By Alang Bendahara
LAST month, Bank Negara Malaysia (BNM) announced that the Malaysian economy is projected to expand between 6.0 per cent and 7.5 per cent in 2021 compared to the 5.6 per cent contraction in 2020 due to the Covid-19 pandemic.
The state remains the highest contributor to the national GDP in 2019 with an achievement of 24.2 per cent. As Selangor continues its aim to become an Asean premier smart state in 2025 through its digitalisation agenda, Menteri Besar Selangor (Incorporated) or MBI addresses some of its post-pandemic recovery plans and focus.
While the state realigns several of its economic initiatives to help the country to meet its target, MBI chief operating officer Soffan Affendi Aminudin said the recent economic projection by BNM has made the task more challenging for the state.
“As the main contributor to Malaysia’s gross domestic product (GDP), Selangor has to work harder to ensure that the country’s GDP in 2020 would be achieved. So using the BNM’s data, we have come up with suggestions for the main focus and direction for Selangor in its long-term plan for the economic recovery after Covid-19,” he said in a recent interview with Media Selangor.
Soffan said to maintain the economic recovery, the state agency had recommended that the state should enhance several of its existing long-term initiatives, which were designed with the goal of bringing Selangor towards becoming a premier smart state.
“Firstly, the state government should build a resilient and highly skilled workforce through its Selangor Kerjaya that would be able to adapt with incoming investments. Secondly, we also need to have investment-led growth focusing on innovation via the Selangor Innovation Fund (SIF).
“Last but not least, the social security group should help target groups in getting the funds for them, get a new source of funds or maybe for the government to issue Sukuk or Dana Wakaf Korporat,” he said.
Touching on Selangor Kerjaya, Soffan said the job portal www.selangorkerjaya.com.my, which was launched by the Selangor Menteri Besar in January has attracted more than 6,000 applications and will begin to show results by the third quarter of the year.
“We match the skills of the applicants with the jobs offered. Once an applicant registers, we will screen them to find what their skills are and this process will take between two and three weeks. After that, the applicants will undergo one month of training.
So in just two months, the applicants will get the right job that is suited with his or her skills while the company will get the right candidate that matches their requirements,” said Soffan, adding that the process is to address the issue where job seekers are not interested in their field of study and have capabilities in other fields.
As for the SIF, which was announced in the 2021 Selangor Budget with a RM100 million fund, Soffan said the venture capital fund is being set up while awaiting a licence from the Securities Commission. He said its first investment will be made before the end of this year.
“SIF is part of the Selangor digital agenda and provides capital for local companies that are able to stimulate new industries in Selangor, which can contribute to the state’s digitalisation target. “Ideally, we want companies that have already been set up but we are also looking at start-ups.
So we are already looking at all the prospects out there,” he said, stating that SIF differs from other venture capitals as it is linked to the state ecosystem as well as the Selangor digital agenda.
Factors to look out for
Coming back to the BNM report, Soffan said their analysis on the report found that there are internal and external factors that will affect Selangor’s post-pandemic economic recovery.
“For internal factors, they are the execution of the immunisation programme, spending on public infrastructure and spending by the private sector.
“While the external factors involve the recovery of overseas demand, the upcycle of the global technology sector and the increase in manufacturing as well as commodity production.”
Soffan said MBI has made recommendations based on both factors.
Among the recommendations for the internal factors are initiatives to improve vaccination, to focus on affordable homes and the creation of an ecosystem that is able to support digitalisation infrastructure in the future.
He said during the movement control order period, there was a pent-up demand that was waiting to be channelled into the economy, but confidence among the people is currently still on hold as they are on the lookout for the latest progress on the Covid-19 outbreak.
“The building of 80,000 (units of) Rumah Selangorku Idaman and Harapan will complete in four years’ time and will inject RM17 billion of returns for the state economy. This comes from all levels, from the construction, employment of workers, financing and added value to the homeowners.”
He said 45,000 units of Rumah Idaman will be built by MBI while the rest by the Selangor Housing and Property Board (LPHS).
Both projects are apartments with a minimum size of 1,000 square feet and offered to families earning RM10,000 a month.
While for external factors MBI recommends turning Selangor into a hub for demand from industries and investors, urging state government-linked companies (GLCs) and developers to create more industrial and business parks to address this demand which will come post-pandemic. MBI is also calling to expedite the approval process to make it more attractive for investors.
Soffan said the BNM report also highlighted two commodities that will contribute to the economy — petroleum and palm oil — should the state decide on whether to focus on palm oil production or food security for Selangor.
He also said MBI has made several recommendations for the long run. “We need to set up competitive platforms to attract quality investments in industrial or new technology. We also need to enhance our innovation building so we will be an innovation-based economy. Also, we need to enhance economic management so there will be ease of doing business for investors in the state, and lastly, socioeconomic reforms that are more specific, systematic and non-overlapping, while using technology.”
On another note, Soffan said the state is also making plans to change the fate of 75 per cent of the 22,000 small-time traders to have their own shops via the Platform Selangor (Plats) e-commerce platform. He said this group is divided into two categories.
First, those earning less than RM100 per day and second, those earning more than RM100 per day. Additionally, there is also the third category of traders who own one shop and fourth, those who own a chain of stores.
“We are targeting for those in categories one and two to change their circumstances to become categories three and four. The economic impact is bigger if we can train them to be on the right platform (Plats). Because they are the B40 and changing them to be M40 will be the state’s biggest achievement.”
Soffan said besides Plats, they are also using the Rakan Digital Selangor to guide the small traders in
generating income, including doing promotions on social media.
MBI was established in 1994 as a body to administer assets and investments of the state government, and to represent the state in economic and business activities that are beyond the state government’s jurisdictions.
With 124 companies under its wing and 18 subsidiaries, MBI also plays a role in promoting and supporting the state government’s development efforts as well as carrying out social responsibility obligations for the public.
This article first appeared in the Selangor Journal monthly May edition, published on May 3, 2021.