{left}

 

4.23 Bumiputera companies are already widely involved in food manufacturing industries, particularly in small and medium scale operations. During the OPP3 period, they need to increase and improve the manufacturing of halal-food products, in line with efforts to make Malaysia as the halal-food hub for the world market. As such, they should look beyond the domestic market, since there is a vast potential for halal products, particularly in more than 50 Muslim countries worldwide. The appropriate halal and health certifications need to be obtained to expand their venture into international markets.

4.24 In the services sector, Bumiputera participation continued to be low,
particularly in the utility, wholesale and retail trade, tourism, shipping and
financial services. In 1999, Bumiputera ownership of the corporate equity in
utility was 12.2 per cent and in wholesale and retail trade was 15.2 per cent,
as shown in Table 4-3. In the finance sector, the proportion of Bumiputera
corporate equity was 20.5 per cent. Bumiputera companies will need to venture
into potential areas of the dynamic services sectors, which include information
and communication, education, health, tourism, sea and air transport, consultancy
and professional services.

4.25 Measures will be undertaken to increase Bumiputera participation in the
sea transportation services, including related support services such as haulage,
warehousing, managing distri-parks, distribution, packaging and repackaging,
and customized delivery services. As for the air transportation, Bumiputera
participation will be enhanced in areas such as air cargo handling, freight and
forwarding services. Bumiputera participation in these areas is important to
ensure that they also enjoy the benefits from the efforts of developing the nation
into a regional hub for sea and air transportation. With the increase in participation
and new strategic alliances with foreign interests in the sea and air transport,
more opportunities will be available for Bumiputera ventures.

4.26 Another service sector for Bumiputera participation is in tourism. Instead
of merely specializing in ticketing services, Bumiputera entrepreneurs will have
to venture into other activities including operating tour agencies dealing especially
with inbound tourists as well as expanding tourist operation into niche markets
such as the Middle East, Islamic countries, China and India.

4.27 In the education sector, more Bumiputera need to establish private institutions
of higher learning (IPTS). Meanwhile, the existing small Bumiputera-owned
IPTS must be merged. To ensure high quality of education, apart from obtaining
accreditation from the National Accreditation Board (LAN), Bumiputera IPTS
will have to establish network and twinning programmes with credible institutions
of higher learning abroad as well as open branch campuses.

4.28 The provision of consultancy and professional services is another area of
potential for more Bumiputera participation. To date, the number of Bumiputera
professionals with experience, particularly in engineering, accountancy and
architecture, has increased and there is a vast potential for them to provide these
services both domestically and internationally. More Bumiputera need to attain
higher skills and obtain international recognition to be competitive.

4.29 Increasing Bumiputera ownership through privatization. Privatization policy
will remain as an important instrument to enhance Bumiputera participation in
the corporate sector. As of April 2000, the Federal Government privatized a total
of 180 companies. Bumiputera managed and controlled 109 or 61.2 per cent of
the companies with RM8.1 billion or 28 per cent of the total equity of companies
privatized. Non-Bumiputera has also benefited from this program where they
controlled 28 companies with equity of RM5.3 billion or 15.6 per cent of the
total equity. However, the Government controlled 43 companies with equity of
about RM16.5 billion or 56.4 per cent. In order to achieve the restructuring
target, the privatization programmme will continue to be implemented to create
more opportunities for Bumiputera entrepreneurs.

4.30 As at April 2000, there were 40 privatized companies listed on the Kuala
Lumpur Stock Exchange (KLSE), representing 5.2 per cent of the total number
of listed companies in the bourse. These companies contributed to about RM156.6
billion or 24.7 per cent of the total market capitalization and 15.3 per cent of
the total paid-up capital of all listed companies in the KLSE. Bumiputera owned
21 per cent of the equity in the listed privatized companies, while the non-Bumiputera
and foreigners owned 27 per cent and 10.2 per cent, respectively.
The Government owned about 41.8 per cent of the total equity in these companies.
The Bumiputera-owned listed privatized companies were largely in trading and
services, industrial and infrastructure businesses. In terms of the controlling.98
interest in the listed privatized companies, Bumiputera controlled 20 companies
with a total paid-up capital of RM5.8 billion or 24 per cent. This amount
represents only 3.7 per cent of the total paid-up capital of all the listed companies.

4.31 Enhancing the role of Bumiputera institutions and trust agencies. The
Government will review and streamline the functions and roles of trust agencies,
particularly the State Economic Development Corporations (SEDCs). This effort
will strengthen their position in fostering the development of entrepreneurship
as well as creating more opportunities for Bumiputera to increase ownership and
control in the corporate sector. Steps will also be taken to develop measures and
establish specific mechanism for effective monitoring and evaluation of the
agencies. The respective agencies are expected to create and acquire new wealth,
particularly in the sectors or activities where Bumiputera are lagging behind, and
also provide a wider platform as well as opportunities for Bumiputera to own
and participate in the corporate sector. They should employ professionals to
improve their management capabilities. While consolidating their business activities
and resources, these agencies also need to establish strategic alliances through
joint ventures and smart partnership with other local partners and foreign
counterparts.

4.32 Unit trust schemes are expected to enhance their role in the development
of capital market by mobilizing savings and promoting a broad-based participation
of all Malaysians. While providing investment opportunities, these schemes will
also be an effective instrument to increase Malaysian ownership and control in
the corporate sector. Steps will also be taken to ensure that the existing unit trust
schemes, particularly the state unit trust schemes, will be effectively managed
to maximize returns to investors. A review of the existing unit trust schemes will
be undertaken during the OPP3 period.
4.33 The development of potential resources such as Malay reserve, Baitulmal,
waqaf, native and customary land will be intensified. A study will be undertaken
to recommend the modus operandi of developing these land assets. Attention
will be given towards eliminating administrative bottlenecks that hinder the
development of such land and encourage private sector participation. The
Government will develop a mechanism to facilitate the process, particularly
through the provision of support programmes as well as incentives for the
development of such resources. Institutions such as Majlis Amanah Rakyat
(MARA), Lembaga Tabung Haji (LTH) and SEDCs must take an active part in
developing this land into viable commercial properties. These commercial
properties will then be offered for sale or lease to Bumiputera entrepreneurs. The
development of such resources must also take into account the affordability of
Bumiputera..

Development of the BCIC
4.34 Programmes for the development of the BCIC will focus on building
more sustainable, self-reliant and world-class Bumiputera entrepreneurs capable
of competing effectively both in the domestic and international markets. This
will be achieved through inculcating good entrepreneurship qualities irrespective
of the size of business. As world-class entrepreneurs, Bumiputera should be
highly competitive, knowledgeable, innovative, use resources optimally, forward-looking,
adopt good practices and consistently generate good returns over a
long-term. In addition, Bumiputera entrepreneurs must be equipped with good
communication skills, especially in the English language to be successful in a
more competitive environment as well as to venture into international markets.

4.35 To create a more sustainable and self-reliant Bumiputera entrepreneur,
there is a need to inculcate positive values among the Bumiputera. These include,
among others, self-discipline, integrity, reliability, credit worthiness, trustworthiness,
diligence, honesty and prudence. The relevant agencies must reorientate their
training programmes to include inculcation of positive values.

4.36 The development of a full-fledged BCIC is critical for ensuring effective
Bumiputera participation in the economy. The presence of a sufficient number
of viable Bumiputera enterprises will greatly enhance efforts to increase Bumiputera
involvement in the mainstream economic activities in the country. Although
some progress was made in the development of the BCIC, the quality and depth
of their business involvement are still limited. To ensure a meaningful presence,
Bumiputera entrepreneurs need to be adequately represented in all strategic and
dynamic sectors of the economy. In addition, the range of business activities in
which they are involved should encompass the higher value-added activities.

4.37 The existing programmes for the development of the BCIC will be further
strengthened in order to increase the number of viable Bumiputera entrepreneurs.
In this regard, the Ministry of Entrepreneur Development will enhance the
participation of Bumiputera in the packaged programmes such as the vendor and
franchise development programmes. The Ministry will support the franchise
development program through the purchase of selected franchises from overseas
and develop Bumiputera franchisees as well as implement R&D on local franchise
products. In addition, the implementing agencies will establish exit policies that
will determine the time frame for the participants to graduate from the
programmes in order to allow other Bumiputera entrepreneurs benefit from such
programmes..100

4.38 The vendor development programme will be reviewed to be more effective
and expanded to cover more industries to generate new opportunities for Bumiputera
enterprises. Petroliam Nasional Berhad (PETRONAS), Perusahaan Otomobil
Nasional Berhad (PROTON), Perusahaan Otomobil Kedua Berhad (PERODUA)
and privatized corporations such as Malaysia Airlines (MAS), Tenaga Nasional
Berhad (TNB) and Telekom Malaysia Berhad will be urged to improve and
expand the scope as well as develop new programmes towards this end. Bumiputera
enterprises must establish joint-ventures with strategic local and foreign partners
in areas where they lack expertise to produce high quality and high-end products
required by these industries and to participate in the Industrial Linkage Programme
(ILP) of SMIDEC. The joint-venture arrangements will also facilitate access to
a bigger share of the domestic market as well as to foreign markets, to enjoy
economies of scale. This arrangement will be important in gaining access to
regional markets, particularly with the further market opening expected to result
from the ASEAN Free Trade Area (AFTA).

4.39 Emphasis will also be given to the development of Bumiputera entrepreneurs
in the distributive trade sector. Concerted efforts will be taken to increase the
number of Bumiputera traders in the wholesale subsector. To strengthen their
position in the business, Bumiputera traders need to form networks or direct
links with producers in the manufacturing and agricultural sectors in order to
ensure supplies at a lower cost. They must also form network with the retailers
as part of the overall strategy to increase their market share. Bumiputera participation
in the retail trade subsector will be enhanced through the newly established
Projek Usahawan Bumiputera Dalam Bidang Peruncitan or PROSPER. This
project will be target-specific and will provide assistance and support services,
such as the provision of premises and capital, identification of business opportunities
as well as training, particularly in accounting and cash management. Steps will
continue to be taken to provide more business premises in strategic locations for
Bumiputera entrepreneurs. Agencies such as MARA, UDA Holdings Berhad
(UHB) and SEDCs as well as local authorities will construct and purchase more
business premises, especially in new townships and residential areas.

4.40 The programmes for the development of the BCIC will also accelerate
the creation of a larger number and more prosperous middle-class Bumiputera
entrepreneurs. Steps will be taken to increase the effectiveness of existing efforts
and a number of new strategies will be employed to strengthen the position of
Bumiputera enterprises including the provision of equity financing. More
Government-owned companies will develop special programmes to create middle-class
Bumiputera entrepreneurs..101

4.41 The chambers of commerce and trade associations need to initiate new
programmes that can effectively help to create more sustainable, self-reliant and
world-class Bumiputera entrepreneurs. They should promote networking among
their members as well as disseminate information and market intelligence, introduce
best practices and facilitate marketing arrangements. To gain from these private
sector initiatives, more Bumiputera entrepreneurs are expected to join these
associations and actively participate in their activities.

Meeting the Challenges of Globalization

4.42 In preparing Bumiputera to meet challenges of globalization, measures
will be undertaken to nurture competitive Bumiputera companies within the
domestic as well as the global markets. There is a need to rehabilitate, consolidate
and restructure existing small and weak Bumiputera ventures to achieve greater
strength, efficiency and competitiveness. Bumiputera companies need to attain
a critical size or industry-efficient scale and become export-oriented.

4.43 Bumiputera companies have to adopt higher standards and institute quality
improvements in order to enhance the quality of their products and services
through programmes such as zero defects and wastage minimization. In addition,
Bumiputera entrepreneurs require good risk management skills and strive for a
higher standard by attaining the relevant International Standardization Organization
(ISO) certification as well as other international standards. The Government will
support this effort by providing assistance on a selective basis through a special
window in the Small-and Medium-scale Industries (SMI) Fund.
4.44 Malaysian companies, particularly Bumiputera-owned, need to be aggressive
in securing markets in the light of globalization and greater liberalization. Malaysia
External Trade Development Corporation (MATRADE) will provide market
intelligence as well as facilitate and assist in the promotion of Malaysian products
overseas. MATRADE will also conduct special market research and surveys for
Bumiputera entrepreneurs to venture into niche international markets.
Promoting Bumiputera Participation in the Knowledge-based Economy

4.45 In line with the emphasis given to the knowledge-based economy, steps
will be taken by the Government to reduce the knowledge gap and the digital
divide between the rural and urban population. Among the strategies that will
be pursued include promoting greater awareness and participation of the poor
and the low-income groups in the knowledge-based economy, providing education.102
and training in information and communication technology (ICT) and increasing
access to infostructure, particularly in the rural areas and among the disadvantaged
groups.

4.46 As for Bumiputera entrepreneurs, it is essential that they move along the
value chain into product design and development as well as packaging, marketing
and distribution through collaborations with local universities and other institutions.
Bumiputera companies, particularly SMEs, must increase the use and application
of ICT in their production processes as well as in the conduct of their internal
operations. They must also adapt their businesses, where possible, to go online
to source inputs and market their output. The greater application of ICT will
increase their accessibility to new sources of financing as well as establishing
international market linkages. The Government in collaboration with industry
associations will provide training and expertise.

4.47 A recent study on Bumiputera participation in the ICT industry found that
they were predominantly small scaled enterprises with an annual revenue below
RM500,000. They also operate mainly as resellers of hardware and software
products. A large number of Bumiputera entrepreneurs in the ICT industry is
single service provider and most of them are dependent on business with the
Government. Bumiputera entrepreneurs are faced with difficulties in penetrating
into non-Government markets due to their weak customer relationship management
skills. The challenges faced by them in this area include obtaining recognition
as reliable and capable ICT players in the market, demonstrating ability to
compete in the open market and exploring regional market opportunities to
broaden their market base.

4.48 To enhance Bumiputera participation in the ICT, a Bumiputera ICT Council
will be established to plan and develop as well as monitor the implementation
of a Bumiputera ICT Agenda. The Agenda will include strategies such as increasing
the awareness of the importance of the ICT industry, developing a sufficient pool
of ICT Bumiputera technopreneurs as well as providing greater accessibility to
capital and market information. Bumiputera technopreneurs must tap resources
from venture capital as well as the seed, start-up, second round or mezzanine
financing to finance their business ventures in ICT. The Government will be
establishing an ICT fund to encourage participation in the ICT industry.

4.49 Similarly, Bumiputera technopreneurs must take advantage of opportunities
created in the multimedia and ICT, health and education as the nation aspires
to be the regional centre of excellence for these services. Measures will also be
taken to ensure that Bumiputera companies will benefit from the development
of the knowledge-based economy by participating in projects such as the building
of infostructure, manufacturing of hardware and the development of software..103

Employment Restructuring

4.50 During the OPP2 period, policies and strategies for employment restructuring
were directed towards increasing the number and percentage of Bumiputera in
the modern economic sectors and in higher level occupational categories, particularly
in the professional and technical as well as the administrative and managerial
categories. Bumiputera employment in the professional and technical category,
which includes teachers and nurses, increased from 60.5 per cent in 1990 to 63.9
per cent in 2000. While in the administrative and managerial category, the
percentage of Bumiputera increased from 28.7 per cent to 37 per cent for the
same period. Despite the increase in the number of Bumiputera in higher level
occupations, Bumiputera employment was still concentrated in lower category
jobs such as the production and agriculture workers, as shown in Table 4-5. In
terms of the professional occupations, such as accountant, architect, lawyer and
engineer, the proportion of Bumiputera was low, as shown in Table 4-6.

4.51 Under the NVP, appropriate mechanisms will be formulated to further
increase the participation rate of Bumiputera to ensure employment pattern
reflects the ethnic composition of the population. The private sector must employ
more Bumiputera professionals and executives in their firms. A study will be
undertaken to review the current state of Bumiputera employment in the private
sector to facilitate the formulation of remedial measures to overcome the imbalance
in participation. Measures will continue to be undertaken to ensure that Bumiputera
obtain appropriate education and training in order to be employed in high income
jobs. The capacity of the higher education institutions will be expanded to
increase accessibility, especially to Bumiputera. Both the public and private
institutions of higher learning will be required to increase the number of Bumiputera
graduates and ensure that the courses offered meet the market demands in terms
of employment. At the same time, the National Higher Education Fund will be
increased to provide more loans to Bumiputera students enrolled in private
institutions of higher learning. The loan will cover all expenses, including living
expenses, for students from the low-income group. In addition, the Government
will continue to extend loans to students from Bumiputera and other low-income
households to pursue higher education in reputable universities abroad.

4.52 Based on the information obtained from 456 registered IPTS, as at December
1999 the proportion of Bumiputera students enrolled in degree and diploma level
courses in IPTS constituted only 36.1 per cent of the total enrolment, as shown
in Table 4-7. The enrolment of the Bumiputera students in the science and
technical courses was low at 36.2 per cent while in the non-science courses, the
proportion of Bumiputera students was at 55.7 per cent. Measures will be taken.
to increase enrolment of Bumiputera students in science and technical courses as
well as in management and business studies. Efforts will be undertaken to improve
the performance of Bumiputera in technical subjects at school levels to enable
them to become high achievers in these subjects in the institutions of higher
learning.

4.53 Greater emphasis will also be given towards increasing the number of
workers with skills and high technical capabilities, particularly among Bumiputera,
through higher and advanced vocational and technical training programmes.
Additional higher vocational and technical training institutions will be established.
Those with lower qualifications will be provided with opportunities to enhance
their skills.

4.54 Employment opportunities will increasingly be based on relevant knowledge
and skills. Apart from achieving higher academic excellence, Bumiputera students
must acquire market-related knowledge and skills that will enable them compete
effectively for job opportunities. The newly created skill development fund,
Tabung Pembangunan Kemahiran, will continue to provide financial support to
Bumiputera. To increase Bumiputera participation in the higher income jobs, the
private sector also needs to recruit more Bumiputera graduates from the public
institutions of higher learning.
Towards Balanced Regional Development

4.55 A development composite index 1 (DCI), which was derived using a set
of economic and social indicators, was used to gauge the development pattern
as well as categorize states into the more developed and less developed state,
1 The composite index of development is an average score of 10 selected socio economic indicators. The indicators
include per capita GDP, unemployment rate, urbanization rate, registered cars and motorcycles per 1,000
population, telephone per 1,000 population, incidence of poverty, population provided with piped water, population
provided with electricity, number of doctors per 10,000 population and infant mortality rate per 1,000 live birth..108
as shown in Table 4-8. The economic indicators include per capita GDP,
unemployment, urbanization, telephone as well as registered vehicle ownership,
while all the remaining indicators are categorized as social indicators. Based on
the DCI, Wilayah Persekutuan Kuala Lumpur, Selangor, Penang, Perak, Negeri
Sembilan, Melaka and Johor are categorised as the more developed states, while
the others as the less developed states.

4.56 Wilayah Persekutuan Kuala Lumpur, Penang and Selangor, registered the
highest points in terms of the development composite index, reflecting a higher
level of economic activities and income as well as living standards and quality
of life. In terms of the change in the index between 1990 and 2000, all the more
developed states, with the exception of Wilayah Persekutuan Kuala Lumpur,
gained by more than the national average of 29.0 points. As for the less developed
states, all the states recorded a higher DCI in 2000 compared with 1990. Kedah,
Perlis and Pahang recorded the highest points in 2000, indicating a higher level
of economic activities and quality of life. However, Sarawak, Kedah, Terengganu
and Perlis attained a larger change in index between 1990 and 2000, which
shows that these states are more vibrant economically compared with other less
developed states.

4.57 In terms of the real GDP growth, Wilayah Persekutuan Kuala Lumpur,
Selangor, Penang, Johor, Negeri Sembilan and Terengganu witnessed rapid growth
exceeding the national average of 7.0 per cent during the OPP2 period, as shown
in Table 4-9. This was largely attributed to the expanding manufacturing and
services activities in these states. During the OPP3 period, all the states are
expected to grow rapidly in terms of GDP. The proportion of GDP of the more
developed states is expected to increase from 67.6 per cent in 2000 to about 68.2
per cent in 2010, while the proportion for the less developed states will decline
from 32.4 per cent to 31.8 per cent during the same period.

4.58 As for the per capita GDP, during the OPP2 period, the rate of increase
ranged from the lowest at 4.8 per cent recorded by Sabah to the highest at 10.5
by Wilayah Persekutuan Kuala Lumpur, as shown in Table 4-10. Overall, the per
capita GDP in Melaka, Penang, Selangor, Wilayah Persekutuan Kuala Lumpur
and Terengganu were higher than the national average in 2000. These states are
expected to maintain the same structure during the 2001-2010 period, with
Wilayah Persekutuan Kuala Lumpur recording the highest per capita GDP at

4.59 During the OPP3 period, the thrust of the regional development policy will
be to accelerate the development of the less developed states and reduce the
socioeconomic imbalances among regions. Steps that will be taken include promoting
the concentration of economic activities by state on the basis of their comparative
strength, continuing the industrial dispersal programme, expanding sub-regional
cooperation arrangements, and further improving infrastructure and access to
quality basic amenities, particularly in the less developed states. Efforts to modernize
the rural areas will include increasing the accessibility to ICT infrastructure. To
ensure orderly and systematic urban and rural development, spatial development
considerations will be given due importance. Thus, all states are expected to
register positive growth with significant improvements in the quality of life.

4.60 To promote concentration of economic activities, states will be encouraged
to build on their existing areas of strength and expand into higher value-added
products and related cluster activities. New and potential areas will be identified
for all states based on their locational advantage as well as socioeconomic
considerations. Among the concentrations identified include electronics, furniture,
automotive, chemical and petrochemical as well as mixed industrial activities.
Meanwhile, the formation of related clusters will be promoted in states to strengthen
the industrial base, increase the value added and generate new investment activities.
At the same time, to ensure that the less developed states are able to generate
faster growth through agriculture, concerted efforts will be taken to enhance
productivity and efficiency by introducing modern methods of farming, using
high-yielding varieties and improving post-harvest handling. In addition, appropriate
measures will be introduced to intensify agro-based processing activities in these
states by initiating the setting up of modern and high tech plants producing
higher value-added products for the domestic market as well as for exports.

4.61 Concerted efforts will also be taken to strengthen the economic base of
the less developed states by diversifying into manufacturing and selected service
activities. In order to promote manufacturing in these states, the industrial
dispersal programme will be further enhanced. Under this programme, certain
industries will be encouraged to relocate in the less developed states. At the same
time, supporting cluster industries will also be encouraged to set up their plants
in the less developed states, to take advantage of the lower rentals and cost of
operations. The Government will improve existing industrial estates and consider
setting up new ones with quality infrastructure as well as improve their linkages
to port, airports and other developed areas. While the industrial dispersal programme
will provide the impetus for growth and generate new employment opportunities
in the less developed states, it will also result in a net gain to the nation due
to the synergy that will be generated from this symbiotic relationship. This programme.113
will also reduce the stress placed on the urban centres in terms of resources,
infrastructure and space.

4.62 To attract high value-added agro-based activities and manufacturing and
selected services investments to the less developed states, among others, the
Government will promote the locational advantage of these states. The State
Governments will create a conducive and investor-friendly environment by removing
unnecessary procedures and regulations and accelerating and simplifying the
approval process for investment, including for land. The existing incentive package
will also be reviewed and, where necessary, customized incentive packages will
be introduced to attract investors to locate in these states.

4.63 While growth of the services sector is expected to be concentrated in the
faster growing states, concerted efforts will be taken to develop suitable services
activities in less developed states, particularly in states that will not be able to
benefit from the industrial dispersal programme. Among the activities that will
be promoted are tourism, health and education.

4.64 In addition, the Government will accelerate the development of infrastructure
and amenities to support the growth of economic activities in the less developed
states. This will include upgrading and constructing roads and highways within
the less developed states as well as linking with the developed states to further
facilitate inter-state economic cooperation and resource sharing for mutual gains.
Access to safe water, electricity and telecommunications as well as quality social
services such as modern hospitals and clinics, and schools will be improved so
as to ensure a better quality of life.

4.65 Urban and rural areas are a set of diverse ecosystems that have evolved
and been impacted in many different ways. In line with the concept of total
development, there is a need to strengthen the existing institutional elements of
urban and rural development to ensure sustainable urban and rural societies.
Total development will be operationalized by balancing the economic, social,
and environmental benefits that accrue from the implementation of development
policies, programmes and projects, with its costs. It will include sharing
responsibilities among the public, private and local communities to increase
efficiency and effectiveness. Many activities will be created throughout rural
areas to mobilize local creative energies. In addition, the Government will build
upon existing and traditional management structures and processes to strengthen
incentives to ensure equitable access to resources and sound environmental
management.

4.66 To enhance spatial development, the National Spatial Plan will be introduced.114
during the OPP3 period. The urbanization programme will continue to be given
emphasis. By 2010, about 78 per cent of the population is expected to reside
in the urban areas. Efforts will be undertaken to ensure that 70 per cent of the
land area remains rural including forests, national parks and other protected
areas, with about 30 per cent being set aside as urban areas. New strategies will
be introduced to enhance the capability of local authorities to effectively manage
the increased concentration of activities in the urban centres. In this regard,
several local authorities will be upgraded. In addition, recognizing that many
sustainability issues have their roots in local activities, the Government launched
the Local Agenda 21 project to enable local authorities together with local
communities to identify programmes and projects for sustainable development.
An index on the urban quality of life will also be developed to measure standards
and be used as a management tool to improve related services.

4.67 Rural areas will be modernized through the provision of high standard
social and physical infrastructure facilities. In this respect, among others, existing
infrastructure facilities will be improved and upgraded to improve accessibility
to ICT including better telecommunications facilities, computers and Internet
services. Efforts will also be taken to strengthen the linkage between rural and
urban areas to promote greater complementarities and synergy. In addition,
efforts will be taken to develop the rural areas as centres of modern cottage
industries producing quality local handicrafts to meet the demands of the tourism
industry. The rural areas will be promoted as attractive tourist destinations for
city dwellers as well as foreigners. A rural quality of life index will be developed
to monitor the standard of living and to design appropriate strategies and programmes
to ensure continued development of rural areas.

4.68 Cooperation through the Growth Triangles will also serve as important
means to facilitate further development of the border states. In this respect,
border cooperation especially in the Growth Triangles will be enhanced through
the development of core economic projects such as wholesale border markets
and the development of the Pan-Borneo Highway. The private sector will be
encouraged to take an active role in the development of these projects while the
Government will provide the necessary support. The Government will also introduce
appropriate measures to attract foreign direct investment to the Growth Triangle
areas.

III. CONCLUSION
4.69 The distributional agenda, under the NVP, will be reemphasized to ensure
a more balanced and equitable participation among and within the ethnic groups
and regions. With the significant reduction of the incidence of absolute poverty,.115
the poverty eradication programmes will focus on increasing the income of the
poor and low-income groups irrespective of race. As for the restructuring strategy,
the shift in emphasis will be towards increasing effective Bumiputera participation
in the major dynamic sectors while pursuing efforts to attain the minimum target
of 30 per cent in terms of effective Bumiputera equity ownership by 2010. The
implementation of the distributional strategies will thus contribute towards
strengthening national unity..

Chapter 5 Developin Malaysia into a Knowledge-Based Economy.118.119
I. INTRODUCTION
5.01 The knowledge-based economy will provide the platform to sustain a
rapid rate of economic growth and enhance international competitiveness so as
to achieve the objectives of Vision 2020. It will also strengthen Malaysia’s
capability to innovate; adapt and create indigenous technology; and design,
develop and market new products, thereby providing the foundation for
endogenously-driven growth. In addition, the knowledge-based economy will
complement and accelerate the change from an input-driven to a productivity-driven
growth strategy, a major policy thrust initiated under the Seventh Malaysia
Plan. In this respect, the fuller recognition of the role of knowledge input will
enhance the productive capacity of the traditional factors of production as well
as generate new sources of growth. This, in turn, will expand the production
possibility frontier of the Malaysian economy.

5.02 Several initiatives have already commenced to facilitate the smooth
development of a knowledge-based economy. Malaysia, however, will accelerate
its efforts during the Third Outline Perspective Plan (OPP3) period, particularly
in the areas of human resource development (HRD), science and technology
(S&T), research and development (R&D), infostructure and financing to position
itself prominently in the global map of knowledge-based economies. It will also
undertake measures to ensure that all segments of Malaysian society have equitable
access to the new opportunities that will be generated.
II. CONCEPT OF THE KNOWLEDGE-BASED ECONOMY

5.03 The knowledge-based economy is one where the generation and utilization
of knowledge contribute to a significant part in economic growth and wealth
CHAPTER 5
Developing Malaysia into
a Knowledge-Based Economy.120
creation. While traditional factors of production, that is labour, capital, raw materials
and entrepreneurship, remain important, knowledge will be the key factor driving
growth, creating new value and providing the basis to remain competitive. While
information technology (IT) will be the fundamental enabling tool, the nucleus
of the knowledge-based economy will be human capital - essentially the capacity
to create, innovate, generate and exploit new ideas as well as apply technology
and exercise superior entrepreneurial skills. Existing industries will become more
knowledge-intensive, while new knowledge-based and enabling industries will
emerge. Accordingly, the economy will be characterized by knowledge-based
activities and high-technology industries accounting for a significant share of
employment, Gross Domestic Product (GDP) and exports. Besides being a factor
of production, knowledge will become a commodity to be traded.

5.04 The knowledge-based economy provides a means to maintain sustainable
rapid economic growth and competitiveness in the medium and long term. In
this context, Malaysia will develop the enabling tools and nurture industries that
have the potential to become knowledge-intensive. The private sector will continue
to be the engine of growth in the knowledge-based economy, while the public
sector will provide the enabling and supporting environment. The social and
equity objectives will remain a crucial element in this new stage of economic
development with the added responsibility of narrowing the knowledge gap
among various income groups, between urban and rural communities and across
regions. A definition of knowledge and the stylized characteristics of a knowledge-based
economy are as shown in Box 5-1.
III. RATIONALE FOR THE KNOWLEDGE-BASED ECONOMY
To Achieve Sustainable Rapid Economic Growth

5.05 Until the mid-1990s, Malaysia depended largely on capital investment to
spearhead economic growth. It then initiated the strategy to shift from an input-driven
to a productivity-driven mode. The basis for this change was the declining
marginal productivity of capital, reflected by the increasing incremental capital
output ratio. The proportion of investment to GDP was at a high level and the
country consistently experienced a resource gap making this position unsustainable
in the long term.

5.06 The Seventh Plan endorsed the task of increasing the contribution of total
factor productivity (TFP) to output as an important strategy. Nevertheless, during.121
Box 5-1
KNOWLEDGE AND CHARACTERISTICS OF A KNOWLEDGE-BASED
ECONOMY
o Knowledge is information that is interpreted and used by decision-makers to meet their goals.
It is a public good, in that, there is no additional cost when shared with other users and others
cannot be excluded from using it once it is created.
o Knowledge is generally divided into two types, namely, knowledge about technology and knowledge
about attributes or tacit knowledge. The latter refers to knowledge gained from experience and
which is often a source of competitive advantage.
o Characteristics of a knowledge-based economy:
– Has abundant resources. Unlike most resources that deplete when used, the knowledge
input is ever expanding in tandem with technology and innovation.
– No location barrier. Innovation in technology opens access to resources and markets all
over the world, creating virtual market places and organizations. There will be increased
mobility of workers and capital.
– A highly educated labour force. The knowledge economy comprises a better-informed
populace as the government invests more on human development. Workers contribute to
ideas, skills and knowledge by using latest technology.
– A high level of per capita wealth. Knowledge-based investments generate increasing returns
to scale and therefore, more wealth for all.
– Open cosmopolitan society attractive to global talent. There will be ample opportunities
for locals to tap foreign knowledge and learn of best business practices as world-class
infrastructure will encourage foreign investment. The population will be willing to accept
and put into practice new ideas and technologies and hence, local companies will become
fit and fully equipped to face global challenges.
– Well connected to other global knowledge nodes. Connectivity to the rest of the world and
technology sharing as well as technology transformation will be made easy with the free
flow of information with lower cost, and reliable infrastructure encourage information and
technology sharing.
– A shift from top-down hierarchical organizational structures to flatter shared-structures
such as networks of semi-autonomous teams. IT development and communications technology
will lead to better interaction among workers and there will be active involvement of
workers in contributing ideas and decision-making.
– Skills and knowledge are key assets. Skills and knowledge become the main assets for the
economy to gain competitiveness.
– Information and communications technologies (ICTs) are pillars of the knowledge-based
economy. Access to networking is essential in acquiring and disseminating knowledge and
the Internet is a key driver of ICT especially in the development of E-based activities,
resulting in new approaches to doing things..122
the Seventh Plan period, the transition to a productivity-driven economy was slow
partly due to the large investments with long gestation periods as well as the
decline in output as a result of the 1997 financial crisis. The lack of skilled
manpower and technology advancement also contributed to this phenomenon.

5.07 The knowledge-based economy will complement efforts to improve
economy-wide productivity through enhancement in TFP as it will add new
value to existing activities and will be accompanied by improvements in technology,
greater innovative capability and the input of higher skilled workforce. An
assessment using input-output analysis confirms that knowledge-intensive industries
have a higher value-added multiplier and higher productivity compared with
non-knowledge intensive industries.

5.08 The knowledge-based economy will also spawn new activities for investment
within existing industries as well as create new industries. The introduction of
high-technology and knowledge-intensive production processes will offer new
investment opportunities within existing industries. The need to move along the
value chain in terms of product design and development as well as packaging,
marketing and distribution will open up investment opportunities in new industries.
Knowledge-enabling industries, particularly in the area of information and
communications technology (ICT), will also generate green areas of investment
in the development of hardware and software as well as infrastructure. The
premium given to conceptualizing and testing of new ideas in the knowledge-based
economy will also become the seedbed for the creation of completely new
products and services. The knowledge-based economy through its contribution
to productivity enhancement and the generation of new areas of investment will,
therefore, increase the long-term growth potential and provide the basis for
continued sustainable rapid growth of the Malaysian economy during the OPP3
period.

To Sustain Competitiveness
5.09 The rapid creation and dissemination of knowledge and information on
the back of advances in ICT are altering the manner in which goods and services
are produced and marketed, and investments are made. Trade and investment
transactions are conducted on-line and are becoming increasingly virtual. This
has changed the basis and format for global and regional competitiveness and
forced developing nations in particular, to review their policies and strategies.
These countries are opening up their markets and economies to encourage freer
flow of trade and investment as well as knowledge, technology and expertise. The
developing economies that wish to take advantage of ICT are being wired-up at.123
a rapid pace to facilitate the process. Given these global developments, it is crucial
for Malaysia to respond to the external environment to remain competitive by
developing into a knowledge-based economy.

5.10 Malaysia is facing increasing competition for its labour-intensive and
lower-end manufactured products from the lower-wage and resource-rich developing
economies such as China, Indonesia and Thailand. Many of the local manufacturers
of these products have been compelled to differentiate their products as well as
refocus on specific market segments to remain competitive. With respect to high-technology
and knowledge-intensive industries, Malaysia has yet to match the
competency of the more advanced economies such as South Korea, Japan and
Taiwan.

5.11 To maintain its competitive edge, Malaysia will need to aggressively
undertake productivity improvements in traditional industries and at the same
time, enhance its technological and knowledge capabilities to move into the mid-range
and higher-end products. It is also imperative for local industries to move
along the value chain into related upstream and downstream activities. These
changes will be necessary so that the manufacturing and services sectors can lead
economic growth during the OPP3 period. Towards this end, the knowledge-based
economy can provide the platform to accelerate this transition.

IV. CURRENT POSITION

5.12 Malaysia started to lay the foundation for the knowledge-based economy
in the mid-1990s, among others, with the launching of the National IT Agenda
(NITA) and the Multimedia Super Corridor (MSC). Some efforts have also been
taken in the areas of human resource, S&T and R&D, infostructure and financing,
as well as to ensure that the development of the knowledge-based economy does
not result in a knowledge divide.

5.13 The objective of NITA is to formulate strategies and promote the utilization
and development of IT, the key enabler of a knowledge-based economy. For
NITA to be realized, demonstrator applications, crucial for the implementation
of IT projects at the national, public sector and community levels, were launched.
The demonstrator applications priority areas are e-economy, which covers e-commerce
and e-business, e-public services, e-community, e-learning and e-sovereignty.

5.14 The MSC strives to create an ideal IT and multimedia environment as well
as a global test-bed to enable Malaysia to be in the mainstream of activities.124
necessary to attract knowledge workers, technopreneurs and high-technology industries.
The basic physical infrastructure, including the telecommunications infrastructure
with 2.5 gigabits per second asynchronous transfer mode-based backbone scalable
to 10 gigabits per second in the MSC, were completed in mid-1999. This will
enable the transfer of voice, image and data. The five designated cybercities of
Kuala Lumpur City Centre, Kuala Lumpur Tower, Technology Park Malaysia,
Cyberjaya and Malaysian Technology Development Corporation- Universiti Putra
Malaysia Incubator Centre have attracted a sizeable number of sophisticated
businesses, world-class technology-led companies and R&D investments. The
First Wave Flagship Application including e-government, multipurpose card and
smart schools are currently being implemented. New programmes and projects for
the Second Wave Flagship Application are also being identified.

5.15 In the area of human resource development, although the overall level of
educational attainment improved, the percentage of those in the labour force
with tertiary education, which is critical to drive a knowledge-based economy,
is still small at 13.9 per cent, as shown in Table 5-1. The enrolment at the tertiary
level of the age cohort 17-23 years increased to 25 per cent following the
substantial allocation provided for tertiary education, but it is still lower compared
with many of the newly industrialized economies (NIEs), as shown in
Table 5-2. In addition, enrolment at the first-degree level in public institutions
continues to be biased towards the arts courses. While it is recognized that the
arts courses are also important in the context of a knowledge-based economy,
the need to create a critical mass of scientific and technical manpower necessitates
higher enrolment in these fields. Enrolment in science and technical fields
constituted only 31 per cent of total enrolment in 1999. This was largely due
to the lower number of science stream students at the secondary school level,
comprising 25.7 per cent of the total number of students in 1998, which was below
the targeted 60:40 science to arts ratio.

Source: The World Competitiveness Yearbook, 1998, 2000
Note: 1 Refers to year 2000 and age cohort 17-23 years.
5.16 S&T and R&D are important determinants of innovation and knowledge
generation and need to be given greater emphasis. Malaysia’s R&D expenditure
was 0.4 per cent of GDP, as shown in Table 5-3, and a significant proportion
of this expenditure was in the agricultural sector. The proportion of R&D expenditure
to GDP in Malaysia was low compared with some countries that have successfully
built indigenous capability to innovate, produce new technology as well as
design new products. S&T and R&D efforts were partly constrained by the lack
of a critical mass of scientists and engineers. In 1998, the number of scientists
and engineers per one million population was 500, compared with the Second
Outline Perspective Plan (OPP2) target of 1,000 scientists and researchers per
one million population by 2000.

5.17 With respect to infostructure, Malaysia is an emerging global hub and
universal provider in terms of its ICT penetration, quality of services, content.126
and infrastructure, and access, as shown in Table 5-4. While considerable progress
was achieved in communications and multimedia, Malaysia lags behind the NIEs
in terms of the availability and diffusion of communications infrastructure, ICT
penetration rates, development of local content and security of infostructure
networks.

5.18 Most of the telecommunications network development is concentrated in
the Klang Valley and the urban centres of Ipoh, Pulau Pinang and Johor Bahru,
resulting in disparity in terms of accessibility between the urban and rural areas.
The telephone penetration rate in 2000 was 28.6 per 100 population for urban
areas and 11.7 per 100 population for rural areas.
5.19 With regards to the development of local content in IT and multimedia,
several Malaysian portals and sites have been set up. However, local content
which reflects the culture and values of the nation that is digitally available and
TABLE 5-3
PUBLIC SECTOR R&D EXPENDITURE AND NUMBER OF
SCIENTISTS AND ENGINEERS FOR SELECTED COUNTRIES
R&D Expenditure Scientists and Engineers
(% of GDP) (per million population)
1998 1985-1995
Australia 1.7 3,166
Canada 1.6 2,656
China 0.7 350
India 0.7 149
Ireland 1.5 1,871
Japan 2.9 6,309
South Korea 2.7 2,636
Malaysia 0.4 500 1
New Zealand 1.0 1,778
Singapore 1.8 2,728
United Kingdom 1.9 2,417
United States 2.5 3,732
Sources: The World Competitiveness Yearbook, 2000
World Development Report, 1999/2000
Note: 1 Refers to preliminary figures for year 1998
Country.127
TABLE 5-4
KEY PENETRATION PERFORMANCE INDICATORS, 1998
Indicator Status 1
Teledensity (main lines per 100 population) 21.6 Level 3
Cellular Mobile Penetration 10 Level 3
(cellular subscribers per 100 population)
Internet Penetration Per Household 11.9 Level 3
Internet Penetration Per 100 Population 6 Level 3
ISDN Penetration Per 100 Population 0.04 Level 3
Internet Host Per 100 Population 1.9 Level 3
Computers Per 100 Population 8 Level 3
Computer Power Per 100 Population (MIPS) 1,211 Level 3
Pay TV Penetration Per Household (%) 2.1 Level 3
Average Performance Level 3
Notes:
1 Level 1 (World Class) - comprises the United States, United Kingdom, Finland and Japan.
Level 2 (Advanced) - comprises Germany, South Korea, Taiwan and Singapore.
Level 3 (Emerging) - comprises Argentina, Chile, Thailand and China.
Level 4 (Rudimentary) - comprises India, Indonesia, Honduras and Nigeria.
accessible for the various application requirements, is inadequate.
5.20 Malaysia has made significant headway in terms of creating a conducive
regulatory environment. Several legislations were amended and new ones enacted,
including the Digital Signature Act 1997, Computer Crimes Act 1997, Telemedicine
Act 1997, Copyright (Amendment) Act 1997 as well as Communications and
Multimedia Act 1998. There is, however, a need to further improve the regulatory
framework to support the orderly development of the knowledge-based economy.
5.21 The Government initiated the development of the venture capital industry
as an alternative source of financing and allocated RM1.1 billion for the purpose.
The Malaysian Exchange of Securities Dealing and Automated Quotation
(MESDAQ) was established and its rules were liberalized to act as an attractive
exit mechanism for technology-based investments of venture capital corporations
(VCCs). The Kuala Lumpur Stock Exchange (KLSE) also provided listing facilities.128
for high-technology companies. The venture capital industry, however, is still at
its infancy and will need to be further strengthened.

5.22 In addressing the issue of digital divide within the country, several initiatives
such as the computerization of rural schools and provision of Internet access in
strategic locations, have started. However, there is a need to accelerate the
implementation of programmes targeted to improve access and narrow the equity
gap. Malaysians with no formal education, senior citizens, people with disabilities
and those in the 15-64 age group outside the labour force are particularly at risk
of being marginalized by the ICT revolution. In terms of infostructure, gaps exist
in telephony development and disparity of Internet access between states. A total
of six states was below the national average of 20 per cent in telephone penetration
rate while almost 70 per cent of Internet users were concentrated in the Federal
Territory of Kuala Lumpur, Selangor, Penang and Johore. In addition, given that
the majority of the population is Bahasa Malaysia-literate, the lack of local
content restricted access to source of information.

5.23 In order to assess Malaysia’s readiness to become a knowledge-based
economy, the Knowledge-based Economy Development Index (KDI) was developed.
It compares Malaysia’s position relative to 21 other countries which are mainly
developed. The KDI is derived from selected key factors required to drive a
knowledge-based economy, namely, computer infrastructure, infostructure, education
and training as well as R&D and technology. The indicators used in the computation
of the index are, as shown in Box 5-2.

5.24 In terms of the KDI, Malaysia is in 17th position, as shown in
Chart 5-1. The relatively better position for R&D and technology compared to
computer infrastructure, infostructure as well as education and training, as shown
in Table 5-5, is attributed to Malaysia’s large exports of electronic and electrical
goods. With regards to its readiness for a knowledge-based economy, Malaysia
is better prepared with respect to its telecommunications infrastructure and
literacy level but has to intensify efforts to improve its R&D capability, computer
usage, Internet connectivity and higher education enrolment, as shown in

Chart 5-2..129
Box 5-2
COMPONENTS OF THE KNOWLEDGE-BASED ECONOMY
DEVELOPMENT INDEX
Computer Infrastructure
Examines the extent of availability of computers, specifically personal computers (PC) and the
Internet, as a means of accessing the information superhighway. This is measured through:
o share of worldwide computers in use
o computers per 1,000 population
o share of total worldwide Millions of Instructions per Second (MIPS)
o computer power per capita
o connections to the Internet
Infostructure
Comprises networks, appliances and legislation necessary to provide the conduit and enabling
environment for seamless flow of information for learning and advancement at the personal, organizational
and national levels. It includes indicators such as:
o investment in telecommunications
o main telephones in use per 1,000 population
o cellular mobile telephone subscribers per 1,000 population
o television sets per 1,000 population
o radios per 1,000 population
o fax machines per 1,000 population
o international call cost
o newspaper circulation
Education and Training
Critical to produce the core input of a knowledge-based economy i.e. human resource. This is
assessed in terms of:
o total expenditure on education per capita
o literacy rate
o student-teacher ratio (primary)
o student-teacher ratio (secondary)
o secondary enrolment
o higher education enrolment
Research & Development (R&D) and Technology
Looks at the level of R&D and technology development in the country. R&D essentially reflects
the capacity to innovate and apply new technologies. This includes:
o high-technology exports as a proportion of manufacturing exports
o number of scientists and engineers in R&D
o number of R&D personnel nationwide per capita
o total expenditure on R&D as a per cent of GDP
o average annual number of patents granted to residents
o business expenditure on R&D per capita.130
CHART 5-1

V. MAJOR THRUSTS
5.25 To develop a knowledge-based economy, concerted efforts must be made
to put the building blocks in place. In this respect, Malaysia will focus on strengthening
the critical elements to support the knowledge-based economy. The major thrusts
of the knowledge-based economy development plan for Malaysia will be as
follows:
o building the knowledge manpower base, among others, through a
comprehensive review of the education and training system, the introduction
of a system for life-long learning and a brain-gain programme;
o intensifying S&T and R&D initiatives towards strengthening the national
innovation system;
o accelerating the development of infostructure to facilitate the development
of the knowledge-based economy;
200
400
600
No. of computers per 1000 people
Share of total worldwide MIPS
Computer power per capita
Connections to Internet
Investment in telecommunications
Telephone lines
Cellular mobile telephones
Television sets
Radios
Fax machines
International call costs
Newspaper circulation Total Expenditure
on Education
Literacy
Primary pupil-teacher ratio
Secondary pupil-teacher ratio
Secondary enrolment
Tertiary education enrolment
High-tech exports
Scientists and Engineers in R&D
R&D personnel nationwide
Total Exp. on R&D
Patents granted to residents
Business Exp. on R&D
Share of worldwide
computers in use
MALAYSIA
UNITED STATES
Note: The ‘Knowledge wheel’ shows Malaysia’s preparedness for the knowledge-based economy.
The wider the spread on the wheel, the more prepared it is.

CHART 5-2
KNOWLEDGE WHEEL: MALAYSIA AND UNITED STATES, 2000.133
o restructuring the financial system to provide appropriate types of financing
for knowledge activities, avail the tools for macroeconomic management
and withstand the challenges associated with the knowledge-based economy;
o raising the knowledge-content in the agriculture, manufacturing and services
sectors;
o getting the private sector to prepare themselves with greater urgency for
the knowledge-based economy as well as identify and exploit the opportunities
that will be generated;
o reinventing the public sector to become more proficient in the acquisition,
utilization, dissemination and management of knowledge;
o fostering the ethical utilization of knowledge; and
o taking affirmative action to bridge the digital divide between income,
ethnic and age groups, urban and rural communities, and across regions.
Building the Knowledge Manpower

5.26 Human capital will be the key driver of growth in the knowledge-based
economy and will determine the competitive position of the nation. The successful
development of the knowledge-based economy will, therefore, largely depend
on the quality of the education and training system. The institutional framework
to ensure an adequate supply of appropriately qualified and skilled manpower
and to continuously retrain them, will be put in place.

5.27 The education system from pre-school to tertiary level will be reviewed
to enable it to meet the manpower requirements of the knowledge-based economy.
The key areas that will be reviewed include the curriculum, teaching methods,
enrolment at the tertiary level and the quality of the teaching profession. The
curriculum will emphasize the teaching of core competencies and will be in line
with changing manpower requirements. Vocational and technical education and
training will be given greater prominence and will be refocused to produce the
skills required by the knowledge-based economy. In addition, teaching methods
will be transformed to promote creativity, originality, innovation as well as
thinking and analytical skills. The use of IT as a tool for teaching and learning
will be made more pervasive..134

5.28 Concerted efforts will be taken to increase enrolment at the tertiary level,
particularly for science and technical courses. Public and private tertiary institutions
will need to become more market-driven and proactive by moving beyond traditional
areas to new fields of education required by a maturing knowledge-based economy.
They will be required to enhance the standard of education and produce highly
employable manpower. The quality of the teaching profession will also be improved
by attracting better qualified people into the teaching profession, undertaking a
programme of continuous training, and reviewing their scheme of service in
terms of remuneration and promotion opportunities.

5.29 A system of life-long learning will be promoted to ensure that workers
can continuously upgrade their skills and knowledge in order to remain relevant
in the environment of rapidly changing technology and work processes as well
as to nurture a learning society. Both the public and private sectors will be
encouraged to set up the necessary infrastructure to facilitate life-long learning.
In this regard, educational institutions will be required to introduce flexible
learning approaches in terms of duration of course, entry requirements and mode
of teaching as well as ensure affordability. Community colleges and resource
centres will be set up to increase accessibility to acquire and disseminate knowledge.
Firms and industries will be encouraged to provide incentives to their employees
to relearn and continuously upgrade their skills. Towards this end, financial
institutions will be encouraged to provide low interest loans to those interested
in upgrading their skills.

5.30 To meet the immediate manpower needs of the knowledge-based economy,
the Government will review on-going initiatives and undertake a coordinated
brain-gain programme to attract qualified Malaysians working abroad as well as
highly skilled foreigners. Among others, the programme will seek outstanding
Malaysian students, quality Malaysian technopreneurs and highly skilled personnel
from abroad as well as liberalize conditions for their recruitment. Appropriate
steps will also be taken to ensure that those who set up their operations in
Malaysia prior to this programme are not disadvantaged.
Intensifying S&T and R&D

5.31 Malaysia needs to harness its potential to drive the key sectors in S&T
and R&D and become a competitive knowledge-based economy. In this context,
during the OPP3 period, priority will be accorded to increasing S&T and R&D
manpower, improving related infrastructure, strengthening existing mechanisms
for supporting R&D and technology development and diffusion, promoting S&T.135
awareness as well as enhancing S&T management. These will provide the basis
for a well-functioning national innovation system and underpin the National
Science and Technology Policy.

5.32 To provide the impetus for S&T and R&D initiatives, the public sector
will increase the proportion of the budget allocated for this purpose. The funding
mechanism for R&D activities will be streamlined to ensure optimum utilization
of funds. Proposals for research will be evaluated by a panel of experts, including
foreigners, in the proposed area of research. The corporate sector, including the
small- and medium-scale enterprises (SMEs), will be provided significant incentives
to allocate a greater proportion of their revenue for R&D.

5.33 Greater selectivity will be exercised in terms of the areas for S&T
development to maximize benefits to the nation. The areas where Malaysia has
already built its strength and where the opportunities for growth and leadership
are highest, will be promoted. In line with this, S&T and R&D efforts will be
refocused and reprioritized by systematically identifying areas, including those
that are emerging and generic, that are strategic for Malaysia to develop into
a knowledge-based economy.

5.34 To strengthen the capacity to identify, assimilate and exploit knowledge,
the public sector research institutions will enhance their level of expertise and
capability. The private sector will be encouraged to do the same. While efforts
will be taken to expand the supply of S&T manpower, firms will be encouraged
to offer appropriate training to employees to upgrade their skills. FDI will be
increasingly used to leverage R&D and technology capabilities from abroad. The
private sector will be urged to forge strategic alliances with suitable foreign
partners to ensure that R&D activities are not insular. Malaysia will seek out
and provide assistance to multinational companies with strong R&D capability
in strategic areas to invest in the country. In addition, the incentive mechanism
for FDI will be reviewed to pay special attention to those that are supported by
new and value-adding R&D activities to be located in Malaysia.

5.35 In order to improve the diffusion of research findings and increase its
commercial applicability, efforts will be taken to forge greater collaboration
among public research institutions, universities and clusters of industries. Industry
associations will be encouraged to take the lead in the implementation of industry-specific
programmes.

5.36 In an effort to instil greater awareness and foster greater appreciation for
science, the teaching of science in schools and tertiary institutions will be.136
reviewed regularly to ensure that the content is relevant, up-to-date and is taught
in an interactive and lively manner. In addition, the Government in partnership
with industry and non-governmental organizations (NGOs) will undertake
programmes to popularize and promote S&T.
Accelerating the Development of Infostructure
5.37 Malaysia will upgrade its communications and multimedia infrastructure
to be world-class so that it can support the rapid flow and accessibility of
information within the country and across countries at competitive prices. Given
the increasing importance of the Internet to support e-activities and knowledge-intensive
activities, there is a need for an integrated high-bandwidth national
backbone. A longer term perspective will be taken in the planning and implementation
of this facility to ensure that such communications and multimedia infrastructure
is state-of-the-art and will be able to keep pace with the rapid advances expected
in ICT.
5.38 Efforts will be directed to ensure equitable distribution and provision of
telecommunications infrastructure and services to underserved areas and groups
to bring them into the mainstream of the knowledge-based economy. For this
purpose, an effective universal service obligation programme will be put in
place. The Government will complement private sector contribution to ensure
network roll-out to underserved areas and groups. The services offered will be
made affordable. Specific targets to enhance penetration must also be set for the
medium term as well as for the OPP3 period. In addition, coordinated efforts
will be taken to accelerate the setting up of the Internet and multimedia kiosks
in strategic locations.
5.39 Local content development will be given a strong push. In addition to
catering for the global market, the need to preserve Malaysia’s history and
heritage and to exploit the local knowledge embedded in communities will be
duly recognized. Incentives will be provided to individuals and institutions of
learning to produce local content in local languages as well as to produce user-friendly
software and appropriate Internet access technology. The private sector
and NGOs will be encouraged to play a significant role in the area of content
development. Towards this end, among others, the regulatory framework governing
the local content industry will be reviewed and local players will be encouraged
to undertake R&D and develop their skills as well as form strategic alliances
with foreign partners..137

5.40 A more integrated and comprehensive approach will be taken in developing
the regulatory environment and institutional framework to create a conducive
environment for the development of the knowledge-based economy and proliferation
of knowledge activities. The legal framework will be fine-tuned to support the
orderly operation of electronic activities such as e-commerce, e-government, e-financing
and e-education as well as to support a flexi-working system. Legislation
relating to intellectual property rights, and protection of privacy and security
will be reviewed to improve the flow of information and knowledge. Malaysia
will also participate in initiatives to coordinate and harmonize legal and institutional
arrangements at the regional and global level to safeguard national interests.
Restructuring the Financial System

5.41 The financial system including the modalities and sources of financing,
rules and regulations as well as institutions, will be realigned to support the
growth of knowledge-based economy activities and industries. The banking
system, which currently serves as the main source for corporate financing will
introduce innovative lending instruments and develop capability to assess future
cash flow potential of knowledge-based projects. In addition, it will expand the
scope of lending beyond core production activities to upstream and downstream
activities, particularly for R&D, product development and marketing. In this
respect, regulatory agencies will strive to achieve a balance between innovation
and prudence.

5.42 Efforts will be taken to strengthen the venture capital industry to become
more investor-friendly and responsive to the needs of start-ups. VCCs must
enhance their capability to identify and evaluate potential projects as well as be
more willing to take risk. The Government will also encourage the inflow of
foreign venture capital funds as well as consider increasing foreign equity ownership
in VCCs in order to tap foreign expertise and experience in this area. To promote
venture capital investment opportunities in Malaysia, among others, the coordination
mechanism linking potential investors and financiers will be improved, regular
publications, fairs and technomarts will be held and websites will be created.
To ensure that the Government venture capital funds will be able to add value,
their management will be outsourced to experienced and reputable VCCs including,
foreigners. To widen the sources for venture capital funding, the participation
of trusts and insurance funds will be considered. In addition, the incentive
package for the venture capital industry will be reviewed so as to accelerate
high-technology initiatives..138

5.43 The capital market will become an increasingly important source for raising
funds for new and expanding companies engaged in knowledge-based activities.
Initiatives to develop the capital market will be accelerated with the introduction
of innovative funding instruments and the development of alternative capital
raising avenues to finance high-technology companies.

5.44 Rapid advancements in ICT are expected to further accelerate the volume
and speed of capital flows and other financial transactions across borders. In this
regard, a comprehensive early warning system, financial sector safety nets as
well as related prudential regulation and supervision will be put in place. The
financial sector as a whole will reorientate itself to support the needs of the
growing e-based transactions in the knowledge-based economy.
Raising the Knowledge-content in Agriculture, Manufacturing and Services
Sectors

5.45 While all sectors of the economy are expected to become more knowledge-intensive,
efforts will be intensified to increase the knowledge-content in the
agriculture, manufacturing and services sectors. The greater application of knowledge
will strengthen as well as increase the dynamism and competitiveness of these
sectors and contribute to sustained rapid economic growth. These sectors offer
great potential in the context of a knowledge-based economy as they have
extensive scope for further innovation and application of new technologies. In
addition, the rapid advancements in ICT, which will underpin the growth of the
knowledge-based economy, will itself spawn new activities and areas of investment
in these sectors. Further, Malaysia has already acquired world-class knowledge,
technology and skill capabilities in selected industries within these sectors and
is, therefore, well placed to build on this advantage to drive the knowledge-based
economy. This also places Malaysia in a favourable position to draw foreign
expertise as well as investments into these sectors.

5.46 In the agriculture sector, the intensification of knowledge-content particularly
through the more extensive application of modern technology and life sciences
is expected to increase output substantially. Biotechnology will also contribute
towards increases in yield, quality and crop protection. In addition, the development
of life sciences will create increased demand for agricultural produce as inputs
into the production of items such as edible vaccines, bio-pesticides and bio-pharmaceuticals.
To facilitate the optimal utilization of knowledge in the agriculture
sector, innovation networks will be established among researchers, producers
and extension workers. The concept of innovation networks will also be extended.139
to permanent food production areas in line with the strategy to increase food
output. The establishment of innovation networks, while providing the catalyst
for the modernization of the agriculture sector, will enhance Malaysia’s position
as a leader in agriculture research as well as provide a strong base for developing
state-of-the-art technology particularly for tropical food production. Appropriate
programmes will be implemented so that smallholders will also benefit from
these developments.

5.47 To remain competitive and maintain its position as an important contributor
to economic growth, the manufacturing sector will have to undertake rapid
structural change. Firms must aspire to move up the technology ladder to produce
high-end products that generate greater value added. Within each industry, it will
become pertinent to identify niche products where Malaysia has the knowledge-edge
and develop them into world-class products. To achieve sustained
competitiveness of identified products and industries, the supporting cluster
industries and services will have to be developed simultaneously. Malaysian
firms will be encouraged to move along the value chain into knowledge-intensive
activities.

5.48 In the services sector, efforts will be taken to modernize and enhance its
efficiency so that it becomes more competitive as well as supports an advanced
industrial sector. While developing the traditional sectors, there is the need to
identify and develop new service products that will be generated by the knowledge-based
economy.

5.49 In order to ensure that SMEs are brought into the mainstream of the
knowledge-based economy, the Government will formulate programmes to accelerate
the creation of a critical mass of capable, progressive and efficient SMEs.
Specific programmes will be introduced to empower SMEs through knowledge
and information, inculcate new management mindsets and IT practices, and
encourage R&D through collaborative institutional networking. To facilitate the
participation of SMEs in knowledge-intensive activities, particularly in the
manufacturing and services sectors, they will be encouraged to establish supply
linkages with large high-technology companies as well as form smart partnerships
and strategic alliances with foreign high-technology SMEs. The Government
will facilitate access of SMEs to venture capital funding as well as funds to carry
out R&D so that they can design, innovate and produce components and products
and thereby effectively participate in the new industries emerging in the knowledge-based
economy. Industry associations will also need to be more active and
committed in assisting the development of SMEs so that they will be able to
partake in the opportunities that will be generated in the knowledge-based economy..140

5.50 The Government will continue to promote investments in high-technology
and knowledge-intensive activities, including FDI. It will provide competitive
fiscal and non-fiscal incentives as well as customized incentives for highly
innovative and strategic activities. The incentive mechanism will favour investments
that involve and include R&D, designing, testing, prototyping, packaging and
distribution as well as new industries and services associated with a knowledge-based
economy.
Preparing the Private Sector for the Change

5.51 The private sector will continue to be the engine of growth in the knowledge-based
economy. The private sector including the SMEs, will have to swiftly
redefine their production processes by applying appropriate and cost-efficient
technology. They must also take a global view as markets will become virtual
and borderless. Traditional modes of sourcing inputs and marketing products
will have to be complemented by the greater use of e-trading and e-business
tools. In addition, the private sector will need to create new value by developing
capacity to undertake R&D, product development and innovation, as well as
package, market and distribute their products efficiently and speedily. They must
identify niche areas in which they have potential and build their competency to
world-class standards.

5.52 To succeed and stay ahead, the private sector will have to adopt best
practices and benchmark themselves at a higher level than the best firms in their
respective industries. Entrepreneurial and managerial skills must be sharpened
to handle new challenges. Efforts must also be taken to develop a sufficient
number of high quality technoprenuers to drive firms. In addition, the private
sector must be more willing to take risk and venture into new areas and opportunities
that will be generated by the knowledge-based economy.

5.53 In order to marshal the private sector to respond with urgency, the
Government will create greater awareness of the opportunities that will be
generated through better dissemination of information. The Government will
also avail the necessary infrastructure and conducive climate.
Reinventing the Public Sector

5.54 The public sector will transform itself to propel the development of the
knowledge-based economy. It will continue to play a facilitative role by providing.141
the appropriate environment and more importantly act as a catalyst for the private
sector to spearhead the development of the knowledge-based economy. Among
the important tasks for the public sector in respect of providing an appropriate
environment for private sector participation will be maintaining a stable macroeconomic
environment, making available the basic infrastructural facilities, developing an
education and training system capable of supplying the knowledge manpower,
encouraging as well as undertaking R&D, creating a conducive regulatory framework
and initiating the development of flexible financing mechanisms. The public sector
will be directly engaged in ensuring the continued achievement of social and
distributional objectives, including the critical responsibility of implementing strategies
to narrow the knowledge gap.

5.55 The public sector will reinvent itself by using advanced IT and multimedia
technology, benchmarking against best practices, and adapting its mind set and
operational processes to perform the tasks required of it in the context of the
knowledge-based economy. The creation of an e-government will also be expedited.
The e-government will be used as a means to improve the internal operations
of the Government as well as the delivery of public services. It will improve
efficiency, accessibility and quality of its services. In addition, it will facilitate
the offering of new services and information, and open up new service levels
consistent with the requirements of the knowledge-based economy.

5.56 The skills of the public sector will be continuously upgraded and programmes
will be introduced to instil greater resourcefulness and nurture innovative capability
within the public sector. The public service, while continuing to right size, will
recruit competent and well-qualified people. Efforts will also continue to reorganize
the structure of the public sector to become more responsive and flexible as well
as more transparent.
Fostering the Ethical Utilization of Knowledge

5.57 With the advent of the Global Information Age, a new code of ethics is
needed to ensure that the knowledge which is freely and readily available is
positively used to bring well-being and prosperity rather than create havoc and
destruction. The advances made by ICT have made the location of learning
centres less relevant than before. Students can interact with teachers halfway
across the world in real time, while recorded knowledge can be accessed freely,
completely and from anywhere. There is an explosion in the volume and variety
of information available on the Internet, and it is possible to come into contact.142
with individuals in different parts of the world who are able to provide opinion
and feedback on any particular subject matter. The information available could
be useful and constructive, on one hand, or trivial, wrong or even potentially
destructive and life threatening, on the other. It is, therefore, important for
Malaysians to maintain a high level of ethics and morality so as to be able to
handle and use knowledge well.

5.58 Serious consideration will be given to ensure that the knowledge acquired
will be utilized in a positive and ethical manner and is beneficial to the individual
and nation. As part of the effort to reinforce positive values through the education
and training system, students will be taught the importance of using knowledge
properly for the purpose of increasing understanding and well-being. Parents
will have to provide guidance to their children so that their creative energies are
utilised in a wholesome and positive manner. The media and other forms of
information dissemination will be encouraged to enhance public awareness on
the importance and benefit of maintaining an ethical conduct with regard to the
positive utilization of knowledge. The private sector and NGOs will need to
complement the efforts of developing a new code of ethics for the Information
Age. To deter the abuse of knowledge and computer crimes, the implementation
and enforcement of IT-related laws will be strengthened.
Bridging the Digital Divide

5.59 Social and equity objectives will remain a fundamental consideration
with the added responsibility of ensuring that the knowledge-based economy
does not widen disparities between various sections of Malaysian society. Affirmative
action as outlined in the New Economic Policy (NEP) and the National Development
Policy (NDP) will be continued to ensure that participation in the knowledge-based
economy ultimately reflects the ethnic composition of the population.
Strategies will be designed to enable all Malaysians, particularly Bumiputera,
to gain from the opportunities created through the knowledge-based economy.
5.60 Telecommunications infrastructure will be expanded throughout the country
to achieve total connectivity. The focus will be to ensure widespread diffusion
of ICT and access to rural areas and disadvantaged groups. Computers and
Internet access will be made more affordable. There will also be a parallel
programme to develop local content to increase access to information, particularly
in Bahasa Malaysia to reach out to all Malaysians. Efforts will also be taken to
foster greater awareness on the importance of English to facilitate maximum.143
access to information. The Government in partnership with the private sector will
introduce ICT literacy programmes to educate targeted population groups based
on their needs and capability. They will also provide appropriate opportunities and
financial assistance to the disadvantaged to be an active participant in the knowledge-based
economy. In addition, efforts will be taken to create greater awareness on
the importance of the knowledge-based economy, particularly among the poor and
the lower income group as well as to ensure their equitable participation.
VI. CONCLUSION
5.61 The knowledge-based economy presents the way forward to achieve
sustainable rapid growth and remain globally competitive in the medium and
long term. In order to develop a knowledge-based economy, it is imperative to
address the constraints and resolve them swiftly. While Malaysia has set some
of the basic foundations of a knowledge-based economy, efforts will be accelerated
in the key areas of HRD, S&T and R&D, infostructure, financing and equity,
which are fundamental to building Malaysia’s knowledge-based economy..Chapter 6
Investing In People.146.147
I. INTRODUCTION
6.01 Significant achievements were made in human resource development
during the Second Outline Perspective Plan (OPP2) period with rapid employment
growth and increased accessibility to education and training. The economy
attained full employment beginning 1993 and unemployment was maintained at
a low level even during the financial crisis in 1997-1998, due to the measures
undertaken by the Government. Education and training institutions expanded
rapidly to cater to the increasing demand for educated and skilled manpower.
The private sector also became a major provider of education and training
mainly as a result of the liberalization of education in the latter part of the OPP2
period.
6.02 As Malaysia enters the 21 st century, human resource development will
continue to remain a key strategy in ensuring that all Malaysians share in the
nation’s prosperity and develop a dynamic labour force that is globally competitive.
The development of a knowledge-based economy coupled with emerging
technologies and globalization will influence future growth trends in the demand
for skills and expertise as well as creating new economic opportunities that can
be translated into income improvements for all Malaysians. Priority will, therefore,
be given to increase accessibility to quality education and training as well as
strengthening the human resource base to support the development of a knowledge-based
economy during the Third Outline Perspective Plan (OPP3) period.
II. THE THRUST OF HUMAN RESOURCE DEVELOPMENT
6.03 The thrust of human resource development in the OPP3 will be to prepare
a workforce that is capable of meeting the challenges of a knowledge-based
economy so as to enhance the productivity and competitiveness of the economy.
CHAPTER 6
Investing In People.148
The transformation of the economy will increase demand for technological skills
and expertise as well as a labour force equipped with tacit knowledge and a high
level of thinking skill. Efforts will, therefore, be made to ensure that the education
and training system has the capacity to enhance the quality of intellectual capital
as well as expand the human resource base.
6.04 The pervasiveness of information technology and increasing knowledge-intensity
of the economy will create new employment opportunities but will also
result in skill redundancies and job displacements. It is critical that the labour
force possesses the ability to adapt and adjust to the changing demands of
technological advances in the knowledge-based economy. Lifelong learning will
be promoted among Malaysians as it is critical for them to continuously acquire
new knowledge to upgrade their skill base after leaving the formal education and
training system. Efforts will also be undertaken to retrain and reskill the labour
force to minimize the effects of structural unemployment as well as to meet the
new skill requirements of the knowledge-based economy.
6.05 The education and training system will be reoriented so that the knowledge,
skills and expertise acquired can support the knowledge-based economy. Priority
will be given to the teaching of Science, Mathematics and languages as well as
the development of extra-functional and critical thinking skills. The inculcation
of positive values such as a sense of belonging, drive for excellence, loyalty and
love for the country as well as discipline, integrity, dedication and other positive
attributes will also be emphasized. Accessibility to quality education and training
at all levels will be increased. To prepare a workforce that is capable of meeting
the challenges of the knowledge-based economy, efforts will be intensified to
encourage the private sector to increase their involvement in providing quality
education and training to complement the Government’s efforts as well as to
develop Malaysia as a regional centre of educational excellence.
6.06 Priority will be given to improve the quality of education in rural and
remote areas. Towards this end, education facilities will be expanded and upgraded
to reduce the performance gap between schools in urban areas and rural and
remote areas. Schools in rural and remote areas will be equipped with better
facilities and amenities including the supply of electricity and water as well as
adequate educational support services. More schools with hostel facilities will
also be established in these areas..149
6.07 With increased use of information and communications technology (ICT),
work organization is expected to become less hierarchical and management
structures flatter, resulting in some structural unemployment and job displacements.
In this regard, efforts will be undertaken to minimize the problems arising from
structural unemployment through more innovative human resource development
and labour market strategies to minimize skill mismatches and facilitate labour
mobility. At the same time, to ensure that Malaysia continues to be competitive,
wage increases must commensurate with enhancements in productivity brought
about by improvements in the quality of the labour force.
III. POPULATION, LABOUR FORCE AND EMPLOYMENT
Population
6.08 The population of Malaysia is projected to increase to 28.9 million in
2010, at an average growth rate of 2.2 per cent per annum. This growth rate is,
however, slower compared with the 2.5 per cent per annum achieved during the
OPP2 period, as shown in Table 6-1. As more women pursue higher levels of
education or training, the overall fertility rate, which is the number of children
TABLE 6-1
POPULATION STRUCTURE, 1990-2010
(‘000 persons)
Average
Annual
1990 % 2000 % 2010 % Growth Rate
(%)
2001-2010
Total Population 18,102.5 23,265.9 28,904.2 2.2
Malaysian Citizen 17,336.5 100.0 22,032.8 100.0 27,348.6 100.0 2.2
Bumiputera 10,586.1 61.1 14,564.5 66.1 18,668.2 68.3 2.5
Chinese 4,755.8 27.4 5,583.8 25.3 6,509.0 23.8 1.5
Indian 1,332.6 7.7 1,628.6 7.4 1,941.7 7.1 1.8
Others 662.0 3.8 255.9 1.2 229.7 0.8 -1.1
Non-Citizen 766.0 1,233.1 1,555.6 2.4
Age Group
0-14 6,814.7 37.7 7,705.2 33.1 8,595.9 29.7 1.1
15-39 7,645.4 42.2 9,776.8 42.0 11,793.6 40.9 1.9
40-64 3,134.6 17.3 4,847.1 20.9 7,201.8 24.9 4.0
65+ 507.8 2.8 936.8 4.0 1,312.9 4.5 3.4
Dependency Ratio (%) 67.9 59.1 52.2.150
that a woman will bear during her child-bearing age, will continue to decline. In
addition, delayed marriages, increasing urbanization, higher cost and improved
standards of living is expected to reduce family size.
6.09 It is expected that with the decline in the fertility rate, there will be a
change in the demographic structure of the population during the next ten years.
The population in the 14 years and below age group is expected to grow at an
average rate of 1.1 per cent per annum, slower than that in the OPP2, reflecting
the decline in total fertility rate from 3.2 in 2000 to 2.8 in 2010. Consequently,
the proportion of this age group to total population will decline to 29.7 per cent
in 2010 from 33.1 per cent in 2000. On the other hand, those in the working
age group, that is, 15-64 years will increase from 62.9 per cent in 2000 to 65.7
per cent in 2010. Similarly, the proportion of the age group 65 years and above
will also increase due to the better life expectancy resulting from improved
quality of life.
6.10 These changes in the age-structure of the population will have a significant
impact on the economy. The growth in the working-age population implies the
need to create more employment opportunities as well as increased provision of
education and training facilities. Since the proportion of the working-age population
is expected to be greater than that of those below 15 years and those above 65
years, the dependency ratio which is the ratio of dependants to every 100 persons
of working age, will decline from 59.1 in 2000 to 52.2 in 2010. This indicates
that a high proportion of the population will be economically active and therefore
will be a positive factor in contributing to increased output.
6.11 The median age of the population will be 26.7 years in 2010, reflecting
a young population. This is expected to result in the formation of more family
units and households during the OPP3 period. With improving incomes and
increasing urbanization as well as an increasing number of families, the demand
will be for better quality housing and related facilities such as telecommunications
and Internet connections. The Government will, through appropriate legislation,
ensure that housing developers conform to prescribed standards in the construction
of houses and provide a conducive living environment. In addition, to meet the
requirements of the increased proportion of those aged 65 years and above,
policy initiatives will be instituted to expand geriatric care services.
Labour Force
6.12 The size of the labour force is expected to increase by 3.1 per cent per
annum or an additional 3.3 million during the OPP3 period, to reach 12.9 million.151
in 2010. The growth of the labour force is attributed to the increase in the size
of the working-age population and in the labour force participation rate (LFPR)
from 65.5 per cent in 2000 to 68.1 per cent in 2010. The labour force will be
better educated with an increased proportion of 35 per cent attaining tertiary
level education, as shown in Table 6-2. The expansion in education and training
facilities as well as the growth in virtual learning will provide more opportunities
for Malaysians to pursue tertiary education.
6.13 With improved levels of education and expanding employment opportunities
as well as the institution of more flexible working arrangements, more women
are expected to participate actively in the economy. The female labour force
participation is expected to increase from 44.5 per cent in 2000 to 49.0 per cent
in 2010. As more women attain higher levels of education, they are expected
to increase their participation rate in the professional and technical group. In
2000, they constituted only 44.5 per cent of the professional and technical
category of which the majority were employed as teachers and nurses. The
increase in the female LFPR will increase the supply of local labour and this
will reduce the need for foreign workers and professionals.
TABLE 6-2
PROFILE OF LABOUR FORCE, 1990-2010
(‘000 persons)
1990 % 2000 % 2010 %
Total Labour Force 7,042.0 9,572.5 12,939.6
Age Distribution 100.0 100.0 100.0
15-24 2,014.0 28.6 2,498.3 26.1 3,112.2 24.1
25-34 2,204.1 31.3 2,979.2 31.1 4,118.9 31.8
35-54 2,436.5 34.6 3,611.3 37.7 4,995.5 38.6
55-64 387.4 5.5 483.7 5.1 713.1 5.5
Educational Structure 100.0 100.0 100.0
Primary 2,380.2 33.8 2,604.3 27.2 1,643.3 12.7
Lower & Middle Secondary 4,042.1 57.4 5,624.5 58.8 6,767.4 52.3
Tertiary 619.7 8.8 1,343.7 14.0 4,528.9 35.0
Labour Force Participation Rate 65.3 65.5 68.1
(%)
Male 85.6 85.4 86.4
Female 44.1 44.5 49.0.152
Employment
Employment by Sector
6.14 During the OPP3 period, the demand for labour will increase at an average
rate of 3.1 per cent per annum with the expected rapid Gross Domestic Product
(GDP) growth. This will result in an increase in employment from 9.3 million
in 2000 to 12.6 million in 2010, as shown in Table 6-3. With an average labour
force growth of 3.1 per cent per annum during the period, the unemployment
rate will be 2.5 per cent in 2010 as compared with 3.1 per cent in 2000. The
challenge in the development of a knowledge-based economy will be to
ensure that structural unemployment is minimized through retraining and
reskilling.
6.15 The services sector will continue to have the largest share of total
employment. By 2010, the share of employment in the services sector will
increase to 51.5 per cent, accounting for 59.4 per cent of total employment
creation. A large portion of the jobs created will be in the other services subsector,
which include private education and health, other business activities, recreational,
cultural and sporting activities, as well as computer and related activities. The
wholesale and retail trade, hotel and restaurants subsector will also be an important
generator of employment due to the expansion of the tourism industry.
6.16 Improved capital-labour ratio and efficiency in the production process
will lead to lower employment growth in the manufacturing sector. However,
it will still be an important sector for employment creation during the OPP3
period. Employment growth in the sector is expected to average 4.1 per cent per
annum, increasing from 2.6 million in 2000 to 3.8 million in 2010. It will
account for 38.2 per cent of total employment generated in 2010. As the sector
moves towards higher value-added products and capital intensity, the demand
will be for more highly skilled labour, thus requiring skill upgrading of the
labour force.
6.17 The agriculture sector’s share of employment is expected to constitute 9.8
per cent of total employment by 2010 compared with 15.2 per cent in 2000. The
introduction of high technology cultivation methods and large-scale farming as
well as increased mechanization are expected to reduce the demand for labour,
particularly for food crops. However, the oil palm, rubber and cocoa plantation
subsectors will still require substantial amount of labour until the production and
harvesting processes improve to a higher level of mechanization..153
T ABLE 6- 3
EMPLOYMENT BY SECTOR, 2000- 2010
(‘ 000 persons)
Sector 2000 % 2010 % Average Annual Growth Rate Net Job Creation
(%)
2001- 2010 ‘000 %
Agriculture, Forestry, Livestock 1,407.5 15.2 1,231.0 9. 8 -1.3 -176.5 -5.3
& Fishing
Mining & Quarrying 41.2 0.4 41.8 0.3 0.1 0.6 0.0
Manufacturing 2,558.3 27.6 3,833.3 30.4 4.1 1,275.0 38.2
Construction 755.0 8.1 1,012.4 8.0 3.0 257.4 7.7
Electricity, Gas & Water 75.0 0.8 99.2 0.8 2.8 24.2 0.7
Transport, Storage 461.6 5.0 669.7 5.3 3.8 208.1 6.2
& Communications
Wholesale & Retail Trade, 1,584.2 17.1 2,159.7 17.1 3.1 575.5 17.2
Hotels & Restaurants
Finance, Insurance, Real Estate 508.7 5.5 775.9 6.2 4.3 267.2 8.0
& Business Services
Government Services 981.0 10.6 1,206.3 9.6 2.1 225.3 6.8
Other Services 898.7 9.7 1,582.0 12.5 5.8 683.3 20.5
Total 9,271.2 100.0 12,611.3 100.0 3.1 3,340.1 100.0
Labour Force 9,572.5 12,939.6 3.1
Local 8,823.3 12,589.6 3.6
Foreign 749.2 350.0 -7.3
Unemployment 301.3 328.0
Unemployment Rate (%) 3.1 2.5.154
Occupational Composition
6.18 The future growth and development of the economy will be driven by
knowledge–based industries in all sectors, particularly the manufacturing and
services sectors. This process of development to a knowledge-based economy
will spawn new areas of economic activities entailing a change in the pattern
of demand for manpower. In the knowledge-based economy, high technology
and science–based industries as well as knowledge–intensive industries such as
ICT, pharmaceutical industries and research and development (R&D) activities
will generate jobs requiring tertiary education, especially those trained in the
science and technology disciplines. The fastest growing occupations will be in
the professional and technical as well as administrative and managerial workers
categories, as shown in Table 6-4. These occupations will account for 32.2 per
cent of the new jobs created during the period. The increasing sophistication of
production processes due to technological advances will generate demand for
137,200 engineers and 331,700 engineering assistants trained in chemical,
mechanical, and electrical and electronics fields as well as ICT and other cutting-edge
technologies such as photonics and nanotechnology, as shown in
Table 6-5.
TABLE 6-4
OCCUPATIONAL STRUCTURE, 2000-2010
(‘000 persons)
Net Increase Average
Annual
Occupational Group 2000 % 2010 % 2001-2010 Growth Rate
(%)
‘000 % 2001-2010
Professional & 1,019.9 11.0 1,790.8 14.2 770.9 23.1 5.8
Technical Workers
Administrative & 389.4 4.2 693.6 5.5 304.2 9.1 5.9
Managerial Workers
Clerical & Related 1,029.1 11.1 1,412.5 11.2 383.4 11.5 3.2
Wor ker s
Sales Workers 1,019.7 11.0 1,526.0 12.1 506.3 15.2 4.1
Services Workers 1,094.0 11.8 1,589.0 12.6 495.0 14.8 3.8
Agricultural, Animal 1,678.1 18.1 2,055.6 16.3 377.5 11.3 2.1
Husbandry & Forestry
Workers, Fishermen &
Hunters
Production & Related 3,041.0 32.8 3,543.8 28.1 502.8 15.0 1.5
Wor ker s
Total 9,271.2 100.0 12,611.3 100.0 3,340.1 100.0 3.1.155
TABLE 6-5
EMPLOYMENT BY SELECTED OCCUPATION, 2000–2010
(‘000 persons)
Occupation Stock Employment Net Output (2001-2010)
2000 2010 Increase Public Private
Engineers 64,376 201,615 137,239 122,651 6,967
Civil 18,828 33,411 14,583 25,008 -Electrical
& Electronics 19,149 64,974 45,825 38,858 6,967
Mechanical 14,620 45,887 31,267 32,255 -Chemical
2,888 29,418 26,530 26,530 -Others
8,891 27,925 19,034 n.a n.a
Engineering Assistants 139,066 470,810 331,744 296,658 36,067
Civil 23,436 100,233 76,797 65,728 11,069
Electrical & Electronics 59,412 194,922 135,510 110,512 24,998
Mechanical 45,473 137,661 92,188 102,104 -Chemical
1,703 14,074 12,371 18,314 -Others
9,042 23,920 14,878 n.a n.a
Medical & Health 21,270 45,878 24,608 11,748 12,860
Professionals
Medical Officers, 16,468 35,514 19,046 8,105 10,941
Physicians & Surgeons
Dental Surgeons 2,001 5,073 3,072 1,393 1,679
Pharmacists 2,801 5,291 2,490 2,250 240
Allied Health 45,052 147,405 102,353 55,907 46,446
Professionals
Physiotherapists & 413 3,947 3,534 1,490 2,044
Occupational Therapists
Radiographers 645 2,307 1,662 1,225 437
Health Inspectors 1,549 5,376 3,827 1,497 2,330
Medical & Lab. Med. Assts 7,334 20,422 13,088 9,952 3,136
Dental Paramedics & 3,537 8,191 4,654 3,819 835
Auxiliary
Pharmaceutical Assts. 2,205 5,796 3,591 1,195 2,396
Nurses 29,369 101,366 71,997 36,729 35,268
School Teachers 298,083 369,756 71,673 67,911 0
Pre-School 34,271 61,911 27,640 -Primary
School 154,920 177,599 22,679 38,941 1 -Secondary
School 108,892 130,246 21,354 28,970 -Note:
1 Output include both pre-school and primary school teachers..156
6.19 In view of the need to continue providing and upgrading health care
services for the population, the demand for medical and health personnel will
remain high during the period. These personnel will be needed to staff the public
health facilities that will be expanded and upgraded to cater to the needs of a
growing population. With improved income levels, a large proportion of the
population will be seeking treatment, particularly specialist services. However,
to ensure every Malaysian has access to quality health care services, the pool
of health personnel will be expanded to meet the targeted doctor to population
ratio of 1:800 by 2010. The increasing number of foreigners using Malaysian
health facilities can form the base for developing the health care services into
an industry and tourism product. Measures will be undertaken to facilitate entry
of foreign patients and their families. Private hospitals and health facilities will
also be encouraged to expand their clientele base and promote their services
overseas.
6.20 The widespread application and diffusion of ICT in all sectors will require
workers with differing levels of computer skills such as computer design, complex
data management systems, data communications and networking as well as
multimedia and Internet development. Low skilled and routine jobs will be
reduced through automation. New jobs created will require workers with higher
education and technical skills in new technologies. The increasing use of computers
will facilitate these workers, thus increasing the return on the creative use of
ICT. Computer literacy and numeracy are, therefore, essential skills and will
have to be acquired by everyone in the workforce. In addition, workers with core
ICT skills will be required in all sectors in the economy, particularly in ICT
industries. The demand for key ICT personnel comprising systems engineers,
software developers, systems analysts, computer programmers and technical
support is expected to be 306,600 personnel by 2010, as shown in Table 6-6.
The projected supply of graduates in ICT will be adequate to meet the demand
for ICT personnel as a result of the enormous expansion in ICT education by
both the public and private sectors. There will be a greater demand for ICT
personnel with post- graduate degrees, especially in hardware and software
engineering in the OPP3 period. Measures will be undertaken to increase the
supply of these personnel from institutions of higher learning to meet the increased
demand.
6.21 There will also be increased demand for scientists and technologists in
R&D, particularly in new technologies such as fuel-cell technology, biotechnology
and genetic engineering. To remain competitive, Malaysia will intensify R&D
activities in these new areas and more concrete measures will be implemented
to increase the supply of R&D scientists and technologists from 7 per 10,000.157
TABLE 6-6
EMPLOYMENT OF IT WORKERS, 2000-2010
(persons)
Average
Annual
Occupation 2000 % 2010 % Growth Rate
(%)
2001-2010
System/Hardware Engineer 15,930 14.8 37,860 12.3 9.0
Software Developer/Engineer 10,410 9.6 26,680 8.7 9.9
Business/Systems Analyst 25,620 23.7 71,020 23.2 10.7
Computer Programmer 21,320 19.7 62,820 20.5 11.4
Technical Support 34,720 32.2 108,230 35.3 12.0
Total 108,000 100.0 306,610 100.0 11.0
labour force in 2000 to 60 per 10,000 or a total of 77,640 by 2010. Efforts to
expand the existing pool of R&D scientists and technologists will be taken
through instituting more attractive schemes of service as well as extending the
service of outstanding R&D personnel beyond their retirement age.
6.22 To further enhance the country’s capability to acquire and use knowledge,
it is critical to improve the standard of education with emphasis on science and
technology (S&T) and develop skills in information-based technologies for acquiring,
diffusing, interpreting and applying knowledge. The education and training system
will build upon existing capacity to produce a critical mass of S&T and knowledge
workers rich in talents, abilities and creativity to support the transformation of
the economy and the growth of new industries. In this regard, efforts will be
made to accelerate the achievement of the 60:40 ratio of science to arts students
at the school as well as tertiary level.
6.23 To supplement the pool of local skills and talents, the brain-gain programme
to recruit top-notch talent, skills and experts from overseas will be expanded
during the OPP3 period with better incentives. The programme will initially
focus on recruiting highly qualified and talented ICT personnel as well as R&D
scientists and technologists. These are knowledge workers who are highly mobile
and command an international market for their talents and expertise. Malaysia.158
will have to compete for them in the global markets, especially ICT personnel
where there is a world-wide shortage. To facilitate the recruitment of foreign
skills and talents, the registry of Malaysian R&D scientists and engineers working
overseas will be expanded to include experts and technopreneurs in other knowledge-related
disciplines. In addition, industries will be encouraged to sponsor outstanding
Malaysian students pursuing degree programmes in key technologies.
Wages and Productivity
6.24 It is critical that wage increases commensurate with increases in productivity
so that the competitiveness of the economy is further enhanced during the OPP3
period. Wage increases, which reflect productivity gains, will ensure that there
is no undue pressure on prices and erosion of real incomes. In this regard, the
adoption of the Guidelines for a Productivity-Linked Wage Reform System
established in 1996, to ensure a closer link between wages and productivity
performance, will be intensified through efforts such as seminars, workshops and
company visits. In addition, an online network database that provides productivity
benchmarking in the manufacturing and agriculture sectors will be expanded to
include other sectors.
6.25 Labour productivity growth during the OPP3 period is expected to increase
by 4.2 per cent per annum for all sectors, in line with the shift towards the
knowledge-based economy. Labour productivity in the manufacturing sector is
expected to increase by 4.0 per cent per annum as industries shift towards high
technology and knowledge-based activities with emphasis on high value-added
products. In the agriculture sector, labour productivity is expected to grow by
4.8 per cent per annum during the OPP3 period due to the greater use of
technology and modern agronomic practices. Labour productivity in the services
sector is expected to increase by 4.5 per cent per annum. The main contributor
to this growth will be the wholesale and retail trade, hotels and restaurants
subsector, the productivity of which is expected to increase by an average annual
growth of 5.8 per cent, followed by the transport, storage and communications
subsector by 5.7 per cent per annum.
IV. EDUCATION AND TRAINING PRIORITIES
6.26 Globalization and rapid technological advances during the OPP3 period
will intensify the demand for a quality labour force, which is knowledge-rich
and has superior thinking skills. In addition, they must have the capability to.159
optimize the use of new technologies and materials and to combine them effectively
with creativity and innovation. Towards this end, a labour force equipped with
higher academic and technical qualifications, multi-skilled and with knowledge
in the use of ICT as well as imbued with positive values and work ethics will
have to be developed. To meet this demand, the education and training system
will be reoriented and the industries must intensify the retraining of their employees
to upgrade their knowledge, skills and creativity to match technological advances
in production and services.
Creating Excellence in the Education System
6.27 High priority will continue to be given to education, by increasing investment,
as it is the key in developing the capability to create, adapt and spread new
knowledge. A strong basic education is the foundation for building a healthy,
skilled and agile labour force and for competing successfully in world markets.
Strategies will be put in place to make schools the platform to nurture creative
thinking and learning skills, which are essential for future manpower needs.
Overcrowding in urban schools such as those in Wilayah Persekutuan Kuala
Lumpur with a class to classroom ratio of 1:0.63, will be reduced through
relocation of existing schools and the construction of additional classrooms and
schools. The class to classroom ratio of 1:0.90 in primary schools and 1:0.83
in secondary schools is expected to reach the target of 1:1 in 2010.
6.28 The school curriculum will also be reviewed to inculcate thinking skills
and generate creativity and independent learning among students, especially at
the primary and secondary levels. It will be continuously updated to incorporate
new aspects of knowledge and technology as well as innovative methods of
teaching Science and Mathematics. In addition, the high level of competency in
Bahasa Malaysia among students will be maintained while their proficiency in
English will be improved. They will also be encouraged to learn other foreign
languages, which will enable them to access and contribute to global knowledge.
To create a pool of talent in the performing and cultural arts, measures will be
taken to tap and nurture potential talents at the school level. The school curriculum
and co-curricular activities, will provide opportunities for students to excel
in the arts. Sufficient teachers will be trained and adequate facilities will be
provided. In addition, schools will be encouraged to nurture talents through
participation in national competition in various forms of arts. As ICT is the
enabler for acquiring new knowledge, schools will be provided with facilities
to allow them to teach more subjects using interactive multimedia technology.160
and web-based teaching. The majority of schools, including those in rural and
remote areas, will be connected to each other through the Intranet and Internet
by 2010. To ensure that the school curriculum will remain relevant to industry
and include work-based learning components, a mechanism will be set up to link
schools with industries. Industries will be encouraged to accept upper secondary
school and college students to participate in attachment training or internship
during school and college holidays.
6.29 The number of science stream students who can feed into the university
system is still low. This low output will be addressed through intensifying the
use of contextual learning, the upgrading of facilities for teaching and
learning, increasing the quality and quantity of teachers, and measures to motivate
students to enrol in the science stream. At the primary school level, the teaching
of science will be introduced at an earlier stage.
6.30 Current trends indicate that there is still a disparity in performance between
urban and rural schools despite efforts to expand and improve education facilities.
Emphasis will continue to be given to provide the necessary facilities to increase
accessibility of the rural population to quality education. In addition, the provision
of special incentive packages to retain teachers and school staff in remote and
inaccessible areas is expected to improve student performance. To ensure that
schools in these areas will enjoy the benefits of ICT in learning and teaching,
wireless mobile computing technology will be introduced in these schools.
6.31 The rapid expansion in education facilities, especially at the tertiary
level, and the extension of universal education to 11 years improved the educational
attainment level of the population and labour force substantially. In 2000, the
percentage of the population completing tertiary education was 14.0 per cent and
secondary education was 58.8 per cent, an improvement to that in the beginning
of the OPP2 period. To support the manpower requirements of the knowledge-based
economy, a larger proportion of the population and labour force will need
to have a higher level of educational attainment, especially at the tertiary level.
Measures will be taken to improve the transition rate from lower to upper
secondary level as well as the retention and completion rate at the upper secondary
level to improve the tertiary-education participation rate. Increased emphasis,
therefore, will continue to be given to expand tertiary education so that the
enrolment of the age cohort of 17-23 years in tertiary education will be 40 per
cent, and at least 35 per cent of the labour force will have attained tertiary
education by the end of the OPP3 period. The establishment of new public.161
universities and expansion of existing institutions will provide additional places
to meet expected increasing demand for higher education in the OPP3 period.
In addition, private universities and colleges are expected to increase their
existing capacities to complement public universities.
6.32 Universities will not only be developing the future workforce but also
become centres for the creation of intellectual capital and new knowledge. This
will hinge on their ability to produce a pool of high calibre researchers who are
actively engaged in R&D as well as undertake research activities that have
commercial viability. The number of graduates with post-graduate degrees in
local universities will be increased to 25 per cent of total output by 2010. In
this regard, a few of the existing public universities will be restructured to
become research universities focusing on post-graduate degree programmes.
More focus will be given to science and technology areas as there is an urgent
need to increase the supply of S&T manpower. The curriculum and degree
programmes at the universities will also be reviewed to ensure that they are
market-driven, anticipatory of future trends and facilitate the adoption of new
technologies. To ensure that their research activities remain relevant and responsive
to industry needs, universities will be encouraged to forge closer collaboration
and partnerships with industry in research as well as training for their students.
Universities will be encouraged to establish more centres of excellence in specific
fields to develop and implement their R&D activities. A coordinating mechanism
for R&D activities will be instituted to allow the sharing of information and
enhancement of R&D activities among institutions of higher learning.
6.33 The private sector will be encouraged to increase their involvement in
providing education at all levels to supplement and complement Government’s
efforts as well as to become the catalyst for developing education and training
into an industry and foreign exchange earner. The expansion of private education
institutions will form part of efforts to establish Malaysia as a regional centre
for education. Private institutions will be encouraged, among others, to upgrade
existing facilities and develop purpose-built campuses incorporating both academic
and recreational facilities. Incentives will be given to support private institutions
that offer courses in technical and medical courses. Measures, including greater
flexibility in hiring foreign teaching personnel and less stringent immigration
conditions, will be put in place to facilitate the expansion and establishment of
new private institutions. To ensure that the private sector provides quality education,
the regulatory functions of relevant authorities will be strengthened. The regulations
concerning private education will be reviewed regularly to protect consumers’
interests and ensure the development of a progressive private education industry..162
Teacher Development
6.34 Teaching will become an increasingly challenging profession as the
generation of young Malaysians are growing up with a different set of values
and expectations. Teachers and educators are expected not only to impart knowledge
but are given the responsibility to mould the personality and character of students.
In addition to teaching skills, greater emphasis will be given to incorporate
ethics and moral values into their training programmes. Continuous efforts,
therefore, will have to be made to attract school leavers and graduates who are
qualified and interested to pursue teaching as a vocation. Considering their
important role, an increasing number of primary school teachers during the
OPP3 period are expected to be degree holders and some may have master’s
degrees as well as qualifications in child psychology. This is to ensure that
teachers possess a high level of competence in teaching as primary schooling
provides the foundation for a student’s learning ability and absorption of knowledge.
6.35 Apart from attracting graduates into the teaching profession, serving
teachers will be encouraged to pursue degree courses in critical and relevant
areas. Better remuneration and promotion packages as well as terms and conditions
of service will be offered to these teachers. All teachers will be equipped with
IT knowledge to undertake courses and to design their teaching materials using
ICT. In this regard, training programmes to upgrade ICT skills of teachers will
be expanded and accelerated.
Promoting Lifelong Learning
6.36 Lifelong learning will become increasingly important in the knowledge-based
economy where knowledge and skills need to be continuously updated and
upgraded. New skills and expertise will be required to improve employability
and productivity. Measures will be taken to promote lifelong learning among all
Malaysians, especially those without a strong basic education where lifelong
learning will provide them the opportunity to continue their education as well
as to learn at their own pace outside the school or in the workplace.
6.37 The Government will initiate efforts to promote and implement programmes
for lifelong learning. Affordable accessibility to training courses and education
programmes through the Internet or other ICT-related media will be provided
so that Malaysians have the opportunity to acquire new competencies and
qualifications for career advancement. More IT kiosks and cyber centres will be.163
set up by the Government, especially in rural areas, to increase accessibility to
education and training. In addition, the establishment of community colleges,
open universities and distance education will provide another avenue for Malaysians
to pursue tertiary education and upgrade their skills and qualifications. The
establishment of community colleges will also provide opportunities particularly
to those who left the school system to join the labour market to further their
education and training. Financial institutions will also be encouraged to provide
soft loans to working adults to continue their education. Employers will be
encouraged to promote lifelong learning through training and retraining to equip
workers with new skills and knowledge so that they can keep up with the steady
stream of technological advances.
Forging a New Approach to Training and Retraining
6.38 Increasing investment in capital-intensive and knowledge-based industries
will increase the demand for highly skilled manpower as the utilization of new
technology creates more jobs with high skills content. In this regard, training
and retraining, the critical enabler in equipping the future workforce with suitable
skills and facilitating the present workforce in adjusting and adapting to a
knowledge-driven economy, will continue to be given priority during the OPP3
period.
6.39 More investment in human capital, especially in training and retraining,
will be undertaken to enhance Malaysia’s competitiveness in the international
market. In this regard, the capacity and capability of the training delivery system
will be further strengthened to increase the quantity and quality of skilled
manpower. New skills training institutions will be established and the absorptive
capacity of existing institutions will be expanded at all levels. In addition, public
training institutions will be encouraged to conduct part-time training programmes,
particularly in new technologies. Through the implementation of these programmes,
the training institutions will be able to optimize the utilization of training equipment
and facilities and contribute towards increasing the supply of skilled manpower.
It will also create opportunities for skills upgrading and continuous learning for
the workforce. The advanced skills training centres will be upgraded and developed
into centres of excellence. Apart from expanding and upgrading their facilities,
the advanced training institutions will establish consultancy units to provide
advisory services and product testing to industries. This will enhance the quality
and cost-effectiveness of their training and also provide support to the small-and
medium-scale industries..164
6.40 Rapid changes in technology in the OPP3 period will affect work organization
and will increase the demand for multi-skilled manpower with strong academic
foundations, knowledge capabilities and extra-functional skills. In this regard,
skills training institutions will give emphasis to the development of social and
learning competencies as well as strengthening the academic foundation of
trainees in Mathematics, Science and the English language. To enhance further
the quality of skills training, the development of the National Occupational
Skills Standards (NOSS), which is based on job or occupation will be re-structured
towards work processes that are in line with the changing needs of
employers. In addition, NOSS will be developed for skills training in agriculture-related
areas.
6.41 The adoption of the dual training approach through apprenticeship schemes
will be enhanced during this period. Towards this end, more training institutions
will be encouraged to adopt this approach in collaboration with industry to
enhance the effectiveness of their training programmes. This approach is a
combination of work-based training and attendance of part-time vocational training.
The focus is on hands-on training at the workplace whereas the training institution
provides the theoretical foundations. By acquiring work-related experience, a
school leaver with Sijil Pelajaran Malaysia can be trained to be a certified
skilled worker to meet the needs of industries. As the trainees spend about two-thirds
of their time in the workplace, the utilization of training facilities in
institutions will be lower, reducing expenditure on infrastructure. Efforts will be
made to restructure training programmes in all public training institutions to use
this approach, which is market-oriented and responsive to changes in technology
and industries. The National Vocational Training Council will be strengthened
to enhance its capability so that it can identify the types of training occupations,
contents and standards of the training as well as increase collaboration between
firms and training institutions. In addition, the apprenticeship training schemes
under the Human Resources Development Council (HRDC) will be expanded to
cover a wider range of courses such as industrial electronics and computer
engineering.
6.42 The implementation of training programmes and courses, in terms of
types and levels, in public training institutions will be reviewed regularly to
ensure that they are in line with technological changes, as well as to enhance
cost-effectiveness. Public training institutions will also strengthen their delivery
system by using ICT, including a web-based learning system. The implementation
of web-based learning is critical as public training institutions are experiencing
a shortage of instructors. It will also improve the cost-effectiveness of training
in the long run. Web-based learning can also be an effective means for lifelong
learning and provide the environment for self-paced learning..165
6.43 Measures will also be undertaken to increase the supply of qualified instructors
so as to meet the ratio of instructors to trainees of 1:17. Public training institutions,
especially advanced training centres will conduct instructor training programmes
to complement the programmes of the Centre for Instructors and Advanced Skill
Training (CIAST). To attract and retain experienced instructors in public training
institutions, the scheme of service for instructors in these institutions will be
reviewed to ensure, among others, better promotion and career prospects, greater
opportunities for training and more flexible service conditions. Special incentives
will also be provided to attract and retain instructors with industrial experience.
6.44 Technological development and industrial restructuring will displace low
skilled workers and will lead to the occurrence of structural unemployment. To
minimize the impact of structural unemployment, a proper retraining programme
and mechanism for the implementation of the programme will be developed.
Collaborative efforts through smart-partnerships between the Government and
private sector will be promoted. Greater private sector participation will be
encouraged to provide training in new skills and cutting-edge technologies.
V. POSITIVE VALUES AND ATTITUDES
6.45 Efforts to build a resilient nation rests upon human resources imbued with
positive values and attitudes, which are crucial in increasing and sustaining
productivity as well as enhancing competitiveness. These positive values are
inherent in the religions, cultures and traditions of Malaysia’s multi-ethnic and
multi-cultural society and will be an important facet in nation-building and in
expediting the moulding of a Bangsa Malaysia.
6.46 The free flow of information arising from an increasingly borderless
world poses challenges to the inculcation of positive values, especially among
the younger generation. In this regard, a new curriculum combining civics with
religious or moral education, will be taught in both primary and secondary
schools to inculcate these values, such as discipline, strive for excellence, loyalty
and love for the country, unity, good citizenship as well as respect for leaders
and elders. In addition, co-curricular activities for character building and development
of leadership qualities will be emphasized in schools and tertiary institutions.
6.47 At the work place, efforts will be made to ensure that the workforce adopt.166
good work ethics including honesty, commitment and diligence. In this regard, the
implementation of a common code of good work ethics will be instituted. For the
public sector, other related rules and regulation on discipline and work culture,
will be continuously revised to meet the changing needs of a modern economy.
Among corporate and business organizations, tenets of positive corporate governance
such as transparency, accountability and credibility, will be promoted through the
formulation of a common code of ethics for trade and business as well as professional
practices.
6.48 The family unit will continue to be pivotal in inculcating positive values
and its efforts will be supplemented and complemented by non-governmental
organizations, community-based organizations and other voluntary organizations.
Values such as tolerance, kindness, gratitute, caring and neighbourliness will be
integrated as part of programmes to promote national unity and social harmony.
Towards this end, motivational- and attitudinal-based family- and society-oriented
programmes, which emphasize positive values will be intensified to induce good
behaviour and morality in line with the Rukunegara.
VI. CONCLUSION
6.49 Human resource development is a prerequisite in preparing Malaysia for
the knowledge-based economy and sustaining growth and development during
the OPP3 period. Malaysia’s capability and capacity in the management of new
knowledge and technologies will be determined by the quality of its human
resources. A competent and highly skilled labour force will be developed with
strong ethical and moral values and commitment to excellence. With globalization,
Malaysia will be facing more competition in trade and investment and its workforce
will have to be equipped with a strong base in education and training as well
as possess a range of generic skills including communications and thinking
abilities. In addition, Malaysia’s successful entry into the information age and
ability to take advantage of the vast opportunities arising from the information
and technological revolution will depend on a dynamic and responsive education
and training system. Education and training will be crucial in the creation of
knowledge manpower to support the new industries and economic activities and
to develop an information-rich society, which is progressive, united and creative
as well as possesses other positive values that will make Malaysia a developed
nation by the year 2020..Chapter 7
Sectoral Strategies and
Priorities.168.169
CHAPTER 7
Sectoral Strategies and Priorities
I. INTRODUCTION
7.01 The Third Outline Perspective Plan (OPP3) period will be extremely
challenging given the increasing globalization of the Malaysian economy and
the intense competition for markets and investments. Taking into cognizance
these challenges, Malaysia’s sectoral strategies and programmes will be aimed
at developing a knowledge-based economy to ensure the continuity of the drive
towards achieving the status of a developed country by the year 2020. The
sectoral programmes will also be geared towards achieving a broad based, globally
competitive and resilient economy. In addition, the emphasis will be to further
improve the coverage and quality of social services, utilities and transport services.
The successful implementation of the sectoral programmes will increase the
opportunities for Malaysians to enhance their income and quality of life as well
as facilitate the promotion of an equitable society.
II. DEVELOPMENT THRUSTS FOR 2001-2010
7.02 The key sectoral development thrusts during the OPP3 period will be to
create wealth and promote new sources of growth in the manufacturing, services
and agriculture sectors. The sectoral strategies will focus on achieving sustainable
growth with resilience. Efforts will be undertaken to strengthen indigenous
capabilities and capacities to enhance national competitiveness in the world
market. The sectoral thrusts that will be actively pursued include:
q strengthening the manufacturing sector by developing strong linkages,
industrial clusters and small- and medium-scale enterprises (SMEs) as
well as improving the technological base;.170
q restructuring and modernizing the agriculture sector to be dynamic and
competitive;
q enhancing the services sector to be a key driver of economic growth;
q expanding the coverage of infrastructure and utilities as well as improving
the efficiency and quality of services;
q improving accessibility and quality of social services to enhance the
quality of life and meet the expectations of the population;
q accelerating the development capacity and capability in science and
technology to further enhance competitiveness and efficiency; and
q increasing the utilization of information and communications technology
(ICT) in all sectors to enhance productivity.
Manufacturing
7.03 The manufacturing sector is targeted to grow at 8.3 per cent during the
OPP3 period. The sector will move into a new phase of industrial development
in line with the aim to develop a knowledge-based economy. Accordingly, industrial
development will focus on efforts to consolidate and strengthen the resilience
and competitiveness of the manufacturing sector as well as promote new sources
of growth. At the same time, the development of dynamic industrial clusters will
be critical to contribute to the further growth of the sector. The Government will
continuously fine-tune policies and programmes to maintain and enhance an
environment that is conducive for investments and business operations. In this
regard, efforts will continue to be undertaken to encourage strategic alliances
in high value-added and high-technology industries. Programmes will also be
implemented to enhance productivity and improve the competitiveness of industries.
7.04 Manufacturers will need to take into account the significant trends that
are shaping industrial development and their impact on industries. To compete
globally, industries will need to develop a new competitive advantage by striving
towards the achievement of internationally recognized quality and standards of
goods and services. The private sector will be encouraged to adopt information-intensive
and knowledge-driven processes in manufacturing and related activities.171
such as research and development (R&D), product design, marketing, distribution
and procurement. This approach will enable the diffusion of knowledge at all
levels of the enterprise’s value chain, thus creating dynamic industrial clusters
in the manufacturing sector.
7.05 To meet future challenges, the technological base of the manufacturing
sector will be further strengthened. Measures will be undertaken to improve the
absorptive and adaptive capabilities of industries to utilize new technologies. In
the area of R&D, market-oriented research will be promoted and the private
sector will be further encouraged to invest in R&D activities. The Government
will also promote the transfer of new and emerging technologies into the country
through strategic alliances and technology acquisition.
7.06 Productivity growth will have to be higher than the increase in wage rates
to sustain the growth momentum and ensure competitiveness of the manufacturing
sector. In this respect, labour productivity will have to be continuously enhanced
through a culture of acquiring new skills and capabilities. The existing skills
delivery system will be further strengthened and the skills of the workforce will
be upgraded through training and retraining. The focus of training will be to
supply knowledge manpower to meet the demands of industry.
7.07 The strategy of widening the export base and diversifying export markets
will continue to be promoted. Strategies to further reinforce marketing and
export performance include improving the quality and modes of providing
information, using innovative export promotion tools as well as promoting the
use of export quality inspection and certification services. In addition, efforts
will be undertaken to upgrade marketing and promotional skills.
7.08 During the OPP3 period, SMEs will have to adopt innovative approaches
including benchmarking against international standards to meet the increasingly
competitive business environment. SMEs will also have to rationalize their
operations with a view to modernizing and automating their production processes.
The Government will continue to strengthen the development of SMEs so as to
increase their contribution towards the mainstream of industrial activities. In
addition, SMEs will be encouraged to be export-oriented to tap market opportunities
available in the regional and global markets.
Agriculture
7.09 The agriculture sector is targeted to be an important source of growth
during the OPP3 period. Its growth will mainly be derived from the significant
increase in industrial crops, food production and contribution from new activities..172
Towards this end, efforts will be focused on restructuring and modernizing the
agriculture sector to be more dynamic and competitive. Agricultural development
will be guided by the Third National Agricultural Policy, covering 1998-2010,
which focuses on market driven product-based and agro-forestry approaches to
improve productivity and global competitiveness. The development of industrial
crops, forestry and wood-based product group will continue to be encouraged
and supported by appropriate incentives, infrastructure, R&D, supporting services
and human resource development. The thrust of development for this group will
focus on restructuring and modernizing the industry through increasing the
uptake and commercialization of R&D findings, developing alternative uses
such as bio-fuel from palm oil and establishing niche markets for specialized
products. The sector will be further diversified with the cultivation of other
potential crops as well as the planting of selected tree species on a plantation
basis. In addition, efforts will be intensified to promote mechanization and large-scale
commercial production of food including fish. The potential of aquaculture
will be fully exploited not only to complement the supply of fish from marine
catch but also to provide raw materials for downstream industries. Satellite
farming will be introduced through the establishment of more food production
areas close to major towns and cities.
7.10 Land utilization will be intensified through the adoption of agro-forestry
approach, which integrates agriculture and forestry activities and through the
wider practice of crop-mix. Integrated systems, such as multiple crop farming
and plantation activities combined with livestock rearing, will continue to be
encouraged to enable smallholders and plantation owners to maximize land use
and increase food production and obtain higher returns. The increase in production
of agricultural commodities will be achieved through productivity gains from
existing areas rather than expansion in planted hectarage. In addition, in-situ
development through land consolidation and rehabilitation will be carried out
on a commercial and group-farming basis.
7.11 Sustainable forest management will continue to be the main strategy to
provide the supply of raw materials for the wood industries and at the same time
protect the environment. Greater focus will be given to increase the productivity
of forest resources to meet the increasing demand for raw materials by agro-based
industries. Towards this end, a multi-resource approach will be adopted,
whereby forest plantations will be developed using multi-cropping and periodical
harvesting technique. In addition, improved silvicultural treatment, forest
rehabilitation, afforestration and R&D will be enhanced. The development of
selected timber species and latex timber clones as well as non-wood forest
resources and products will also be intensified. The uniqueness of the tropical
rainforest will be utilized to promote eco- and agro-tourism..173
7.12 In accelerating the modernization of the agriculture sector, the provision
of support services including R&D, marketing, extension services, training, and
credit facilities will be further strengthened. Greater emphasis will be placed on
measures to improve pre- and post-harvest handling of agricultural produce.
These include the grading of farm produce and improvements in storage,
transportation and marketing to maximize returns from agriculture. R&D efforts
will be intensified to improve productivity and efficiency, particularly in reducing
cost of production, increasing product quality and marketing, increasing utilization
of labour-saving technologies as well as widening end use applications. Collaborative
R&D efforts will also be encouraged between public R&D agencies and the
private sector to facilitate commercialization of research findings. In order to
target niche markets, innovative approaches will be adopted such as the establishment
of specialized zones to facilitate the development of specific products, which
have higher value added. This will support the development of new industries
in food, herbs, specialty natural products, floriculture and biotechnology.
Mineral Resources
7.13 The development of the mineral sector will be guided by the National
Mineral Policy, which laid the foundation for the development of both the up-stream
and down-stream aspects of the industry. The thrust of the development
of the sector is to expand and diversify the sector through competitive regulatory
environment, to promote optimum exploration, extraction and utilization of
resources using modern techniques as well as improved R&D. Emphasis will
also be given to environmental protection, sustainable development and management
of the social impact of the industry.
Tourism
7.14 Tourism industry in Malaysia has been identified as a key driver in the
growth of the services sector during the OPP3 period. In this regard, tourist
arrivals are expected to grow at an average rate of 7.5 per cent per annum.
Furthermore, the focus will be to attract more tourists to stay longer, spend more
as well as make repeat visits. Towards this end, a more integrated approach to
tourism planning and implementation will be adopted. To facilitate these efforts,
state tourism and culture authorities will be established. In addition, research and
data collection will be intensified to upgrade the tourism database to support a
holistic approach to policy formulation and a market-driven approach to product
development, marketing and promotion..174
7.15 The major programmes that will be implemented include the preservation
and conservation of historical sites, provision and upgrading of tourism-related
infrastructure as well as improvement in the quality of tourism products and
services. Eco-tourism, rural tourism, education, health, culture and heritage,
cruise, sports and recreation tourism as well as meetings, incentives, conventions
and exhibitions (MICE) will be further developed. To maximize the potential of
tourism, product development in niche areas will be emphasized based on the
relative strengths and comparative advantage of the respective states. New tourism
products, such as the promotion of martial arts practised by the various ethnic
groups in the country, will be developed. In addition, more effective customer-focused
promotional efforts will be carried out to expand and diversify the
tourism market base.
7.16 The development of domestic tourism will remain a key priority and will
be actively promoted. In view of the increasing affluence of the population and
the accompanied increase in demand for leisure, domestic tourism is expected
to experience rapid growth. The expansion of the tourism industry through a
wider range of recreational and entertainment activities, better infrastructure and
facilities as well as conservation of the environment will further improve the
quality of life of Malaysians.
7.17 Developments in ICT will enable the tourism industry to provide better
quality services at competitive rates. In this regard, efforts will be undertaken
to offer better destination information systems, provide more extensive links
with the global travel distribution channels and enhance capacity building on
electronic travel. Towards this end, a tourism portal will be developed to facilitate
these efforts.
7.18 Human resource development will continue to be a priority in order to
enhance the level of competencies and professionalism to facilitate the growth
of an efficient and competitive tourism industry. The provision of tourism education
to the public and frontliners such as hotel employees, tourist guides as well as
immigration and customs personnel will be emphasized. This is to create greater
awareness on the benefits of tourism and to inculcate values of being a good
host to visitors as well as stressing the importance of preserving the nation’s
heritage and the environment.
7.19 Regional cooperation through joint tourism programmes among Association
of South-East Asian Nations (ASEAN) partners will be rigorously pursued.
Collaboration in tourism projects through the Growth Triangle initiative and
other strategic partnerships at the regional and international level will be further
strengthened. Collectively, more competitive tourism products will be packaged
to attract a higher number of tourist arrivals and generate more revenue, thus
benefiting all participating countries..175
Financial Services
7.20 In moving ahead, the Malaysian economy will face a rapidly changing
global and financial landscape. The financial sector will be further strengthened
to enable it to mobilize and allocate resources to generate higher growth through
productivity-driven investments and knowledge-based activities. Steps will also
be taken to increase the resilience of the financial sector to face the challenge
of high mobility and volatility of capital flows.
7.21 The Financial Sector Master Plan, together with the Capital Market Master
Plan, will provide a comprehensive framework for the strategic development and
greater diversification of the financial sector. Underlying the objective of developing
an efficient and effective financial sector is the need to develop a core group
of domestic banking institutions capable of competing in a dynamic environment
of technological change as well as meeting the increasingly diverse customer
demands. The Master Plan will also address issues such as the need to inculcate
effective risk management, develop an early warning system to enhance surveillance
as well as institute measures on customer protection.
7.22 The Capital Market Master Plan provides for the development of competitive
intermediaries and institutions in core areas to facilitate efficient mobilization
of resources and to build a domestic base for a strong financial services sector.
Measures will be taken to further develop the key segments of the capital market
such as the bond and derivatives market as well as the fund management industry.
Emphasis will also be placed on developing the venture capital industry to
facilitate the financing of high-growth technology-related industries. The
implementation of the Master Plan will be marked by three distinct phases. The
first phase covering 2001 to 2003 will be to strengthen domestic capacity and
develop strategic and nascent sectors. The second phase from 2004 to 2005 will
be to further strengthen key sectors and gradually liberalize market access while
the third phase from 2006 onwards will be geared towards becoming a fully-developed
capital market.
7.23 The Government will strengthen and streamline the Islamic banking and
financial sector to develop a dynamic and progressive system at par with the
conventional system. In addition, efforts will be made to position Malaysia as
an international centre for Islamic capital market activities. Measures will be
introduced to facilitate the development of competitive products and services.
7.24 During the OPP3 period, Labuan will continue to be developed into a
reputable International Offshore Financial Centre (IOFC). Towards this end, the
International Islamic Financial Market will be established to tap the enormous.176
market opportunities in Islamic financing in the global financial markets. Further
efforts will be made to position the Labuan International Financial Exchange as
a leading international offshore exchange for listing and trading of equities and
debt instruments.
Distributive Trade
7.25 The distributive trade sector will have an increasingly important role in
the economy during the OPP3 period mainly due to the positive economic
outlook, which will lead to a higher level of affluence and consumer demand.
The thrust of the sector will be to enhance its competitiveness through measures
such as the provision of an enabling administrative and legislative framework
as well as the development of electronic-commerce (e-commerce).
7.26 With increasing globalization, there will be an increase in the number of
giant foreign retailers setting up hypermarkets and supermarkets. In view of the
growing competition, the distributive trade sector will be encouraged to take
steps to incorporate foreign technical know-how and expertise to improve
productivity and competitiveness. Joint ventures and strategic alliances with
foreign partners will also be encouraged. With the trend towards mergers and
acquisitions, there is a need to safeguard against anti-competitive behaviour. In
this regard, a fair trade law and policy will be formulated and adopted to foster
healthy competition to reap the benefits of market efficiency.
7.27 In the quest to increase value added, efforts will be made to promote
Malaysia as a regional distribution and warehousing hub. This will enable the
processing and trading of goods for a much wider market, thus accruing the
benefits from economies of scale. Efficient facilitation measures will be undertaken
to accelerate the development of a regional distribution and warehousing hub.
Steps will also be taken to position the nation as an international centre for halal
food to cater for the global Muslim market. Towards this end, measures will be
undertaken to leverage on the nation’s credibility in producing halal food. In
addition, R&D on food technology will be intensified.
7.28 The forging of strong linkages between the distributive trade and other
sectors of the economy, particularly the agriculture and manufacturing sectors,
will continue to be an important strategy. In this regard, the promotion of local
products will be intensified to enhance linkages as well as strengthen the economy.
Direct sourcing of products through contract manufacturing and farming will be
encouraged to contribute towards a more cost-effective distribution link and
facilitate feedback of information on the changing consumer preferences to the
producers. In addition, the market and cost structure of the distribution of goods.177
will be examined to improve the logistics chain and reduce unit cost. Support
services such as transport, storage, communications and financial services will
be strengthened to facilitate closer linkages to improve efficiency of the distributive
trade sector.
7.29 E-commerce will be a significant area of growth during the OPP3 period.
Efficiency gains will be realized through the use of e-commerce technologies,
resulting from lower business costs and a rationalization of business processes.
Firms, particularly SMEs, will be encouraged to develop e-commerce to offer
a wider range of services and products including customization, reach new
customers and suppliers as well as adopt a more efficient supply chain and
distribution channel. Besides e-commerce, other modes of distribution such as
direct selling, franchising and factory outlets will be encouraged, not only to
generate income and employment, but also to promote healthy competition in
the distributive trade sector.
Infrastructure and Transport Services
7.30 Infrastructure development will focus on ensuring availability of supply,
enhancing efficiency as well as improving the quality of services. The expansion
of infrastructure facilities will take into consideration long-term demand, economic
growth and competitiveness. The development strategies will also emphasize
further expansion of infrastructure facilities to rural areas to enhance accessibility.
The expansion, upgrading and integration of roads and highways, railway, ports,
airports as well as telecommunications will be undertaken in a more coordinated
and integrated approach.
7.31 The emphasis of the transport services during the OPP3 period will be
the provision of an efficient and cost effective multimodal transport systems for
both passengers and cargo. The speedy movement of passengers will entail
seamless transfers between various transport modes while ensuring convenience,
comfort and safety. In the case of cargo, carriage will increasingly be on a single
liability basis, although a combination of modes is utilized.
7.32 The development of roads will continue to focus on increasing accessibility,
which will facilitate the establishment of new growth centres as well as reduce
travel time and costs. Higher standards will be applied in the construction of new
roads, especially those that link the industrial areas to the ports and airports.
Accessibility to rural areas, particularly in Sabah and Sarawak will be further
enhanced to promote economic and social activities. Safety aspects will also be
emphasized in the construction of new roads as well as the upgrading of existing
roads..178
7.33 The provision of public transport infrastructure, especially in urban areas,
will focus on the need to have a more integrated, efficient, safe and comfortable
public transport network. Proactive measures will be undertaken to alleviate
traffic congestion and enable the required modal shift from private car usage to
patronage of the public transport system. For the Klang Valley, these measures
will include the extension of the urban rail network, introduction of a common
ticketing system, integrated route and facility networks, more efficient feeder
buses, and additional park and ride facilities. Bus services will continue to play
a major role in the urban centres and their operations will therefore be further
enhanced.
7.34 To increase the efficiency of cargo movement, shippers including exporters,
importers and freight forwarders will be encouraged to utilize multimodal
transportation to reduce the need for long distance road haulage. In this context,
the movement of cargo from seaports to inland ports will be by rail transportation
and the distribution of goods from inland ports to the customers will be by road
haulage carriers, thereby reducing the maintenance cost of roads and releasing
more road space for other vehicles. Emphasis will also be given to the provision
of an efficient and safe containerized road haulage.
7.35 Railway infrastructure development will focus on capacity expansion and
upgrading of the rail network to provide integrated rail transport services as well
as the enhancement of safety and maintenance standards. Railway links to the
ports, airports, industrial zones and high density corridors will be enhanced to
enable greater accessibility and competitive pricing for the production, transportation
and distribution of goods. Haulage and passenger capacity will be further increased
by the phased double tracking and electrification of the railway network beginning
with the Rawang to Ipoh segment. The phased double tracking and electrification
of the national railway network is part of the planned Trans-Asian Railway link
between Kunming, People’s Republic of China and Singapore. This regional rail
project will greatly improve cross-border rail links especially for freight
transportation.
7.36 Port development will continue to focus on improving capacity, enhancing
the efficiency and productivity of related services as well as the forging of
strategic alliances. Continuous efforts will be undertaken to attract more exporters,
importers and the shipping community to use local ports. In line with this, a
single port authority will be established which, inter alia, will perform regulatory
functions to ensure that port operators meet the performance standards stipulated
as well as comply with the terms and conditions of the licences issued. In.179
addition, the authority will facilitate an orderly and integrated development of ports
and port-related services based on their respective strengths, uniqueness and
specialization. Besides Port Klang, Port of Tanjung Pelepas will also be developed
as a cargo transhipment centre. Ancillary services such as distriparks, warehousing,
bunkering, ship building and repairing will also be encouraged to increase their
capacity and productivity to support port development.
7.37 Measures will be undertaken to increase the capacity and upgrade operations
to enhance the growth of shipping services. The Malaysian fleet will be expanded
through leasing, chartering and the purchase of ships as well as forging strategic
alliances such as integration, acquisition and joint ventures between local and
foreign shipping companies. Shipping operations will be upgraded through the
wider use of computerization, automation and the continuous improvement of
the core competencies and skills of personnel.
7.38 Airport development will focus on improving efficiency, productivity and
safety while expanding capacity to meet increasing demand. Airports will be
developed along a hub and spoke policy to provide effective air links and
improve accessibility to rural areas. Efforts will be intensified to promote
KL International Airport (KLIA) as a regional aviation hub, shopping and
recreation centre as well as a tourist destination. Measures will be instituted to
ensure that KLIA conforms to world-class performance standards.
7.39 In an increasingly competitive global environment, the national carrier
will have to rationalize its operational network, review operational costs and
improve efficiency. With the increasing liberalization of the aviation industry
and the trend towards ‘open skies’ especially in Europe and the United States
of America, prospects are bright for the national carrier to expand its international
network. With strategic alliances and code-share as well as other commercial
arrangements, the national carrier will be able to develop and expand its market.
7.40 Recognizing the importance of the aviation industry to facilitate economic
growth, trade, investment and tourism, the Government will continue to pursue
a liberal approach to Air Services Agreements with other countries. At the same
time, sufficient safeguards will be instituted to ensure market access and
competitiveness of the national carrier and other local operators. Efforts will be
stepped up to obtain additional landing rights for Malaysian carriers as well as
attract more foreign airlines to operate flights into Malaysia.
7.41 In order to support communications and multimedia applications as well
as to reduce the digital divide, the telecommunications infrastructure will be
expanded to increase its capacity and accessibility, particularly to the rural areas..180
To meet the challenges of global competition, the communications and multimedia
industry will have to be innovative and creative to provide new and differentiated
services at competitive rates. The Government will set performance standards
as well as monitor the industry to ensure fair competition and protect consumer
interests.
7.42 ICT will be utilized as an enabling tool to support the growth of infrastructure
facilities and services. The usage of ICT in the transport system for monitoring,
tracking and real-time information on traffic flows and volume as well as traffic
management will continue to be expanded to enhance transportation efficiency,
safety and comfort.
Utilities
7.43 Sustainable development of the energy sector is important in ensuring the
competitiveness of the economy, particularly the industrial, transportation and
commercial sectors. Efforts will continue to be undertaken to manage both
depletable and renewable energy resources to cater for the demands of a rapidly
growing economy. The main thrust will be to ensure adequate, secure, quality
and cost-effective supply of energy, promote its efficient utilization and minimize
the negative impact on the environment.
7.44 The development of the oil and gas subsector is expected to undergo a
major shift during the OPP3 period. Based on the present oil reserves and the
current rate of production and utilization, Malaysia is expected to be a net
importer of oil by 2008. In order to increase stock, efforts will focus on deep-sea
exploration locally and prospecting for oil resources overseas. As the availability
of gas in Peninsular Malaysia is expected to increase during the Plan period,
there will be an increase in the utilization of gas by the power sector. However,
an optimal generation mix will be determined to ensure system security and
reliability. At the same time, the utilization of gas by the non-power sector, such
as the transport sector as well as petrochemical industries, will be intensified.
7.45 The main thrust of the electricity subsector will continue to emphasize
the adequacy of electricity supply as well as improve its productivity and efficiency.
New private investments in the generation activities, including co-generation
system connected to the distribution networks, will be encouraged. At the same
time, the transmission and distribution systems will be further strengthened to
improve coverage, reliability and quality of supply. The Malaysian Grid and.181
Distribution Codes will be further improved, particularly in terms of frequency
limit and reactive power requirement. The electricity supply industry will be
restructured to create an efficient industry, in terms of both technical and economic
efficiencies. An Energy Commission will be established to regulate the technical
and economic efficiencies of the industry.
7.46 To supplement the conventional supply of energy, new sources such as
renewable energy will be encouraged. In this regard, the fuel diversification
policy which comprises oil, gas, hydro and coal will be extended to include
renewable energy as the fifth fuel, particularly biomass, biogas, municipal waste,
solar and mini-hydro. Of these, biomass resources such as oil palm and wood
waste as well as rice husks, will be used on a wider basis mainly for electricity
generation. Other potential sources of energy will include palm diesel and hydrogen
fuel.
7.47 Efficient utilization of energy will also be encouraged during the OPP3
period through the enforcement of the Energy Efficiency Regulations and
implementation of Demand-side Management, such as retrofitting and district
cooling programmes, changing the energy usage pattern and appliance labelling.
The establishment of new integrated complexes and townships that are managed
on an energy-efficient manner will also be encouraged. Towards this end, the
Malaysian standards on efficient lighting, air-conditioning and building envelope
systems will be formulated and energy efficiency provisions will be incorporated
into the Uniform Building By-Laws.
7.48 Efforts will be intensified to promote the development of domestic energy-related
industries and services. In promoting higher local content in the energy
sector, the Entrepreneur Development Programmes and the Vendor Development
Programmes undertaken by Tenaga Nasional Berhad (TNB) and Petroliam Nasional
Berhad (PETRONAS), respectively, will be intensified. These efforts will contribute
towards promoting Malaysia as a regional centre for energy-related engineering
services. Major companies, like PETRONAS, TNB and the independent power
producers will be urged to expand their participation in energy-related industries
and services in other countries.
7.49 There will be greater emphasis on enhancing accessibility to safe drinking
water, particularly for rural households. To overcome the problem of water
shortage especially in rapidly developing areas, interstate water transfer programmes
as well as the utilization of surface downstream water for industrial and non-critical
purposes will be implemented. Efforts will also be taken to identify.182
potential groundwater sources as a supplementary source to surface water, especially
during dry seasons. To improve water demand management, programmes to
reduce non-revenue water and increase public awareness on conservation will
be further intensified.
7.50 In terms of the sewerage system, the provision of modern sewerage
facilities will be accelerated to reduce water pollution and preserve the environment.
To meet these objectives, centralized sewerage projects will be implemented
with priority given to state capitals, major towns and tourist resorts. However,
in locations where connections to the centralized system are too costly or have
adverse impact on the environment such as hilly and isolated areas, individual
sewerage systems will be implemented. The refurbishment and upgrading of the
sewerage system will also be intensified.
Social Services
7.51 Health services programme will continue to be expanded during the
OPP3 period, both in the urban and rural areas. The public sector will continue
to place emphasis on the provision of promotive and preventive health care,
while the private sector and the non-governmental organizations (NGOs) will
be encouraged to be more active in the provision of these services. The private
sector will continue to expand the provision of curative care and complement
the services provided by the public sector. As part of the efforts to ensure the
provision of quality health services, the public sector will strengthen its regulatory
role to monitor the services provided by the private sector in accordance to
relevant laws and regulations.
7.52 The changing pattern of diseases due to changes in lifestyle and behavior
had led to increasing incidence of non-communicable diseases and injuries.
Thus, health promotive and preventive programmes, including healthy life style
campaign, which focus on changing health behavior, will be given emphasis
during the OPP3 period. Surveillance and control of emerging and re-emerging
infections as well as programmes on immunization, food and nutrition, water
quality and sanitation will be strengthened.
7.53 The quality and access to health services will be further improved using
ICT and telehealth as the enabler. All new and existing hospitals will be incorporated
with ICT and automation services, thus creating an efficient networking of
hospitals and clinics services, which will be seamless and client-friendly. The
integrated health information system network will further facilitate communication
and referrals through the various levels of care in the public and private health
facilities..183
7.54 Human resource planning and training will be given priority to overcome
the shortages of health professionals and meet the needs of the expanding health
services. A health care financing scheme will be implemented to ensure universal
coverage and access to health services as well as appropriate sharing of costs
by the private and public health care providers and consumers. However, the
Government will continue to ensure the provision of health care services to the
low-income group.
7.55 During the OPP3 period, housing development will continue to give
emphasis to the provision of adequate, affordable and quality housing to all,
particularly the low-income group. In this respect, focus will be on the provision
of better quality houses in suitable locations and conducive living environment.
Housing development will continue to be closely coordinated with industrial and
overall development planning to ensure adequate and timely provision of houses
including access to social services and amenities as well as an integrated and
adequate public transport system. These efforts will be undertaken within the
framework of the National Spatial Plan. The private sector will continue to play
an increasingly important role in meeting the overall housing needs, while the
public sector will concentrate on providing houses for the low-income group and
public sector employees.
7.56 Efforts will be undertaken to promote R&D activities related to production
of cheaper building materials and better construction techniques with a view to
improving the quality and safety of houses and ensuring their affordability. The
housing sector will also address a more broad-based agenda such as fulfilling
the needs of the elderly and disabled, energy efficient design as well as
implementation of the community based and garden city concept. Emphasis will
continue to be given to the maintenance of high-rise buildings especially low-cost
and low-medium-cost flats.
7.57 To ensure that the success in rapid economic development is not negated
by social problems, efforts will continue to be undertaken to strengthen the
family unit that forms the basis for social stability and building a caring society.
Programmes will be undertaken to equip families to face the challenges arising
from rapid development as well as ensure that stability and harmony within the
family unit is maintained. In addition, as globalization will have an impact on
the family structure and society, including the relevance of cultural values and
norms in social integration and nation building, efforts will be undertaken to
ensure that the Malaysian society is resilient to withstand such negative
influences..184
7.58 The continuity and success of the nation’s development depends on youths.
Youths are an important source of manpower, and as such will have to be
properly guided and provided with the appropriate skills and knowledge and at
the same time inculcated with the right attitudes and values. Youth skills training
will focus on acquiring knowledge and skills in new and appropriate fields as
well as upgrading existing skills to ensure its relevance to the needs of the
industry. More apprenticeship programmes will be implemented to cater for
youths who are less academically inclined. In addition, programmes will also
be designed to develop creativity and talents among youths. Youth development
programmes will also emphasize the importance of harmonious community living
and the inculcation of the spirit of patriotism and national pride.
7.59 The promotion of high performance and mass sports will continue to be
undertaken as it contributes to the building of a disciplined and competitive
society. Efforts will be undertaken to ensure effective coordination and management
of sports activities between the public and private sectors, including a review
of the role and functions of sports associations. Priority will be given to develop
Malaysian sportsmen to world-class standards, particularly in high performance
sports. More sports and recreation facilities, including world-class sports
infrastructure will be provided to ensure greater accessibility for the public and
also to enable Malaysia to host international events. These efforts will also
contribute towards the growth of the tourism industry, while at the same time
contribute towards the enhancement of national unity.
Science and Technology
7.60 The global economy is rapidly developing into a knowledge-based economy
where competitiveness and efficiency will be driven by technology, skills and
innovation. In order to meet these demands, emphasis will focus on accelerating
the development of Malaysia’s capacity and capability in science and technology
(S&T) knowledge and skills, promoting innovation and intensifying market-oriented
R&D within the context of the new environment of a knowledge-based
economy. Efforts will also be taken to further strengthen the linkages between
the relevant sectors and institutions to evolve an effective national innovation
system.
7.61 With regard to R&D, efforts will be taken to increase the amount of Gross
Expenditure for Research and Development (GERD) from the current low level
of 0.4 per cent of GDP to at least 1.5 per cent by 2010. While the Government.185
will continue to provide funding for R&D activities through the Intensification of
Research in Priority Areas (IRPA) programme, the private sector is expected to
raise its contribution in the national R&D expenditure. Measures to increase
GERD to at least 1.5 per cent will include the restructuring of the existing
institutions, further promoting private sector R&D as well as creating new funds
in addition to IRPA. These will further stimulate R&D activities to a higher level
and create greater competitive advantage. To further enhance competitiveness,
the private sector will need to expand and intensify its R&D efforts to improve
on existing products and introduce new ones. In this regard, the Government will
provide an enabling environment to promote and facilitate private sector R&D.
In particular, the legal framework of intellectual property management will be
reviewed and strengthened.
7.62 Recognizing the high risks and costs associated with investments in R&D
to develop strategic industries, the IRPA mechanism will be reviewed and fine-tuned
to emphasize more on priority setting for R&D in strategic areas that will
sustain long-term technology development. Specific research institutions, singly
or jointly with industry partners will then be provided with funding to develop
targeted areas of technology development in knowledge-based and high-technology
industries such as biotechnology and pharmaceuticals, ICT and microelectronics,
advanced materials and aerospace technology.
Information and Communications Technology
7.63 The emphasis on the development of ICT is central in the pursuit of
productivity-driven growth and the knowledge-based economy. The extent of
ICT application will emerge as a significant determinant of competitiveness for
firms and countries as there will be increasing reliance on value-creation of
information and knowledge. Thus, it is imperative to intensify efforts to enhance
capacity building in terms of human resources, infrastructure and institutions.
In this respect, the Government and the private sector will step up efforts to
leverage on ICT development to increase productivity and growth opportunities
in all sectors of the economy.
7.64 A principal thrust will be to facilitate the development of a dynamic and
viable e-Malaysia by focusing on people, infostructure and applications development,
which will be guided by the National IT Agenda (NITA). Towards this end,
programmes will be intensified to promote greater awareness, confidence and.186
utilization of ICT applications as well as strengthen institutional capacity in the
public and private sectors including the community. In addition, expansion of
ICT infrastructure will be given priority to enable equitable access to information
and knowledge while reducing the digital divide. The provision of equitable and
affordable services to rural and remote areas will be intensified. To complement
these efforts, all government agencies will implement the Information Technology
Strategic Plan (ISP) to ensure a coordinated approach to computerization that
will cover the national, state and district levels.
7.65 To take advantage of the progress in ICT development in the nation,
efforts will be made to develop Malaysia into a global ICT and multimedia hub.
Towards this end, a strategic policy direction aimed at fostering healthy competition
in the ICT and multimedia sector will be adopted. Measures that will be undertaken
include removing the barriers to entry, nurturing fair competition as well as
expanding and upgrading ICT infrastructure.
7.66 During the OPP3 period, concerted efforts will be made to roll out Multimedia
Super Corridor (MSC) first-wave flagship applications. In addition, a study will
be undertaken for the implementation of the second-wave MSC applications.
Efforts will be made to further promote MSC as well as provide a conducive
environment to attract top-notch personnel and world-class companies. This will
create a synergistic effect and serve as a catalyst to attract a greater number of
leading companies to MSC.
7.67 A greater number of ICT-based SMEs including ICT start-up companies
will be developed to facilitate increases in productivity and market expansion.
Towards this end, an ICT fund will be set up to provide SMEs with better
financial accessibility to embark on ICT development. To optimize investment,
SMEs will be encouraged to pool their resources to utilize ICT and develop
portals for e-commerce. Measures will also be undertaken to develop the necessary
skills and competencies of employees and entrepreneurs to facilitate a wider
utilization of ICT.
Environment
7.68 During the OPP3 period, the Government will continue to take appropriate
actions to keep the balance between growth objectives and environmental concerns.
Environmental considerations will increasingly be integrated into development
planning taking into account the population’s socio-economic needs as well as.187
the enhancement of the quality of life. To strengthen the empirical base for
environmental decision-making, steps will be taken to introduce environmental
performance standards and environmental data on a sectoral and cross-sectoral
basis. Existing legislative framework for environmental protection will be further
complemented by the use of market-based instruments to encourage the adoption
and development of environmentally-sound technologies and environment-friendly
products.
7.69 The major environmental and natural resource concerns during the OPP3
period, will include improving air and water quality, efficient management of
solid waste and toxic and industrial waste, developing a healthy urban environment
and the conservation of natural habitats and resources. The Government will
continue to undertake appropriate measures to address air pollution caused by
various sources. These will include enhancing enforcement of emission controls
for motor vehicles, instituting comprehensive traffic management systems, and
promoting the use of public transportation and electric vehicles in urban areas
as well as increasing the usage of natural gas to reduce total air pollution load.
In addition, zero emission technologies will be promoted to reduce energy
consumption and facilitate the reuse and regeneration of new materials from
waste. The industrial sector will be encouraged to adopt cleaner technology
production.
7.70 A National Water Policy, which will provide the framework for water
conservation and management to ensure adequate and safe water supply for the
nation, will be formulated. This policy will focus on the integrated river-basin
approach, the protection of catchment areas and reservoirs and address issues
of inter-state and inter-basin water transfers. To contain the discharge of waste
water polluting the rivers and water ways, the Government will continue to
upgrade and build new sewerage treatment plants, and the industrial sector will
be encouraged to reuse and recycle waste water. To further improve the management
of solid waste, the Government will consider the adoption of a comprehensive
waste management policy including the installation of incinerators for safe and
efficient disposal of waste as well as to formulate strategies for waste reduction,
reuse and recycling. Local authorities will be provided with assistance through
capacity development programme and demonstration projects to integrate
environmental considerations into local planning. In addition, community
participation in the development planning process based on the principles of
Local Agenda 21 will be enhanced..188
III. CONCLUSION
7.71 The principal thrusts for the OPP3 period will be the creation of wealth
and promotion of new sources of growth in the manufacturing, services and
agriculture sectors. Efforts will be undertaken to mobilize and allocate resources
more effectively and efficiently to attain a higher growth through productivity-driven
investments and greater application of ICT in all sectors of the economy.
The provision of better social services, utilities, infrastructure and facilities as
well as conservation of the environment will enhance the quality of life. The
sectoral strategies and priorities will contribute towards the building of a resilient
and competitive nation, in line with the aspirations of becoming a developed
country by 2020.

 

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