For the past two weeks, Malaysians had been fed with the news that good economic times are back, with the country drawing a record RM20.2 billion in foreign investment in manufacturing, a record 2006 trade volume breaching RM1 trillion, rocketing share prices, a strong ringgit and rising foreign reserves.
The Prime Minister Datuk Seri Abdullah Ahmad Badawi had denied that an imminent general election is on the cards because of the slew of good economic news to generate a “feed good euphoria” reminiscent of the period before the 2004 general election.
Although the next general election will not be held in the next few months, everyone would expect the holding of early general elections in the next eight to 14 months before April 2008, when Datuk Seri Anwar Ibrahim would regain his civil liberties including the right to stand for elections at the end of his five-year disqualification from the date of his prison release.
But are the good economic times back for the people of Malaysia? If so, a little-noticed announcement on Chinese New Year’s Day has sent out a very different message.
On February 18, 2007, Bernama reported that the government had scrapped its earlier plan to extend the textbook loan scheme to all school students, both at primary and secondary level, from next year. Deputy Education Minister, Datuk Noh Omar was quoted as saying that the move was scrapped as the ministry would incur an extra sum of over RM100 million yearly.
When the government has to cancel the textbook loan scheme for all students because it cannot afford the additional expenditure of RM100 million, it strains credibility to believe that the government and the country is aflush with funds.
Malaysians have been told in the past fortnight that the country is back on the global investment map, in reversal of the gloomy news in the past few months that Malaysia is in danger of dropping out from the radar of foreign investors because of increasing lack of international competitiveness, whether in efficiency of public service, quality of education, good governance, transparency and integrity.
The United Nations Conference Trade and Development (Unctad) World Investment Report 2006 last October revealed unflattering figures about Malaysia for the year 2005, viz:
- Foreign direct investment (FDI) in Malaysia dipped to US$3.97 billion in 2005 from US$4.62 billion in 2004;
- For the first time since 1990, Indonesia managed to overtake Malaysia in drawing FDIs. Inflows to Indonesia surged by 177% to US$5.26 billion in 2005. Indonesia registered a 177 per cent hike in FDI from US$1.89 billion in 2004 to US$5.26 billion in 2005, while Malaysia suffered a 14.3 per cent shrinkage of FDI.
- As a whole, FDIs to South, East and South-East Asia reached a new high of US$165 billion in 2005, a 19% increase over 2004, with China (US$72 billion), Hong Kong (US$36 billion) and Singapore (US$20 billion) as the biggest receipients of FDIs in 2005.
Ten days ago, the Minister for International Trade and Industry, Datuk Seri Rafidah Aziz gave a glowing picture of foreign investments for last year, with one mainstream newspaper declaring: “Malaysia is back on the global investment map”.
She announced a record RM46 billion achieved last year — RM20.2 billion of approved foreign investments in manufacturing as compared with RM17.9 billion in 2005 and RM25.8 billion in domestic investments compared with RM13.1 billion in 2005.
Rafidah’s FDI figures however do not tally with the latest Unctad figures released in its “Number 1, 2007 Unctad Investment Brief” which has given an even lower estimate for FDI for Malaysia for 2006 as compared to 2005.
In its preliminary estimates of FDI inflows in 2006, Unctad figures for Malaysia see a shrinkage of 1.6 per cent to US$3.9 billion from US$4.0 the previous year, while FDIs for the whole region of “South, East and South-east Asia” register an increase of 13.1 per cent from US$165.1 billion in 2005 to US$186.7 billion, with Thailand recording a 114.7 per cent increase from US$3.7 billion in 2005 to US$7.9 billion and Singapore a 58% increase from US$20.1 billion in 2005 to US$31.9 billion.
The Prime Minister should explain the RM6.4 billion difference in MITI’s FDI figure of RM20.2 billion (or US$5.7 billion) for 2006 and UNCTAD’s preliminary estimates of US$3.9 billion (RM13.8 billion) for the same year.
This difference would increase to RM9.85 billion if we take into consideration two qualifications to the MITI figures released by Rafidah:
Firstly, the figures are for approved FDI figures for the year which are very different from actual FDI inflows for the year. For instance, for 2005, approved FDIs in manufacturing was RM17.9 billion (US$4.71), but actual FDI inflow into the country was US$3.97 (RM15.1 billion) — a shortfall of RM2.8 billion.
Secondly, the FDIs in manufacturing represents only 75% of total FDIs, which will bring the difference between FDIs for manufacturing as approved and actual inflows for 2005 to RM6.6 billion.
On the same basis that some 75 per cent of FDI inflows in 2006 was for manufacturing, then the difference between MITI and Unctad figures for FDI inflows for manufacturing would increase further to RM 9.85 billion — which is no small figure.
A full and proper explanation for these different set of FDI figures should be given to the people in keeping with the government’s pledge of accountability, transparency and good governance.