A discussion on the Promuda Circle on our Foreign Direct Investment (FDI) performance (which can be tracked by even non-members from this link) has such potential that I'm taking a break from my new baby. (Yes, the another son of mine has arrived, Alhamdulillah!)
Of the matters not yet said on the discussion at the Circle, which also explored the issue of Malaysia's competitiveness vs China and Singapore, I put forth the following to be noted in discussions on FDIs:
- W.r.t. competition for FDI, Malaysia is typically not seen as a competitor to China, but the ASEAN Free Trade Agreement (AFTA) region, i.e. ASEAN, is seen to be so. In fact, outside of the cash-rich aberration that is the gulf states, the demographically attractive regions for FDI now are seen as China, ASEAN and India, in order of 'sexiness'.
- Malaysia is hence not really competing with China for FTA, but rather with other members of ASEAN for FDI into ASEAN. Of course our own competitiveness may help drive ASEAN competitiveness upwards to help ASEAN compete against China, but in a country perspective, Malaysia competes with say Thailand for ASEAN FDI, much like Jiangsu competes with Shandong for China FDI, or Tamil Naidu with Karnataka for India FDI.
- Malaysia also does not, or rather should not, compete with Singapore for ASEAN FDI. This is because Singapore's role in ASEAN as a region is much like Hong-Kong's or Shanghai's, that of an enabler of inter and intra regional trade. It also fulfills a role familiar in other regions as a neutral clearing house for finances, like the Swiss performs for Europe and Frankfurt and London from within the EU.
- Malaysia's competition is really the other 'almost there nations' of Thailand, and if you like, perhaps Jawa and Luzon as high net-worth regions within Indonesia and the Philippines. These countries and regions compete for FDI to fulfill its own development and also when acting as launching pads into higher risk and potential areas of development in Indochina, and the rest of Indonesia and the Philippines.
- The main reason some ASEAN countries like Malaysia, Indonesia and Thailand, are annoyed with Singapore is because it misbehaves whilst trying to impose a stronger presence in the region (than it deserves?). In the case of Shanghai and HK, this had resulted in swift reprisals (corruption charges on Shanghai Mayor and the general put-down of over-zealous democratic activists in HK by mother China). Hence the Thais are trying to emulate such actions with their treatment of Temasek's Thai holdings post-Thaksin.
Please note that from the outset I assume that we are trying to attract the right sort of FDI, the type that will result in Greenfield economic development, not simply selling Malaysian companies to foreigners (individuals and entities) and calling them FDI!
In the end, Malaysians should consider the following 2 approaches to enhancing our attractiveness to the right form of FDI:
- We should benchmark against and close the gap between us and the competitors that are beating us, and Indonesia (Jawa most likely) and Thailand are beating us to FDIs at the moment.
- We have to remove the factors that erode our value as an FDI destination, and I'm not talking about the NEP et al, using this as an excuse is simply politicising the issue out of ignorance.
- inefficiencies in actions and infirmities in government policies.
- the continued perception of indecisiveness and lackadaisical attitude of our nation's current leaders.
- being trapped in the old models for development, like free trade zones/special development regions (the IDR being a case in point)
- in our insecurity, forgetting to nurture our real strengths as a nation, such as our creativity, openness and appreciation of diversity.
- being over-respectful of the ideas and initiatives of others whilst neglecting to value local talent, achievements and initiatives
It hence continues to puzzle me why the Lah-ist regime is so hard-up for Singapore to participate in the IDR? In fact, why have an IDR at all? I would have thought North Perak or the Malaysia-Thai Border or perhaps Sarawak from Sibu to the interior deserves more development focus than the IDR. Could it be because Singapore sees no benefit from developing these other regions? Why should it matter what Singapore thinks about Malaysia's priorities?