Announcement of Economic Transformation Programme Second Round Early Wins

By Tuesday November 30th, 2010 Speeches

1.            Sukacita saya untuk berada di sini hanya lebih kurang sebulan semenjak pelancaran Program Transformasi Ekonomi serta pengumuman pusingan pertama projek awalan. Para hadirin mungkin masih ingat lagi bahawa saya telah mengumumkan sembilan Projek Permulaan pada hari tersebut dan pada hari ini pula, saya amat berbesar hati untuk mengumumkan sembilan lagi perkembangan serta projek seterusnya.

2.            Semenjak pelancaran hala tujunya, Program Transformasi Ekonomi telah menarik perhatian yang memberangsangkan daripada golongan peniaga, pelabur dan rakyat. Sedikit sebanyak, ianya telah diterjemahkan kepada perkembangan yang positif di pasaran. Walaupun ianya bukan petanda secara langsung, Ringgit Malaysia terus kukuh sekitar paras tertinggi buat 13 tahun, sementara FBM KLCI mencapai paras tertinggi 1,531.99 mata pada 11 November 2010.

3.            Lebih banyak syarikat swasta kini tampil ke hadapan untuk mengambil tempat di blok permulaan Program Transformasi Ekonomi menerusi pelbagai Projek Permulaan. Mereka telah melihat perubahan yang ketara dan mahu mengambil bahagian dalam pelbagai peluang yang ditawarkan oleh inisiatif transformasi yang tidak pernah dilakukan sebelum ini.

4.            Let me now turn to the specifics of the nine new developments and Entry Point Projects I wish to announce today. These projects, three promoting sustained growth in the oil and gas and energy industry, two bolstering Malaysia’s electronics and electrical services, three focused on drawing higher-value from our tourism sector, and one enhancing the country’s education system for young children constitute major developments in attracting investment and transforming our economy by 2020.

5.            Under the ETP we have targeted intensifying exploration and production of domestic petroleum resources in order to overcome the projected 1 to 2 per cent decline in domestic oil and gas production. Through the right projects and incentives, we aim to transform Malaysia into a regional oil field services and equipment hub. Today I’m pleased to announce two projects that will drive us closer to our goal of doubling Oil, Gas, and Energy sector contributions to gross national income by 2020.

6.            First, the government has endorsed a new plan of tax incentives led by PETRONAS, which will be incorporated in the Petroleum Income Tax Act (PITA). Five new incentives have been proposed to promote the development of new oil resources, facilitate the exploitation of harder to reach oil fields and stimulate domestic explorations. The five new incentives include

  • Investment tax allowance of up to 60 to 100 per cent of capital expenditure to be deducted against statutory income to encourage the development of capital-intensive projects, i.e. in the area of Enhanced Oil Recovery (EOR), High CO2 gas fields, High Pressure High Temperature (HPHT), Deepwater and Infrastructure projects for Petroleum Operations
  • Reduced tax rate to 25 per cent from the current 38 per cent for marginal oil field development to improve commercial viability of the development
  • Accelerated Capital Allowance of up to five years from 10 years, where full utilisation of capital cost deducted could improve project viability
  • Qualifying Exploration Expenditure transfer between non-contiguous petroleum agreements with the same partnership or sole proprietor to enhance contractors’ risk-taking attitude, which could encourage higher levels of exploration activity
  • Waiver of export duty on oil produced and exported from marginal field development to improve project viability

7.            By lowering risks and increasing the rewards for investment, this initiative will potentially lead to additional petroleum-generated revenue of more than RM50 billion for Malaysia over the next 20 years. There will be a notional trade-off of about RM8 billion in the form of revenue foregone from investment tax allowances, reduced tax and the export duty waiver for marginal fields. But the benefits far exceed this trade-off and these measures mark the kind of rational policy changes that will enable the private sector to play a greater role in our economic development.

8.            This leads to our second announcement. In line with our efforts to transform Malaysia into a regional oil and gas hub, Tanjong Agas Supply Base & Marine Services Sdn Bhd (TASBMS) will develop the Tanjong Agas Oil & Gas and Logistics Industrial Park as a one-stop centre to serve and support the region’s enormous and rapidly growing upstream and downstream activities. This includes oil and gas exploration, exploitation and production activities. With an investment of RM3 billion between 2011 and 2012, this project is expected to contribute with RM30 billion to the Gross National Income of our country over 10 years and it will create 30,000 jobs by 2020.

9.            The third project that I am pleased to announce today is a RM4 billion investment by TENAGA Nasional Berhad in 2011. TENAGA will develop two new hydro power plants, the Ulu Jelai Hydroelectric and Hulu Terengganu Hydroelectric Scheme Developments, and a large coal plant in the state of Perak. This substantial investment is vital to support our economy as it continues to grow.  Increased capacity is essential to provide energy to businesses and to the growing population of our country.

10.         In addition to these three new plants, TENAGA will also allocate funds to the reinforcement of the power transmission infrastructure, ensuring supply reliability throughout the nation including, among others, locations such as Salak South Mahkota Cheras, South Pantai and Puchong Perdana Olak Lampit.

11.         The Electronics and Electrical sector is another vital industry for Malaysia’s long-term economic growth. In order to attract 157,000 new jobs in this sector over the next 10 years, Malaysia is actively developing projects that can create technical ecosystems that foster higher-value engineering skills.

12.         I am happy that today’s fourth announcement shows that we are already attracting the kind of high-value jobs and investment that we are seeking; Cisco Systems has invested in transferring its manufacturing process and skills for a wide range of products from Texas to Malaysia. In recognition of the investment, the Malaysia Investment Development Authority (MIDA) has approved a grant to be utilised for training purposes over the next three years. With these funds, Cisco will be equipping about 1,000 Malaysians with the skills necessary to work with Cisco’s advanced technologies and applications.

13.         Today’s fifth announcement shows we are working to ensure that investors find a ready pool of skilled employees and to spur local innovation. To further cultivate and accelerate first-class high-skilled human capital and to improve the commercialisation of academic research in Malaysia, Technology Park Malaysia (TPM) will lead the development of an Advanced Engineering, Science and Innovation Cluster, in collaboration with Universiti Tenaga National (UniTen) and the Multimedia University. The investment for the total cluster is expected to be RM374 million over the next 10 years, with a projected Gross National Income of RM636 million and 20,900 new jobs created by 2020.

14.         Today, I am very pleased to also announce three new projects that will help Malaysia reach our goal of tripling tourism output by 2020. These projects will focus on upgrading hospitality services and offerings, as well as enhancing our business tourism competitiveness to draw higher returns from tourist visits.

15.         In an effort to improve services offered to tourists, UCSI University is launching a new education cluster focused on hospitality and tourism to deliver a steady stream of highly qualified graduates, ready to be employed in the growing tourism industry in Malaysia. Through its Faculty of Hospitality and Management, UCSI will invest in a five-star hotel in Sarawak, and in an international convention centre and resort hotel in Greater Kuala Lumpur/Klang Valley. With a total investment of RM650 million, the Hospitality and Management Faculty is one part of a new hospitality and tourism cluster that will generate RM618 million and 2,300 new jobs by 2020.

16.         Additionally, YTL Hotels, renowned for their range of luxury resorts, is refurbishing the Majestic Hotel on a 3.2 acre site in Kuala Lumpur. With an investment of RM250 million, this complex will feature the original and fully restored Majestic Hotel, adjacent to an all-new block. The new luxury hotel will boast 320 rooms and suites, full-service restaurants and a spacious ballroom innovatively designed and capable of accommodating 1,300 diners. 600 additional jobs will also be created.

17.         Furthermore, an allocation of RM50 million has been made for 2011 and 2012 to enhance Malaysia’s competitiveness in the segment of business tourism via the Malaysia Convention & Exhibition Bureau (MyCEB). This includes a support programme with a budget of RM25 million per year to provide financial and non-financial incentives to help bids for international business events expected to offer a high economic value to the country.

18.         Thanks to the government’s support¸ business tourism arrivals in Malaysia are expected to grow from five percent to eight percent of overall tourist arrivals. This translates to an increase from 1.2 million business tourists to 2.9 million by year 2020, contributing RM3.9 billion in incremental Gross National Income and 16,700 additional jobs.

19.         Building on these initiatives, I wish to stress that it is important for Malaysia to develop tourism with a holistic, end-to-end approach. I welcome YTL Hotels’ investment in what should be an iconic landmark in Kuala Lumpur, congratulate UCSI for the vision to support the industry with first-class resources and trust that the allocation under MyCEB will give business tourism a major boost. It is a perfect combination of the right infrastructure and people that will move Malaysia’s tourism industry up to the next level.

20.         Finally, I am pleased to announce that the Ministry of Education, in conjunction with SEGI College, DiKA College, Taj International College, Institut Teknologi Info-Sains Mahir, MCS College, Institut Perkembangan Awal Kanak-Kanak, Kolej Uniti, Thames Technology, Iras Mewah and Institut Megatech will be conducting pre-school teacher training in 10 Malaysian states. This initiative is part of the government’s plan to enhance pre-school education in the country, ensuring high quality standards for pre-school teachers and offering support to the welcome increased enrolment rate of children in pre-schools. The selection of the mentioned Private Tertiary Institutions (IPTS) and training centres was made very recently via competitive bidding open to all training centres and IPTS at the value of RM 11.4 million.

Ladies and gentlemen,

21.         These developments, new projects and foreign investment clearly demonstrate that our programme to transform Malaysia’s economy is working. The bright future for the country that we have promised is far from a pipe dream. Ranging from the ongoing engagements with project champions, to our monthly Steering Committee and weekly Economic Council meetings, we are showing that this government is firing on all cylinders and that a bright future lies ahead for Malaysia.

Thank you.

Wabillahitaufiq Walhidayah Wassalamualaikum Warahmatullahi Wabarakatuh.