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Malaysia’s New Economic Model:
Risks and Rewards
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AseanAffairs Magazine May - June 2010

Prime Minister Najib Razak vows to take Malaysia forward and transform it into a high income nation through economic and social reforms. Initial responses to this ambitious drive are mixed, details are scarce and investors play wait-and-see.Yet, Najib insists he’s got support to push ahead.

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GE: Coming Home to Asean
Asean is becoming more attractive as an integrated economic zone because of its successful integration over the last 20 years and its commmitment to achieve the Asean Economic Community by 2015. Economists forecast that Asean, if viewed as one integrated area, would rank #5 in the world in 2014 behind only US, China, Japan and India on a PPP basis. Companies like GE know this and consider Asean equally strategic as China and India.

Asean integration is working and providing another pillar for growth in Asean. Intra-Asean trade is the number 1 source of trade for Asean at 25 percent (about $400 million. Over time, free trade and investment in Asean allows individual countries to focus on their comparative advantages and, as a result, Asean as a whole becomes more globally competitive.

Since 1998, GE has viewed Asean as integrated and we restructured our operations in order to eliminate duplication and thereby obtain greater economies of scale in our operations. As a result, GE operations in Asean are all regionally or globally competitive.

Asean countries are also encouraging domestic spending as another important pillar of growth. GE is seeing this in infrastructure sectors like aviation, power, water, healthcare, and land transportation (such as moving more freight via rail instead of road).

Much of this spending today is by the government, but private sector infrastructure spending will also grow significantly over the next 5 years since the governments cannot achieve their objectives alone. PPP structures will become increasingly important. GE has invested and will continue to invest in Asean infrastructure projects in the future.

Many Asean countries have significant natural resources like coal, agriculture, oil and gas and other minerals, which can provide the financing for investments in infrastructure. GE is seeing many projects to support the development of these natural resource investments. For example, there are many coal mining opportunities which will generate adjacent opportunities for mine mouth power plants, coal bed methane plants and railroads to transport the coal. This is very exciting.

As mentioned, GE has developed an Asean strategy over the last decade and it has helped us to become more regionally and even globally competitive. For example, GE Engine Services Malaysia, Malaysia’s leading aircraft engine repair and overhaul facility which is a joint venture with Malaysia Airlines, started out in 1997 only serving one customer, but now serves more than 35 customers throughout Asia Pacific.

Also, GE Energy is building a wind turbine generator manufacturing facility in Haiphong in Vietnam to serve the global wind turbine market, which indicates that it is a globally competitive facility.

We continue to invest in Asean (more than $500 million in 2009), particularly to support infrastructure development in the region in such diverse areas as wind, geothermal, locomotives, healthcare equipment and after-sale services. They say that “home is where the heart is” and GE’s home and heart are in Asean.



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