KUALA LUMPUR, Sept 11 (Bernama) -- Malaysia, endowed with a host ofnatural resources such as natural rubber and palm oil, should redevelopproduct leadership in these sectors as well as in tourism to lessen itsdependence on electrical and electronic exports, says a regionaleconomist.

"Malaysia has its own natural resource niche and it is important for thecountry to look at these endowments and embark on a more balanceddevelopment approach," by diversifying the export base, said Daniel Lian,Morgan Stanley Dean Witter's economist for South-east Asia.

Malaysia had given strong emphasis on multinationals and foreign directinvestment and that policy was expected to continue but it should alsoredevelop leadership in products stemming from its resources, he toldBernama during a teleconference from Singapore yesterday.

Currently, electrical and electronic goods -- which comprise more thanhalf of Malaysia's total exports -- mainly go to the US market but theslowdown in the US had severely affected the intake of Malaysian goods.

Lian said global fund managers were concerned over the cyclical weaknessin Malaysia's economy, which was "electronically dependent" as the globaldownsizing in that sector had hurt Malaysia quite badly.

Nevertheless, he said they were pleased with the country having embarkedon a programme of more balanced macro development.

Lian was summing up deliberations from the Morgan Stanley Malaysiaconference held in Singapore yesterday, which was attended by officialsfrom Bank Negara Malaysia, Kuala Lumpur Stock Exchange, leadingpublic-listed companies and the National Economic Action Council and some150 global fund managers.

As for tourism, Lian said Malaysia was well-positioned to attract a lotmore international tourists and enhance its income.

It also has "a first class airline and a first class airport fits part ofthat strategy."

Fund managers wanted Malaysia to pursue a more balanced growth strategy,he said.

Lian said it was good that Malaysia was pursuing "a multi-facade type ofstrategy where strong emphasis on FDIs and multinationals would continueand balanced by the emphasis on natural resources and other areas thatMalaysians are capable of doing well."

"Clearly, its dependence on electronics in the longer term would not bethat beneficial to Malaysia, they (fund managers) want to see the economygrow fast enough to deliver good returns. They are just as demanding asbefore, not only in Malysia but every market they participate in."

Asked whether multinational companies (MNCs) were pulling out of SouthEast Asia due to the global slowdown or was it just as an excuse topenetrate China's vast domestic market ahead of Beijing joining the WorldTrade Organisation, he said:

"I don't think they even have to come out with that excuse. The mostfickle-minded investors are probably MNCs and even if they are here inMalaysia, they can still decide to wind up their operations and move toChina."

"So, I don't think this is about finding excuses to go to China. This isabout how to make the Malaysian economy competitive so as to retain MNCsand to attract new FDIs."