Tuesday, December 12, 2006
Globalisation and Competitiveness: Where to Malaysia?
Are we in the globalisation race?
The economic performance of Malaysia is becoming a highlight of the foreign press. I was asked by a journalist from Singapore's Straits Times on the same matter today. I told him that we have several reasons to be worried.
First, it quite obvious that the country has not being able to reinvent itself since the Asian financial crisis in 1997. Instead of focusing on adapting the public policies and the implementation mechanisms to better support change, the framework of policy formulation remains largely the same. For example, the licensing regime is archaic and is prone to corrupt practices.
In the recent World Bank report, Malaysia ranked mid-table in the ease of doing business due to its licensing regime. The de facto implementation of the pro-bumiputera affirmative action through several governmental agencies has made the whole process of setting up a business, raising funds and bidding for public contracts more murky and less transparent.
Second, the foundation of our economy has not changed much. On industrial development, we are dependent on low cost labour from neighbouring countries to drive our cost down. Many MNCs have complained that while the government offers good incentives, the access to skilled workers is becoming more accute. Simply, highly skilled workers prefer better paid destinations and a more meritocratic environment. Malaysia has an 'entitlement' culture which breeds mediocrity and complacency.
Overall, the government did not do enough to reinvigorate and reinvent the economy. Many of the projects undertaken suffered from poor execution and management. One such project is the Multimedia Super Corridoor. When first launched, it was touted as the next high growth area in Asia. The buzz had awakened governments in Asia, from Hong Kong to Singapore. Since then, these economies have reinvented and repositioned themselves to capitalise on new regional opportunities created from the emergence of both China and India. Malaysia is still stucked with its race-centric and too inwardly focused 5-year development plan.
According to the UNCTAD report, Malaysia has fallen from a top 4 FDI destination to no.62 in year 2005. Private investment is barely 8 percent of total GDP and continues to drop double digit.
I heard immigration is becoming a buzzword in Malaysia again. I am not surprised. When situation gets bad, many choose to run away. While some politicians choose to blame the other communities for their fate. What they should do but did not do is to start being pragmatic and find new solutions to end our dilemma.