I agree with Dr M's observation, as reported in the Business Times, that given the right push and support, home-grown companies can grow to become successful global players, with spin-offs that will benefit the country and its people.
Dr M also made an important observation that local companies and corporations are well-run, but they do not get enough support from the government.
He made an interesting point, "Support is not in terms of cash, but if they need RM1 billion to expand, the government can help reduce the interest on financing. It won't cost the government much but the returns to the government is greater," when fielding a question on Vision 2020 after delivering a talk at The Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) 50th Anniversary Lecture in Kuala Lumpur yesterday.
I have knocked the seeming obsession that we have with FDIs many a time.
If we were to trouble ourselves to study how Japan and Korea addressed the challenges of economic development we will find the source of Dr M's inspired observations.
The government must facilitate and foster homegrown entrepreneurship. Malaysia has a vast talent bank of business and managerial talent. Many may have left our fair shores. But, many more remain. These are the talent pool that needs to be encouraged and given the opportunities.
Dependence on FDIs will only make us a nation of employees.
4 comments:
Hi Deminimis,
"Dependence on FDIs will only make us a nation of Employees" Unquote.
Very apt indeed...
Malaysia badly needs “Role Model” established Leaders & Politicians of HONOUR with Calibre, Maturity & Tolerance without Fear or Favour & NOT Political OPPORTUNISTS on both sides of the Political divide …
Further this nation Desperately needs Intelligent, Time Proven Pragmatic Successful modelled, Financial, Economic, Politiical & Social “SOLUTIONS” NOW!
Repeated High Level Political Rhetorics do not put “Bread on Citizen’s family table”, when citizens do not even have “Basic Rights & Amenities” in Urban & the Rural Community.
To be Leaders & Team players, Globally, we talk about "Leading Edge Theories, Strategies & Technologies" that are "Relevant to the 21st Century Scenarios & Demands" & not otherwise, which are "Obsolete".
There is no room for "Total Monopoly, Bureaucracy, etc" in the 21st Century Scenario & Context.
It is all about "Innovations, Creativity, Proof of concepts, Justifications, Track Performance, Perseverance, etc & not Rhetorics" towards the Good of Mankind, Nation, Citizens, etc.
Well, what can we expect from our Bolehland's "Myopic Visioned" Ketuanan Jaguh Kampung Powers that be...to change their PARADIGM !!!
But there again, who started it all...
Just to share this with you...
"I'm sorry that we have to have a Washington presence.
We thrived during our first 16 years without any of this.
I never made a political visit to Washington and we had no people here.
It wasn't on our radar screen.
We were just making great software." - Bill Gates
Cheers.
3/3
Indeed our education infrastructure is world-class. Why else dare we recommend ourselves to Unesco as a role model?
We're good at the big picture which is so big we can afford to ignore minutiae. We look, no, grasp for the straws of supply chains.
Like a cluster school in an urban city where the students like lemmings skip the day because they cannot take it anymore when seven of the ten lesson slots have no teachers and three are used for some talk on anti-smoking. How concerned for these students in an exam year. Replacement teacher? Only ask students to copy out notes and keep discipline in class. Meanwhile can parents afford another bunch of banknotes for tuition? And from that, we will outgrow our eighty-percent SPM-"qualified" corpus to join the pantheon of international high-achievers like Japan and Korea?
It's one country two systems three dreamers alright.
Having crossed out the manpower determinant, let's relieve ourselves by not bothering about the other determinants. Since it's the same administration, if one is bad, the others can't be too good, you reckon?
Indeed, sooner or later, a nation has to be self-independent. We have used FDI to move our society and its mindsets out from agrarian to industrial settings. Some residual costs and issues remain. But if we want to be more self-reliant, we must be truly honest about our real policies by design and in practice.
Let's put that bluntly. If it is found that the majority of the SMEs are from one community whose leaders get their basic education from vernacular schools, would this government of Malaysia prevail upon all - from its own frontdesk officers approving site license to the backend director approving fast and soft loans to the overarching politician executing funding for education improvement - do without one instance of prejudice all that must be done to enable and elevate those SMEs?
The very fact we are turning towards investment self-reliance must be predicated upon recognizing those who have been self-reliant, despite imposed artificial impediments. That's enough record to credentialize more support for them across the entire spectrum of enabling determinants.
And all this should have been done three decades ago. Ask Dr Lee, Dr Mahathir too if warranted.
It remains for one to hope it won't be tragic upon our rakyat as we change tact from FDI to LDI.
Because one economic survey is saying:
'Results suggest the presence of a nonlinear effect in developing countries; wage inequality increases with FDI inward stock but this effect diminishes with further increases in FDI.'
Smarter economists should argue this one out from GINI coefficient records. While at it, they may also want to take a leaf from the Greek tragedy unfolding before us. One notes that the same factors of that stage are also enacting - here.
Therefore we should not be so complacent that our fiscals are healthier and so we are insulated. We have been living on antibiotics and one new strain of virus can end the story.
This post, for one deputy minister of MITI.
References (just two):
http://is.gd/c5clT
http://is.gd/c5cnK
(;P)
2
When one says we have the 'talents, management skills, understanding of the market, technology and access to capital', do we mean, for instance, Proton is now ready to go it alone tomorrow on the global markets with much the same panache as was dished by Porsche to Mahaleel, namely 'you come for jv? do you have a return flight ticket with you now?'
And if we already have access to capital, why the need then to coax the government to subsidize financing costs for domestic expansion, especially when the same government has been noted to say the two stimuli packages had amounted to sixty-seven billion ringgit while industry calculations now say it was actually only sixteen billion ringgit, others from the normal budgets thrown in for window-dressing measure?
And behold interest rates or cost of financing will soon be raised while the nation is still wrestling with how to get out of a seventy three billion ringgit bill for subsidies every year that has been clouding the real non-competitiveness of this nation, what more with the economy to be hit in two years time with a net oil bill while the world markets are still in L shape, as attested by another quarter of dismal exports from our high-tech sector.
Now, from the same paper that has opened this topic, let us draw an earlier statement:
"Currently, private investment growth is at a dismal 0.4 per cent owing to the sluggish world economy.
(BT Feb 06 2010)"
The question is why. Is it only because the world markets are in bereavement that our private or domestic enterprises are not growing or are there other domestic determinants of economic growth as well?
The two links in the reference below provide compelling answers.
Let's regale some of the standing determinants.
We need brains that work. Where are they? Sure we have managerial talent and powerpointers but what about innovators and industrial-strength inventors? Do we have an IP-fueled venture capital industry to talk about? Do we have three thousand engineers on call ready to participate in a domestic enterprise when the profession laments we have only sixty thousand engineers which must grow to two hundred thousand in ten years time, coincidentally the same timeline to achieve NEM objectives?
Shoot breeze and take a small example from the air:
http://is.gd/c58Wz
Those trained in medicine should ask themselves how the hell did we lose this one? And for effect, are there more in the three hundred thousand who left last year?
Just imagine, if we have ten of him, and he was Malaysian, then Malaysia could virtually start a world-class orthopedic centre for disabled children and earn big bucks from health tourism as well.
Don't believe me? Perhaps those trained in medicine can ask themselves whether the people they have put in high positions have the same credentials, awards and achievements.
And we have the temerity to say we are ready and replete with real talent?
But admittedly it's always good to look for the positive side of things. And indeed change is in the air.
That would explain why so-called educated politicians have now asked for another in the series of position papers immediately upon finding out to their horror that teachers have to relieve themselves in self-dug holes behind their dilapidated schools in those states whose shacks banner this blog. And those states have for years been oiling the economy, to boot.
FDIs are akin to farming.
Land and people otherwise idle can be tilled and tapped to build wealth. If one does nothing, they will just be idle.
Moreover, FDIs and farming cluster domestic activities around them.
In manufacturing, our SMEs are an integral part of the global MNC supply chain.
Many have grown their wealth as OEM subcontractors. With advice from their principal customers, some have developed inhouse ODM capabilities. To that extent, FDIs have helped build domestic investments.
Furthermore, when FDIs cluster as in the FTZs, there are spinoffs into the surroundings. Employment, logistics, transport, finance, housing, education, healthcare, food and accessories businesses thrive. Out of initially nothing.
With years of successful growth, national reputational capital soon augments and economic indicators become more positive which enable analysts to write more glowing reports when otherwise they would have had nothing interesting to write about which means we could have easily fallen off the location and investment radar of those with money to burn.
True, there is a price to pay for all this.
One, the host country subsidizes the MNCs through the initial set of incentives to attract them. These include tax relief and rebates as much on income as on raw materials and components.
Two, the employment and value equations are at the mercy of the MNC. They choose who to employ at what wage, and what price to affix to which product.
These criteria have to a large extent defined the present manpower politic of this country, skewing towards contract foreign workers with low skills at cost of demotivating the local economy to automate or upgrade local skills.
In addition but with some exceptions, cutting-edge designs and innovations are too often done elsewhere so that the local economy doesn't get motivated enough to invest in real brain work now realized to be needed for high-income activities.
And three, they owe no loyalty to their hosts, ever ready to pack up, sell off the land for profit, leaving behind long-serving workers with an RSS or a gratuity hardly equal to the years of effort put in and at cost of health forfeited.
But, to be fair, it's just globalization and the rapacity of unfettered capitalism in the face of competitive realities.
After all, the pro's and con's of FDIs are exactly the same for domestic investments.
The domestic investor would be urged by the same factors as that which prime the foreign investor - to maximize profit, achieve better cash-flow, carve more market share and milk the cow for the highest yield in the most fuss-free way.
So it leaves to be asked what exactly has been said.
If what was said was actually to ask for a change of focus on the type of investment - more domestic, less foreign - then how does saying we are ready to rely less on FDIs help not only the economy but also the workers?
To say we are ready to be on our own from now on must mean we are ready with all the factors that make for the success of an MNC FDI operation.
That not only includes knowhow but also access to markets. No point domestic investor ploughs money to make things which cannot be sold in global markets, innit?
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