How to scare away investors – the Perkasa Way

The anti-Chinese agitators are missing the forest for the trees since they fail to ask what would be the point of having 99.9 percent political power if the economic cake has crumbled.

By Dr. Lim Teck Ghee

The government’s New Economic Model structural reform agenda is aimed at raising average annual growth to 6% until year 2015. While implementation of the agenda would be positive for Malaysia’s economic fundamentals, even the talk of reform has already provoked considerable political opposition.

When first introduced, the NEM was supposed to be Malaysia’s new selling point to local and foreign investors and the country’s passport to a better future. It now appears to be aborted before birth. Or at best, it appears to be a newly arrived baby in the critically ill ward, and needing an incubator and special attention if it is to survive at all.

Chief amongst its enemies has been Perkasa and Dr Mahathir Mohamad. From them emerged harsh talk about Malays losing power in the country and of Umno allowing the situation of Malay dominance to be so badly eroded that the community is facing a bleak and hopeless future.

While Perkasa may claim a big membership of 200,000 – even if unsubstantiated or exaggerated – the results of a survey released in April by pollster Merdeka Center nonetheless did show that the right-wing group has been gaining popularity. The centre found that nearly 70 percent of Malay voters in the peninsula agreed with Perkasa’s demands for the government not to dismantle quotas and economic protection for the Malays.

Describing the list of demands sent to Najib Razak before the prime minister presented the 10th Malaysia Plan in Parliament, Perkasa economic bureau chief Dr Zubir Harun said, “We (Malays) would, of course, require assistance from the government.” Asked by reporters about any consequences should the government not consider Perkasa’s memorandum, Zubir replied that there would be “political implications”.

What form the ‘implications’ might take would boil down to the numbers game. “Malaysia comprises 55 percent Malays and 12 percent of other Bumiputeras, which total 67 percent Bumiputeras. Therefore, the nation’s wealth must be 67 percent for Bumiputeras but we get 30 percent only,” Perkasa president Ibrahim Ali decried at his movement’s inaugural congress in March – an event that was graced by ex-premier Mahathir.

It is the latter who has taken centre stage and had the spotlight shone on his continued manipulation of the Malay sense of insecurity. While Dr Mahathir’s scaremongering has been the grist for many a debate mill, his views on FDI is of equal public interest.

Now cautioning that Malaysia “should be more selective with FDI”, Dr Mahathir seems to have changed his tune from his past grand visions of ‘Look East’ development. He says presently: “Certainly we should not encourage foreign developers to develop high cost projects which are not within reach of local buyers. Rather Government should help local investors to develop these specialised areas by building needed infrastructure.”

He advocates “supporting local industries to grow big”, and cites Japanese and Korean world class businesses “with their own brand names” as examples of success.

Dr Mahathir’s selective amnesia appears rather convenient when one recalls how his expensive state-backed Proton project failed to make a dent in branding overseas, not to mention at home where it would have surely failed a long time ago were it not for crippling taxes levied on imported cars and injection of massive amounts of taxpayers’ money to buoy Proton.

Dr Mahathir’s continued efforts at whipping up fear amongst Malays has now been taken up by some other Umno leaders, including former party secretary-general Sabbaruddin Chik who was reported by Malay daily Berita Harian recently as saying that all the hard-fought privileges accrued by the Malays over the years would soon be lost if they are to be “disunited”.

The anti-Chinese agitators are missing the forest for the trees since they fail to ask what would be the point of having 99.9 percent political power if the economic cake has crumbled. Getting a guaranteed share of a small equity or property market cake is what the warlords may insist upon but at what cost to young Malays when the jobs that come with local and foreign investment disappear.

And if investor sentiment is the gauge of how well Ibrahim Ali – who avows he is proud to be a “jaguh kampung” – and Dr Mahathir and their friends have done, then they all should pat themselves on the back for doing a great job of scaring the business community, and not only just the Malay community.

Capital continues to flows out

According to a recent report, Malaysia’s capital account is now showing eight consecutive quarters of outflows. The capital account is an account that tracks the movement of funds for investments and loans into and out of a country.

Not only is money and funds moving out of Malaysia, so far this year, according to Emerging Portfolio Fund Research data, Bursa Malaysia has received just two percent of total equity inflows into the emerging markets of Asia – yes, two percent.

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