Assalamualaikum Warahmatullahi Wabarakatuh and good morning.
Let me first welcome everyone to this launching of the second issue of the Malaysia Economic Monitor this morning. The theme of Growth Through Innovation is indeed relevant as Malaysia embarks on the journey to become a high growth and high income economy.
2. In an increasingly competitive global economy, the ability to leverage on innovation as a key driver of growth will become significantly important in enhancing productivity and competitiveness. As Malaysia transits to a high growth path and high income nation, we need to put in place an enabling environment where productivity and competitiveness and innovation will drive the creation of high value-add activities in the economy.
3. These are strategic elements as we leverage on our strengths to develop new potential sources of growth, particularly in resource, manufacturing and services sectors. In this regard, we are indeed fortunate that we are blessed with new areas of comparative advantage that can be developed to contribute towards higher productivity as well as improvements in the nation’s competitiveness.
4. A key driver of productivity and competitiveness is the nation’s capacity to foster innovation as well as the greater utilization of the state of the art technologies. Indeed, the ability to leverage on leading edge technologies will have to be at the forefront of our innovation-led growth strategy.
5. The transition into an innovation driven economy, however, requires skills, competencies and capabilities to meet the needs of knowledge-intensive and skills based industries. Concerted efforts at enhancing human capital to strengthen technological capability and capacity, however, require greater investments in skills and innovative capabilities. While Malaysia’s investments in education and training have increased by leaps and bounds over the last fifty years, the shortage of highly skilled and quality talents remains apparent.
6. Going forward, we need professionals with the requisite skills and expertise to add to the critical mass of the nation’s talent. Towards this end, a strategic focus in developing our human capital has been on upskilling and deepening the skills of our workforce. There has also been greater collaboration between training institutions as well as institutions of higher education and industries to ensure better response to industry’s requirements for skilled sets.
7. We also realize that enhancing human capital to strengthen technological capability and capacity requires efforts not only to create, but also to attract and retain talent. As competition for talent intensifies in the global market place, the need to retain as well as attract the best skills and talents from abroad will become even more challenging. Towards this end, we will continue to improve the ecosystem for work and living to entice global experts and skilled workers to Malaysia.
8. Apart from ensuring adequacy of skill sets, we also need to strengthen our capabilities in R&D. While government investment in R&D has seen significant increases, our gross R&D expenditure remains relatively low at 0.64 percent of GDP, compared with those of developed nations of between 3-4 percent. In addition, the low number of R&D personnel remains a major challenge in the efforts to enhance knowledge generation and innovation capability. In this respect, we need to put in place a conducive environment to attract knowledgeable human capital for research and innovation activities.
9. In addition to investing in research capabilities, our focus has also been on deriving value from home-grown technological capabilities by increasing the rate of commercialization of R&D. However, more needs to be done. In this context, we will continue to review incentives to encourage the development of a more vibrant venture capital industry, improving access to finance for innovation, and the generation of IPs as well as other support systems for development of entrepreneurs and new ventures.
10. The MEM also touches on the need to focus efforts on selected niches which Malaysia can excel. In this regard, several potential areas have been identified which will enable Malaysia to become a global dominance. These include palm oil down streaming, halal hub, private higher education, health care, Islamic finance, as well as tourism and medical tourism to cater for newly emerging markets.
11. In terms of the macroeconomic framework, I am pleased to note that the World Bank has upgraded its 2010 growth forecast for the Malaysian economy to 5.7 percent. This upgrade augurs well as it reflects the growing investor confidence as well as improving business sentiment on the Malaysian economy.
12. While growth in the developed economies remain uncertain, Malaysia will benefit from the better prospects of Asia leading the global recovery. In this context, we are confident that the strong growth of 4.5 percent in the fourth quarter of last year will further improve this year. Underpinning this improvement will be a stronger domestic demand as well as a stronger external sector performance.
13. The Malaysia Economic Monitor published by the World Bank provides useful insights to investors, analysts and the business community on the state and potentials of the Malaysian economy. This issue which focuses on growth through innovation underscores Malaysia’s efforts to put a premium on innovation in our mission towards becoming a high income and developed economy.
14. In concluding, I would like to take this opportunity to thank the World Bank team, led by Mr. Philip Schellekens, who has worked diligently to produce this issue of the Malaysian Economic Monitor. I would also like to record our appreciation to all ministries and agencies that have given their full support and cooperation towards the publication of this Report.
15. With this, it gives me great pleasure to officially launch the Malaysia Economic Monitor –Growth Through Innovation.
Thank you.Wassalamualaikum Warahmatullahi Wabarakatuh.