The Jeddah Economic Forum
PARTNERSHIPS – THE MALAYSIAN WAY”
HRH Prince Khalid Al Faisal bin Abdulaziz Al Saud,
Adviser to the King of Saudi Arabia and Governor of Makkah
His Excellency Mr Mahmat Simsek, Deputy Prime Minister of Turkey
His Excellency Dr Taufik Al Rabiah, Minister of Commerce and Industry of Saudi Arabia,
His Excellency Dato’ Seri Wahid Omar, Minister in the Prime Minister, Economic Unit
His Excellency Dato’ Seri Major-General Jamil Khir Baharom, Minister in Prime Minister Department for Religious Affairs
His Excellency Sheikh Saleh Abdullah Kamil, Chairman, Jeddah Comerce of Industry
Distinguished guests, Ladies and Gentlemen,
1. I am delighted to be here, and to have the opportunity to share with you Malaysia’s experience of Public Private Partnerships at the Jeddah Economic Forum – which many are rightly referring to as the “Davos of the Middle East”. My thanks to the Jeddah Chamber of Commerce and Industry for inviting me to address you today.
Ladies and gentlemen,
2. As you all know, the global economy has been facing strong headwinds for some time, and continued turbulence is to be expected. Oil and gas exporting countries such as Saudi Arabia and Malaysia have certainly been affected.
3. But one approach that we already share – and I know that Saudi Arabia wishes to emphasise more – is the aim to diversify our economies and increase the participation of the private sector.
4. One of the key paths to achieving this is the development of public private partnerships, and in Malaysia, we have a long history of successfully implementing this model.
5. At one time it was widely agreed that it was down to Government and the public sector to produce public goods and services, such as infrastructure, healthcare, education, security and telecommunications; and that it was for the private sector to produce the consumer goods and services not traditionally catered for by the public sector.
6. But Government resources are, necessarily, limited. And in Malaysia we began to make a shift decades ago. The Government’s role would continue to be that of a major “provider” to our people. Of course – that is our duty to our citizens.
7. But we decided that the Government should also strive hard to be a “facilitator”, and an “enabler”, to the private sector.
8. Our original privatisation policy dates back to 1983. In 2006, we started to streamline and improve this approach by embracing the PPP / PFI model.
9. In 2009, the Public Private Partnership Unit was set up under the purview of the Prime Minister’s Department to serve as a dedicated central agency responsible for planning, facilitating and coordinating PPP projects across the country.
10. And in 2010, PPP was made one of the major thrusts of the Tenth Malaysia Plan with the announcement of the Economic Transformation Programme, which aims to propel Malaysia to high-income nation status by the year 2020.
11. In our country, the building of toll highways, ports, airports, flood tunnels and government offices, among others, have been made possible by PPP arrangements.
12. Projects like the North South Highway, the Port of Tanjung Pelepas, Kuala Lumpur International Airport and new administrative centres in Putrajaya have spurred Malaysia’s economic growth and created new areas of development, as well as improving accessibility and mobility.
13. To date, a total of 31 toll highways and toll bridges have been constructed using the Build-Operate-Transfer method. This generally involves a concession period of around 30 to 50 years.
14. During this period the private sector is required to deliver public infrastructure-based services, while it is compensated through lease rental charges – provided that levels of quality and timeliness are maintained.
15. Apart from facilitating movement of passengers and goods, these highways have also increased national growth through the creation of new townships and industrial areas.
16. As of December 2015, Malaysia has so far successfully implemented 754 PPP projects. Overall, the Government has saved a total capital expenditure of RM203.45 billion and total operating expenditure of RM9.25 billion. The total proceeds from sales of Government equity and assets stands at RM6.5 billion.
17. Thousands of jobs have gone from the government payroll, while hundreds of thousands have been created in the private sector.
Ladies and gentlemen,
18. In Malaysia we have found over the years that when we used conventional procurement methods, cost, time over-run, and late delivery were issues which we frequently had to deal with.
19. PPP on the other hand, provides better and faster delivery. Design and construction risks are borne by the private sector, as are any matters relating to completion and rework. These do not weigh on the Government, which instead sets the Key Performance Indicators to ensure uncompromised quality of service.
20. For countries that want to use the Public Private Partnership (PPP) approach, it is important that the right model is adopted. From our many years of experience, we in Malaysia have learnt that one of the ways to reap maximum benefit from this approach is to have competitive bidding, and not on first come, first serve basis.
21. Secondly, negotiators on the Government side must match the capabilities and competencies from those representing the private sector. This is to ensure fair and well-balanced results. It must be remembered that the PPP are essentially long term concession agreements, with long term impact, typically over a period of 20 to 30 years, sometimes much longer. As such, it is critical that right from the very onset, a right model is adopted. It is only with the right model that an equitable balance of public and private interests can be achieved.
22. So I would like to urge those here today to take advantage of the capacity building, consultancy and advisory programmes offered by Malaysia.
And, ladies and gentlemen,
23. I can offer Malaysia’s advice with great confidence, as despite the difficult circumstances we all face, our economy “continues to perform well” – to quote the IMF’s most recent report on our country, released just over a month ago.
24. They commended our “prudent monetary policy” and said that “conditions are expected to remain supportive of growth”. Indeed, our trade performance in 2015 exceeded forecasts, and the ratings agency Fitch recently reaffirmed our A- rating and stable outlook.
25. This is against the backdrop of an economy in which Gross National Income grew at an average annual growth rate of 5.5 percent from 2009 and 2015; 1.8 million jobs have been created since 2010, and private investment has more than doubled.
26. Our fundamentals are strong, and my Administration continues to take all steps necessary to strengthen the resilience of our economy, and keep the country on an inclusive and sustainable path, with the fruits of growth shared equitably.
27. So you can be confident that Malaysia will be a strong, stable and durable partner, whether you wish to invest in our country, work with us or our businessmen and women, or train and pursue new opportunities together in Malaysia or in any other part of the world.
Ladies and gentleman,
28. Talking of partnerships, it would be remiss of me not to mention the relationship between Malaysia and Saudi Arabia. The ties between our people are longstanding and deep, dating back at least as far as the time of the Melaka Sultanate in the 15th century, and it has always been characterised by respect and the very best of friendships. Indeed, I am proud to say that we are like brothers.
29. For instance, the first Secretary General of the Organisation of Islamic Cooperation, which of course is headquartered here in Jeddah, was our founding Prime Minister – Malaysia’s Father of Independence, Tunku Abdul Rahman Putra al-Haj.
30. Malaysians have always felt welcome when they visit Saudi Arabia, most especially when they come to perform Umrah or Hajj. This country has provided so much assistance to Malaysians here in many areas, including visa facilities and the emergency relocation of students, which has been much appreciated by our people.
31. We are proud that a Malaysian was involved in the design of the magnificent Abraj al-Bait in the city of Makkah, and that a Malaysian company, Prasarana, won the contract last year for the operation and maintenance of the Arafah-Mina Metro system during the Haj season.
32. Malaysian armed forces have been proud to participate in Northern Thunder, the largest ever military exercises in the Middle East, which will further cement coordination and cooperation between the 20 countries which have gathered under Saudi Arabia’s leadership.
33. And we are inseparable partners in the fight against extremism and terrorism, forces that have unleashed terrible chaos, death and destruction in this part of the world, and threaten other regions, including Southeast Asia and Malaysia.
34. These are forces that have desecrated the name of our religion and perpetrated unspeakable barbarities on their own peoples, their own neighbours.
35. We stand shoulder to shoulder with you in this fight, and we will never tire in the battle to defend the true authentic Islam. For this is what brothers do.
36. I would like to personally thank the Royal Family of Saudi Arabia for all their support over many decades. We will always appreciate it, and we will never forget it.
37. From Custodian of the Two Holy Mosques His Majesty King Salman Bin Abdullah bin Abdulaziz Al Saud, and their esteemed predecessors, we in Malaysia have been so very fortunate to have constant and trusted friends.
38. I hope that this Forum, and my visit to Saudi Arabia, is just one of the many occasions and ways in which our country can reciprocate that friendship, and elevate it still further in the spirit of wasatiyyah and partnership.
39. In closing remarks I would like to thank the Jeddah Economic Forum and Chambers of Commerce under the leadership of Saleh Kamel, and Khalaf Al Otaibi for their amazing commitment to enhancing the Jeddah Economic Forum on a world scale.
40. I wish you all success.
Prime Minister Office
1 March 2016