Winning back FDIs by Dr. Chen Man Hin
Prime Minister Datuk Seri Abdullah Ahmad Badawi announced a bouquet of incentives to induce foreign investors to put their money in Johore’s Iskandar Development Region (IDR). Undeniably the incentives are attractive.
While the development of IDR is important and should be encouraged, it is vital to realise that foreign investments are needed badly for the country as a whole. Therefore, the incentives for IDR should logically be implemented for the whole country.
Malaysia unfortunately is bypassed by foreign investors and is low in their choice to park their money. It is definitely not on the radar of foreign investors, contrary to the claim of the Minister for International Trade, Datuk Paduka Rafidah Aziz.
UNCTAD report on FDI shows that Malaysia has much lower FDIs than many other countries in ASEAN –
2004 2005 2006
(billions of dollars)
Malaysia US 4.62 bill US3.97b US3.9b
Indonesia 1.9 5.26 2.0
Thailand 1.4 3.7 7.9
Singapore 14.8 20.1 31.9
HongKong 34.0 35.9 41.4
UNCTAD figures do not lie. Clearly Malaysia is in dire straits. The figures show that Thailand is now preferred by foreign investors with Indonesia fast catching up, not to mention Singapore which is far ahead.
The incentives for IDR of South Johore should be offerred as incentives for the whole of Malaysia.
Foreign investors also look at political measures taken to promote democracy, unity and stability. Indonesia has implemented policies which give foreign investors confidence.
Indonesia has revoked its pribumi policy by passing a law that gives equal citizenship to all Indonesias irrespective of race or religion. The Indonesian Parliament has declared Indonesia to be a secular state and not an Islamic state, although it has the largest number of muslims in the whole world. There is also economic freedom without racial bias.
Foreign investors tend to look favourably to countries that are non-racial, secular and a liberal economy.
The same cannot be said for Malaysia with its Malay agenda of ketuanan melayu, New Economic Policy to favour bumiputras and leanings towards an Islamic state.
Unfortunately, Malaysia is the only Asean member which embraces a racial policy of ketuanan Melayu, a bumiputra-biased economy and a pro-Islamic state philosophy.
It is no wonder that foreign investors do not include Malaysia on its radar.