Perhaps, we will need a new govt which is elected with a clear economic platform for the future of Malaysia
by RAHIMI YUNUS / Pic by MOHD AMIN NAHARUL
MALAYSIA needs to chart a clear economic direction and communicate it well to multinational companies to stay ahead of the competition in attracting foreign direct investments (FDIs).
Centre for Market Education CEO Dr Carmelo Ferlito said Malaysia did very well in the past in developing regulations, institutions and infrastructures that stimulated both domestic entrepreneurship and foreign investments.
However, he said graft scandals, the lack of a general economic strategy from the previous government on top of the political instability with the current government, have made the country less attractive.
“Malaysia needs then to clarify which direction it wants to go for the future: Being open and business-friendly or closed and entrapped into a nationalistic dialectic.
“In order to clarify this, political stability is key. Probably, we will need a new government which is elected with a clear economic platform for the future of Malaysia,” Ferlito told The Malaysian Reserve (TMR).
He said one cannot simply adopt policies that attract skilled workers, but automatically take out foreign workers as integrated production processes may require both of them, particularly when higher salaries are not enough to attract Malaysians toward the 3D jobs — the dirty, dangerous and difficult jobs.
Senior Minister (Economy Cluster) and International Trade and Industries Minister (MITI) Datuk Seri Mohamed Azmin Ali recently denied that Malaysia is losing out foreign investments to other countries in the region.
Instead, he said Malaysia is being more selective for quality investments that can create value for local companies and not too labour-intensive that require foreign workers.
Meanwhile, Williams Business Consultancy Sdn Bhd founder and director Dr Geoffrey Williams said labour-intensive investments add value because at least they provide jobs and incomes which are spent in the local economy.
He said they should not be dismissed so lightly and certainly not because of foreign worker concerns.
He said high technology firms create worker-free businesses, making lots of money, but sending it out of Malaysia instead of having it flow through the domestic economy.
“If the government is concerned about the high use of foreign workers, then, they should enforce existing regulations on decent work and living conditions.
“This would raise standards, protect workers and make it more costly to use foreigners,” Williams told TMR.
The economist said Malaysia needs to change its mindset on foreign investment and be more, not less, open to any form of investment to increase its appeal to foreign investors.
He said the best way for MITI and Malaysia External Trade Development Corp is to engage investors on what they want.
“There is far too much guesswork in current policy and central direction of ‘selective’ criteria which has no real justification. In the postCovid-19 world, investors will want new options so the government must research what those will be.”
Universiti Utara Malaysia senior lecturer Muhammad Ridhuan Bos Abdullah said Malaysia needs to enhance talent development and innovation efforts similar to how Japan and South Korea did by allocating higher share for research and development.
He said the services sector has no barriers to local high-skilled labour but the circumstances are different from other sectors as manufacturing, construction and plantation, hence a review of the policy may be required.
He also said value-added activities and products with highly-skilled talents are important for Malaysia to compete with other countries in the region that have also stepped up their game and offerings.
PKR treasurer general Lee Chean Chung said Azmin’s excuse of the country being selective cannot hold ground and the fact is neighbouring countries, Singapore as a high-income country, and Vietnam and Indonesia in the medium-income league, continued to receive strong investment.
He said the three countries received more than 80% of FDI inflows in South-East Asia in 2019.
“Azmin and Perikatan Nasional’s state-of-denial would not help the government acknowledge our inherent structural weaknesses, as highlighted by the World Bank recently, and to identify new growth opportunities to propel the nation to the next level, he said in a recent statement.