2.3. Maintenance of a favorable investment climate
Malaysia has long recognized the private sector as a prime mover of economic growth and
development. This was underscored by the promulgation of the Malaysia Incorporated
concept in the mid-1980s that envisages the existence of a symbiotic relation between the
private sector and the public sector. It emphasizes the need for the public sector to facilitate
the operation of the private sector. Yearly national budgets tabled in Parliament would
invariably contain some clauses that have the effect of facilitating and inducing business
expansions and operations. The liberalization of the Industrial Coordination Act (ICA) to
spur investment in the late 1980s following the economic crisis of 1985–1986 in the late
1980s and the liberalization of foreign equity participation in the services sector in recent
years are some other examples of the Malaysian government efforts to support private
sector operations. The main insights into the growth effects of capital accumulation are
attributable to Solow (1956, 1957) who pioneered the neoclassical growth model. Availability
of good infrastructure is crucial to the growth and development of the private sector.
Large sums have been expended on the construction of roads, ports, airports and power
plants that enhance connectivity and accessibility and this has resulted in the emergence of
new growth centers. Generally, Malaysia has a good infrastructure from the substantial
investments made.