Anwar: Nation no longer competitive
Malaysiakini.com
Dec 11, 2006

Malaysia is no longer able to compete with many of its Asian neighbours as corruption and the lack of high-skilled labour force have reduced foreign direction investment (FDI) rates back to 1990 levels, says Parti Keadilan Rakyat (PKR) advisor Anwar Ibrahim.

The country, which had few Asian economic peers in the 1970s and 80s, has now reached alarming levels of inflation and is now relying on foreign workers to keep wages low, says the former deputy prime premier.

“The government has failed miserably in propelling our economy. To enjoy the economic growth we had from the 1970s to the 1990s, we need to attract foreign investment,” said Anwar in a statement today.

Citing United Nations Conference on Trade and Development (Unctad) figures, the former finance minister pointed out that Malaysia was the fourth most attractive destination for foreign direct investment in 1990 but is now ranked 62.

“Even Indonesia has overtaken us in terms of foreign direct investment. Even our private investment has crashed to a percentage less than it was in 1990,” he said.

Anwar said that Thailand, Singapore, Korea and Taiwan which lagged behind a decade ago in terms of market capitalisation, has overtaken the country in spite of recent excitement at Bursa Malaysia.

“In the 1970s and 1980s our peers were Singapore, Taiwan and Korea – they are now far ahead of us. China and India have emerged as economic giants. We are now losing out to Indonesia, Vietnam and Thailand,” he added.

The same wages

Anwar said the country is not moving sufficiently high up in the value chain as it relies on foreign workers to keep wages low.

In addition, Malaysia now finds itself in an odd position where it has neither the high-skilled labour force to compete with industrialised nations, nor the low-wage workforce to compete with developing nations.

“But just as we cannot compete with the high-skill workforce of Korean, Taiwan or Singapore; neither can we hope to compete with the low wages of China, Vietnam or Indonesia.

“The public also has to cope with rising prices as inflation is projected to be the highest in seven years whilst wages have remained unchanged,” said Anwar, who also pointed out that the country has 80,000 unemployed graduates.

Anwar, who was released in 2004 after his sodomy conviction was overturned, said the current administration has not made progress in their pledge to battle corruption.

“No political will has been shown to prosecute the major corruption cases, whilst the prime minister and former prime minister engage in a surreal battle on who has given more contracts to their children,” he added.

He also pointed out that Malaysia has fallen five places, from 39th to 44th, in the Transparency International Corruption Perception Index this year.

“While the recent Umno assembly talked more about government intervention and regulation not so much to help the poor but the politically connected, countries which were lagging far behind a decade ago a swiftly and surely overtaking us, either now on in the near future.

“Malaysia is currently at a crossroads: we can either move forward by focussing by building national competitiveness and addressing the widening gap between rich and poor.

“Or we can remain without clear direction by squabbling on racial quotas as the mediocrity, corruption and inequality reign,” he said.

Moderate growth next year

Regional developmental bank Asian Development Bank (ADB) reported last week that Malaysia’s gross domestic product (GDP) growth is forecast to slow to 5.3 percent in 2007 due to softening of exports.

The figures are below the government’s projection of 5.8 to 6 percent growth next year.

ADB also reported that during the first 10 months of 2006, inflation in Malaysia averaged 3.7 percent, peaking at 4.8 percent in March (after authorities reduced fuel subsidies).

Inflation was expected to average four percent for the whole year, the highest since 1998, during the Asian financial crisis.

The economy is likely to be the primary issue if the ruling government decides to call for early polls next year. The next general elections must be held before Oct 2009.

Anwar, who has been critical of the government’s affirmative-action based New Economic Policy (NEP) and its lacklustre anti-corruption initiatives, announced last month that he would run for parliament if the general election was held after April 2008 when his political disqualification ends.

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