Malaysia should now promote technology-intensive investments

KUALA LUMPUR: Malaysia should now focus on attracting technology-intensive foreign investments into the country to make up for the loss of competitiveness in labourintensive industries, said former Treasury Secretary-General Tan Sri Mohd Sheriff Kassim.

He said this could be done by investing heavily on the “soft infrastructure” to enlarge the technology-base and talent pool.

Another way would be by promoting research and development activities and strengthen the enabling facilities like venture capital financing to provide the launching pad for local startups, he said.

“The larger the local support base for technology, the easier to attract the big multinational corporations to locate here instead of Singapore,” he said in response to news reports of a plunge in foreign investment.

Last week, the United Nations Conference on Trade and Development (UNCTAD) reported that direct foreign investment (FDI) into Malaysia plunged by more than two-thirds to just US$2.5 billion last year amid the Covid-19 pandemic.

According to Mohd Sheriff, who is also the co-founder of the Group of 25 former top civil servants (G25), the declining trend of foreign investment into Malaysia was “to be expected” as the country was no longer competitive on labour costs like it used to be before.

“In fact, even many Malaysian companies have shifted their labour-intensive manufacturing plants to neighbouring countries, for example our textiles manufacturers have gone to Vietnam and Cambodia.

“Some foreign semiconductor plants in Bayan Lepas have transferred their assembly operations to other Asean countries while maintaining the more technology-intensive operations here,” he added.

Mohd Sheriff said Malaysia was also facing more competition from Indonesia and Vietnam which were improving their infrastructure so much that they were now on par with Malaysia.

“They also have liberalised their institutional bottlenecks like land ownership and foreign majority control in joint ventures. Indonesia has made good progress in fighting corruption, which was rampant before,” added Mohd Sheriff.