Malaysia’s capital is at the heart of plans to make the country a major world player – in just seven years, reports Jenny Southan
Less than a one-hour flight from Kuala Lumpur is the Malaysian island paradise of Langkawi. Life is simpler here than in the big city, with the primary sources of income being tourism and agricultural endeavours such as rice growing, fishing and rubber tapping. Yet these time-tested pursuits are key to the government’s plans to build a new economy.
On a bike ride across the island, I stop to observe a local worker harvesting sap from a plantation of rubber trees. The bark on one side of each trunk has been cut away to form shallow diagonal channels, allowing the latex to trickle down into an awaiting cup. I’m told that for every kilo of latex the woman collects, she earns RM4 (85p) – in a week, she might pocket the price of a cocktail at a luxury hotel.
On a macro scale, natural rubber, which is used to make products such as tyres, gloves and condoms, is big business. According to the Malaysian Rubber Board, the country is the largest condom producer on the planet – in 2011, 4.37 billion of them were exported with a total value of RM285 million (£61 million). By 2020, experts forecast that rubber’s contribution to gross national income (GNI) will more than double, to RM53 billion (£11 billion).
Although demand for raw latex continues to rise, Malaysia is competing with India, Thailand, Vietnam and Indonesia in the market so it can’t afford to be complacent. But, then, that’s not a characteristic of the local population here. “People in this part of the world work damn hard and make sacrifices,” says Tony Collingridge, director of trade and investment for the British High Commission.
It’s a quality shared by the government, too, it would seem, as it tries to shunt the nation from “middle-income” status to “high-income” by 2020. This means boosting annual GNI per capita by 6 per cent a year – from RM23,700 (£5,110) to more than RM48,000 (£10,348). Its Economic Transformation Programme (ETP) cites rubber as one of many sectors that will help it achieve its ambitions. Other pillars of the economy identified include palm oil production – another staple commodity – energy, gas, tourism, financial services, education, retail, electronics, business services, healthcare, communications and infrastructure.
Core to achieving high-income status is the city of Kuala Lumpur itself – a teeming metropolis accounting for a third of Malaysia’s GDP. Life is visibly different from in Langkawi. At a respectful distance from the iconic Petronas Towers, great skyscrapers rise from the earth – many of them are under construction and, looking up, you see tiny workmen soldiering perilously close to the raw ledges, and great bundles of steel being hauled by giant cranes.
Money seems to flow outwards from the 450-metre-tall twin spires, which are home to a buzzing ecosystem of shops and offices housing companies such as Bloomberg, Boeing, IBM and Microsoft. Splayed out in the path of the building’s double shadow is the KLCC Park, the manicured grass of which is so green, it’s almost fluorescent. Children run and splash around a huge state-of-the-art outdoor playground and paddling pool.
Greater Kuala Lumpur has a population of about six million people, though in only seven years this is anticipated to rise to ten million, with many people moving in from rural areas. But with an influx of migrants in search of jobs, it is essential for business opportunities to open up at the same time, and for quality of life to be improved, not impaired.
“In all of history’s episodes of rapid economic growth, cities have come under strain,” reads the ETP’s document Developing Greater Kuala Lumpur/Klang Valley as an Engine of Economic Growth. “From the squalor of Industrial Revolution London to the slums and congestion of 1980s Mexico City, or the pollution of modern-day Beijing, citizens’ lives have often been impacted. The aspiration is to drive rapid growth in parallel with upgrading the city’s liveability. Rarely, if ever, has this been achieved, but it is our priority for Malaysia’s next decade.”
It adds: “People vote with their feet. In today’s global and mobile economy, professionals can choose where to live and work. The war for talent is not between nations, but between cities. Cities that are vibrant and liveable are magnets for highly skilled people… Therefore, while urbanising intensively, Greater KL [and the] Klang Valley must also focus on improving liveability.”
While Christine Lagarde, managing director of the International Monetary Fund, has praise for Malaysia’s ETP, she also recognises the associated problem of inequality. “When a country develops very fast, as it would be for Malaysia in the next eight years, you don’t want to leave people behind. You want everybody to be carried by the growth path,” she was reported as saying in the New Straits Times last November. Collingridge agrees: “KL on its own has probably already reached the GNI average of £10,000 a head, but there is more work to be done in rural areas, there is no doubt about that.”
Rapid urbanisation puts a huge strain on city infrastructure, too. Trying to get around downtown KL during rush hour, especially the area closest to the Petronas Towers, can be a nightmare. One rainy evening, I had to wait three hours for the person I was meeting to show up as the congestion was so bad, and when leaving my hotel at 6pm, my car pulled out of the driveway only to be forced to sit on the road, bumper to bumper, for 30 minutes without moving. In the end, I walked.
Thankfully, there are a number of solutions on the way. As well as the KLIA Express train, which opened in 2002 and connects Kuala Lumpur International airport with KL Sentral station in about 30 minutes, an MRT light rail system serving the city and its suburbs is being built. With 141km of track, three lines and RM36 billion (£7 billion) of investment, it will be able to transport 1.2 million people a day by its first-phase deadline of 2017. By 2020, it is expected to be moving two million passengers a day and responsible for 64 per cent of travel in and out of the centre.
Also in the pipeline is a high-speed rail link between KL and Singapore – it was given the go-ahead in February and, when complete in seven years, will be whizzing people back and forth in only 90 minutes (the 300km journey currently takes six hours by rail or four by road).
At the moment, 40 million people fly in and out of the airport a year, but plans are under way to expand the hub to 100 million passengers annually – again by 2020. Once complete, there will be five runways, two “mega-terminals” linked to satellites, a convention centre, shopping mall and hotels, and even golf courses, hiking trails, a theme park and wetland nature reserve in the vicinity. A monorail link to the F1 circuit in Sepang has also been proposed.
Next month, the new KLIA2 airport extension will open. Initially, it will have a 30 million-person capacity (this will go up to 45 million people), and will be dedicated to low-cost carriers – a market that is rapidly expanding in the region. These will include Air Asia, Lion Air, Tiger Airways and Zest Airways. The terminal will also be connected to downtown by a 2km extension of the Express Rail Link, which will open at the same time.
All of this bodes well for the 36 million visitors expected to be entering the country by 2020. “In terms of income, whether you are a hotel, a taxi driver, a convention centre or just doing business, it’s huge,” says Robert Dallimore, general manager of the capital’s new 412-room Grand Hyatt hotel (kualalumpur.grand.hyatt.com), which opened in August, making it the first top-end property to be unveiled in the past decade.
More hotels are on the horizon. Starwood was set to open a 482-room Aloft last month, and is due to follow that with a 200-room St Regis next year, and a 150-room W in 2016. Pullman is opening a 513-room hotel in the city this year, and work has begun on a Four Seasons with 230 rooms and apartments – due in 2017. Further ahead, the world’s first seven-star Harrods hotel is scheduled to arrive in 2018 at a cost of RM1 billion (£215 million), with between 250 and 300 rooms.
Malaysia has had a long-standing relationship with Britain since it was colonised in the 1800s – it gained independence in 1957 – and the upping of flag carrier Malaysia Airlines’ A380 service to double-daily between KL and London Heathrow in November is one example of how this is being reinvigorated. In April last year, Prime Minister David Cameron became the first UK leader to engage in an official visit in almost two decades, and this was followed by the Duke and Duchess of Cambridge in September.
Collingridge says: “It was a good mix of protocol and country-to-country relations. Malaysians have a terrific liking for the UK. There was a period of ‘benign neglect’ by the British for the past 20 years when we didn’t take Malaysia as seriously as we should have done. But there is a growing recognition by the UK government of this.”
He adds: “[There is] a completely different level of engagement now, and the ease of doing business is something we have that you don’t get in China or India. There is more going on between the UK and Malaysia than ever before. [UKTI – UK Trade and Investment] has been collaborating with Malaysia’s government to look at doubling trade by 2016 to about £8 billion in both directions. That shows that the Malaysians are keen to build this business relationship too.”
So which UK businesses are setting up in KL? Debenhams, Marks and Spencer, Foster and Partners, Tesco, Prudential, Glaxo Smith Kline, HSBC, BP and Rolls-Royce all have a presence here, while global multinationals include BMW, Citibank, Ikea, Nestlé, Nokia and Paypal. In 2011, UK exports to Malaysia were up about 14 per cent on 2010 figures to £2.3 billion, and overall trade rose 8 per cent to £4.4 billion.
In a bid to attract the likes of Fortune 500 and Forbes 2,000 companies to the capital, government agency Invest KL was set up in 2011. So far, it has pulled in 17 multinational corporations, creating more than 15,000 jobs over the next few years. It aims to add another 83 companies to the list by 2020.
What makes the capital a good bet? A spokesman for Invest KL says: “There is a rising cost of living that comes with upgrading the infrastructure, but we are still one of the most affordable places in the region to do business. Singapore has done a good job of positioning itself but it’s getting very expensive so we make a good alternative.
“People can use KL as a gateway to the region – a trading hub. Residence passes for expats are valid for ten years and spouses can now work – this helps with encouraging multinationals. There are also no visa requirements or landing forms at the airport.” So the question is, when are you going to touch down in Malaysia?
