The Federation of Chinese Associations Malaysia Youth Section (FCAM-Youth) urges Prime Minister Najib Abdul Razak to address the problems faced by Malaysia in the economic sector and hopes that the government could introduce strategies to improve the investment environment in Malaysia, besides helping SMEs (small and medium enterprises) in their transformation problems.

The country's economy is becoming worse and the government must implement mechanisms to handle this crisis immediately. This is to ensure that local investors will not lose faith in the government.

According to UBS Securities Asia Limited’s report, it says that in 2009, Malaysia experienced the biggest foreign exchange reserve losses among Asian countries and our official reserves fell by more than one-quarter.

In addition, official figures show that approved investment for the first nine months of last year totaled RM19.1 billion, of which RM12.2 billion was foreign direct investment. This is a far cry from the RM62.8 billion in approved investments in the previous year, with just over RM46 billion in the form of foreign capital.

At the same time, recent media reports state that many of Malaysia's top business tycoons are moving out of the local economy. Asia’s richest businessperson and Malaysia’s top corporate figure Robert Kuok sold off his long-established interests in the sugar importing and refining business.

Save for his Shangri-La hotels nationwide, Kuok has little visible business interests left in Malaysia. Meanwhile, casino operator Genting, engineering and property group YTL and the telecommunications and multimedia holdings conglomerate Maxis controlled by tycoon Ananda Krishnan have all been restructuring their respective corporations in recent months.

They want to channel financial resources generated locally to finance their overseas expansion plans.

Therefore, we feels that Najib’s immediate challenge is to recreate an environment that will encourage investment and convince the investors. Apart from severe capital outflow, Malaysia also suffers from domestic issues such as the arson attacks on houses of worship and two missing Royal Malaysian Air Force (RMAF) F-5E jet engines.

All these will weigh heavily on investors' plans for future investments in Malaysia. Even Malaysia's number one trading partner, the US, has expressed concern on more than one occasion.

Hence, Najib, as finance minister, should take immediate action to solve the issue in a convincing and transparent manner to regain the confidence of investors towards our government. Besides that, the government should focus on solving problems that are harmful to the investment environment, for instance, corruption and infrastructure and economic management because these are the reasons foreign investments are leaving the country.

Meanwhile, the country’s export-led economic model is sputtering because of weak global demand, while higher labour costs are forcing companies to consider other investment locations.

We are of the opinion that the government should find ways to develop other potential industries such as SMEs and the servicing, manufacturing and electronic industries.

The government can bring down the tax rates and provide more low-interest financing plans to help these potential industries to grow. Lastly, we strongly suggest that the government open up more high-income businesses sectors and at the same time improve local investments rather than over-depending on revenue from petroleum and foreign investments both of which are not sustainable in the long run.

The writer is head of the Youth Section, Federation of Chinese Associations Malaysia Youth Section Chief (FCAM-Youth).