Daim calls for graft-free government to attract investors

By Clara Chooi, The Malaysian Insider

KUALA LUMPUR, March 28 — Tun Daim Zainuddin has asserted that Malaysia’s only hope to survive as a viable investment destination in the face of increasing rivalry from its neighbours is to ensure a corrupt-free and transparent administration.

The former finance minister said in an interview published today that investors were more concerned about the existence of a fair legal system and good infrastructure than they were about the cost of investing in Malaysia.

“A good investment climate is the result of joint support from all parties. Good governance — one that is free from corruption — transparency and certainty are what investors are looking for.

“In fact, to attract investors, cost is not the barrier, but the certainty, a fair legal system and good infrastructure,” he said in a two-hour interview with Utusan Malaysia.

Daim (picture), however, dodged a question on whether he believed the country would be able to achieve its six per cent annual growth target consistently until 2020 and chose instead to admit that the present economic environment posed many challenges to the country.

“But challenges also bring opportunities. We must be smart in finding our niche; one that may help provide opportunities for economic development.

“Malaysia must be prepared to move fast, seek opportunities and, at the same time, make full use of our existing advantages,” he said.

Malaysia registered 7.2 per cent economic growth last year, the highest since 2000 following a recovery in the manufacturing and services sectors as well as brisk exports and imports.

Prime Minister Datuk Seri Najib Razak had expressed confidence in Malaysia’s ability to repeat this strong performance this year despite the rise of uncertain external challenges.

The growth forecast for this year is between 5.5 and 6.0 per cent.

This, he was reported as saying, was due to increased confidence in initiatives underlined in his Economic Transformation Programme (ETP).

But the opposition has pointed out that despite Malaysia’s 7.2 per cent growth, its neighbours in the region have outperformed it, showing that the country was losing its competitive edge fuelled by a ballooning public debt.

Opposition Leader Datuk Seri Anwar Ibrahim has noted that Malaysia’s immediate neighbours — Singapore and Indonesia — have both registered growth of 14.5 per cent and 6.1 per cent respectively.

“Both outperformed Malaysia’s growth by miles especially considering that Indonesia’s 6.1 per cent growth was calculated on a higher base as Indonesia did not face economic contraction in 2009 unlike Malaysia or Singapore.

“This is yet another proof that our economy is sliding downwards relative to our neighbours. We are losing our competitiveness and our fiscal position is in a lot worse shape compared to the neighbours,” he had said, referring to the public debt of RM407 billion, or 53 per cent of GDP.

Daim, however, claimed that Indonesia’s improved economy would likely benefit its neighbours in Asean, including Malaysia.

“In this situation, the Asean economy will grow and more investments will enter this region.

“Indonesia’s import demand will increase, and its neighbouring countries can share the opportunities in its growing economy,” he said.

Daim also agreed that Malaysia needed to undergo a swift economic transformation or risk trailing further behind its neighbours.

“If we do not change, we will be left behind. I need not explain about the intense competition we already face from our East Asian neighbours and India in exports, technology, investments and manpower.

“We cannot just sell low-value exports because other countries can sell the same goods at cheaper prices,” he pointed out.

Local goods and services, he stressed, must be of high quality as consumers would be willing to fork out more money for good-quality products.

“Only through this way can we achieve our high-income target; not by simply increasing wages without increasing productivity. Malaysia needs a more serious transformation,” he said.

Daim said the government needed to be ready to undertake changes and improvements that were more “meaningful” instead of merely “superficial” in nature, adding that an “internal transformation” should take priority.

“We should have an economy that is more efficient and yet at the same time creates a better standard of living for the people.

“Issues like subsidies and price of goods, the role of the private sector in boosting the economy, the role of the government, an encouraging investment climate, good job and wage opportunities, transparency and foreign worker policy are among the major transformation concerns that should be studied,” he said.