Heed the call
○ Govt advised to take threat of losing FDI seriously
PETALING JAYA: It is a warning that Malaysia ignores at its own peril. This is the view shared by economist Tan Sri Ramon Navaratnam in response to indications by foreign investors that they may be forced to pull out of the country if the Covid-19 pandemic and lockdown persist.
Ramon, who spoke with theSun yesterday, also wondered if these were all signs of a crumbling economy.
“If FDI (foreign direct investments) are pulled out, it will be disastrous for our economy,” he said.
“I am aware that many have already countered the narrative that Malaysia is a failed state. However, with such (possibility of investors pulling out) coming to light, I cannot help but worry about the future of our nation,” he added.
If this was true, he said the country is heading for trouble.
Ramon was commenting on a report in theSun on Wednesday citing the displeasure of foreign trade groups over inconsistencies in standard operating procedures (SOP) for business continuity.
The groups, representing investors from Japan, Germany, the United States and the Netherlands, had written to Prime Minister Tan Sri Muhyiddin Yassin seeking a clearer definition of the SOP and expressing the possibility that they may rethink their investment decisions in the country.
A spokesman for one of the trade groups said investors may have to relocate to other countries where conditions are more stable, if the situation in Malaysia does not improve.
Ramon, who is chairman of the Centre for Public Policy Studies at the Asian Strategy and Leadership Institute, said mirroring the current drop in FDI to the 78.6% decline during the 2009 global financial crisis should be seen as alarming.
Sunway University economist Dr Yeah Kim Leng, who made the comparison, also pointed out that the net inflow of FDI into Malaysia had declined by 54.8% to RM14.6 billion last year.
Ramon said the sentiments expressed by the foreign investors were not surprising, given that they have not been allowed to proceed with their operations for a long time.
“My question is … is our government taking this as seriously as it should?”
He pointed out that the ramifications of a mass pull-out of
FDI would be devastating.
“It will severely hit local investment links, cause the unemployment rate to shoot through the roof, lead to a plunge in income tax collection and curtail economic growth,” he said.
He cited a report in June by the Malaysian Economic Action Council that revealed that since the pandemic began, 600,000 households, about 8% of the population, had fallen from the middle-income bracket into the low-income group, whose income is under RM4,849 a month. At the same time, the unemployment rate has risen from 3.2% to 5.3%.
“If this is allowed to continue, Malaysia will very well plunge into the rabbit hole of failure and chaos in just a matter of time,” Ramon said.
“Every day, we see the rakyat’s anger grow. The government needs to act right now to review and improve our policies if we are to maintain our stature as a developing country. Reduce and remove government monopolies and
exclusivity such as government-linked companies and introduce policies that will help re-attract FDI by reducing equity ownership,” he suggested.
“I have stressed this point many times, but please consider being more transparent and consult the stakeholders more often to devise new policies and better universal practices.”
“Remember, it is not wrong for us to follow others who have successfully beaten this pandemic. After all, by putting in a little more effort, the government has nothing to lose, especially since it benefits the rakyat,” he added.