Malaysia is beginning to reap the benefits from its economic transformation programme, part of which involves a move away from labour-intensive industry to more value-added activities such as high technology. The result has been an increasing flow of investments from major economies including the United States, Japan and South Korea.
The transformation is part of the ambitious Vision 2020 first set out by former premier Mahathir Mohamad, to make Malaysia a developed nation by 2020, with per capita income rising to US$15,000 from $9,000 now.
Thailand is also striving to attract more value-added manufacturing, especially since the minimum wage was increased by 40% at the start of this year. Higher wage costs have affected labour-intensive industries such as garments and food processing, many of which are expected to move to lower-wage countries such as Cambodia, Laos and Vietnam.
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