Unbelievable response from MITI Minister regarding Malaysia decline in 2009 FDI

Posted on July 27, 2010

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27 Jul : Today at a industry dialogue Minister for International Trade and Industry Mustapha Mohammed dismissed the 81 % plunge in 2009 FDI attributing it to Malaysia being in a different stage of development. He said the other Asian countries attract huge costs infrastructure investments like for roads and power supply whichMalysia is not lacking. He further added that it was more a case of quality over quantity, as the country is attracting better-value investments. He quoted an example a company which invested only RM200 million but created 1,500 jobs for our graduates. He explained that Malaysia being at a different level of the development scale also makes her  uncompetitive in attracting investments in certain sectors, example textiles, apparels and furniture.

What a unbelievable response from the learned Minister. It is obvious he is trying to find excuses. His reasoning is deeply flawed. He forgot that we are not kids and cannot be duped further by such reasoning.  He is making a fool of himself  with such answers. The Minister should have kept quiet and work behind doors with his ministry staff to identify the Ministry weakness and how to pull in investors. When was the last time and on how many occasions  had the Ministry led a trade mission overseas to attract investment ? The Ministry should identify all the efforts conducted to date, analyzed the response and evaluate/review the followup steps that were taken subsequently.

Reasoning that Malaysia developmental stage is different from others is not an answer.  Has he forgotten countries like Thailand and Indonesia whose economies used to trailed Malaysia’s for several decades is now progressing and continue to surpass us . While many of our regional competitiors suffered declines in FDI last year, none of them came close to what we experience. Thailand, Vietnam and Indonesia’s FDI declined by 30.4%, 44.1% and 44.7% respectively, those figures are by far healthier when compared to Malaysia’s 81.1% drop. This was despite the fact that Thailand was facing a year-long political upheaval while Vietnam was mired in a currency crisis. On the other hand, Singapore, Brunei, Philippines and Myanmar still managed to register positive growth although for Singapore, the bulk of its decline in FDI was registered in 2008 which accentuated its improvement in FDI in 2009.

What ” quality” investments is he quoting ? Undoubtedly there are good investments in this country. Quoting one good investment does not necessary means all the other investments are similar. I find it pathetic that he’d to resort to such reasoning. Obviously he was unprepared and giving statements off the cuff just to appease the reporters.

On 24 Jul in my post in this blog, I deliberated on several reasons contributing to the drop in foreign investment based on my experience in the private industrial sector for the last 30 years. I summarized here ; it is due to a poor unprogressive education system producing poor labor quality, corruption, croynism and and racial politics being allowed to play out affecting the Government Transformation Plan  and the New Economic Model. Foreign investors are simply losing confidence and frightened at what is happening to our country today. They feel safer and secure investing in other countries. The Minister must take stock of the situation and address the issue seriously. He need to remember that according to the 10th Malaysia Plan (2010-2015) , Malaysia’s economy need to grow by 6 percent annually in order to achieve a high income and developed nation status. The plan projected private investments need to grow by 12.8 percent yearly. The economy needs to attract new investments (local or foreign) worth RM115 billion annually. The 10 th MP calls for a greater private sector investment which is Foreign Direct Investment (FDI).