Malaysian PM calls for reform

He said the country's labor productivity also needed a large jump for local small and medium enterprises to compete well in the increasingly globalized and liberalized markets.

Najib said Malaysia's labour productivity was valued at RM15,000 per employee per year compared to RM103,000 for each American employee.

“According to this benchmark and compared to other countries, we are still very low. “We must change in the next few years to raise productivity by 100 percent,” he said after chairing the 11th National Small and Medium Enterprise Development Council (SMEDC) meeting here yesterday.

Najib, who is also the Finance Minister, said lack of funding was the least of the SMEs' weaknesses as RM6bil had been allocated for SME development this year through various ministries and agencies

He said the key weaknesses are weak managerial and entrepreneurial skills, reluctance to innovate and use technology and reliance on human-intensive labour to generate output. “We find that many problems do not stem from funding but rather from the need to boost (SMEs') capacity,” he said.

Regarding a World Bank report on Thursday, Najib admitted that businesses were hampered by the slew of licences and permits required to start and conduct business and that this could encourage “elements of corruption”.

“The council (SMEDC) has decided that more radical steps are needed to relax permit requirements as a whole. This is related to our competitive policy to make it easier for companies to enter a market,” he said.

“A green lane policy has been established where the government will give opportunities through contracts to use their products or services.

“We are looking at what other help we can give to enable these companies to enter the global market,” Najib said.

On foreign direct investments, Najib said FDIs into Malaysia had increased four-fold since 2009, rising from US$1.4billion (RM4.2bil) in 2009 to US$9billion (RM27bil) last year.

“I am confident that we will be able to ensure a very healthy growth in FDIs. But don't forget, it's not only about FDI, it's also about domestic investment as 73 percent of our development plans involves these,” he said.

Najib admitted that brain drain remained a major obstacle to Malaysia's plans to achieve a high-income developed status by 2020.

“We have identified (brain drain) as one of the problems that we need to find solutions to. That's why we set up Talent Corp.

“We will try to overcome (brain drain) through Talent Corp and other policy measures,” he said. “It (brain drain) is not something that is happening now. It is a problem that has been happening for some time.”

He said the ringgit's gain over the US dollar will not affect Malaysia's exports. “Local companies should use our stronger ringgit to strengthen processes in their companies, such as buying equipment and ensuring their supply chains are more efficient,” he said.