KUALA LUMPUR: The Socio-Economic Research Centre (SERC) has urged the government to draw up a National Investment Strategy Plan to revitalise private investments, which are critical to sustain economic growth.
SERC executive director Lee Heng Guie said reinvigorating private investment is a key priority to sustain economic growth, raise future growth potential, create high income jobs and increase exports.
He said government policies should focus on how to improve competitive edge, which kind of economic policies should be adopted and mapping up the voyage to higher and more sustainable economic growth.
“For the short term, policies should focus on some quick fixes that we can look into to enhance our investment climate,” he told reporters at a briefing on SERC’s quarterly economy tracker today.
Lee said an example of a quick gain for the government is tourism, citing the Visa on Arrival requirements for tourists from China and India which may be relaxed.
He said policymakers need to focus on reforms that will help Malaysia catch up with its regional peers in terms of supply of skilled and creative workforce, adapting to a rapid shift in technological advancement, state-of-the-art infrastructure, industrial development as well as good governance and best business practices.
Lee said the National Investment Strategy Plan must have equal emphasis on direct domestic investment, especially for small and medium enterprises and high quality foreign direct investments.
SERC recommends that the government examine factors restraining business investment decisions, such as economic and investment prospects, domestic policy uncertainty, regulatory and investment policies and the “crowding out” effect from the participation of government-linked companies (GLCs).
Lee applauded the government’s effort to remove ineffective GLCs, which he said would free up resources for public use and provide more room for the private sector.
“The most important function of private investment determinant is profitability, cost of capital, rate of return, equity return to investment and opportunities. People want to know where are we heading,” he said.
He said the government needs to be an effective facilitator by creating the right environment for investments while continuing to invest in sectors that will raise the economy but stressed that the government has limitations as it needs to contain its debt.
“The new government says it needs three years to fix the economy so the private sector has to step up to fill up the void or else the overall economy will be affected,” he said, adding that the private sector should not be overly cautious as the economy is still growing, albeit not as strong as expected due to the government’s transition period.
“The private sector needs to take the lead and step up. Don’t always rely on the government to kick start investments. The government’s role is to create a conducive environment,” he said.