Malaysian companies were told today to seek niche markets, boost their competitiveness and engage China instead of relying on government protection to survive market liberalisation.

Deputy Finance Minister Ng Yen Yen said it was crucial for Malaysian firms to strengthen their capabilities to compete with multinational corporations (MNCs), including emerging giants from China.

With the world's top 100 MNCs controlling about 20 percent of global foreign assets, Ng said it was increasingly difficult for firms in developing nations to compete with them.

For instance, "General Motors is larger than Denmark, Daimler Chrysler is bigger than Poland, Royal Dutch Shell is bigger than Venezuela, IBM is larger than Singapore and Sony is bigger than Pakistan," she noted.

Rapid growth in China, which attracted US$53 billion last year to become the world's top recipient of foreign investment, has also spawned large companies, with 11 listed among the Fortune Global 500, she said.

"These facts point to the stark reality that the global business revolution is real and the concurrent rise of large corporations in China will soon pose another competitive challenge for Malaysian firms," Ng said when opening a two-day business conference.

"We need to find new ways to improve the competitiveness of our companies. We cannot continue to rely on the protectionist measures of yesteryear."

Largest trading partner in Asean

Ng urged local companies not to stay as "village heroes" but expand their scope and seek new markets abroad.

"Malaysian companies must beef up their core competencies to compete in a liberalised environment. Make no mistake, competition today is not among nations but among global firms."

They must "engage China as our strategic partner" because despite the challenges, it is also a big market, she said.

Ng cited opportunities in the food industry to cater to some 60 million Muslims in China, the construction sector as the World Bank estimates new infrastructure needs for China at more than US$750 billion until 2010, tourism, education, bio-technology and palm oil.

An impending free trade agreement between China and the Association of Southeast Asean Nations (Asean) with 1.7 billion consumers, a combined gross domestic product of nearly US$2 trillion and two-way trade of US$1.20 trillion also offers huge potential, she said.

Ng said Malaysia overtook Singapore last year to become China's largest trading partner in Asean, with bilateral trade surging 49 percent to US$11.40 billion.

"Malaysia is well placed to be the gateway for increased trade between Asean and China," she added. - AFP