training. Malaysia established the Human Resources Development Fund (HRDF) to support employee training. This fund is funded by companies with 50 or more employees contributing 1% of the total wages paid to employees.
Regarding university training, Malaysia focuses on expanding the training of good managers and technical experts. Notably, in order to promote the expansion of international cooperation and exchanges, English is widely used in university training. In addition, Malaysia also focuses on educating about the spirit of discipline in work. As foreign economic relations increasingly affect the country's economic situation, since 1983, Malaysia has carried out educational reforms, including a notable new point of introducing knowledge about integration into teaching for university students.
In general, in a short period of time, Malaysia has achieved remarkable achievements in human resource development. Malaysia's Human Development Index (HDI) increased sharply, reaching 0.794 in 1993, ranking 57th in the world, surpassing many countries in the region (Indonesia ranked 105th, the Philippines ranked 99th). The rate of university graduates in computer science, science, mathematics, and engineering in 1990 reached 25%; the labor structure working in the manufacturing industry increased from 19.5% in 1990 to 25.5% in 1995; the labor force with secondary and university degrees in 1995 accounted for 36% [54, p. 32].
In addition, to solve the problem of labor shortage, Malaysia allows foreign workers to work in the construction, plantation agriculture, and service sectors; allows foreign investors to bring experts and technicians to work in fields where locals cannot meet the requirements. Malaysia also stipulates that FDI projects with investment capital of 2 million USD or more are allowed to immigrate up to 5 people, while projects under 2 million USD are considered on a case-by-case basis.
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2.1.2.4. Policy to promote technology transfer
Malaysia pays great attention to investing in scientific and technological research and development, while creating favorable conditions for the investment environment and generating endogenous resources to improve the ability to receive and transfer technology through FDI projects.
- Malaysia is very interested in investing in research and development (R & D),
considered as a key axis for growth and prioritized in annual budget plans and long-term strategies. Even during the years of economic crisis (1984), investment spending on science and technology research was still prioritized and not cut. In 1986, Malaysia developed a national science and technology policy, and established a committee to develop a national action plan for technological development in industry in 1987 [7, p. 174].
In addition to the system of agencies and research institutes invested by the state, Malaysia also encourages the private sector to invest in scientific research. In fact, the private sector has made many positive contributions to the research process, technology application deployment and training of high-quality technical experts. Malaysia also has a policy to create close links between research institutes and businesses to quickly apply research results into practice.
To enhance the training of a qualified workforce capable of accessing and mastering new science and technology, Malaysia expanded its technical and technological training schools. By 1996, Malaysia had 12 research institutes, 7 technical universities, and 159 private technology training institutes. The National Institute of Public Administration alone, from 1992 to 1996, provided IT training to 8,653 civil servants in state administrative agencies [35, p. 257]; in 3 years (1996 - 1998), the Human Resources Development Fund spent 64.8 million RM on popularizing information technology knowledge for workers; Malaysia invested 1 billion RM in the 5-year plan (1995 - 2000) for R&D [7, p. 178].
- In order to attract advanced technology from abroad, Malaysia has preferential policies to attract FDI into industries and fields using high technology. For example, high-tech projects are exempted from income tax and have investment tax reduced for a period of 5 years with a reduction of 60% (for normal areas), 80% (for priority areas); exempted from income tax for 10 years and reduced investment tax up to 100% for 5 years for projects serving the industrial development strategy that use modern technology, large investment capital and have linkages with economic sectors; projects that have an impact on adjusting the industrial structure in the fields of wood, textiles, and machinery are reduced up to 100% of investment tax for 5 years [26, p. 87].
Malaysia encourages technology transfer activities between domestic enterprises and FDI enterprises; encourages domestic enterprises to research, study, and acquire technologies in countries with high potential. For example, in 1996, 20 companies went to Sweden, Finland, Belgium, Germany, and the Netherlands to exchange telecommunications equipment; 12 companies went to Finland and Sweden to exchange paper and packaging technology; 12 companies went to Japan and Taiwan to exchange metal cutting technology and measuring equipment; 8 companies went to Germany and the UK to exchange advanced ceramic technology; 12 companies went to the US to exchange electronic technology... [26, p. 93].
2.1.2.5. Infrastructure development policy
Clearly identifying infrastructure as very important, as a "red carpet" contributing to creating an attractive investment environment to attract FDI. In addition to investment capital from the state budget, mobilizing official development assistance (ODA) capital, Malaysia also encourages private sector, both domestic and foreign, to invest in infrastructure construction. In industrial infrastructure construction alone, Malaysia invested 15,834 million RM in the period 1991 - 1995, and increased to 19,230.1 billion RM in the period 1996 - 2000. Private investment in infrastructure also increased rapidly and accounted for a significant proportion of total investment capital of the private sector, accounting for 25% in 1995, while this rate in Indonesia was 10%, Thailand was 18% [54, p. 239]. Thanks to that, Malaysia's infrastructure system has gradually developed relatively synchronously and modernly.
- Regarding transportation. In 1986, Malaysia built a highway from the border with Thailand to the border with Singapore at a cost of 5.2 billion RM; in 1991, it built the East-West highway... As of 1992, Malaysia's road system had a total length of 92,545 km, of which 75% were paved roads; 46.5% were grade 2 standard roads; 15.1% were highways [40, p. 152] and by the end of 1997, Malaysia had a highway system connecting regions throughout the country.
Malaysia's railway system has also been rapidly developed, with a total length of 1,086 km by 1992, connecting domestic seaports and international intermodal connections with Singapore's railways. Malaysia has implemented a railway modernization program since 1990, including a two-way railway project with initial costs of
RM543 million in capital.
Malaysia's aviation system has 8 international airports with more than 70 routes to 36 countries around the world, including several large airports that meet international standards such as Kuala Lumpur and Selagor airports with a capacity of 100 million passengers per year. Since 1992, Malaysia Airlines has implemented an aircraft modernization program at a cost of about 5 billion USD. In 1994, Air Asia Sdn Bhd came into operation, creating additional air transport capacity.
By sea: With the advantage of 4,675 km of coastline, Malaysia has built many large, modern seaports such as Penang, Port Klang, Kuching, Sibu, Miri, Labuan... Therefore, Malaysia's maritime transport services are very developed and are considered to operate effectively in the world. Container transport services have developed with many forms and high quality. In the field of maritime transport, in early 1992, Malaysia had an international shipping fleet of 51 ships, a cargo fleet with a capacity of over 2 million tons.
In general, along with the expansion and upgrading of the transportation system, Malaysia's transportation services are also very developed. Most of Malaysia's transportation companies have branches abroad and are members of international transportation associations [26, p. 100].
- The financial and banking service system in Malaysia is developed, modern, and has good service quality. With 35 domestic commercial banks and a network of 1,684 branches and 39 representative offices of foreign banks, it has created favorable conditions for investors. By the end of the 1980s, Malaysia had 61 insurance companies operating in all fields.
- Malaysia's postal and telecommunications service system has developed rapidly with a network of service offices present everywhere and is considered one of the most modern countries in Southeast Asia, contributing significantly to the creation of an attractive investment environment, creating favorable conditions for foreign investors. In 1988, telex services in Malaysia were automated with more than 12,000 machines. In 1996, the satellite telecommunications system (MEASAT) was put into operation.
- The electricity produced is capable of supplying the entire country's needs at a relatively low price compared to many countries in the region. Investment projects in
The Eastern Peninsular enjoys a 5% reduction in electricity prices. The clean water system meets international standards and meets the needs of the whole country [67, p. 54].
2.1.2.6. Policy on developing free trade zones, industrial zones, and high-tech zones.
To encourage attracting high-tech and HVXK FDI, Malaysia has focused on investing in building free trade zones (FTAs) and industrial parks (IPs) with many preferential policies and good infrastructure. Thereby, diversifying the forms and solutions to attract FDI.
In 1971, the first free trade zone was established in Penang, and by the end of the 1980s, there were 10 free trade zones. The purpose of establishing free trade zones is to link trade with investment, especially attracting FDI projects to produce export goods. Investment projects in this area enjoy special status as a free trade zone, and are provided with services that facilitate the movement of goods. Malaysia's free trade zones have similar characteristics to export processing zones, because they are mainly for projects to produce, process or assemble export goods. Malaysia's policy of establishing free trade zones has been effective in attracting FDI and is considered the most successful among developing countries [26, p. 97].
To create links between FDI and domestic economic activities, since the late 1980s, Malaysia has focused on rapidly developing industrial parks. From the first industrial park in Petaling Jaya, by 1998 Malaysia had 308 industrial parks. Industrial parks in Malaysia have invested in quality infrastructure, capable of meeting all operational needs of industrial projects. In addition to tax incentives, FDI projects investing in industrial parks also enjoy many preferential policies: Products do not necessarily have to be 100% exported, which has created favorable conditions for foreign investors in product consumption and reduced the gap between export industries and other industries; land rental prices in industrial parks are often lower than the average level of the region and the world...
In general, the investment in opening commercial zones and industrial parks with many preferential policies has created diverse open areas to attract FDI. In the early period, commercial zones were quite effective, but after discovering that this form was still limited.
In order to create linkages between FDI and domestic economic activities, Malaysia has paid attention to expanding the industrial park form. The industrial park form has overcome some limitations of the industrial parks but also revealed limitations in terms of scale, multi-sectority, and linkage between research and production... Moreover, the general trend of the world as well as the requirements of industrialization require a shift from industries that use a lot of labor, natural materials, and assembly industries to industries that use modern technology and create high added value. To do so, there must be policies to encourage the development of high-tech industries (CNC), strengthen the linkage between universities, research institutes and industrial production facilities. Therefore, along with the consolidation and completion of industrial parks and industrial parks, since the mid-1980s, Malaysia has begun to build CNC zones. In 1988, the first CNC zone under the MSC program in the Kuala Lumpur Belt Area was established with an area of 310 hectares in Bukit Jalil. Later, the Kulim CNC zone in Kedah state with an area of 1,448 hectares was built in Kedah state, North Peninsular. For CNC zones, Malaysia has special preferential policies to attract large projects and use modern technology.
2.1.2.7. Diversification policy in attracting investment partners in economic sectors.
- Diversify investment partners
Like other developing countries, Malaysia's goal of attracting FDI is not only to supplement capital for development but also to receive and improve advanced technology and modern management skills. These resources, each region and each developed industrial country has its own strengths. Therefore, Malaysia advocates flexibility, choosing the right investment partners suitable to the requirements of industrialization in each development stage. That is, based on the practical requirements of industrialization to choose investment partners, not to receive investment according to the requirements of foreign investors. Therefore, when switching to implementing the HVXK industrialization strategy, to develop manufacturing industries, Malaysia has focused on attracting partners with great investment potential such as Japan, the US, and Europe.
Malaysia has also seen the effectiveness of engaging TNCs directly.
Investment is the stability of the investment program is quite high. Therefore, in addition to implementing preferential policies, Malaysia has sought to approach to promote investment opportunities and create the most favorable conditions for projects invested by TNCs to be implemented most smoothly.
- Attracting FDI into economic sectors
To implement HVXK industrialization, since the 1970s, Malaysia has had a policy of shifting FDI attraction from mainly focusing on rubber plantations and mining to export-serving industries, especially manufacturing industries and investment in commercial zones. Malaysia especially encourages FDI in large-scale production facilities, using advanced technology, and capable of attracting many workers. At the same time, due to the need to concentrate large capital through the financial market for industrialization, Malaysia encourages FDI attraction in the financial and banking sectors.
In the 1980s, to accelerate the industrialization process, Malaysia strongly attracted domestic investment and FDI into the manufacturing industry, especially heavy industry under the first comprehensive industrial development program - IMP1 (1986 - 1995) with the goals of: (1) Promoting development and production; (2) maximizing the efficiency of national natural resources; (3) developing domestic technical capacity.
2.1.2.8. Investment promotion policy
In order to attract the attention and investment of foreign investors, along with actively integrating into the international economy, Malaysia focuses on promoting the country's image in terms of natural resource potential, economic and technical infrastructure, investment opportunities, etc.
Malaysia's investment promotion activities are carried out in various forms. Malaysia regularly organizes investment seminars at home and abroad, helping foreign investors to know about the policies, investment opportunities as well as the economic development orientation of Malaysia to make appropriate investment decisions. In addition to sending delegations at the central level abroad to introduce opportunities and mobilize investment, Malaysia encourages states and domestic enterprises to proactively promote and call for investment based on development strategies and planning.
development of industries, economic zones as well as the general investment promotion program of the government. For example, when establishing the EZ in Penang state, the Governor directly went to the United States and Europe to invite TNCs to invest. MIDA regularly publishes publications in many languages; combines with industrial and commercial organizations of countries to introduce investment opportunities in Malaysia.
2.1.3. Some assessments of FDI attraction policies in the period 1971 - 1996
2.1.3.1. Positive aspects of FDI attraction policy
* Malaysia's FDI attraction policy is basically relatively uniform and consistent towards foreign investors.
Compared to many developing countries in the region and the world, Malaysia's open-door policy and international economic integration took place quite early. To attract FDI capital, Malaysia has built and continuously improved a relatively synchronous, open, consistent and transparent FDI attraction policy system. In addition to commitments to ensure ownership, Malaysia has preferential financial and monetary incentives; created a stable political and social environment; upgraded economic infrastructure.
- technology; focus on training and developing human resources; promote research activities and technology transfer... Thereby, it has created an attractive investment environment for foreign investors. In fact, the policy of attracting FDI has impacted the rapid increase of FDI capital in Malaysia, playing an important role in supplementing investment capital for development serving industrialization. FDI capital in Malaysia increased from 368 million USD in 1971 to 2,333 million USD in 1990, and reached 7,296 million USD in 1997.