KUALA LUMPUR, Feb 8 (Bernama) -- Subsidies for industries and consumers must be restructured and gradually phased out, and greater domestic competition must occur to give freer rein to private initiatives and market forces, Prime Minister Datuk Seri Najib Tun Razak said today.

"Better allocation of national resources which have been somewhat misallocated because of massive subsidies must be addressed," Najib said in his keynote address at the 1Malaysia Economic Conference organised by the Associated Chinese Chamber of Commerce and Industry of Malaysia here.

According to him, the country may not be able to afford over-subsidised and under-priced energy.

Najib also said that the nurturing of infant industries must be done differently and based on skills, technology, access to capital and marketing support.

"Not on protection. We must be loyal as a domestic champion because domestic champion can become a regional champion and global champion," he said.

"The sooner we realise these realities, the better it will be for all of us."

Najib said the government was in the process of streamlining institituions, policies and procedures to make it easier for investors to invest.

"What we require is not just tangible private investment but also intangible," he said.

A study by the World Bank showed that 60 to 80 per cent of the country's wealth could be in the form of intangible assets such as proprietary technologies, intellectual property, brand names and institutions.

Malaysia needed to do more to create these intangible assets because investment in these assets was extremely critical, Najib said.

"Look at the high income countries, their high-value industries and corporations have a high ratio of intangible investment," he said.