issues such as the lack of
economies of scale and poor value chain integration,
which cause domestic producers to be uncompetitive,
the EPPs under this theme have been designed
to address the core issues to replicate successful
ventures in and outside Malaysia.
The fourth and final theme is to expand
participation in the regional agriculture value chain.
The sector is expected to undergo rapid expansion in
the region and there is room for Malaysia to become
a service provider in higher-value-added areas.
Pemandu says cross-border investments by
Malaysian companies in the agriculture sector,which
is currently lacking,will be promoted to encourage
value chain integration across different countries.
The EPPs that have been identified have
been sequenced to give immediate priority. The
implementation structure for the NKEA has
been designed to balance high-level, strategic
oversight with cross-functional teams to
undertake the implementation of each EPP. A
Central Management Unit will be established
under the Ministry of Agriculture to take the lead
in the implementation of the NKEA.
Five key enablers are required to support
EPPs
CAPITALISING ON MALAYSIA
EPP1: Unlocking value from Malaysias
biodiversity through high-value herbal
products
Strengthen product quality and marketing

efforts to penetrate global export markets for
nutraceutical and botanical products with a
targeted GNI of RM2.2 billion by 2020 and
creation of 1,800 jobs.
EPP 2: Expanding the production of swiftlet

nests
Capture 40% of the global market share by
2020 with increased production to 870 tonnes
from 290 tonnes and increased downstream
products. Targetted GNI of RM4.5 billion and
creation of 20,800 jobs.
EPP 3: Venturing into commercial-scale

seaweed farming in Sabah
Increase dried seaweed production to 5 metric

tonnes from 1.5 metric tonnes in 2009.
Targetted GNI of RM1.4 billion and creation of
12,700 jobs.
EPP 4: Farming through integrated cage

aquaculture systems
Promote large-scale, anchor company-driven

cage farming focusing on three species that
have high export value. This is expected to
generate GNI of RM1.4 billion and create
10,100 jobs.
EPP 5: Rearing cattle in oil palm estates
Focus on structured, rotational grazing to

ensure profitability and sustainability. Targetted
GNI of RM150 million and creation of 3,600
jobs.
TAPPING PREMIUM MARKETS

EPP 6: Replicating integrated aquaculture
model (IZAQs) to tap the market for premium
shrimp
Strong anchor companies to champion

production of fully certified and traceable
seafood in a sustainable manner through
IZAQs, a network of industrial scale, land-based
aquaculture zones. Targetted GNI of RM1.3
billion and creation of 11,900 rural jobs.
EPP 7: Upgrading capabilities to produce fruit

and vegetable for premium markets
Increase production of better quality and better

tasting fruit and vegetables to access premium
markets in the Middle East and Europe.
Targetted GNI of RM1.6 billion and creation of
9,100 jobs.
EPP 8: Strengthening export capabilities

of the processed food industry through an
integrated processed food park
Recognise and scale up the industry through

domestic anchor companies that will establish
integrated food parks and pursue the
involvement of foreign partners. Targetted GNI
of RM884 million and creation of 4,900 jobs.
the implementation of the EPPs and business

opportunities. They are providing incentives for
anchor companies; changing regulations and
policies; strengthening logistics infrastructure;
ensuring sufficient pipeline of human capital; and
strengthening the adoption of good agricultural
practices and good manufacturing practices to
enhance market access.
Additionally, the Agriculture NKEA targets the
creation of 74,600 job opportunities, the bulk of
which will be in rural areas, and to increase the
income of farmers participating in its initiative by
two to four times.
The industry faces a shortage of labour as most
farmers are above the age of 55.An industry player
said that has to be good incentives to encourage the
newer generation of farmers to continue the trade.
The rural employment structure is expected
to experience a shift as a result of the agriculture
sectors transformation. While currently labourintensive with subsistence-level employment,
mechanisation and scaling-up will be accelerated
EPP 9: Introducing fragrant rice variety for

non-irrigated areas
Tap the higher-end rice market through a new

rice variety, MRQ76. Targetted GNI of RM100
million.
ENSURING FOOD SECURITY

OBJECTIVES ARE CONSISTENT
WITH INCREASING GNI
EPP 10: Scaling up and strengthening
productivity of paddy farming in the
Muda area
Promote commercial-scale farming, improve

irrigation density and accelerate the use
of new technologies to increase average
yield to eight tonnes per hectare by 2020.
Targetted GNI of RM1 billion and reduction
of 14,900 low-value jobs.
EPP 11: Scaling up, strengthening paddy

farming productivity in other areas
Initial focus on incentives to encourage

outsourcing of land management. Targetted
GNI of RM1.4 billion and reduction of 9,600
low-value jobs.
EPP 12: Strengthening current anchor

companies in cattle feedlots
Expand feedlot capacity by 240,000 heads by

increasing small-scale feedlotters. Targetted
jobs.
EPP 13: Partnering with a large foreign dairy

company to establish dairy clusters
Develop three dairy clusters with 27,000 heads

of dairy cattle and downstream processing
facilities to increase the countrys milk sufficiency
to 5% by 2020. Targetted GNI of RM326 million
and creation of 800 jobs.
EXPANDING PARTICIPATION IN THE REGIONAL VALUE CHAIN

EPP 14: Establishing a leadership position in
regional breeding services
Capitalise on the expected growth of the

agriculture sector in the region and establish a
regional breeding centre in Malaysia. Targetted
jobs.
EPP 15: Securing foreign direct investment in

agriculture biotechnology
Leverage on existing bio-nexus incentives

to attract potential investors in agriculture
biotechnology. Targetted GNI of RM820 million
and creation of 1,200 jobs.
EPP 16: Investing in a foreign cattle farming

company
Acquire four overseas cattle operations to
ensure a steady supply of breeder cattle for
local feedlots. Targetted GNI contribution of
RM117 million.
in the sector. This will not only provide ageing

farmers with an exit from the industry but also
create higher-value agriculture-related businesses
for the next generation of rural workers.
The investment required to implement the
EPPs and business opportunities is estimated to
be RM21.8 billion, of which RM18.9 billion will
go towards the 16 EPPs.
Some 62% or RM13.4 billion of the total
investment will be from the private sector while
the balance of RM8.4 billion will be from the
public sector.
Notably, half of the governments investment
will go towards upgrading irrigation systems in
Muda and other granary areas and developing
critical infrastructure in identified aquaculture
zones.This is expected to be matched by the private
sector for investment in operating infrastructure,
such as processing plants, grow-out farms and
E
hatcheries.
22
Tourism

THEEDGE mal aysia |JANUARy 24, 2011

to becoming a high-income nation that is both inclusive and
sustainable. Private sector-led and government-facilitated, the
ETPs starting point is the implementation of concrete changes in
specific areas of the economy.
Serving up Malaysias
tourism treasures
to the world
by Chua Sue-Ann
n the Economic Transformation
Programme s (ETP) tourism sector,
Pemandu CEO Datuk Seri Idris Jala
once said lightheartedly that the
challenge was really how to attract
tourists to Malaysia and get them to
spend their money here.
To that end, the public services, together with
private sector initiatives,have crafted a roadmap to
boost the vibrancy of the tourism industry and its
gross national income (GNI) contribution from the
starting point of RM36.9 billion in 2009 to RM103.6
billion by 2020.
The Ministry of Tourism
projects that the tourism
industry will need to achieve
the following targets to reach
its ambitious growth target
of almost tripling its GNI
contribution in 10 years:
Tourist arrivals: From 24 million in 2009 to 36
million by 2020 (1.5 times growth);
Yields (receipts per arrival): From RM2,260 in 2009
to RM4,675 by 2020 (double the growth); and
Tourist receipts: From RM53 billion in 2009 to
RM168 billion by 2020 (3.2 times growth)
Part of the plan are 12 entry point projects
(EPPs), under five broad themes, that cater to
different categories of tourists, ranging from avid
shoppers and nature lovers to business travellers
and families.
The first theme, affordable luxury , aims to
grow shopping receipts from 28% of total tourism
receipts in 2009 to 35% by 2020, thus increasing
average tourist shopping expenditure from RM631
to RM1,636 by 2020.
The three EPPs under the affordable luxury
theme are expected to generate RM9.9 billion in GNI.
The second theme focuses on nature adventure
tourism products, given the immense potential for
increasing the number of tourists to Malaysia for
ecotourism and growing the yield per tourist.Plans
are afoot to showcase Malaysias natural heritage
to the world,while managing these resources with
long-term sustainability in mind.
Moving forward, Malaysia will have a
recognised network of world-class biodiversity
sites which will be developed or rehabilitated to
allow for tourist participation in rehabilitation
activities, says Pemandu.
The third theme, family fun, has identified
high potential projects for families, mainly
integrated resorts and cruise tourism, to target
the rapidly growing middle class populations of
India, China and the Middle East.
The fourth broad theme encompasses plans to
put Malaysia on the tourist map by hosting more
international events and promoting a vibrant
nightlife in Malaysia.
The business tourism sub-sector receives
attention under the fifth theme,with the Tourism
Lab finding that the segment is an attractive one
to develop given that business delegates often
spend up to three times more than non-business
tourists.Additionally, the Tourism Lab found that
almost 60% of business tourists return as regular
holidaymakers, and these tourists often offer high
returns on government investment.
For successful implementation of the reform

plans, the Tourism Lab concluded that there need
to be common enablers of increased and focused
marketing strategies, an efficient roll-out of visa
facilitation services, adequate supply of qualified
human capital and improvements to the tourism
environment.
While lauding the ETP plans for the tourism
industry, Malaysian Association of Tour and Travel
Agents (MATTA) president Datuk Mohd Khalid
Harun says that attention must also be given to
ensuring that the tourism industry has enough
skilled human resources at all levels.
Mohd Khalid says the tourism industry
is facing a shortage of
experienced and skilled
workers, often attributed
to the perception that the
industry is unattractive as
a career option, and a lack of
work-ready graduates.He adds
that the tourism industry is facing a brain drain
many Malaysian-trained tourism workers are
working overseas in destinations like Macau,
Singapore and Vietnam.
According to Mohd Khalid, the government
should also look at liberalising the airline sector
to enhance connectivity to and from Malaysia
in order to bring in more tourists. They need to
have an open sky policy. Let the airlines compete.
Another travel agent who owns a private
company says that while the ETP plans for the
tourism industry may sound good, there is still
a palpable scepticism as industry operators
remain uncertain about the implementation and
continued maintenance of the planned facilities
and programmes.
He also notes that there should be a revival in
initiatives to encourage Malaysians to visit local
tourist sites in addition to the various strategies
to attract more tourists from overseas. If our own
people dont visit our local holiday destinations,
how are we to attract those from overseas? he asks.
Why business as usual is not enough

As it stands, Malaysia s tourism industry is already
on a strong footing, having generated RM36.9
billion in GNI in 2009, making it the fifth largest
industry after oil, gas and energy, financial services,
wholesale and retail and palm oil.
However, the results from the Tourism lab
shows that despite the tourism industrys strong
historical growth, it has been predominantly
dependent on growth in the number of arrivals
rather than on yield per tourist.
Going forward, it is more sustainable for
Malaysia to shift its focus to growing the yield
per tourist rather than on relying heavily on
growth in tourist arrivals.To attract a higher yield
segment, we will need to improve and upgrade
tourist offerings and services, as well as enhance
connectivity to key priority markets, it says.
Tourist arrivals account for three quarters of
Malaysia s tourism industry growth, with the
remaining 25% attributed to growth in yield,
says Pemandu. In comparison, Singapore and
Thailand have a better balance between arrivals
and yield growth.
The Tourism Lab also found that of the 24
million tourists that came to Malaysia in 2009,
12 High impact projects under 5 themes

THEME 1: AFFORDABLE LUXURY
EPP1: Positioning Malaysia as a duty-free
shopping destination
Expand the list of duty-free products to

include those with high tourist spend. Lower
government revenue from import taxes will be
offset by additional yield from corporate taxes.
Mitigation plans will be in place to help local
manufacturers compete in the liberalised market.
EPP2: Designating the KLCC-Bukit Bintang

area as a vibrant shopping precinct
This area will be connected by pedestrian

walkways and public transport, with a public
investment of RM132 million, including RM75
million for the construction of the walkways. This
EPP is expected to contribute RM1.2 billion by
2020.
EPP3: Establishing three new premium outlets

in Malaysia
Three private sector-led premium outlets, costing

RM355 million, are being planned. The first
outlet in Iskandar Malaysia should be operational
by 2013.
EPP 9a: Developing local expertise and

regulating the spa industry better
The private sector will take the lead in developing

three training centres to produce local therapists
for the spa industry in Greater KL, Johor and
Sabah, and reduce our reliance on foreign
therapists.
EPP 9b: Expanding sports tourism offerings

beyond hosting events
The plan is to promote and repackage Malaysias

golf tourism offerings to target high-yield tourists
and gain RM300 million in GNI by 2020.
THEME 5: BUSINESS TOURISM

EPP 10: Establishing Malaysia as a leading
business tourism destination
The aim is to increase business tourist arrivals

from the current 5% to 8% by 2020, which
translates to a growth from 1.2 million to 2.9
million business tourists by 2020. This will be
achieved by having an effective convention and
exhibition bureau and dedicating up to three
iconic shell sites for large business events. By
2020, business tourism is expected to bring in
RM3.9 billion in incremental GNI.
THEME 2: NATURE ADVENTURE
Cross-theme projects: Medium-haul

connectivity, better
Leading the charge will be the Global Biodiversity quality hotels
EPP4: Establishing Malaysia as a biodiversity
hub
Hub (GBH). The total GNI impact of this initiative

is estimated to be RM1.5 billion.
THEME 3: FAMILY FUN

EPP5: Developing an eco-nature integrated
resort in Sabah
A private investor will develop an eco-nature

integrated resort in Sabah. The total investment
is estimated at RM6.7 billion, of which RM6.1
billion will be funded by the private sector. The
GNI impact is expected to be RM707 million by
2020, with 7,700 jobs created.
EPP 6: Creating a Straits Riviera
Modelled after the French Riviera, it will be

anchored by five integrated cruise terminals in
Penang, Sepang, Melaka, Tanjung Pelepas and
Kota Kinabalu and nine secondary ports. Each
cruise terminal is envisioned to be a catalyst
for waterfront and urban renewal. The total
investment required is RM2.7 billion, while the
GNI impact is estimated to be RM1.8 billion by
2020.
THEME 4: EVENTS, ENTERTAINMENT, SPA

AND SPORTS
EPP 7: Targeting more international events
The target is to develop or attract three or four

major international events while enhancing those
already hosted by Malaysia.
EPP 8: Establishing dedicated entertainment

zones
The five cities identified as potential sites for

dedicated entertainment zones are Greater KL,
the Klang Valley, Genting Highlands, Penang,
Langkawi and Kota Kinabalu. Regulations related
to the nightlife entertainment industry will be
liberalised to achieve a target growth of RM1.8
billion by 2020 from the current RM600 million.
78% were from the short-haul markets, while the

medium- and long-haul markets accounted for
15% and 7% of tourist arrivals respectively.
The yield per tourist in Malaysia is also relatively
low at RM2,260 per tourist,compared with RM3,106
in Singapore and RM3,785 in Thailand, it adds.
This is attributed to the lower average length of
stay, lower spend per day and high dependence
on arrivals from the short-haul markets.
To achieve its targeted growth, Pemandu
estimates that cumulative funding of RM203.9
billion over the next 10 years will be needed to
deliver incremental GNI growth of RM66.7 billion by
2020. Of this, 97% will come from the private sector.
The 12 EPPs will require 67% of that total, or
RM136.6 billion, while the balance will go towards
the identified business opportunities and to
support baseline growth. The tourism sector is
EPP 11: Enhancing connectivity to priority

medium-haul markets
To address the significant gap in medium-haul

flights, the focus will be on increasing flight
frequencies to 10 priority cities, such as Beijing,
Delhi, Melbourne, Osaka and Taipei. There
are also plans to develop a transparent and
liberalised air rights allocation framework.
EPP 12: Improving rates, mix and quality of

hotels
More investments are needed to upgrade and

increase the supply of four- and five-star hotels
and ensure quality of service. This is expected to
bring a GNI contribution of RM5.5 billion.
Business opportunities
1) Food and beverage outlets: This will be driven

by additional demand arising from growth in
tourist arrivals. It will require RM1.4 billion in
capital expenditure and provide 9,600 jobs.
2) Local transport: Additional taxis are required to
support the growth in tourist numbers.
3) Tour operator segment: There is an
opportunity to increase GNI contribution from
tour operators by RM900 million by 2020. There
should be an additional 2,300 tour guides by
that time. A capital expenditure of RM1.1 billion
is required for this.
Baseline growth
In addition to the three business opportunities,

the lab expects baseline growth to 2020 to
account for RM23.4 billion in GNI. This growth
is based on the assumption that Malaysia will
be able to maintain its market share of tourist
arrivals and grow the yield per tourist at 2.8%
inflation rate per annum until 2020.
estimated to create an additional 497,000 jobs by

2020, says Pemandu.
According to the United Nations World
Tourism Organisations (UNWTO) World Tourism
Barometer, international tourism recovered faster
than expected in 2010 from the impact of the
global financial crisis.The report found that while
all regions posted growth in international tourist
arrivals, emerging economies were the main
drivers of this recovery, with Asia being the first
region to recover and post a strong 13% year-onyear growth.
International tourist arrivals into Asia reached
a record high of 204 million last year, up from 181
million in 2009, says the UNWTO. It adds that its
panel of experts remain positive on the outlook
for 2011, but expects slower growth of 4% to 5%,
which is slightly above the long-term average.
E
23
How will we ensure

Making the ETP
that the ETP delivers? Journey a Reality
To achieve our target of a high-income nation by 2020, we can no longer go about business as
usual. The government will ensure that Malaysias fiscal policy is sustainable. There will be a
much stronger focus on investment led by the private sector, avoiding reliance on public funding
to spur growth. Clear governance procedures and protocol have been put in place to ensure
proper, accountable delivery.
What is the private sectors role?

The private sector will be pushed as the main growth engine for our economy. The majority
of Entry Point Projects (EPPs) under the ETP are private-sector owned. This means that the
private sector will take the lead in terms of implementation and employment. Some 92% of these
projects will have the private sector as the main investment contributor. This also means that
global best practices will be adhered to in the implementation of these projects, ensuring that we
remain relevant in an increasingly competitive global economy.
How have we performed since the launch of the ETP

in October 2010?
Right from the start, the Economic Transformation Programme (ETP) was conceived to drive
sustainable investment in Malaysia, and to positively affect the lives of every Malaysian.
We had a great start in October with nine Entry Point Projects (EPPs) and RM5.3 billion in
investments from the private sector.
To-date, we have announced a total of 60 concrete projects amounting to RM95.35 billion in
total investment. These will create approximately 224,258 jobs till 2020 and raise RM137.22 billion
in Gross National Income (GNI).
This is a strong beginning to the ETP journey, and there is more work to be done to reach
targets set in the ETP Roadmap.
How does the public sector deliver?

The government will move away from being the principal driver of economic growth; as
it has been in the past. It will play the role of an active facilitator of the private sector through
resource and policy support, fast-tracking approvals, removing obstacles and allowing the
private sector to concentrate solely on delivering their targets. Where public funding is required,
it will be high impact and catalytic, creating multiplier effects, encouraging additional private
sector investment.
How have we accomplished this?

Through relentless focus and commitment complemented by excellent support from the
private sector and close co-operation from the public sector. Anchored on with one goal: Big
Results, Fast. And supported by dedicated teams with multiple responsibilities working hard to
make the ETP a success. In Malaysia, and for Malaysia. Locally and internationally.
How will the ETP stay on track?

The Performance Management and Delivery Unit (PEMANDU) was established to ensure
strong, transparent delivery of the ETP. Clear and demanding key performance indicators have
been specified for each project under the ETP. Project owners are in constant contact with
PEMANDU, and each of the National Key Economic Areas (NKEAs) holds a monthly Steering
Committee to ensure that challenges are resolved, directions are set and decisions made.
Investment Committee meetings are held every fortnight to determine fiscal incentives, if
any. Unresolved issues will be escalated to weekly Economic Council meetings, which will be
chaired by the Prime Minister. Semi-annual public forums will also be held to inform investors
on milestones, progress-to-date and ensure accountability and transparency in delivery.
What has been the impact of the ETP to date?

Since its announcement on 25th October last year, the ETP has announced 37 projects
generating over RM80 billion worth of investments, with a projected GNI impact of over RM117
billion by 2020. Multiple sources have confirmed that investors confidence is high and growing,
with foreign direct investment (FDI) in 2010 quadruple that of investment recorded in 2009.
These 37 projects include new projects which have come under the aegis of the ETP, which will
assume responsibility for facilitating their success.

Is the ETP more than just an alphabet soup?

The ETP is a programme and not a plan. It has a clear focus and is built around the 12
National Key Economic Areas (NKEAs), each of which have identified EPPs, action items, specific
timelines, identified project owners and clear targets. Most importantly, this Programme was
co-created with the private-sector.
The ETP is clearly measurable and anchored on GNI and the creation of jobs, come 2020. This
Programme will see the private sector financing 92% of the projects set out in the ETP Roadmap.
Only eight percent of financing will come from the public sector. The governments role is to
facilitate, not finance the ETP.
EPPs are catalytic and transformational. These are action oriented specific ideas to grow
each NKEA and help Malaysia become a high-income nation by 2020. Most importantly the ETP
is about driving performance now and our journey so far is a demonstration of this.
We have just begun the journey. Join us in making the ETP a success for Malaysia and
Malaysians.
Performance Management and Delivery Unit (PEMANDU)

Prime Ministers Department, 3rd Floor, East Block, Perdana Putra Building,
Federal Government Administrative Centre, 62502, PUTRAJAYA, MALAYSIA.
Tel: +603-8872 7237 Fax: +603-8888 7107 E-mail: enquiries@pemandu.gov.my
www.pemandu.gov.my

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THE

Roadmap for Malaysia

The Economic Transformation Programme is Malaysias roadmap to

Managing the present by

In terms of investment size, the

Transformation Programme (ETP) for Malaysia,

The Edge: Of the 12 NKEAs, which are the

Jala: First of all,the priority is the 12 NKEAs,and the

Based on what you have now, what are

Clearly, the oil and gas projects are the highest

No doubt. If you take a look at our whole economy,

We need projects with strong multiplier

Jala: When you think about it, if all Malaysians

There are two types of benefits projects that will

ETP projects to help country generate RM1.7 trillion gross

Escaping the middleincome trap

by Yong Min Wei

for 65% of GDP in 2020 as compared to 58% in

Greater Kuala Lumpur/

Oil, Gas AND Energy

The Greater Kuala Lumpur/Klang Valleys

By 2020, Malaysia will have a more diversified

Malaysia aims to evolve its financial

Wholesale and Retail

Malaysia aims to increase the importance

Palm oil will remain a major contributor

Malaysia plans to strengthen the Electronics

Malaysias growth in tourism has mostly

By 2020, Malaysia would like to have moved

The focus of the education NKEA

By 2020, agriculture will have been

The healthcare NKEA aims to grow three

Progress Update 1 (25th Oct 2010)

On the 25th of October, in conjunction with the ETP Roadmap

RM1 billion investment by Mydin

Located in Genting Indahpura, Johor, the

400 jobs, RM300 million investment by

investment by St. Regis

The six-star St. Regis Kuala Lumpur will be

Schlumberger established a new Global

6,500 jobs, RM1.9 billion investment

RM124 million investment by Premium

Premium Renewable Energy (Malaysia) Sdn Bhd

1Malaysia Development Berhad

RM486 million investment by Malaysia

MAHB has invested in a new Low-Cost Carrier

For more info, log on to

Greater Kuala Lumpur/Klang Valley

THEEDGE mal aysia | october 26, 2010

Transformation to include boosting

100 firms will amount to RM82.2 billion and is

Other key agencies, companies and

A long-term plan by DBKL is in the works to

Oil, Gas & Energy

Economic Transformation Programme: A Special Report

The Economic Transformation Programme is Malaysias roadmap

Powering the economy

by Yong Win Wei

Enhancing downstream growth

traders), says the ETP roadmap.

Hub for oilfield services

Making Malaysia a hub for oilfield services and

under the oil, gas and energy NKEA.

Four thrusts and 12 EPPS