By Raveen Jeyakumar
To increase job opportunities and strengthen the economy, the government must reduce the country’s excessive dependence on foreign direct investment (FDI).
1. The primary motive for most of these foreign investors and companies is profit maximisation. They only invest in sectors with high growth and, by extension, high profit potential. They care little about the socioeconomic status of ordinary people in the countries where they invest.
2. A country that depends on FDI may lose its sovereignty and control over key economic sectors. It reduces the government’s ability to shape certain policies and protect its economic priorities. Large foreign investors often impose significant control over the country’s strategic industries, natural resources or critical infrastructure.
3. Foreign investors have access to advanced technology, economies of scale and larger financial resources, which creates unfair competition for local companies. This forces most local firms to struggle just to sustain themselves. Some are even forced to close or be taken over
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4. Foreign companies want to pay the lowest rates in their contracts with local companies. This pressurises local companies to accept low payments. These local companies are then forced to reduce the salaries of their workforce in order to generate some profit.
5. Certain foreign investment projects in extractive industries lead to natural resource depletion and environmental damage
6. Usually, the elite benefit most from FDI, while the socioeconomic status of ordinary people is suppressed. It is grossly unjust if large FDI projects only serve the elite, traders and major companies. Insufficient revenue is generated by the government to help the common people. All this will only widen the inequality gap
So, the government must prioritise domestic investment and development in important sectors such as small and medium businesses (SMEs), public health services and elderly care.The country can use its own resources, talent and human resources in these sectors.
Asean member nations should solidify their cooperation. They should provide greater access to each other’s materials, technology and services in public transport, construction and agriculture.
This will strengthen Asean’s internal trade and economic capacity. The regional bloc can become less reliant on foreign firms and international trade agreements for development and job opportunities.
To finance such domestic investments in Malaysia, the government, along with other Asean countries, must collectively impose higher taxes on foreign investors and multinational companies in each country.
Asean also needs to collectively change some key aspects of the free trade agreements so that its member nations will have the space to build an independent industrial base, thus strengthening its independence and autonomy from foreign industries.
Trade can be beneficial when it is fair. But when countries are forced to trade from a position of weakness, they will get short-changed, and this kind of trade only keeps poor countries poor.
Raveen Jeyakumar, an Ipoh-based Aliran volunteer, is a writer who is passionate about social and environmental issues. His work can be found at reform-the-system.com