Greeting from the Chairman Mr. Jari Niemi
The Economy has been surprisingly strong considering the all the events since 2016. IMF continues to support Malaysia’s efforts in increasing female labour force participation, improving the quality of education, lowering skills mismatch, boosting productivity growth, encouraging research and innovation, and upholding high standards of governance.
Recent infrastructure or new shipbuilding projects being awarded to foreign companies do not bring much benefit to Malaysia or its citizens, but will be expensive and paid in the coming decades to China. Also some examples of bad gone chinese investments can be found in Sri Lanka and Africa.
Low ringit value has benefitted Malaysia as consumer imports have been slightly slower and the benefits for the exports can be seen. A low ringit value would benefit the export sector and government ringit infrastructure spending as well
Domestic risk is mostly on the household debt and public but China or global retraction or weak emerging markets growth would risk the domestic economy as well. Household debt and construction sectors should be montored. Household debt of GDB is now 88,9 percent compared to 80,5 percent of 2012, or an increase of 311 Billion ringgit to almost 1,1 trillion ringgit
Gross Official reserves have declined by around 30% or 40Billion USD in the last 5 years while the GDP has grown 26% 1,229 Billion RM.
Education spending is high in Malaysia but the results are weak, skills and performance do to match up. This also shows in productivity development is just above 1,5 percents while average globally is more than 2 percent.
The biggest risk what can be seen is the shortsighted policies which are not developing Malaysia on the long run, but are rather short temporary measures which can cause problems on the medium and longterm growth.
Instead of long term focus, the we have seen during the last year reversal on several policies and the speed of these backwards reforms has been increasing the last 18 months. We are most likely to see new foreign owned companies restrictions next year as well, at least in the KL area, where the DBKL has claimed a new rule for 1Million RM minimum paid capital for all foreign owned companies starting next year. Whereas Malaysia 10 years ago was about removing red tape and restrictions, today we can only witness a reverse on these policies.
Despite the international Business chambers like EUMCCI, AMCHAM, JACTIM, and many other, including malaysian organisations, individually and jointly have tried to reason with the government ministries on new regulations.
This direction looks to continue, and simultaneously government and public companies related tenders are often out of bounds even for global multinationals and are negotiated and decided on other interest
The positive side is that the political situation looks more stable at the moment but on the cost heading towards autocracy.
But to finish, I would like to highlight, that understanding the circumstances, the government has managed to do a surprisingly fairly good job for the last year for keeping the Malaysian economy heading forwards. Business for many of us is looking promising for the coming years, and I look forward to be entertained by the Malaysian politics in the future as well. I would be delighted if could hear on your individual sectors your current business sentiment.
Greeting from the Chairman Mr. Jari Niemi
Let me take this opportunity to whish You all a Happy New Year of the Red Fire Monkey 2016!
I think we can all agree that the year ahead will be most interesting both in terms of the economical and political development in Malaysia.
Malaysia has targeted to become a high income nation by 2020. Launched over 20 years ago in 1991, “Vision 2020” envisions Malaysia as a fully developed country in all dimensions; economical, political, social, cultural and spiritual as well.
The country has shown great development during the past twenty years, but the goal to become a high income, developed nation may still be out of reach come 2020. There simply is not enough time.
Malaysia is likely to reach the economic targets that will define it as a developed nation on a global scale, but the soft, non-economical goals that truly show the characteristic of a developed, sophisticated and innovative nation still remain in process.
Taking a Closer Look at the Current Market
During the last decade, Malaysia has introduced several incentives through MITI and MIDA for foreign companies interested of doing business in both Malaysia and other ASEAN countries. Majority of the obstacles and red tape have successfully been removed and according to The World Bank Group, Malaysia ranks as the 18th in the world and 4th in Asia for ease of doing business.
With good English levels, straightforward, appealing incentives and practices towards foreign companies and reasonable employment and living costs, Malaysia is undoubtedly one of the best platforms for SME´s to incorporate their business in Asia.
Businesswise the coming year will be challenging for Malaysia on a local level as oil prices have plummeted and show no significant improvement in the near future. But the situation can also be seen to have positive effects and consequences, as government expenses are being scrutinized, efficiency is re-evaluated and budgets adjusted accordingly.
The market structures in Malaysia and Finland alike are predominated by a large influence of the public sectors and government control over the private sectors, which have created new challenges for the future. Unsustainable benefits and governmental aid schemes burden the state treasury and often fail to support and reach the desired economic and market growth. An inflexible, heavy public and government sector may also hinder and weaken the market situation and the free competition on the market.
Bank Negara’s recent news that the Malaysian market grew 5% in 2015 is positive and encouraging, however it raises questions on the effects of introducing the GST to the market and whether the government has used the annual increase of Malaysian household debt as one of its growth engines, especially relating to the services sector. The growth could also partially be explained by last years’ high oil prices and lower Ringgit exchange rates. Hopefully, the Red Fire Monkey will eventually guide this year´s decisions to rectify the unsustainable doings of the past.
Last year will certainly go down in history as a memorable one. The refugee crisis in Europe and Finland, the long term effects of the financial downturn in the EU countries and worldwide, the political unrest and changes in Malaysia, the terrorist attacks in several countries and the increased security threats on a global scale are just a few of the topics that will continue to raise headlines also this year.
Changes in the EUMCCI
In the same way as with the European Union, last year saw several challenges within the organization of the EU-Malaysian Chamber of Commerce and Industry, or EUMCCI.
You might have heard that the German, Dutch, French and British Chambers resigned from the EUMCCI after 2014 as they were unable to reach a mutual agreement with the Chamber regarding the membership structure and unfair differences in member fees between big and small councils. However, after intensive and hard work to unify our Chamber of Chambers, I am pleased to report that the EUMCCI is again representing all existing European Bilaterals in Malaysia.
The whole board of the EUMCCI was actively involved in guiding our Chamber of Chambers through this challenging time, and part of the Board Members certainly might have had some doubts on whether they had sign up for a fulltime job and not a board membership. But through the combined efforts of the EUMCCI board, operational team, the four chambers and Mr. Daniel Pans, who led the intensive negotiations, the parties were able to reach a mutual understanding and agree on a solution that is fair for all Bilaterals regardless of their size.
The new and improved Chamber of Chambers is stronger, holding more lobbying and negotiation power as it once again represents all European Bilaterals and business interests.
EUMCCI has also elected a new Operations Manager Ms Jennifer Chien, who has taken over the tasks of the previous General Manager. During the past months, Ms Chien has done a remarkable job reuniting the EUMCCI organization and bringing the operational staff forward as a team.
The significant changes that have taken place within the EUMCCI organization during the last year combined with new improvements in the committees, a new membership strategy, structure and levels, will all provide an improved and optimal business platform for our members.
EUMCCIs’ Renewed Membership Structure
EUMCCi had together with its Bilaterals and Members mutually agreed to adjust and rearrange the membership structures in order to provide all Bilateral members with improved benefits and create a more effective and productive organization.
As per the new membership structure, all Bilaterals (e.g. MFBC) can top-up their corporate members to a full membership with the EUMCCI for a top-up fee of RM500 per Corporate Member.
The MFBC Board decided during the ExCo Meeting on 22 Jan 2016 to top-up all corporate members for this year with no additional cost to the members. The Board also agreed to raise the annual corporate membership fee with approx. RM200-250 from 2017 onwards, and it was discussed and mutually agreed that the increased benefits and advantages for our members support the small increase in the membership fee.
Corporates can still choose to join the EUMCCI as direct members, but being a top-up member and joining through a Bilateral such as MFBC costs significantly less than being a direct member. On the other hand, only direct members are allowed to vote in the EUMCCI Annual General Meeting.
In addition to the direct membership and top-up membership, Corporates can also select a Platinum Partnership, which is an advertised sponsorship giving the member visibility in a majority of EUMCCI´s own events and publications.
MFBC has been focusing on representing the Finnish Council’s members and interests within the EUMCCI, coordinating our functions with the EUMCCI and the other Nordic and European Bilaterals as well. As a result, MFBC will this year offer its members an extensive variety and number of corporate events, business luncheons, industry briefings and networking opportunities.
We will continue to inform our members on news from Malaysia, the EU and Finland, and through Facebook and our newly launched Internet site we will me able to communicate with our members and a broader audience more efficiently.
EUMCCI and MFBC are currently updating the events calendar for 2016. We will send out invitations and information on upcoming events via email and you can also stay updated through our Facebook and here on internet page under the links -tab.
I would like to wish you all a happy and successful year ahead!
With Best Regards,
Malaysian-Finnish Business Council