Doubt for the political future a detriment for Malaysia's economy: The Star columnist

The writer says that the political instability Malaysia is experiencing is causing a significant damage to Malaysia's economy and comes at the detriment of its citizens.

Pedestrians cross a road in front of Malaysia’s Petronas Twin Towers in Kuala Lumpur on Jan 12, 2021.
Pedestrians cross a road in front of Malaysia’s Petronas Twin Towers in Kuala Lumpur on Jan 12, 2021.PHOTO: AFP

KUALA LUMPUR (THE STAR/ASIA NEWS NETWORK) - Let's face it - investors will not put their money in Malaysia if they're unsure of the country and the federal government's status tomorrow.

Malaysia once proudly told investors it has a stable government, but it can no longer make that sales pitch.

The present federal government under Prime Minister Tan Sri Muhyiddin Yassin has a wafer-thin majority, and it's struggling to keep the administration intact.

Law makers from Umno in the ruling coalition have threatened to withdraw support and want an immediate general election, despite the raging pandemic.

Datuk Seri Anwar Ibrahim still thinks it's his entitlement to be Prime Minister, and probably spends his time counting and recounting his list of supporters.

Tun Dr Mahathir Mohamad still feels he should be PM - for the third time - and that no one is ever going to be as good as him.

Datuk Seri Najib Tun Razak awaits jail sentence and would do anything to avoid the slammer.

Meanwhile, PAS president Datuk Seri Abdul Hadi Awang, the king maker, is busy spinning the myth or rather, fantasy, that the minority non-Muslims are hatching a plan against Malay-based parties.

Now, even with several billions of dollars to invest, why would anyone want to look at Malaysia, especially if one needs justification for their shareholders?

They can choose any country they want in Asean, or anywhere else which could offer a better deal.

An unstable government, squabbling politicians, endless shortage of labour, constant water disruptions, corruption, and race and religion issues aren't going to make for great selling points. After all, we know how ruthless our competitors can be because these factors will surely be used against Malaysia.

Keeping it real, if you are an investor, there's no room for doubt. You want deals as certain as sunrise.

No businessmen would want to work with a country that keeps changing its PM or governments because that translates to changing policies.

Then, there are ministers who display prejudice against businessmen who signed on agreements with their predecessors.

They opine that these businessmen must be lackeys of the past government. So naturally, they insist on the review of those huge projects, further delaying their implementation. And finally, they broker for new contracts as well.

So, it's not surprising that one of the biggest concerns among Malaysians is a report by the United Nations on foreign direct investments (FDI) to Asean countries, which has placed Malaysia as the hardest hit in the region in 2020.

Nearly all Asean countries have seen drops in FDI, but Malaysia is down 68 per cent.

FDI is an investment made by a firm or individual in one country, into business interests in another, according to one definition.

To paint a clearer picture, the report states that FDIs to many developed and developing countries have also dropped in 2020, especially in South-east Asia, which contracted by 31 per cent due to decline in investment to the largest recipients. The tale is similar in South America and Africa, too.

The report predicts that global FDI flows will remain weak in 2021 as the slide continues, with most investors likely to remain cautious in committing capital to new overseas ventures.

Alarmingly, the drop in FDI in Malaysia began a few years ago, and not just in 2020 or 2019.

This was before the uncertainties from the Covid-19 pandemic, which locked the entire world down, and not just Malaysia. So, it's not the sole reason.

Let's see how we stack up. Vietnam is the poster boy of Asean investment now.

No one cares if a country is ruled by a single party, so long as it's politically stable. It's much easier to deal with than democratic India, what with its nosey, quarrelsome politicians, love for litigation and bureaucracy.

Vietnam, on the other hand, has a huge, hungry and young workforce.

Singapore has an image of being a squeaky-clean country. Again, PAP has been ruling since 1963, and it has a sound legal framework and financial regulation.

The island nation has become the most attractive place for digital companies, including start-ups.

Grab was set up by a Malaysian who left for Singapore after failing to get support. We know how that one turned out.

The ride-hailing company has a strong, professional workforce, which comprises many Malaysians and expatriates. Singapore makes expats and rich people feel welcome, while we're still unclear about our Malaysia My Second Home policy.

It's easier for untrained and unskilled foreigners to stay and secure permanent resident status in Malaysia than it is for a foreigner with millions to spend.

Indonesia is getting its act together, and with a population of more than a quarter of a billion people, and with increasing Internet and smartphone penetration, it's a massive market by itself.

President Jokowi has pressed the right buttons and provided the image to the world that it's a tolerant and moderate country.

We know our weaknesses, so for our sake, we need to paint a rosier picture. The last thing Malaysia needs is self-inflicted pot shots.

We still have a vibrant business environment, with an open, diversified and robust economy, and our infrastructure is good and sound, which is paramount for operations.

The Malaysian workforce is young and educated. Certainly, most Malaysians speak English, and Mandarin literacy is an advantage in dealing with China.

Our ethnic and religious links to West Asia, Indonesia, China and India, gives us the biggest advantage in making us a strategic location between Asia and the rest of the world.

Former Treasury secretary-general Tan Sri Mohd Sheriff Mohd Kassim said Malaysia has a dynamic business culture among the business communities because of our multi-racial makeup.

"Each race brings its own strength to the economy. The legacy from the foreign migration from China, India and Indonesia over the last 200 years is that we have a modern generation of business leaders emerging to blaze new paths to success."

The government, despite the current uncertainties, is still pro-business, and its policies clearly reflect that in ensuring opportunities for growth and profit.

But we need to do better. As Dr Sukudhew (Sukhdave) Singh, a former Bank Negara Malaysia deputy governor and former Khazanah Nasional Bhd director, wrote recently in an article: "We are not a united nation. This is not an accident of history. It is the outcome of a political game plan."

He posed several relevant questions, including, after 30 years, is our economy strong, resilient, competitive and dynamic? Are we an economically self-righteous society with fair distribution of wealth and without discrimination, exploitation and injustices? Are we a liberal, tolerant and knowledgeable society? Are we an ethical and moral society? Are we a liberal democracy? Do we have "Bangsa Malaysia"?

"Hence, Malaysia remains a divided nation with its citizens defined by race and religion, and with differing economic and political agendas. This makes us weak and vulnerable.

"What we need now is a clear vision of our place in the global economy, the courage to make effective change even in the face of opposition from vested interest groups, and finally, effective implementation. If we care about our future, we simply cannot allow what is happening now to continue."

But all is not lost. I believe in Malaysia and Malaysians - not necessarily the politicians - because we'voe been written off before, even by the British when they accorded us independence. However, we've always bounced back.

We are seeing it in trade, which rebounded with a high trade surplus even during the pandemic, due largely to the high demand for rubber and electrical and electronic products.

According to the Statistic Department, Malaysia recorded the highest exports of RM95.7 billion (S$31.4 billion) in December last year.

We need to stimulate the investment climate to make it more dynamic, so that it offsets the declining trend from FDI inflows. After all, this can't change overnight.

We can't afford any cut and paste, or worse, unimaginative, development plans for the coming years. And truth be told, we're sick and tired of politicians who are only busy plotting to put themselves in power at a time like this.

The writer is a columnist with the paper. The Star is a member of The Straits Times media partner Asia News Network, an alliance of 23 news media entities.