Country Economic Work for Malaysia - Islamic Development Bank

iii.
Diagnostic Analysis at Sub-Sector Levels
80. In order to understand various dimension of Private Sector Development, it is
imperative to undertake the diagnostic analysis at the sub-sector levels, in particular,
finding of opportunities and the challenges and binding constraints facing various key
sub-sectors. The findings of this section help the IDB Group to identify focused programs for
the niche areas in various sub-sectors. The following sub-sectors are chosen for the analysis.
(i)
(ii)
(iii)
(iv)
(v)
Public Private Partnerships (PPPs)
Innovation
SMEs Development
Private Sector Resource Mobilization
Foreign Direct Investment
(i)
Public Private Partnerships: Key to Malaysian Economy
Overview of PPPs in Malaysia
81. In Malaysia and across the world, demand for public services is increasing overtime.
Insufficient public sector capital to meet this demand is leading to an unsustainable gap
between demand and supply. To bridge this gap, the Government is turning to Public Private
Partnership (PPPs) as they allow the public sector to access new sources of finance and get
the benefits that private sector skills and management with reducing cost and generating
greater value from public sector assets. The common link is that both the public and private
sectors need to work closely with a clear and common objective. The PPP presents a number
of recognised advantages for the public sector which include the ability to:
raise additional finance in an environment of budgetary constraints
make the best use of private sector operational efficiencies to reduce cost
increase quality to the public services
speed up infrastructure development
82. Over the years of Malaysia’s economic development, national leaders had the
wisdom and the foresight to recognize that private initiatives are crucial for national
development. Way before concepts such as PPP, Private Finance Initiative (PFI) or even
privatization existed. Malaysia’s development efforts have always been premised on a probusiness
strategy, where the private sector plays an important role in stimulating economic
growth, with the public sector ensuring overall macroeconomic stability and a conducive
environment for both foreign and domestic investments.
83. Realizing the fact that infrastructure development is a key component to unlock
potential economic activities and support sustainable economic growth, the Government
of Malaysia continues to encourage the participation of the private sector in the
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