Malaysia slips behind rivals in economic race!

[Dashken]

Foreign investments have slumped and even Indonesia is attracting more global capital

By Leslie Lopez
The Straits Times

MALAYSIA, once touted as one of Asia's budding tiger economies, has slipped into a deep funk and that has got economists and businessmen worried.

Its stock market is anaemic and business confidence is testing new lows. What is more, foreign direct investments have slumped and traditional laggards such as Indonesia have overtaken Malaysia in the intense fight for global capital, according to a recent United Nations survey.

'The country is running the risk of being marginalised,' says economist Chua Hak Bin of Citigroup Global Markets in Singapore.

'Unless it tackles the many issues head on, the Malaysian economy could slip into a period of low-quality growth,' notes senior economist Sanjay Mathur of UBS Investment Research, who expects the economy to expand by about 5.5 per cent this year.

There are signs that the Malaysian government is trying to regain investor confidence.

Prime Minister Abdullah Badawi's government has liberalised rules involving banking mergers and the government has said it would welcome a foreign partner for its national car maker Proton.

'These are right noises. But investors want to see real action,' says Mr Mathur.

So what ails the Malaysian economy?

In a nutshell, economists say that the country's reluctance to liberalise its economy to allow for greater competition and foreign participation has undermined Malaysia's standing among international investors.

At home, private domestic investment has dried up largely because of a decades-old race-based economic policy which favours the country's dominant ethnic Malay community at the expense of the non-Malay groups.

Only a decade ago, Malaysia was widely considered as a serious economic threat to Singapore as it pursued ambitions of becoming a regional hub for finance, information technology and transportation.

In the mid-1990s, the country ranked sixth in world as a magnet for foreign investments, while the combined value of shares listed on its stock market trailed only that of Japan and Hong Kong in Asia.

But the lofty standings have taken a major beating.

Today, the country's ranking as a destination for foreign capital has slipped to the 62nd spot, according to a recent survey by the United Nations Conference on Trade and Development.

Malaysia, which once competed with Singapore for foreign investments, is now under threat from traditional economic laggards such as Thailand, Indonesia and Vietnam.

The importance of its capital market has also slumped. Trading values of the Singapore stock market are three times larger than that of the stocks listed on the Malaysian stock exchange.

'It is not that Malaysia is moving backward,' says Citigroup's Mr Chua. 'It is simply not moving forward quickly enough.'

From an international perspective, economists say that Malaysia's image is still tarred by its controversial move to impose capital controls on the economy in September 1998 to protect the economy from currency speculators.

While many of those restrictive economic measures were lifted in April last year - which included removing the peg on the Malaysian ringgit - economists say Malaysia should remove the ban on the trading of the currency in international markets.

More importantly, Malaysia needs to reinvent its economic model.

For the past three decades, the cornerstone of the country's economic blueprint has been a social engineering policy aimed at promoting the interests of the country's politically dominant Malays.

Known as the New Economic Policy (NEP), the plan which began in the early 1970s seeks to raise ethnic Malay economic ownership to 30 per cent from just under 20 per cent currently.

But the NEP has bred deep inefficiencies in the economy and stifled domestic and foreign investment, economists and businessmen say.

What is worse, the policy has mutated into a potent tool to dispense political patronage. The NEP imposes limits on foreign ownership in business and dictates that ethnic Malays must be given stakes in new and established companies.

-

Comments
There is nothing wrong with religion or affirmative action. But, like everything else in life, they must be taken in moderation and with a pinch of salt. A little doubt is good. Unfortunately in Malaysia, emotions over Islam have overcome reason. What we see today is the result of the NEP and Islamisation policies of the past thirty years or so.

No one owes Malaysian Malays a living. Let me assure you that should Malaysia fail - the Malaysian Malay will suffer enormously. And rightly so. After all - they have been pampered with all sorts of goodies over the years. They cannot now expect more goodies. Perhaps the day of reckoning for them, is near. Whatever it is, Malaysia had better wake up to the realities around her. The globalised world of the 21st century has no NEP to offer the Malaysian Malay. And humans cannot live by religion alone..

-

And here's the scary part - Malaysia, too, already has some of these characteristics exhibited by the failed states. The proverbial writing, as they say, is already clearly written on the wall. Written, in fact, with bright luminous paint - if only we bothered to look.

What exactly constitutes a failed state? Syed Akbar characterizes a failed state as one which exhibits the following attributes:

1. Restrictions on the free flow of information
2. The subjugation of women
3. Inability to accept responsibility for individual or collective failure
4. The extended family or clan as the basic unit of social organization
5. Domination by a restrictive religion
6. A low valuation of education
7. Low prestige assigned to work

Even a cursory look at the list tells us that several of these characteristics can already be observed in Malaysia. The possiblity of Malaysia becoming a failed state is all too real.

-

Malaysia can forget about the success of Iskandar Southern hub competing with Spore.

Its all about human resources and quality of service.

Just try dealing with some Govt. Dept , e.g. Land Office... fail hilang, fail lesap, pegawai sakit, cuti, keluar minum, makan suap!

-

Carry on malay supremacy, carry on NEP, carry on corrupt leaders/politicians and your corrupt ways............We shall be watching from the sidelines as you implode, then we'll just step in, pick up the pieces and do things OUR way.

-

Some day, when UMNOputras send their daugthers to Indonesia to work as maids, then maybe they will wake up.

Unthinkable? Maybe not.

-


There is nothing wrong with using affirmative action to help the underprivelege and restructure the social hierachy so that you have a large middle income group, few rich and few poor instead of absolute distinction between large poor group versus the few poor. So in essence the spirit of NEP is good.

But Malays through UMNOputra unilaterally interprete the social contract to argue that NEP is needed because of Ketuanan Melayu. NEP is for the poor not for poor Malays only. But somehow....the Non-Malays in BN kept quiet.....

The rest is history....Lee Kuan Yew is only partially right in saying Chinese are being marginalised. The truth is Non-Malays (not only Chinese) are marginalised. So UMNO is right....... what Lee Kuan Yew said is untrue....

-

The sadest thing in Malaysia is the majority of the moderate Malays are not speaking up against the UMNOPutras who are racists and hyenas!

The whole of Malaysia is being hijacked by the UMNOPutra hyenas and the moderate Malays are still remaining silent!

-


No community will allow their leaders to take away their free meals which they feel are entitled to them. Once they have tasted easy lives, easy income, easy passing marks,easy promotions, easy degrees, easy scholarships, cheaper housing....to take that away? Think whether this is possible especially when the
other parties are so weakly represented.

That is why the AP lady will not be able to sign the FTA. Her fat butt will be kicked in no time. Without FTA will there be FDI at all?

Malaysia has to learn a very bitter lesson to come to her senses that discrimination of nearly half the population has a price to pay no matter what justification one has for it.

-

Quote by Albert Einstein:

"Insanity: Doing the same thing over and over again, and expecting different results."

Right on...

[zy]

yea.... shoot malaysia more.. i want malaysia to wake up ..

[redness]

Nar, the government will not wake up to it.
Even if they do they will only get grumpy and say they are out to ruin the country and we should not listen to outsiders.
Pak L will come out to wave his hand and disappear into the background again for things to boil over.

[zy]

yea.. gov. will give excuses again

[Adrian Wong]

I think the government knows very well just how bad things are these days. No matter what they say, the economy's steadily getting worse every day.

Unfortunately, instead of implementing better economic policies, they are only interested in shifting the blame to various scrapgoats. Evidently, our "Dear Leaders" cannot be wrong.

If we continue like this, we will end up as the second South Korea. What a shame....