Stiff FDI competition, Dr M says remedy is for Malaysia to 'go big'
Malaysia can no longer rely on foreign direct investment (FDI) as an engine for growth, and thus local businesses need to expand into big industries to sustain economic growth, said former prime minister Dr Mahathir Mohamad.
In a blog article titled "A New Economic Policy" today, Mahathir said Malaysia was among the first few newly independent countries with a successful FDI programme but noted that the country now faces stiff competition from other countries offering cheaper labour and tax incentives.
Mahathir proposed that Malaysia could emulate...
Malaysia can no longer rely on foreign direct investment (FDI) as an engine for growth, and thus local businesses need to expand into big industries to sustain economic growth, said former prime minister Dr Mahathir Mohamad.
In a blog article titled "A New Economic Policy" today, Mahathir said Malaysia was among the first few newly independent countries with a successful FDI programme but noted that the country now faces stiff competition from other countries offering cheaper labour and tax incentives.
Mahathir proposed that Malaysia could emulate Japan, South Korea and China in replacing imported goods with local goods that can eventually compete in the international markets.
The governments of these countries, he said, were supportive by providing funding, expertise and land.
"The most important area is manufacturing. It is important to know how things are made. Automation and robotics were acquired and installed in local production lines.
"Very quickly local industries (in those countries) were able to mass-produce sophisticated products for the world market," he said.
A local example, said Mahathir, was the glove-making industry, noting that Malaysia now dominates global rubber glove production.
One potential industry, he said, was the value-added palm oil industry. Currently, said Mahathir, Malaysia mostly exports raw palm oil and not the finished product.
Mahathir added that Malaysia also needed to master electronics, noting that the country has thus far produced semiconductor producer Silterra Malaysia Sdn Bhd.
"The most important thing is to go big," he said.
"If we go into big industries and dominate the market, much of the returns will accrue to Malaysia. We can still cater for FDI, but we will not be dependent on them for the growth of our industries and economy."
