Malaysia's plans of turning Kuala Lumpur into a major financial centre which can rival the likes of London, New York, Singapore and Hong Kong will remain a pipe dream if it does not address the challenges associated with the supply of skilled human capital.
A report published on online portal The Conversation said that Malaysia's poor scores in assessments by international students, declining language capabilities and persistent concerns over the employability of graduates did not augur well for its ambitious plans.
“The government may be able to build world-class facilities in Kuala Lumpur and attract international companies to operate in the new district by offering tax breaks and other incentives.
“However, without a supply of educated, English-speaking workers, hopes of challenging regional neighbours in Hong Kong and Singapore will remain a dream,” said the report prepared by the University of Nottingham Malaysia's Christine Ennew and Nafis Alam.
It said that Malaysia has announced bold plans to transform Kuala Lumpur into a major financial centre to raise the capital's profile and spark greater international trade and investment.
The report also referred to the Tun Razak Exchange (TRX), a newly proposed financial district covering 70 acres and featuring 11 new buildings with 25 floors or more, dubbed the "Asia's Canary Wharf".
Putrajaya believes the TRX is the foundation on which Malaysia will be able to compete with regional financial superpowers such as Singapore and Hong Kong.
On this, The Conversation asked: Can a new upstart join the likes of London, New York and Tokyo as a global financial superpower?”
The Global Financial Centres Index (GFCI), a research-informed survey on the competitiveness of a range of cities worldwide, highlighted the challenge that awaits emerging centres such as Kuala Lumpur.
In its most recent rankings, Kuala Lumpur dropped a place to 22nd globally, but was still in Asia's Top 10 list.
London and New York are already way ahead of the pack, Singapore and Hong Kong are in strong positions, and Shanghai and Shenzhen have already shown their respective dynamism. Gaining ground on the superpowers will be tough for Malaysia.
The GFCI also said that the TRX may be a step too far unless it adopts a niche approach and builds on Malaysia's established strength in the rapidly growing Islamic financial marketplace.
“It is Islamic finance which gives Malaysia the advantage over neighbouring financial centres and those mapping out the country's future would be wise to take note.”
The Conversation agreed with the GFCI, saying: “If Malaysia is to join the top flight of international financial centres, it must leverage its status as an established Islamic finance hub.”
Bank Negara has revealed that Malaysia's Islamic banking assets total US168.4 billion (RM555.7 billion), which is a quarter of its banking system. This accounts for over 10% of the world's total Islamic banking assets.
Prime Minister Datuk Seri Najib Razak is banking on the TRX to be a dedicated international financial hub, promoting Kuala Lumpur as a new nucleus of global economic growth.
The project is seen as crucial to Najib's economic plans, creating the critical mass needed to significantly boost productivity and achieve a developed nation status by 2020. – November 15, 2013.