KUALA LUMPUR, Jan 27 — In order to attract foreign direct investments (FDI), the government must come up with key strategies to cut red tape, tackle economic crimes and enhance human capital, an economic and investment commentator said.
“As a nation, we have to review why Malaysia is not attracting the right FDIs. At the same time, we must analyse why neighbouring countries continue to be FDI magnets,” said Pankaj Kumar, a former chief investment officer of Kurnia Insurans (M) Sdn Bhd.
He added that the “Covid-19 pandemic must not be used as an excuse for poor FDI inflows, as it is proven other Asean countries were lesser impacted by the global pandemic.”
Pankaj was commenting on the United Nations Conference on Trade and Development (UNCTAD) report that showed Malaysia secured just about RM10 billion in FDIs in 2020.
This is the lowest since 2009, when FDI was only RM5.1 billion due to the 2008 Global Financial Crisis.
Malaysia saw a massive dip of 68 per cent in total FDIs in 2020 but the report showed the Philippines saw a 29 per cent jump in FDIs, while other Asean nations also performed better than Malaysia.
“In recent months, Indonesia has been attracting prominent businesses including Hyundai, which moved its US$1.55 billion (RM6.27 billion) business from Malaysia and Toyota, which will open its electric vehicle venture worth US$2 billion (RM8 billion). Even Elon Musk is contemplating a Tesla factory in Indonesia,” Pankaj added.
Pankaj noted that financial scandals, smuggling issues and the tobacco black market are turning investors away.
“Naturally foreign investors will be turned off by the perception of high levels of corruption and breakdown in the rule of law. Their investments may be jeapordised due to out-of-control economic crime.
“Take the tobacco industry, for example. The persistently high levels of illegal cigarettes trade has caused major manufacturers like Phillip Morris International, British American Tobacco Malaysia Berhad and Japan Tobacco International to close their plants in 2012, 2016 and 2017 respectively.
“Nearly a thousand employees were laid off in total and a vibrant eco-system of supporting businesses and services worth multi-billions of ringgit ground to a halt.
“This is why the Malaysian government must take decisive and comprehensive action against the black market. Enforcement must go hand-in-hand with policy reforms in order to regain investors trust and confidence,” he added.
Pankaj said at the same time Malaysia must also invest in enhancing the skill-set and mind-set of its human capital.
“The new norm will usher in different challenges and opportunities. Our current and future talent pool must be able to adapt, innovate and be equipped to match the needs of this changing environment in order to present a compelling reason for globally-oriented organisations to invest in Malaysia,” he said.
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