Malaysia Boleh: Only ASEAN country to experience net capital outflows

Foreign direct investment (FDI) outflow from Malaysia nearly doubled to RM38bn in 2007 from RM21bn in 2006, according to the United Nations Conference on Trade and Development World Investment Report. The RM38bn outflow was far higher than the RM29bn inflow, leading to a net outflow of RM9bn.

This is the first time ever that Malaysia has experienced net outflow, and Malaysia is the only one among 10 ASEAN countries to suffer net outflow. The poor numbers are even more disappointing given that 2007 was the year that the southeast asian region recorded it highest ever FDI inflow, up 81% to RM209bn.

Malaysia is rich in oil and agricultural potential and should be gaining large investments due to the boom in commodities. Instead we are not just lagging behind, we are in negative territory. There are myriad explanations for this, but they all boil down to one core reason: lack of confidence in the government.

Investors seek stability, transparency, and rule of law.

1. On stability, Barisan has a clear majority in Parliament and needs only 8 more seats to have a 2/3^rd majority, Anwar needs 30 MPs to take over. Who should be in the stronger position? And yet Barisan appears busier reacting to Anwar than actually governing. Stability also applies to government policies, which right now seem capricious – take the latest U-turn over the windfall tax for IPPs. Announced in June to very adverse market reaction and now removed. On one hand the government can say it is responding to market feedback. On the other hand, perhaps the implications of the action were not properly thought out in the first place.
2. Transparency – the efforts to root out corruption do not seem to be working. Malaysia fell in Transparency International’s Corruption Perception Index from 43rd place (out of 179 countries) in 2007 to 47th (out of 180 countries) in 2008.
3. Rule of law – ISA detentions of journalists and elected MPs which are not subject to judicial review give the impression of authoritarian government ignoring civil liberties. It also appears the law is selectively applied – Opposition politicians are quickly investigated when reports are lodged but action seems slower when it involves government personalities.

Investors have to be reassured that their investments will not be subject to sudden policy changes, they have access to independent judicial redress in the event of contractual disagreements and that their dealings with the government can be on open and transparent terms. What we need: 1) An Independent Commission Against Corruption and open court trials and jail terms for the corrupt. Not just “transfers” to another department, 2) The ISA to be used only as a last resort and certainly not against journalists reporting facts, 3) The police force acting as and being perceived as neutral, independent enforcers of the law.

Inflation soars at 8.5% yoy: Barisan mismanagement and corruption not helping

Prices in August this year are nearly 9% more expensive than one year ago, according to the just-released Consumer Price Index (CPI). Our CPI has been at 8.5% for two consecutive months now. The last time Malaysia saw such high inflation was 27 years ago in Dec 1981.

Food prices alone are up nearly 12%, and transport costs have been rising rapidly too. In contrast, our southern neighbour Singapore saw its CPI moderate to a 6.4% hike in August.

High fuel and food prices are a global phenomenon, but it’s surprising that tiny Singapore, which has to import everything, is suffering less than oil and agriculture-rich Malaysia. Or is it?

Over here agriculture has been neglected while the Barisan chases high profile “development” projects like the Port Klang Free Zone scandal, dropping Protons on the north pole and sending a Malaysian into space (great headlines; but what’s been done since then to develop science and technology in Malaysia?). ….

Even worse, we have seen attempts that would have destroyed agriculture – for instance, the plan for a massive padi complex in Selangor that would have entailed building over the most productive padi fields in Malaysia. That plan was ultimately aborted … but how about moves to learn best practices from these farmers and propagate across Malaysia so we no longer have to import rice. No need for a MPs’ study tour to Taiwan … just send farmers from less productive areas to a tour in Sekinchan!

Besides producing food, transporting the food to the markets is a significant cost. Government policies here have deterred investment in efficient trucking and transport equipment. Real transport operators have to rent their licenses from connected parties who add no value besides their ability to get the licence. The recent Puspakom scandal is another example of how corruption increases the transporters’ cost of doing business. Yamin Vong of NST’s Cars, Bikes, Trucks has written extensively on these issues over the past months. Also check out “Much Soreness in the Transport Sector”.

Moving on to the subject of fuel. I agree that fuel prices should reflect global realities, but the impact on the people can be mitigated by efficient public transport. This, the Barisan government has failed to achieve in over 50 years of rule. Just yesterday, two LRT trains crashed, injuring 6 people. I use the LRT fairly regularly. It is not a nice ride – airconds sometimes don’t work in the mid-day sun, occasionally trains run late without explanation – just the generic announcements along the lines of “We apologise for the delay …

Everyday, the people risk their lives on poorly maintained and managed trains, buses and taxis while Barisan exco members enjoy their Mercedes cars. PM Abdullah promised way back in 2004 that savings from reducing fuel subsidies would go towards improving public transport. I have yet to see improvements. In fact, I see the reverse - increasingly crowded and dilapidated trains. How about less talk and massive plans and some implementation that we can actually feel on the ground?

A little more about me

I was born in Ipoh in 1971. My parents moved to PJ in 1976, but we continued to make many balik kampung trips, so I have lived some of Lat’s “Kampung Boy” and “Town Boy”.

I had excellent teachers at Methodist Primary School and a great education at La Salle PJ (thank yous, some posthumous, to Puan Maimon, Mrs Murugesu, Mrs Cheah, Tiger Thong, Mrs Chan, Mrs LC Choong, Mr Clement, Mr Rex Michael …..). I learnt discipline and diligence at MPS and acceptance and a broader view at La Salle, a melting pot of ethnic groups and social classes – the No 1 student of my year was in my class, so was the barely-literate last. I wish my children would be able to have a similar education, but that’s a pipe-dream after years of education policy mismanagement.

I have “done well” in the conventional sense, winning two scholarships for study in the UK (for which I am grateful to the University of Warwick and the British government), having lots of paper qualifications (a first-class honours B Sc degree from Warwick, a Cambridge MBA and the CFA charter) and a career which involved jetting around the world business-class and being whisked around Stockholm, Milan, London and New York in chauffeured cars.

Malaysia is my home, and has been home for my family ever since my great-grand father boarded a ship from China. I am third-generation born in Malaysia, which makes my roots deeper than some very senior UMNO politicians. My grandfather, my grandmother, my mother and all my parents’ siblings were teachers or civil servants contributing to nation-building while some of today’s bumiputeras were still growing up in Indonesia.

My family tries to practise low impact living. We do our best to minimise plastic usage – we use our own containers to “ta pau” food and take plastic bags to the pasar malam, we recycle where we can and make compost at home (which is a modest 2-storey terrace), I drive a diesel car (and continue to yearn for better-quality diesel), … but I’m far from a pleasure-denying ascetic. I enjoy teh tarik, canai and daun pisang, sambal belacan, ayam masak merah and nasi kerabu, and yes …. siew yok and wine .. my musical tastes range from AC/DC to Ramli Sarip, Search, Jackson Browne and Theresa Teng …. My guitar heros include Bala, Julian Mokhtar and Angus Young …

Everything in moderation is my philosophy … and I wish all of us can get together AGAIN and ENJOY Malaysia’s diversity rather than just tolerate the differences. “AGAIN”, because my childhood fun included so many birthday parties in so many homes with everyone eating and playing without thought of immaterial differences.

Why I joined the DAP (Democratic Action Party)

It pains me that Malaysians have benefited so little from our country’s wealth. The legacy of 51 years of Barisan’s rule is a litany of woes, ranging from unemployable graduates to an ever-growing national debt. But the greatest tragedy, to me, and indicative of all that went wrong, is the senior citizens living lives here far away from their children and grandchildren who have headed overseas seeking work and education.

Little headway has been made in the things that matter – effective education, job creation, raising living standards and creating a civil society. Our resources have been squandered on enriching an elite few and community has been debased by those with wealth and position flouting the law with impunity.

I see a glimmer of hope in the DAP. It has always been a party grounded on principles - human rights, equality, social and economic justice - and I am pleased to see Chief Minister Lim Guan Eng doing his best to implement integrity and good governance now that he has the opportunity to do so.

It is my privilege to share my experience and skills with the DAP as it seeks to develop Malaysia for all Malaysians. I look forward to the day when every Malaysian has the opportunity to develop to his or her fullest potential here in Malaysia, establishing a virtuous cycle where their talents then enrich Malaysia, creating opportunities for even more Malaysians and an ever-advancing nation.