Oh no! How could this happen?
When we look at the latest maps, we can see that Singapore has become larger, so are Indonesia, Vietnam, Thailand and other South-East Asian countries. But Malaysia is the only country that is shrinking.
I am not referring to the physical geographical maps here. Geographically, Malaysia’s total landmass of 329,845 sq km will remain constant.
I am talking about the investors' maps. They are a kind of economic map, which is much more important than the physical geographical maps.
According to current thinking, the size of a country should be proportional to its economic status.
For example, Ethiopia has an area of 1,100,000 sq km, but no foreign investor bothers about it because of its poor economy. As for Singapore, it occupies only a dot in the physical geographical maps, but it is one of the superior countries in the economic maps.
For investors, the more competitive the economy of a country is, the greater economic growth potential it has, and the greater proportion it will have.
According to the United Nations World Investment Report 2010, the foreign direct investment (FDI) in Malaysia has plunged 81% from US$7.32 billion in 2008 to just US$1.38 billion last year.
In other words, Malaysia has shrunken in the eyes of investors.
As for Singapore, its FDI for last year was US$16 billion.
Thailand, Indonesia, Vietnam and the Philippines receive more foreign investments compared to Malaysia.
Malaysia is a country relying on exports and trade and its economic growth has largely been driven by foreign investments, especially in the 80s and early 90s.
Why are investors avoiding Malaysia today?
It is because the country lacks competitiveness and is less attractive, causing the investors to have less confidence and interests.
They cannot see Malaysia in investment maps, and they just bypass Malaysia when they come to Asia.
Less foreign investments lead to less inflow of capital and technology, less economic activities and fewer job opportunities. Also, the target of 6% economic growth and the goal of transforming the country into a high-income economy may also be unable to achieve.
Even worse, the capital outflow from Malaysia in the same period was US$8 billion. In other words, existing domestic and foreign investors have also transferred their capital abroad.
Therefore, we can no longer expect domestic capital to drive domestic demand and growth.
What have been done by the Ministry of International Trade and Industry and the Malaysian Industrial Development Authority?
Let's see how foreign investors view Malaysia:
•the lack of creativity and bureaucracy is serious in the country
•the government is not open enough and there are complicated and lengthy procedures
•corruption problem is serious and there is a great deal of red tapes
•there is a shortage in general labour, and a lack of professional manpower
•it has many strong slogans but lacks competitive advantage
Are the government, political parties and politicians really aware that Malaysia has reached a crucial point in which we will have to either wake up and reform or sink and disappear from the world economic map?
Sin Chew Daily
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