Key US electronic firms in Malaysia today urged the government to introduce more incentives and ease the granting of work permits for highly-skilled expatriates to attract new foreign investment.

The Malaysian American Electronics Industry (MAEI) group said many of its 19 members, who account for more than 30 percent of the country's electrical and electronics exports, were moving up to higher-value activities such as design and development work.

"These firms need grants to finance bringing in new technologies, acquiring new tools and facilities, and training employees," it said in a memorandum to the trade ministry during an annual industry dialogue.

"To stay ahead, Malaysia must attract new technologies such as biotech or software development. The government should consider grant-based incentives to attract new foreign direct investments, similar to what is happening in many US states and European countries."

The MAEI, whose members include Intel Technology, Motorola, Western Digital, Dell and Seagate Industries, also accounts for some 15 percent of total manufactured exports each year.

The group said the electronics industry faced increasing difficulty in finding local workers to fill highly-skilled positions such as engineers and integrated circuit (chip) designers.

Despite training and other programs there still existed a significant gap between the Malaysian university curriculum and the industry's needs, forcing many of its members to tap foreign talent, it said.

Closing the labour gap

It called for incentives to encourage Malaysians to continue higher education and repeated its call for an Institute of Microelectronics to train a pool of new talent.

"We are closing the labour gap now with expatriates but the government needs to develop a human resources strategy to meet our needs for knowledge workers in the long-term," MAEI chairman Wong Siew Hai told AFP .

"This is not a new issue. The government must seriously think about ways to ensure Malaysia remains competitive and attract new foreign investment."

The MAEI wants the issuing of work permits for expatriates to be speeded up, calling for easing of bureaucratic red-tape.

It also urged the government to clearly define immigration policies and conditions for expatriates to apply for visas, saying rules were not clear-cut and occasionally interpreted differently by junior officers.

The MAEI called on the government to drop its practise of issuing "exclusive contracts" to a sole provider in certain industries, saying this not only drives up the costs of doing business but also prevents innovative, open competition.

"Malaysia should not bind itself to exclusive contracts but should allow market forces and open competition to dictate its economic development," it said.