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Kuala Lumpur

By John Dietz - Email Editor

Dear Valued Reader,

Our Newsletter has and continues to provide our readers with timely updates on Asia. Larry Lipsher has been our eyes for reporting within China and beyond. Today, I am writing from another part of Asia, Kuala Lumpur, Malaysia.

Our pure and simple reason for focusing on Asia and its never-ending story are the numbers, the numbers, and the numbers. The numbers refer to the amount of people, with their basic needs and potential for growth.

Malaysia for Starters

Growth from 2000 until 2010 has been steady at 5 percent with a historical high in September of 2009 of 5.7 percent according the World Bank. The population of 27 million plus people has a current life expectancy of 74 years. At time of this writing, the jobless rate is a little over 3 percent. Malaysia's story gets better as it has been transforming itself from a raw materials producer to an emerging multi-sector economy. GDP per capita has been on a steady growth rate ($14,700 for 2009) helping an ever-burgeoning middle class.

Malaysia is successful because: (1) It is geographically at a major crossroad for international trade; and (2) foreign capital plays a major role in its economic development and subsequent stability through a pro business government. There have been several notable economic cycles, from extensive restructuring in the 60s and 70s to the current economic uptrend, however that is just really part of the story. When you speak to the Malay people, and it is easy to do, as English is widely spoken, you feel a deep sense of pride and country on the move. Just staring up at the majestic PETRONAS Twin Towers, official opening of the Towers in 1999, (tallest buildings in the world at that time) added a real touch of fire in the Malay mindset.

Even more telling was my visit to a typical KL shopping mall, it is always packed with shoppers from top to bottom. While that alone is not an economic indicator, it is a good start. Former Magellan Fund manager Peter Lynch would be very happy with my shopping observation. For example, I saw a group of teens in an open area. My investigation of the curious site opened my eyes to an ongoing Alienware laptop game competition, with a plethora of over-caffeinated serious faced teens, trying to win the day. Go to any electronics mall, and you will find similar gatherings of young people near every computer vendor known to mankind. Malaysia's current bandwidth output and the IT skill set, as I witnessed, certainly gives a good sense of where things are heading.

Why Your Pocketbook Should Care About Asia

Today, money in your local bank is dead money. Money in your pocket is nothing more than purchasing power. This is where your problem begins. What are the greenbacks in your pocket worth? Traveled to Europe by chance over the summer? Is your US dollar taking you as far as it once did? On the heels of Treasury Secretary Tim Geithner's latest strong dollar spiel (last one November 11, 2009), the euro rose to 1.40 against the dollar along with many other currency's following suit. Hollow words from Geithner? Maybe. Caught between a rock and hard spot? Possibly. Up to his ears in debt? Most definitely.

Innovation

Last year, I reported on China and its sheer number of patent filings. My thesis at the time was that China, which did not have any patent law until 1985, was going to start to innovate. When you can respect property rights, people will get busy with new ideas and new technology. According to a an October Economist article tax rebates, preferential treatment and better living arrangements are now common for people and companies who file patents. Reuters is making the claim that China will be the largest patents publisher in 2011. The point is; so goes China, so goes the rest of the Asia.

If all of this sounds optimistic, it is, but Malaysia will have its challenges, economic and otherwise. It will need to balance culture, alongside economic prosperity while competition from other countries with lower wage labor vies for market shares. There is also much talk of educational reform. Where have we heard that before?

So, take a trip to this part of the world, see for yourself. Tourism is going to be a big push as Malaysia is blessed with beautiful countrysides, beaches and beautiful islands. For Malaysia and its people the future looks bright.

As for foreign investment, all of Asia's growth rate will outpace most its western counterparts. It is worth looking into this interesting dynamic land called Malaysia. Despite some ethnic tension, the sheer stability, combined with steady growth make Malaysia the best kept secret of Asia with the best real estate values.

As always bring along a healthy dose of caveat emptor.

Call 888.916.7070 or email info@trustmakers.com

Until next time,

John Dietz

John Dietz, CWPP, CAPP - Senior Advisor

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