August 18, 2017
By Salahuddin Hisham
IN another ceremony in Kuantan recently, work to start the East Coast Rail Link (ECRL) was launched, an event that was aimed at bringing a sense of awareness to the people of Pahang of an economic initiative that would be a game changer to the state.
Transportation and logistics improve accessibility and it is sure fire to raise economic activities and bring development to areas outside the major urban centres. Nitpicking on the corporate banners and signs in Chinese meant for officials from China has no significance.
The China-bashing arguments on compromised sovereignty, the fear China dominance, high national debt and questioning the project’s viability may have run its course.
Foreign direct investments
A more significant achievement than the ECRL is the ability of Prime Minister Datuk Seri Najib Razak to bring more foreign direct investments to the country.
According to the International Monetary Fund, FDIs refer to investments made to acquire lasting or long-term interests in enterprises operating outside of the economy of the investor. Direct means the investors could control, manage or have significant influence over the enterprise.
FDI is important as a source of external finance for countries with limited capital but with economic potential. It was FDI that sparked China’s rapid economic growth to what it is today.
The World Bank views FDI and small business growth as two critical elements in developing the private sector in lower-income economies and reducing poverty.
The right policy by a host nation allows for international economic integration. It creates stable and long-lasting links between economies. There will be transfer of technology and know-how between countries, and market access for the host economy.
The ECRL comes together with other investments from China totaling RM133 billion. Saudi Arabia’s investment in RAPID Pengerang is RM36 billion.
As one former corporate player confided over evening tea recently, such investments were unheard of during his time and Najib’s 8 years as prime minister has brought in more investments than Tun Dr. Mahathir Mohamad did in 22 years!
If the TPPA had not stalled, Malaysia could have attracted and offered more in both FDIs and trade. Malaysia may need FDI in certain areas and offer FDIs to other countries. There are benefits in both directions of capital flow.
Malaysians in general may have taken the country for granted. Many seem to be in awe of the affluent lifestyle in the West and only in recent years was there an increased appreciation of Malaysia’s strategic location.
Other than having natural resources, Malaysia is located next to the busiest sea lane in the world. Ships to and from the Indian and Pacific Oceans have been plying the more sheltered water route of Southeast Asia for centuries.
Malaysia is centrally placed between the continental and maritime counties of Southeast Asia. It is one of the most vibrant economic regions in the world. Though it was British and later American-backed Singapore that benefitted immensely in the past, ECRL and port development initiatives will give them a run for their money.
It is more serious effort than the tired Singapore-phobia political rhetoric in the past but yet gave away 50,000 hectares of land for water catchment and dams.
Doomsday soothsayers are beginning to call it a day as competition of new logistic centres spring up in Malaysia, Thailand and Indonesia, and China’s OBOR (One Belt One Road) initiative bypassed Singapore.
It was seen as the reason Singapore opened up casinos and hosts the F1. Their pole position as a financial and logistics centre could be reduced to an entertainment playground for the rich.
Najib should stand above past psychological envy and shake hands with Singapore. The diplomatic hand extended to Singaporean investors could tame their kiasu-ness and be more win-win.
It is also time to shed-off Mahathirism neo-colonial paranoia. Investments make available facilities and expand capacity. Infrastructure and real estate developed can’t be taken back to Singapore and China. As had happened in China, Malaysians will eventually buy back as they become more capital rich.
Insecurity felt by the Bumiputra could be addressed. Transform certain negative attitudes for handouts and subsidy to the willingness to learn and self-improve. Social infrastructure for social uplifting via education and skill development should be readily available.
A smaller piece from a fast growing economic pie is more beneficial than total dominance in a stagnant economy. Making money with friends and neighbours ensure continued stability, peace and prosperity to all.
Beyond Singapore, neighbours like Indonesia and Brunei have tremendous economic potential and are capital rich.
Indonesia is rapidly building their infrastructure. They need capital and investments too to develop economic activities. Before they catch up, Malaysia should raise the playing field to establish more strategic infrastructure and services to meet the future needs of the region.
Only Vietnam in the Khmer-speaking areas of Southeast Asia is seen as vibrant. When OBOR comes to the area, one could witness the rise of the Indo-China from the ashes of past wars.
Middle East and Bay of Bengal
Malaysia has yet to explore the opportunities in the Bay of Bengal. Malaysians may look at the region as another source of cheap labour but it is home to one of four people in this world. Any marketer will appreciate its future potential.
Though seen as not economically affluent, densely populated and exploited by colonisation, countries bordering the Bay of Bengal are rich in history and culture. It is the heart of imperial history.
Bay of Bengal stood at the heart of global trade for centuries before globalisation became a buzzword. It is where the Indian Ocean meets the overland Silk Road and goods flow from as far as the Mediterranean and South America.
States like Kedah and Penang have benefitted and could boom.
Despite the political elephant in the room, it was Najib that successfully made major inroads to attract FDIs from the Middle East. The Arabs can be difficult and fussy but friendship and trust developed with them could bypass other criteria.
There are still more Arab-Muslim countries to explore in the Gulf States, northern Africa, Asia- Europe border and Central Asia. They are ever willing to shake hands to embark on economic and investment cooperation.
1MDB could even be a western fear of capital leaving the west to move to Malaysia. Since 911 and the subsequent animosity against Islam, which was cloaked as war against terrorism, it was a god-send to Malaysia. It was the opportunity to strengthen old friendship, gain trust and offer the country as a safe haven to the motherland of Muslims.
In the height of tension between Qatar and the Saudi-led Gulf states, the Qatar emir is due to make an official visit to Malaysia. We should refrain from being critical of any side.
Qatar is one of the richest Gulf states. Their FDI in Malaysia is estimated to be US$10 billion. Tens of thousands of Malaysians found employment there. In one of their visits to a neighbouring country, they committed investments that match Saudi’s recent investments.
When the quarrelsome Arabs are at each other’s throat, it can be challenging to be friendly to all sides. It requires delicate diplomatic skill to send the message we do not take sides in the quarrel among friends.
And it is not the time for political grandstanding but to be responsible and trusted peacemaker.
It must be a priority of Wisma Putra to look at its role beyond foreign relations, humanitarian and maybe peacemaking but to also be an economic ambassador of Malaysia.
If there is room in their budget, they should not limit their office to only a nation’s capital. For a start, Wisma Putra may need to open more offices in regions of strategic importance in China and Indonesia.
But if it is beyond our means, maybe we need to rationalise our diplomatic presence.
For Malaysia to build bridges of economic cooperation, it need not be through diplomatic and official channels only. There are tactical ways to go about. It has always been the aspiration of a foreign affairs ministry to see a government to government relation flourish into people-to-people relations.
Maybe, economic cooperation is better serves by Wisma Putra and MITI promoting and supporting businessman to businessman relation and appointing individuals as roving economic ambassadors.