Malaysia must step up to realise potential of investments
12 Apr 2023
By Tan Sri Dr. Sulaiman Mahbob
It can be said that the recent visit by our prime minister to China, sealing memoranda of understanding with total proposed investments of about RM170 billion, was a success.
It indicates that the investment environment in the country is still attractive.
While the quantum seems large — and it is — one may also reflect on the total investment approvals by the Malaysian Investment Development Authority in 2021 and 2022 — RM264 billion and RM306 billion, respectively. For those two years, the approved investment total is RM570 billion.
Thanks to the Malaysian Investment Development Authority, International Trade and Industry Ministry and Finance Ministry for working hard to secure these proposed investments in these challenging and uncertain times.
What does this tell us? While it suggests that our country is still attractive to investors, it also means we will face a major challenge in meeting the expectations of investors and ensuring that the majority of the approvals are realised in the years to come.
Let’s say 80 per cent of the proposed investments, or RM456 billion, materialises within three years, and let’s apply a simple income multiplier of three, we may generate RM1.37 trillion in income — a big number.
The potential income and employment effects of the investments is very large and can be very impactful.
This can boost our economic growth to beyond the middle income trap numbers. This may not be easy. Much remains to be done at many levels; by state and local governments, for sure.
Additionally, we have to greatly improve infrastructure quality at industrial parks and roads leading to ports, as well as access to power in many locations, such as Sabah. There is also another constraint — the availability of talent and skilled workforce for high-tech industries.
The Economy Ministry, previously the Economic Planning Unit, has the tough task of delivering during the review of the five-year development plan to enhance the quality of infrastructure to assist in the materialisation of the proposed investments, as well as working with other departments to bring about a more liberal regulatory investment and business climate.
We have to speed up the transition of the country’s socio-economy to overcome the middle-income trap, which many nations have struggled with, and to reach high-income per capita status, which our nation has been working towards for much too long.
Political developments have temporarily waylaid us from pursuing solid economic transformation that could have turned us into a high-income economy, the way South Korea has done.
The unity government under the leadership of Datuk Seri Anwar Ibrahim, with its policy of zero tolerance for corruption and abuse of power and emphasis on good governance, augurs well with the younger generation and investors’ expectations for greater transparency and efficiency in the nation’s policymaking and delivery.
As competition for capital and investments grow, especially in the Asean region, which is known for its political stability, Malaysia has to move forward with greater dynamism, and the high quantum of proposed private investments gives us the rationale to do so.
The civil service at all levels — federal, state and local — must be in sync with the government’s long-term Malaysia Madani initiative aimed at bringing about a modern and ethical society with zero corruption, efficient administrative machineries and socio-economic justice where absolute poverty and extreme inequity, in structural and spatial terms, are absent.
This article started with the role of private investments and its significance to income and job creation and ends with a call to not lose sight of the importance of good governance, a clean society and socio-economic justice.
Both are important in our pursuit of achieving long-term sustainable economic growth and development. Indeed, it is, as history may have taught us.
The writer is adjunct professor at the International Institute of Public Policy and Management, Universiti Malaya, and chairman of the Malaysian Investment Development Authority