Home Aliran CSI Aliran CSI 2017 BRI, spike in Chinese investments: What are implications for Malaysia’s politics, sovereignty?

BRI, spike in Chinese investments: What are implications for Malaysia’s politics, sovereignty?

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With our corrupt regime still in place, a deluge of Chinese investments and the lack of transparency, Malaysians need to be vigilant about these deals, says Francis Loh.

On 14-15 May 2016, President Xi Jinping called the New Silk Road Summit of world leaders in Beijing. The leaders of 29 countries were present to learn about and to discuss China’s so-called ‘Belt and Road Initiative’ (BRI).

Originally termed the ‘One Belt One Road’ initiative and launched by Xi in 2013, the BRI is a massive attempt to re-develop and modernise the old overland Silk Road and its maritime equivalent. Its end goal is to reconnect China to Central Asia and Central Europe on the one hand, and to South East Asia, the Indian subcontinent and East Africa, on the other.

Predictably, the BRI’s goals have been projected as noble – to promote peace, prosperity, and greater people-to-people ties, ultimately, the opening up and growth of the countries along the BRI. Not only would modern infrastructure be laid out to connect China to these far-flung regions along the New Silk Road, but ‘100 Happy Homes’, ‘100 Health Rehabilitation Centres’, and much ‘food aid’ would be carried out in the developing countries through which the BRI passes.

Since its launch in 2013, there has been an upsurge of BRI-related investments in the mentioned regions, including in Malaysia. In fact, China has emerged as the largest foreign investor in Malaysia in recent years. In Nov 2016, following the summit, 14 MOUs worth a combined RM143.6bn were signed with Chinese companies.

These 14 key projects include:

  • the RM55bn East Coast Railway Line (ECRL),
  • the RM32.6bnn Melaka Gateway project,
  • the RM2.5bn Trans Sabah Gas Pipeline,
  • the RM4bn Wuxi Suntech Power Co Ltd manufacturing project in the Malaysia-China Kuantan Industrial Park, and
  • the RM1.3bn Xiamen Malaysia University.

All are considered as BRI projects.

Bandar Malaysia, a 486-acre transport-cum-property development project in the old Sungai Besi airport, which will house the proposed Kuala Lumpur-Singapore High Speed Rail terminus and become a major transport hub with connections to the MRT lines, KTM Komuter, Express Rail Link and 12 other highways, was launched earlier, but it is also categorised as a BRI project.

The proposed RM70bn Kuala Lumpur-Singapore High Speed Rail project, which will be inviting bidders in late 2017, is categorised as yet another BRI project.

In 2016, Chinese investments in Malaysia totalled some US$1.1bn, just less than 10% of US$9.6bn worth of foreign direct investments that year. Malaysian Industrial Development Authority data further indicate that a total of 33 China-led projects valued at RM4.8bn were approved in 2016. This was almost double that of the previous year’s total of 17 projects worth RM1.9bn. Meanwhile Chinese tourist arrivals have soared and China-Malaysia trade has grown steadily over the past five years.

What are the implications of this sudden and massive growth in China-Malaysia economic relations? And what are the implications of these economic projects for Malaysia’s politics?

The mantra recited by the prime minister and other Umno-BN leaders and echoed by the major local developers and mainstream media is that the BRI will generate numerous multiplier effects for the Malaysian economy including job opportunities, new markets to explore, lower costs to transport goods and people, and even prospects for halal projects and services. The East Coast will also be integrated to the West Coast of the Peninsula via a new rail system which will generate greater growth of the East Coast states, especially in rural parts of that region.

Malaysian Prime Minister Najib Razak has been most enthusiastic about these Chinese investments and has personally spearheaded the signing of many of the memorandums of understanding.

Second Finance Minister Johari Abdul Ghani has described Chinese investments in Malaysia as “focused and meet[ing] the needs of the current national development projects”.

At the Malaysia-China Business Dialogue in 2016, the transport minister and president of the Malaysian Chinese Association welcomed the BRI initiative and envisions Malaysia playing a critical role in connecting the Asean countries to China.

Many business people, Malays and non-Malays, have welcomed these Chinese investors too. CIMB Asean Research Institute chairman Munir Majid has stated that Malaysia should not shy away from investments from China or any other country if the proposed project is viable.

But he wisely counselled that “the governance or decision making structures in whatever joint venture that is set up [should be] the government structures that we are used to in Malaysia, in terms of making decisions, having proper Board, senior management and so on” (The Sun, 20 July 2017). Presumably, he was not having the controversial 1MDB at the back of his mind when he made that statement.

But there has been criticism too, by opposition leaders, civil society organisations, and academics. Three types of criticisms have been heard.

Too much, too fast, too soon

First, it has been claimed by Opposition MP Nurul Izzah, for good reason, that China’s investments in Malaysia have grown “too much, too fast, too soon”. Are these projects in line with Malaysia’s own development plans? Or, are they primarily to serve China’s economic and strategic interests? Which of them are more important for Malaysia’s growth and should be prioritised?

Consider the case of the proposed international ports: why is it necessary for Malaysia to build so many ports, so close to each other, at the same time? The construction of five new ports has been announced:

  • the Melaka Gateway port (involving Power China International) costing RM43bn;
  • the Carey Island port-cum-industrial city complex in the Port Klang area (potentially involving the China Merchants Group) costing RM200bn;
  • the RM30bn energy port in Bagan Datoh with a pipeline from Bagan Datoh in the West Coast running to
  • a new port terminal in Bachok in Kelantan on the East Coast costing RM30bn; and
  • an international port in Kuala Linggi costing US$12.5bn.

Another two ports in Penang and in Kuantan are to be upgraded. The former will cost RM6.3bn and the latter another RM4bn.

All the above are considered as BRI-related projects.

In fact, there are also other non-BRI related ports which are to be expanded at the same time.

For example, it has been revealed that Westports Holdings Bhd, the largest port operator in Malaysia, is planning to invest up to RM10bn to double its container-handling capacity. In the pipeline is the expansion of an additional 10 container terminal facilities from the current nine, expected to be completed by 2040. In its filing with Bursa Malaysia, Westports claims that it has already secured the approval-in-principal from the government and is in the process of seeking sukuk and other forms of borrowings, besides using internally generated funds (StarBiz, 28 August 2017).

Building or expanding all these ports at the same time does not make planning sense! Doing so with money borrowed from China or any other foreign sources surely puts the Malaysian economy into unnecessary potential jeopardy.

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Concerned about the sudden influx of these massive investments from China, CIMB Group Holding Bhd chairperson Nazir Razak, the brother of the prime minister, has proposed that the government come out with some measure that takes into account the value of different types of investments. “The government should bring the proposition away from the big number and focus on the value proposition,” he said. “We could find that Xiamen University is more valuable than the East Coast Rail Link” (TheSun, 19 July 2017).

And what about measuring the Xiamen University or the ECRL projects against the building of those different ports at the same time?

Helping Malaysia get out of the ‘middle income trap’?

Second, about a decade ago, the economic development mantra revolved around getting Malaysia out of the middle income trap, investing in human resourced development especially the development of science and technology in the local universities, and engaging in the K-economy.

In the New Economic Model then proposed, the lag in our universities, especially in science and technology, was highlighted. Ten years on, in spite of the large sums of money spent, not one of our universities has been able to break into the THES (Times Higher Education Supplement) list of the top 200 universities in the world. Now that funds for the local universities have been cut back in the latest Five Year Plan, the lag will widen even more.

In this regard, and contrary to the normal pattern of growth in other newly industrialising countries which tend to focus on expanding its manufacturing sector, Malaysia’s services sector is relatively huge (62.4% of GDP in 2015) while its manufacturing sector is relatively small (only 24.9% of GDP in 2015).

To sustain its growth, Malaysia needs to move into a higher stage of technology-driven industrialisation, which implies more attention given to human resources development and development and use of cutting-edge technology.

Alas, through the use of cheap unskilled or low-skilled foreign labour, the service and construction sectors have been expanding. Consequently, foreign and local manufacturers have been reluctant to invest in new technology and to provide further training to employees.

These factors have contributed towards Malaysia’s middle income trap. An additional downside has been depressed wages for local labour due to access to cheap migrant labour and overall tight control of workers.

Hence, one of the reasons for welcoming foreign direct investments into Malaysia is the knock-on benefit that they bring. New skills can be acquired and the latest technology taught and transferred into the host country, as in say, the electronics, optics, pharmaceutical and medical instrumentation industries. Ultimately, investments in such sectors provide countries like Malaysia with a short cut to value-added production.

In this regard, it is significant that the bulk of China’s recent investments in Malaysia are in property and infrastructure development. Will sophisticated technology and skills be transferred to Malaysian companies in the building of those ports, railways and buildings? Will they enhance Malaysia’s human resources development and enable Malaysia to engage in value-added production and so jump out of the global middle income bracket?

Consider the following cases:

East Coast Railway Link (ECRL)

The proposed ECRL has given rise to considerable concern over its overall costs as well as long-term economic viability.

The first phase of the ECRL running 688km will connect Pengkalan Kubor (just beyond Kota Baru in Kelantan) to the Integrated Transport Terminal Gombak at a cost of RM46bn. The second phase will link the terminal in Gombak to Port Klang, a distance of 88km, at a cost of RM9bn.

The East Coast railway line route: – Source: Spad

Reportedly, 85% of the total project costs will be funded by China’s Exim Bank through a soft loan at an interest rate of 3.25% per annum (and the rest through a sukuk programme by local banks). The project is to be completed in 2024.

At a rate of 3.5% per annum, the interest bill for the project will be huge. Although interest repayment of the loan only begins after a seven-year moratorium, invariably, the government will have to subsidise this project which it can ill afford, not least because it is also involved in several other multi-billion ringgit port construction projects while the repayment of those loans will also come calling about the same time.

And we have not yet factored in the need for massive funding of human resource development at the university level and of reforming our troubled educational system, the neglected public health system, urban public transport and public housing.

Hence the economic viability of the ECRL is a major concern. Such a situation could mean difficulties in repaying the debt, in turn, raising concern over Malaysia’s sovereignty.

A related criticism is that the ECRL project has been overpriced. At RM80m per kilometre, the ECRL has been slammed by critics as “the costliest rail project ever”.

In response to such criticism, the government has claimed that the total costs include planning and design costs and that it takes into account the tunnels that need to be dug and the difficult terrain that needs to be traversed.

Critics do not buy such explanations. The high cost, critics claim, is because the China Communications Construction Company (CCCC), a Chinese state-owned enterprise, has been appointed to construct the ECRL via a direct negotiation method and not on an open tender basis! Consequently, costs at every point have been inflated.

There is further concern that the Chinese will be the major beneficiary in terms of jobs and opportunities, especially at the upper end of the project. The prime minister has announced that 30% of the project would go to local contractors. However, the Chinese would be the main contractors for 70% of total jobs, conceivably at the upper ends of the project.

Even if Malaysians will dominate the subcontracting end, it is not expected that transfer of sophisticated technology to Malaysian subcontractors will occur, perhaps because the Chinese have a reputation for bringing their own technical experts and even skilled workers in their foreign investment projects.

From Proton to Proton-Geely

Another disturbing development has been the acquisition of the debt-ridden DRB-Hicom owned Proton national car project, founded by Dr Mahathir in 1983, by a Chinese automobile company in 2017.

When Mahathir first visited China in 1998, China’s automobile industry was only starting and he presented several Protons to his Chinese counterpart.

For the past two decades, however, Proton had been ailing due to a variety of causes: inability to penetrate the overseas market, rising production costs, mismanagement, and ultimately losing the mantle in the domestic car market.

In 2016, the ailing Proton received RM1.5bn in government aid on condition that it pursued a turnaround plan and sought a foreign partner. The winner was Chinese automobile company, Zhejiang Geely Holding Group, which controls Hong Kong-based Geely Automobile and Sweden’s Volvo car group. It has acquired 49% of the new Proton-Geely joint venture.

Reportedly, Geely was chosen over other competitors like Japan’s Suzuki, France’s Renault, and PSA which produces Peugeot & Citroen because Geely agreed to help Proton grow its sales overseas, by offering its right hand drive technology to Proton.

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Although Proton might improve its overseas sales in the future due to this development, Malaysia will not necessarily benefit most in this joint-venture. (Note that this new joint venture involves a private Chinese company and is not part of the BRI.)

Energy group and refinery

In November 2015, it was announced that China General Nuclear Power Corp, a state-owned-enterprise had acquired a 100% stake in Edra Global Energy Bhd, the second largest independent power producer in Malaysia, at a cost of RM9.8bn. Edra’s stable of subsidiaries include Edra Solar Sdn Bhd, Edra Energy Sdn Bhd, Powertek Energy Sdn Bhd, Jimah Teknik Sdn Bhd, Jimah O and M Sdn Bhd, Mastika Lagenda Sdn Bhd and Tiara Taib Sdn Bhd. (The Star online, 23 March 2016).

According to an article in the New York Times, however, the final price paid, including debts assumed by CGN, exceeded RM17bn. It is noteworthy that Edra itself is owned by 1MDB, the sovereign fund that has been involved in a massive global financial scandal.

It is understandable that the Chinese firm was interested in acquiring Edra. But the final price paid, some analysts have commented, amounted to a partial bail out of 1MDB (more on 1MDB later).

More recently, another Chinese company has acquired a 51% stake in Shell Refining Malaysia’s facility in Port Dickson for US$66.3m. The refinery has since been renamed Malaysia Hengyuan Refining Co Bhd.

It is not clear how the above two acquisitions, like the ECRL and foreign direct investments in infrastructure development, will benefit Malaysia and its people directly. They will surely not

help in furthering value-added production and moving Malaysia up the income bracket.
That statement also applies to the two mega property development projects discussed next. Worse, the Chinese partners that have been selected appear to have problems with their own Chinese government!

Bandar Malaysia

Bandar Malaysia is a 486-acre property development project located in the old Sungai Besi Royal Malaysian Air Force airport. It is projected to become a major transport hub with connections to the MRT lines, KTM Komuter, Express Rail Link and 12 other highways.

Significantly, the Kuala Lumpur-Singapore High Speed Rail terminus is to be housed in Bandar Malaysia. The project is expected to be completed in 15 to 20 years.

About a year ago, at the height of the 1MDB fiasco, it was announced that China Railway Engineering Corporation (CREC), a Chinese state-owned enterprise, had teamed up with Malaysian-owned Iskandar Waterfront Holdings (IWF), hence IWF-CREC, in a 60:40 joint venture to buy a 60% stake of Bandar Malaysia for RM7.4bn.

It was suggested by critics that the sale of 60% of the Bandar Malaysia project together with the sale of Edra Energy was a way for 1MDB to raise funds quickly in order to repay its foreign loans.

In May 2017, however, the Malaysian government terminated the Bandar Malaysia deal, allegedly because the joint venture failed to comply with key terms in the agreement – not least, paying upfront a required sum of money – an allegation disputed by IWF-CREC.

So Prime Minister Najib Razak sought another Chinese company, Dalian Wanda Group, owned by high-flying entrepreneur Wang Jianlin, to replace IWF-CREC. In a press interview with Najib, Wang expressed keen interest and stated that he was prepared to invest some RM10bn in Bandar Malaysia, exactly what the mother company 1MDB wanted to hear.

Alas, in late July 2017, the Wall Street Journal reported that the Chinese finance authorities had ordered a curb on bank loans for Dalian on the grounds that much of its investments had gone to the purchase of theme parks, hotels, and the entertainment industry particularly in the United States, not unlike what 1MDB allegedly has done too (FMT, 18 July 2017).

Consequently, StarBizWeekly (22 July 2017) reported that “the likelihood of [Wanda’s] participation in the Bandar Malaysia project to be minimal”.

At this point, IWF-CREC came back into the frame; the joint venture has re-expressed its interest in the project. The cherry in the pudding is the Kuala Lumpur-Singapore High Speed Rail project estimated to cost RM70bn. Analysts believe that any party involved in Bandar Malaysia stands an excellent chance of securing it.

Rather than inviting interested parties to tender for the Bandar Merdeka project, the prime minister, 1MDB and Bandar Malaysia appear to have welcomed back the original joint venture.

Forest City

Whereas Bandar Malaysia is located in downtown Kuala Lumpur, Forest City is to be located on four artificial islands between southern Johore and Singapore, covering 14 sq km.

Estimated to cost some US$36.2bn, Forest City is a ‘futuristic urban development’ project that will showcase ‘a multilevel city’ with office buildings, parks, a transit network, hotels, restaurants, shops, schools, and 250,000 homes for an estimated 700,000 people, to be built over the next 20 years.

This is a 66:34 joint venture between China’s third largest property development company, Country Garden, and Johore’s little-known Esplanade Dange 88 Sdn Bhd. Currently, Country Garden, based in Guangdong, has four other residential projects in Malaysia though none of them of the Forest City scale.

Opposition leaders and many civil society groups have been highly critical of this property development project which is expected to serve the needs of foreigners rather than locals. Former Prime Minister Dr Mahathir Mohamad has been especially scathing of this project, which he claims will lead to Chinese ‘colonisation’ of that part of southern Malaysia.

Launched in 2013, development of Forest City was halted within a year of its launch due to concerns from both Singapore and Malaysia that land reclamation would have an impact on their coastlines. The project was then restarted in 2015.

By the end of 2016, only 15,000 of the 250,000 residential units, totalling US$2.6bn had been sold. Of these purchasers, some 70% comprise Chinese nationals. In July 2017, a ground-breaking ceremony for the establishment of Shattuck St Mary’s, a private American boarding school costing RM935m that will be able to accommodate 3,200 students, was conducted (The Star, 20 July 2017).

Sales of properties were brisk in 2016 due to affordable prices and reportedly “access to Malaysia’s plants, visa program for long-term stay”, said an article in the South China Morning Post (10 March 2017). Fortunately for critics, sales have slowed due to the the Chinese government banning its citizens from converting yuan into other currencies for overseas property purchases, beginning from January 2017.

Yes, Malaysia’s economy is among the most open ones in the world and has always welcomed foreign direct investments. Unfortunately, most of the Chinese investments, whether part of the BRI or not, will not contribute towards the transfer of cutting-edge technology or enhancing human resources development in Malaysia.

Rather, there is the danger that these investments will open the door for foreign acquisition of important assets in the transport and other strategic sectors – ports, railways, transport terminals, pipelines, oil refining, energy production, and even a major component of the local automobile industry. At best, Chinese investments will further contribute to the so-called ‘middle income trap’ which Malaysia has found itself stuck in for some decades now.

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Shoring up a corrupt and sinking regime?

The third kind of criticism of China’s foreign direct investments, already alluded to, is that they are helping to pull the wool over a massive financial scandal, and in so doing, rendering support to the most corrupt regime Malaysians have ever had!

Put another way, 1MDB’s pressing need to meet repayment deadlines on its massive borrowings has opened the way for the Chinese to step up its involvement in the Malaysian economy.

Seen in this light, almost all Chinese investments are welcome if they can help the current regime dig itself out of the financial hole it has ended in; what with six different countries investigating the operations of 1MDB and its shell companies for breach of financial regulations. In June 2017, the US Department of Justice ordered a seizure of assets in the US which were linked to or had been acquired using 1MDB funds.

In this regard, it is disconcerting that China’s CGN has purchased 1MDB’s Edra Energy, bestowing 1MDB with RM9.8bn in cash. Yet another purchase, which 1MDB hopes to complete soon, is the sale of Bandar Malaysia for RM16-17bn to one or another Chinese company, whether state-owned or otherwise!

A related concern is how this influx of Chinese investments has also provided the Chinese ambassador Dr Huang Huikang a much higher profile. Quite unprecedented, he has served in Malaysia for an extended period, has developed close ties with Chinese Malaysian associations and their leaders, donated funds to Chinese schools and has been accused, at least on one occasion, of interfering in the internal affairs of Malaysia.

He has also been accused of maintaining close ties with leaders of the Malaysian Chinese Association (MCA), the Chinese partner party in Najib’s ruling coalition Umno-BN. Whereas embassies usually send their lower level officers to make contact with political parties, Huang himself has been present at MCA official functions. Ironically, party-to-party relations have developed between the Chinese Communist Party and the MCA, Malaysia’s towkay party.

Consciously or unconsciously, the ambassador and the Chinese investments have helped to shore up a prime minister whose legitimacy is being questioned at home and abroad.

The MCA, which has performed very poorly in the last two general elections, no doubt, is getting a higher profile in China and vis-à-vis the Chinese investors these days and playing a more important role than it deserves given its rapid political decline.

In this sense, the BRI, the Chinese investments and perhaps ambassador Huang himself has helped to prop up the tottering Umno prime minister and his MCA partner.

Indeed, there is always a danger that the Chinese, and foreign investors in general, should they end up controlling major assets and a large share of our economy, will be in a position to undermine our sovereignty – all the more if we owe billions of dollars to them and have no way of repaying those loans and settling those debts.

There are serious complaints that several African countries and Sri Lanka have borrowed themselves into such a relationship with China and face the threat of losing their independence in foreign policy-making.

Transparency, accountability in foreign direct investments

To prevent such an eventuality, accountability and transparency in the operations of the Chinese foreign direct investment deals in Malaysia is critical.

A major reason why the abuse of 1MDB funds was exposed so thoroughly is due to the US Department of Justice taking it upon itself to carry out an investigation of 1MDB. And it did so because 1 MDB had been involved in various transactions in the US that had breached its financial laws.

As a result of careful investigations, the DoJ has now concluded that massive corruption and abuse had occurred in the case of 1MDB, seized assets that had been acquired illegally, and put into motion taking the case to the courts.

By contrast, the Malaysian prime minister had responded to the deepening scandal by sacking his deputy prime minister and several other ministers when they questioned him on the 1MDB fiasco. He also terminated the services of the previous attorney general, the previous governor of Bank Negara, and the former head of the Malaysian Anti-Corruption Commission as they, reportedly, closed in on the case.

His new attorney general has since declared that he can find no evidence of corruption and abuse. Instead, he and the other law enforcement agencies have charged, imprisoned or taken to court Malaysian whistle blowers and others who have persisted in criticising the prime minister.

Given the repression and the lack of transparency and accountability under the corrupt Umno-BN regime, the exposes of the 1MDB financial fiasco would not have occurred if foreign investigative journalists, independent mass media, and foreign government agencies like the US DoJ had not first investigated 1MDB.

Thanks to them, to global information technology, and follow-up investigations by opposition politicians, civil society organisations and the alternative mass media in Malaysia, a majority of Malaysians are informed about the 1MDB fiasco now, although not all equally angry about what has happened.

With our corrupt regime still in place, so much Chinese foreign direct investment arriving and no reason why those behind the projects would want to be transparent and accountable to the Malaysian people, there is every reason why we need to be vigilant over these investment deals.

Or, better still, let’s change the government and make sure that the new one is more transparent and accountable!


Ganeshwaran Kana & Gurmeet Kaur, ‘The real economics of ECRL’ StarBizWeek, 12 August 2017, pp14-15
Ganeshwaran Kana, ‘Westports on RM10bil expansion’ StarBiz, 28 August 2017, p. 1
Ho Wah Foon, ‘Asean Belt and Road risks under scrutiny’ Sunday Star, 30 July 2017, pp 20-21
Dennis Ignatius, ‘The New Silk Road’, four parts, Malaysiakini, 28 May to 5 June 2017
Cecilia Kok ‘Impact of China’s capital controls’, The Star, 22 July 2017, 14-15
Liow Tiong Lai, ‘Unlocking the value of our East Coast’, The Star, 28 July 2017, p. 33
Saravanamuttu, Johan ‘Malaysia’s East Coast Rail Link: Bane or Gain?’, RSIS Commentary No 158, dated 31 Aug 2017.
Sit Tsui, Erebus Wong, Lau Kin Chi and Wen Tie Jun, ‘One Belt, One Road’, monthlyreview.org/2017/01/01/one-belt-one-road
Summer Zhen and Daniel Ren, ‘Country Garden halts Malaysian housing sales amid capital flight crackdown by government’, South China Morning Post, 10 March 2017
Tan Siok Choo, ‘Will Ties with US, China impact GE14?’, theSun, 27 July 2017, p. 13.
Tony Pua, ‘Who ordered termination of Bandar Malaysia deal?, theedgemarkets.com, 11 May 2017, and ‘Why beg Chinese developers to come develop Bandar Malaysia?’ theedgemarkets.com, 15 May 2017

Originally published by Aliran on 7 September 2017.

The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

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PolitiScheiss (a.k.a. IT.Scheiss)

contd /-
In 2011, a venture capital provider advised Malaysian ICT startups not to develop a service when there already are three similar services in the “global village” in cyberspace but to develop something unique.

Unfortunately, many Malaysian ICT startups try to develop “me too” services.

That said, there are a handful of Malaysian successes, such as MyTeksi, developed in Petaling Jaya and now known as Grab, which has since migrated its base to Singapore, from which it has expanded in the region and more recently acquired Uber’s Asian operations.

Likewise, too many Malaysian manufacturers try to compete by producing “me too” products and few if any are radically innovative.

PolitiScheiss (a.k.a. IT.Scheiss)

contd /-
Whilst Malaysia should continue to develop our own ICT industry, however I do not believe that we should expect to produce a “Google”, “Facebook”, “Twitter” or “WhatsApp” since we lack the home mass market, large amounts of venture capital and large enough number of developers – i.e. the ecosystem to give such startups the opportunity to grow domestically first before gaining traction overseas.

In the late 1990s, Catcha Corp tried to be the “Yahoo! of South East Asia” and failed in the face of already globally established U.S. based portals but today it has succeeded in areas where it does not compete head on with these giants.


PolitiScheiss (a.k.a. IT.Scheiss)

contd /-
I believe Malaysia should focus on developing our comparative advantage to a high level, such as developing our agricultural raw materials into high value-added, high quality, high reliability products to high world class standards.

Like why do we place a higher premium on New Zealand and Australian milk, lamb, beef and even the same branded processed foods above similar Malaysian products?

New Zealand and Australia have hardly much home grown manufacturing industry to speak of, let alone an ICT industry but they are internationally noted for their agricultural and animal products, as well as their processed foods, and their people enjoy a high standard of living and a quality environment.

PolitiScheiss (a.k.a. IT.Scheiss)

contd /-
As for Malaysia’s national car project, we must accept that it is very difficult for a newcomer to penetrate into a foreign automotive markets dominated by established automotive giants, especially when the automotive industry is consolidating through mergers and acquisitions of established brands by other established brands.

The saleability of a car in a country depends not only upon its network of sales outlets there but also on the wide availability and affordability of spare parts and of mechanics able to service and repair such brand of cars.

This is why American and most European car brands don’t sell well in Malaysia and I believe likewise why Malaysian cars don’t sell well abroad.

PolitiScheiss (a.k.a. IT.Scheiss)

contd /-
Malaysia may think that we can become like Japan, South Korea and Taiwan but what is hardly mentioned in the media is that these three countries were on the frontline of the Cold War, so the United States and Western Europe were especially helpful in helping them develop with foreign aid, FDI, technology transfer and access to markets but no other country in the Asia-Pacific, Australia or New Zealand were beneficiaries of such largesse, which has nurtured powerful competitors to US and European industries.

Sure, Japan, South Korea, Taiwan and later China initially relied on FDI to provide jobs, however they invested in developing their own products & technologies, such as China’s own high-speed train and C919 airliner.

PolitiScheiss (a.k.a. IT.Scheiss)

Contd /-

These companies investing are not so dumb as to nurture their future competitors, so they will not train Malaysians to eventually be able to compete with them in the future. It is up to Malaysians to develop our own advanced technologies, perhaps with the help of hired foreign engineers and scientists who are required to help train Malaysians in technology development and application.

Also, whilst there now are a handful of Malaysian electrical appliance “manufacturers”, however most of them produce rebranded products sourced from OEM manufacturers in countries such as China, which are affordable for Malaysians but usually are of rather poor quality.

This is not how we can get out of the middle income trap.

PolitiScheiss (a.k.a. IT.Scheiss)

Infrastructure development such as the ECRL may not transfer cutting edge technological skills to Malaysia but they will likely facilitate economic activity and job creation along its route. Property development – not much benefit.

I have heard the “technology transfer” cliche since the semiconductor assembly plants were enticed to set up in Malaysia in the early 1970s. My first job was as a process engineer in the NS Electronics semiconductor assembly plant in Senawang in 1980 and nothing of what I had learned about semiconductor chip fabrication was required there as I could have just as well been working in a sweet factory.

Would love your thoughts, please comment.x