28/01/2012 (ABC Radio Australia) - Malaysia's Prime Minister Najib Razak wants Malaysia to become the hub of what he calls a new Economic Growth Triangle, incorporating China, India, Southeast Asia and the Middle East.

Mr Najib made the comments while launching the World Chinese Economic Forum Global Business Council in Kuala Lumpur.

Mr Najib says as Europe and the United States falter, the so-called Growth Triangle will be the key to any global economic recovery.

And analysts say Malaysia is well placed to take advantage of the shift in global economic power from West to East.

Correspondent: Joanna McCarthy
Speakers: Song Sen Wun, regional economist, CIMB Research Private Limited; Michael Yeoh, chief executive officer, Asian Strategy & Leadership Institute

MCCARTHY: Malaysia's Prime Minister Najib Razak says China, India, Southeast Asia and the Middle East will be the drivers of world economic growth.

He says as Europe struggles to emerge from its debt crisis, all eyes are on the so-called Economic Growth Triangle.

And he wants Malaysia to be a key player.

Song Sen Wun is a regional economist from CIMB Research Private Limited.

WUN: The triangle concept I think has basically been explored I think many times over last few decades - Singapore, Malaysia, Indonesia - to include Singapore, Malaysia, ASEAN et cetera as well. So I suppose given the current interest in this region because emerging Asia anchored by China - India remains and likely will remain the growth engine for the global economy over perhaps the next decade or two. It's not a surprise for the Malaysian PM to basically I suppose put forward Malaysia again just as reminder - hey, we're still here, I think we still stay relevant as a manufacturing hub.

MCCARTHY: Michael Yeoh is the Chief Executive Officer of the Asian Strategy and Leadership Institute.

He says Malaysia can take advantage of its geographic position in the region.

YEOH: Well, we think that Malaysia is centrally located between China, South East Asia, India and the Middle East. We can become a regional hub where there is trade flows from across China to the Middle East and up through Malaysia, and we can also provide financial and professional business services to entrepreneurs from the region.

MCCARTHY: Given the state of the European and the US economies at the moment, what role do you think this region and this so-called Economic Growth Triangle could play in potentially spurring on a global economic recovery?

YEOH: Well, I think this region has tremendous potential. China is now the world's second biggest economy, India is also a large economy, the ASEAN countries are showing their strong, robust growth and together I think China, ASEAN and India can play a significant role in strengthening ... recovery and it's important that we bring Australia into this triangle as well, because there's tremendous faith between China and Australia, particularly China's interest in Australia's minerals.

MCCARTHY: The Eurozone crisis led the International Monetary Fund this week to cut its growth forecasts for the so-called ASEAN-5 - Malaysia, Indonesia, the Philippines, Thailand and Vietnam.

The IMF is forecasting Malaysia's economy to grow by just over 5 per cent this year.

Song Sen Wun says Malaysia has escaped the worst of the global slowdown.

WUN: I think like many other economies around the world who are relatively dependent on the resource factor, it has done quite well. I mean you're looking at petroleum prices still fairly resilient, and the economy and the government depends quite a significant portion of its revenue from the petroleum and oil and gas sector. Not only that Malaysia is a key player in plantation, palm oil, rubber and its resources in tin. So that has been supporting I think a fairly strong income stream, particularly for the rural sector, and that's important, because it will support I think a certain level of domestic consumption, as a result of which, I think despite the slowdown in external demand and Malaysia is also dependant on that global demand, you know, exports is almost one time GDP itself. So to some extent, the slowdown in external demand has been somewhat compensated by still the resilient domestic demand both in terms of spending as well as investment and I think that story has been playing out in many other countries around the region.