"How You Can Participate and Benefit from the rise of the East!"'

The Chinese Business Chamber of Mauritius, just had their Annual General Meeting last November 2011. Mr. LL Koong, Managing Director of Reanda Malaysia, was invited as a keynote speaker during their Dinner. Honourable Guest, President of Mauritius, Sir Anerood Jugnauth, other prominent and distinguish guests and local businessmen also attended the dinner. Mr. Koong has shared with them his views on "How you can participate and benefit from the rise of the East" and other issues i.e. Central point of ASEAN-Malaysia your gateway to ASEAN-China FTA, etc. Below are the highlights. Today's globalization and liberalization draw us closer to more intense competition from transnational corporations and other nations across the globe. The increasing competitive business environment today with high operating costs and thinning profit margins, perhaps now is nano-profit era; organizational effectiveness and efficiency have become critical success factors. The Chinese word for "Crisis" is composed of two characters that signify "Danger" and "Opportunity". Theoretically, it stands to reason that once danger is assessed and addressed, an opportunity to bring about a favourable change of the status quo presents itself. The fallout from 2008 US financial and economic crisis and recent European credit crunch have been traumatic, and even corporate giants with a seemingly unassailable corporate presence, reputation and global brand names have been affected. This corporate crisis triggered by business failure in the world's largest economy has extremely far-reaching consequences! Through globalisation we have seen the corporate cancer spreading fast all over the world, from US to Europe and India unfortunate Satyam fraud. However, through globalisation we have also seen the economy tendency is moving from the West to the East. The East's economic developments has followed a typical path that is an exports-driven economy, which has traditionally sought to offer multinational companies skilled workers for lower cost production as well as access to regional economies through the free-trade zone of the Association of South-East Asian Nations (ASEAN). From 1 January 2010, ASEAN and China realise the full implementation of the ASEAN-China Free Trade Area, ACFTA with duties on 90 per cent of the products eliminated. The ASEAN-China FTA serves to remove trade barriers, enhance economic exchanges and bring both sides together in a mutually dependent and beneficial relationship in the pursuit of growth and prosperity. The integrated market of 1.9billion people is widely seen as a powerful tool to respond to the challenges posed by competitive FTAs. In fact, ASEAN-China FTA is the world's biggest free trade with a combined gross domestic product (GDP) of approximately US$13Trillion. China's strong economic growth offer opportunities for Malaysia and other ASEAN countries to benefit by increasing their exports of goods and services to the Chinese market. For example, China has increased purchases of higher value added and job-creating mechanical and electrical products from ASEAN, which saw a 40% jumps in the category in 2010 alone. China had issued almost 410,000 quarantine certificates for import of ASEAN poultry, livestock and aquatic products, up 80% compared to the same period of the pervious year, at an estimated value of US$14.3 billion. The delight of the ASEAN business communities, zero tariff has reduced the cost and the price of their products, greatly stimulating the Chinese consumption level. ASEAN's export to China continues. This indicates the important role played by China in supporting ASEAN export market. According to the official data, trade between ASEAN and China has increased significantly, from US$106billion in 2004 to US$192billion in 2008. Bilateral trade in 2010, the first year of ACFTA, surged 30% year on year to US$293 billion. China has become ASEAN's biggest trading partner and ASEAN the 4th largest trading partner of China. The most-needed investments are in the areas of infrastructure, education and research. The development of these sectors is crucial to increase productivity in other sectors of the economy. Investment must also pour into sectors or industries that generate the most backward and forward linkage in ASEAN economies such as manufacturing. ASEAN need investment in developing physical infrastructures to open up opportunities in other parts of the region, especially in the least developed nation such as Cambodia, Vietnam, Laos and Myanmar. At this juncture, you may ask what role can ASEAN play in attracting further foreign investment to the region? Or rather, how can we participate from the rise of this ASEAN? ASEAN comprises 10 countries, of which Malaysia is a member. Malaysia stands out in the region for both its success and its dedication to the model. Malaysia is the US's largest trading partner in this region and Americans see Malaysia as a gateway to the ASEAN Zone. Malaysia - the Hub of ASEAN Since ancient times, Malaysia, bordered by the South China Sea on the east and flanked by the Indian Ocean and the Straits of Malacca on the west, has been the crossroads of trade and civilizations. As early as the first century Malay Peninsula was labeled in the map of the world! Islam, Chinese Confucianism, Indian and Western civilization all converged here on the Peninsula of Malaysia giving rise to the powerful place for global interaction and communication. China and Malaysia share a long history of commercial and cultural relations that stretches back many centuries. Following the establishment of diplomatic relations between two countries in 1974, the relationship has grown from strength to strength on many fronts. Chinese investment in Malaysia has also been increasing steadily in recent years, by the end of 2010, some 121 manufacturing projects worth US$250million have been implemented by investors from China, and this has resulted in the creation of more than 10,000 jobs for Malaysians. These developments have been assisted, no doubt, by the implementation of the ASEAN- China Free Trade Agreement (ACFTA). Other than that, China is Malaysia's fourth largest trading partner after Singapore, USA and Japan. China has been Malaysia's largest trading partner over the last two years, with bilateral trade topping US$45.6 billion in 2010. For China, Malaysia has also been its largest trading partner in ASEAN for 3 consecutive years. From January to May this year, bilateral trade amounted to more than US$20billion, surpassing the same period in 2010. Malaysia's having one of the best infrastructure support environments in the region enhances its suitability as a trading centre for investors, continuous infrastructural investments were made during the last 20 years to provide efficient and effective links between all major points of trade through the roads, railways tracks and air and sea ports. Recent major infrastructures include US$2billion 2400-MW Bakun hydroelectric project and the US$3billion high-speed broadband project (supporting up to 1000MB per second). It has often been said that Malaysia as a multiracial nation, possesses the strength in diversity, with linguistic advantages, such as English, Malay, Chinese and Indian languages, highly educated & skilled labour force at very competitive cost. While, the global economy is plagued by financial crises and natural disasters. Energy and food shortages remain the major issues, aggravating inflationary pressure and political unrest in many nations. Malaysia is fortunate to have abundant natural resources and relatively stable geographical and social environment. However, in the context of globalization, Malaysian economy is not immune to external turmoil and negative impact. Malaysia has recorded commendable growth of 4.6% in the first quarter of 2011, and also recorded 5.8% growth in the 3rd quarter, which is higher than its market's expectation! All is however not rosy for the average citizen. Malaysia still has to struggle to lift itself from the middle income trap and in this connection, the Prime Minister of Malaysia has launched his Economic Transformation Programme, ETP to spur the economic growth of the country on 21st September 2010. It is a comprehensive economic transformation plan to propel Malaysia's economy into a high income economy. The ETP aims to almost triple the country's Gross National Income (GNI) from RM660 billion (US$188 billion) in 2009 to close to RM1.7 trillion (US$523 billion) in 2020. This translates into an increase of GNI per capita from RM23,700 (US$6,700) to at least RM48,000 (US$15,000), meeting World Bank's high-income nation benchmark. Malaysia is expected to grow its GNI at 6% between 2011 and 2020 to hit the target. Foreign investors have shown interest in our Economic Transformation Programme. The Economic Transformation Programme is essentially the economic roadmap for Malaysia, one that is co-created by the private sector and the government. It marks a fundamental departure in the approach towards economic planning in order to achieve a developed nation status by 2020. Malaysia is a central point of ASEAN in the sense that it is sandwiched between major world player of China, the Middle East, India, Indonesia as well as business of the Japanese and Korean. Overseas businessmen will profit from stepping their foot and invest in Malaysia, a spiritual centre of the world. China will continue to be a key market for Malaysia and the other ASEAN member countries. New approaches and strategies, including smart tie-ups with Chinese entrepreneurs are required to benefit from this large integrated market. And you could through invest in ASEAN and Malaysia will be the Hub to take advantage of preferential duty free access to export to China as well as take advantage of the liberalization of the services sector. The world is certainly not at a standstill. More than ever, the world is changing. Rising commodity prices, poor economic growth in the developed countries, the increasing economic power of China, the downgrading the US Debt- all these present challenges and opportunities at very turn. Apart from the Governments' effort to facilitate and provide a conducive business environment, it is equally important for private sector to play greater role. Companies here should leverage the opportunities offered under ACFTA and other cooperation that have been created, in particular through preferential treatment and market access. To sum-up, all of us should now put our own house in order, to stimulate our economy for the good of the long run, today we have to change, change is always going to be for our betterment! Source: LLKoong's(Managing Director of Reanda Malaysia) speech for the Annual General Meeting of Chinese Business Chamber of Mauritius