Wednesday, May 27, 2009

Malaysia, Singapore eye changes to economic models

Malaysia and Singapore said Friday they may tweak their economic models as a collapse in demand from the U.S. and Europe sends the Southeast Asian neighbors into recession.

Malaysia plans to emphasize «greater creativity, innovation and high-value» as part of an effort to spark economic growth, Prime Minister Najib Razak said. Details of the plan would be announced «when we're ready,» he said.

«We're taking advantage of the current global downturn ... to come up with a new economic model for Malaysia,» Najib said at a joint news conference with Singapore Prime Minister Lee Hsien Loong.

Malaysia and Singapore, which formed a single country from 1963 to 1965, have seen their exports plummet this year amid the worst global economic slowdown since World War II. The International Monetary Fund said earlier this month it expects Malaysia's economy to shrink 3.5 percent in 2009 while Singapore's will likely contract 10 percent.

Each country has announced major fiscal stimulus packages this year in a bid to boost domestic consumption.

The prime ministers also said they began discussions on building a third causeway between the two countries, which are separated by the Straits of Johor.

Singapore, which relies on trade, finance and tourism, will review over the next few months which manufacturing and services it may branch into, Lee said.

«At the broadest level, our approaches are sound and have to remain,» Lee said.
«But what sort of manufacturing, what new services? These are issues which we have to consider.

Najib has already scrapped a requirement for 30 percent Malay ownership for companies in several sectors, such as health care and transport, as part of a pledge to roll back decades-old affirmative action programs for the ethnic Malay majority.

The Malaysian government has said it would like to boost manufacturing productivity and add more value to exports.