Comment
June 18, 2009 by: editor
By Amber Johnson.
Zaid Ibrahim’s party hopping is a distraction from the main issues facing Malaysia
While much has been made by commentators of the decision by former law minister, Zaid Ibrahim, to join Parti Keadilan Rakyat (PKR), it is in reality of little consequence and a distraction from the real issues facing the country.
Questions had already been raised about Zaid’s intentions when he was expelled from UNMO last December, and while no one can doubt his commitment to law reform, his going will have little impact on the changes which are already taking place as Prime Minister Razak Najib attempts to strengthen Malaysia’s economy, broaden equality and attract more international investors.
Since taking office in April, Najib has announced a number of policy changes to improve the competitiveness of the Malaysian economy and to present the country as a business-friendly location for foreign investors. Perhaps the most crucial of which, is the removal of a long-established restriction requiring foreign investors in the service industries to offer 30 percent of any joint ventures to Malays. While designed to benefit bumiputera – ethnic Malays and other indigenous peoples – in reality, the rules stifled entrepreneurship and deterred foreign investors who simply chose to go to other countries with less onerous regulations.
The liberalisation of 27 sectors including healthcare, business services, tourism, IT and transport – and with the promise of more to come – is designed to pull in more foreign investment at a time when competition amongst emerging nations for FDI, is intense. It is also intended to attract foreign companies specialising in new technologies to Malaysia and to create jobs in the high value, creative and knowledge industries. It’s a move that has been welcomed by economists and analysts because it will open the door for significant foreign participation and help bring in much-needed foreign investment to boost the economy.
These reforms will also prepare the ground for Malaysia to take advantage of new opportunities when the global economy recovers at some point in the future. Liberalisation will also help transform Malaysia from a nation that is heavily dependent on mass production, low cost manufacturing efficiency, relatively unskilled labour, and low wages to an economy where science and engineering and creativity, imagination and knowledge, will become key sources of national prosperity and wealth.
In addition, recently announced reforms to the banking sector will enhance the role of financial services as a catalyst for economic growth. These reforms, including the issuing of licences to foreign players in both conventional and Islamic banking and enabling foreigners to take up to 70 percent equity in investment banks, Islamic, insurance companies and Takaful firms – up from 49% now, as well as the granting of greater operational flexibility to foreign banks, will make Malaysia better placed to benefit from Islamic finance’s move from niche market to a mainstream component of the global banking system; cementing the country’s position as a world leader in Islamic banking.
Banks – particularly non Islamic ones, which have been hardest hit by the global crisis – are having to cut costs and Malaysia, with reforms in place, presents an opportunity to for them to move their middle and back office operations to a more cost effective and liberalised location.
Of course reform can never come fast enough or go far enough for many people but in these difficult economic times the reforms implemented so far are certainly a move in the right direction.
No matter how much the Opposition seeks to exploit the Zaid Ibrahim story, the bottom line is that the machinations of a single maverick politician are just a sideshow. The main issue is the one being addressed by the Prime Minister and his Cabinet at present, and namely how Malaysia introduces changes that will allow it to become a successful unified nation that is primed to take advantage of the return of global economic health and ensure prosperity for all its citizens.
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