Malaysia has the distinction of being the world's largest pirated digital discs exporter and such a reputation may deter foreign investments, said United States ambassador to Malaysia Christopher J LaFleur.

"Malaysia has achieved this unfortunate distinction in part because it is a technologically-advanced place. There are facilities that are capable of making these products well and unfortunately, the criminal syndicates who do this sort of thing are really taking advantage of Malaysia," he said in an hour-long interview with malaysiakini last week.

The US envoy said before he took up his posting in Kuala Lumpur three months ago, he was informed by the software makers' association that Malaysia was the world's biggest exporter of pirated entertainment.

"That kind of reputation can only discourage people from coming to invest their money here," he added.

LaFleur stressed that the authorities must be seen to be winning the war against digital discs piracy if Malaysia is to remain attractive to foreign investors.

He welcomed the recent action by enforcement agencies against manufacturers of pirated discs such as CDs, VCDs and DVDs, but added that more should be done.

Education critical

In addition to the protection of intellectual property rights, LaFleur also spelled out a number of key challenges facing the Malaysian economy as global competition for investment dollars intensifies.

He said Malaysia should improve its legal and regulatory framework to provide companies a stable and predictable sets of rules for their operations here.

"I think further emphasis on education ... is clearly critical, and it is critical in our case. What has happened in Massachusetts, California's Silicon Valley - these places are anchored by world-class universities that produce a lot of graduates in specialised fields that the high-tech knowledge-based industries need," he said.

"You have some strong capabilities in the English language and since a lot of back-office operations are conducted in English - that's another source of potential strength that you continue to work to make sure the younger generations have the English.

Too early to talk about FTA

The US is Malaysia's largest trading partner with a two-way trade of over US$36 billion in 2003. For the Americans, trade ties with Malaysia is just as important as the country is US' 10th largest trading partner.

However, LaFleur revealed that it was premature for the US and Malaysia to begin negotiating a free trade agreement (FTA).

"We're not quite at the stage to be discussing an FTA. What we have done is started a set of talks that are based on a trade-investment framework that was signed last year," he said, referring to the Trade and Investment Framework Agreement, signed by both countries last May.

US has signed an FTA with Singapore, while it is in the midst of negotiating a similar agreement with Thailand.

In the interview, LaFleur said among the issues important to American investors - who have a total of US$29 billion invested here - include transparency in government procurement competition, a level-playing field for businesses and a skilled workforce.

Q&A: Transparency in govt procurement vital to US investors, says envoy