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TJ: Asiaweek: Tiada FDI=Bomb Jangkamasa forMalaysia
By Mind Broker
10/9/2000 2:13 pm Sun
Saya tidak berhasrat untuk menterjemah rencana ini. Cukuplah sekadar memberi
sedikit rumusan akan apa yang ingin diutarakan olehnya. Lagipun kita nak
ambil point dia aje...
Saya tak adalah pakar sangat bab2 ekonomi ni. Tapi saya tertarik dengan
kenyataan Lim Kit Siang 8/9/2000:
Both these statements are not calculated to enhance investor, both national
and foreign, confidence and would have contributed to the downward plunge of
the local bourse."
From Asiaweek 8th September 2000
The Lack of Foreign Investment Is a Time Bomb for
By ASSIF SHAMEEN
Last weekend marked the second anniversary of capital controls in Malaysia.
To the government's credit, the nationalistic rhetoric was more muted than last
year, when quasi-government media used the occasion to launch another
tirade against nasty foreigners who want to colonize Malaysia. Part of the
reason was that the architect of capital controls, Prime Minister Mahathir
Mohamad, was in the U.S. drumming up support for new Foreign Direct
Investments in Malaysia. The irony of this wasn't lost on many.
Two years after capital controls were introduced, Malaysia's economy is
chugging along nicely, thank you. But behind the headlines statistics, a new
crisis is simmering. An investment draught threatens not only to derail recovery
but also leave Malaysia behind as its nearest competitors move to reinforce
their positions in the New Economy. Malaysia's recovery in the past two years
has had little to do with the capital controls. Nearly all crisis-hit countries in
Asia have seen their economies bounce back. The best performers have been
those like Korea, which took the IMF medicine seriously and instituted real
reforms, or Hong Kong, which has completely reinvented itself as more of a
New Economy player.
Among the factors that have sustained the recovery in Malaysia are its huge
electronics exports and the surging increase in demand for electronics
components by Japanese and US companies selling the latest gadgets and
gear to American and European consumers. In other words, the very people
whom Malaysian leaders blame for their economic problems have been buying
loads of goods from Malaysia and helping it recover. For a substantial oil and
gas exporter like Malaysia, the record high oil and gas prices in the past year
have also helped, though energy is fairly small part of total exports. However,
higher government oil revenues however have helped keep fiscal spending up
and that has kept the wheels of the economy turning slightly faster.
Because of its investment-friendly policies of the 1970s, 1980s and early
1990s, Malaysia is now the fourth-largest exporter of semiconductors and
sixth-largest manufacturer of electronics components in the world. In some
low-end categories, such as hard disk drives, it now leads the world.
Much of this can be tied to the investments that poured in from U.S. and
Japanese electronics companies before capital controls were introduced. The
problem now is that even the Malaysian government's own statistics show that
new foreign direct investments (FDIs) especially in the high-tech sector, just
aren't coming in at all. FDIs in the first six months of this year were drastically
down more than 20% on the same period last year. FDIs in electronics
manufacturing dropped even more sharply. What's more worrying is that most
competitor nations particularly the likes of Thailand, China and a few others are
seeing FDIs in electronics manufacturing soaring. U.S. and Japanese
electronics companies, which considered Malaysia their best investment
destination in 1996, now don't even count it as among the top-five
destinations.Though capital controls do not apply to multinationals in the
electronics sector (who are by law exempt) they have adversely affected
decisions to relocate factories to Malaysia or set up new plants. An
undervalued ringgit scares away investors who need to buy huge equipment
today, fearing that at some point down the road the Malaysian government can
arbitrarily change the exchange rate. The little new investments that is coming
in is by companies who already have a plant in Malaysia and need to expand
One problem with electronics manufacturing is that product cycles are getting
smaller. New companies are peddling new components for ever-sleeker
gadgets all the time. Even existing plants need to retool far more quickly today
than they did five or 10 years ago. A country that has just a few dozen
top-notch multinationals with electronics plants can rely on those plants to
keep shipping out products for a few years only unless there is massive new
investment, reinvestment and retooling.
Clearly, that is not happening in Malaysia and its leaders are worried. On a
recent trip to Seoul, I wandered into hotel ballroom after a lunch interview to
find Malaysian Trade and Industry Minister Rafidah Aziz addressing Korean
businessmen. She seemed irritated at the questions they were throwing at her
about political stability, corporate governance, transparency and above all
capital controls. "Why can't you just invest in Malaysia and see for yourself,"
she said. If only it were that simple.
Malaysia's new inward-looking policies, its inability to meet the globalization
challenges, its backtracking on AFTA (ASEAN Free Trade Area) deadline for
sectors such as autos do not instill confidence in long-term foreign direct
SG Securities Asia in a recent report said that falling FDIs in Malaysia will lead to other more worrying trends such as the loss in technology transfers, best practice management techniques and integration into global trends. "This is an obstacle to the development of a productivity-based growth model," the report said. Over the past two decades Malaysia has drawn foreign investment in high-tech industries. It will be a shame to see the skills that have been developed now wasted on old machinery and obsolete technology in heavily protected industries, instead of being deployed to catapult the country into a manufacturing force in the New Economy.