Dr M: Time for Malaysia to shift strategy, stop relying on FDI

13-Apr-2021 Intellasia | TheMalaysianReserve | 5:02 AM Print This Post

IT IS time for Malaysia to change economic strategy as being dependent to foreign direct investments (FDIs) may no longer be relevant due to intense competition from neighbouring countries, said former prime minister (PM) Tun Dr Mahathir Mohamad (picture).

He said the Covid-19 pandemic, which has disrupted how businesses are carried out globally, should be the best opportunity for Malaysia to move away from FDIs and focus on exporting goods, embarking on automation and retraining manpower to adapt to new skills.

Dr Mahathir, who brought the country out of the critical economic crisis in 1997, said nowadays, foreign firms will mostly stand to benefit from FDIs with cheap labour while giving minimal technology transfer to the locals.

“Our first strategy was to have FDIs because we do not have expertise. But now, it has come to the stage that our people are rich enough to go into big industries.

“The government can help and we should change the strategy from being dependent on FDIs to (boosting) domestic investment for the world market. That should be the new strategy,” Dr Mahathir told The Malaysian Reserve in an exclusive interview last week.

“Our dependence on FDI is also not viable now because many countries are offering the same facilities and they are offering better labour, which costs lower and (with) better incentives,” Dr Mahathir said.

Malaysia’s net FDI fell 56 percent to $3.4 billion (RM14.08 billion) last year, down from RM31.7 billion the previous year.

Following this, the government said it will continue to be looking for “selected and quality FDIs” into Malaysia.

Dr Mahathir, who became the Malaysian PM twice, suggested that focus should be on developing new skills among local talents as he believes automation will be the key for Malaysian economy in the future.

He also acknowledged concerns where automation may result in unemployment, but insisted that it can be mitigated by retraining local labours in other new skills. As a result, Malaysia may no longer need to rely on foreign labours to boost its economy.

“We can stop relying on foreign labours, but our people need to be retrained.

“They (locals) need to learn how to programme, and how to produce robots and automated machines. We are already doing that automation in our factories, but we need to do more.

“If you look at Tesla (Inc), there is nobody at the factories and yet, cars are being produced. So, that kind of thinking must be developed by us,” Dr Mahathir said in an hour long interview.

“For example, by keeping the machines going, you know the machines (are) bound to break down and (thus) new skills are required (to fix and maintain the machines),” Dr Mahathir explained.

“It will mean we can still be productive, or more productive and (have) better quality,” the 96-year-old statesman added.

According to statistics, there are 2.3 million foreign workers in Malaysia, who are documented. But it was understood that the undocumented labours are more than double from the figure.

Manufacturing tops the list as the sector which employs the highest number of foreign labour, totalling 706,502, according to a government data.

Based on the Economic Outlook Report 2020, about 77 percent of the workers in the domestic sector consist of foreign workers who came mainly from Indonesia.

Going forward, Dr Mahathir believes local entrepreneurs are now capable and have enough capital to “go big” by producing Malaysian made products for the global market with the adoption of technology.

Citing Japan, Korea and China as examples, Dr Mahathir said the countries have long moved from relying much on FDI while remaining consistent in producing goods beyond its domestic market.

“They go into industries to produce things for the international market and to compete with the West.

“Because of that, their industry is very big. But Malaysia tends to focus too much on the domestic market. Even when you build a car, you build a national car to sell in the nation and because the volume is small, so you can never grow big. We do that on many things,” he said.

“So, now we have to change that. We should not depend upon FDI, and we should encourage Malaysians who are already quite rich, have good capital…to go into industries to produce for the world market,” he added.

However, Dr Mahathir said the agenda can only be successful if it is driven by government support.

“For example, in Korea, the president called up about 10 or 12 small industries and told them they have to go big and the government will help and make soft loans and other incentives available,” said Dr Mahathir.

“We produce palm oil in the world market. If you produce palm oil for the local market, it will go bankrupt. Rubber was the same.

“Now, we have gloves. We see gloves being sold worldwide. We should think about what else we can sell to the world market,” he said.

“We have a lot of raw materials like rubber, palm oil, tin, bauxite, rare earth, silica sand; many raw materials which we export but without value added. So, we should change this.

“Like silica sand, we do not even produce the glassware, but we produce some glass shoes. However, there are thousands of products you can sell using silica sand, (the) same (goes) with rubber. It can produce thousands of things, but we only produce tyres and that is also not for the world market but for the local market,” Dr Mahathir explained further.

As such, he said Malaysians must think of the world market when producing products or goods, as well as strive to be competitive.

https://themalaysianreserve.com/2021/04/12/dr-m-time-for-malaysia-to-shift-strategy-stop-relying-on-fdi/

 

Category: Malaysia

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