Malaysians seeking more investment

Press, 18 October 1978, Page 12

Malaysians seeking more investment

By 1

WONG SULONG

in Kuala Lumpur

for the ‘FINANCIAL TIMES’, LONDON

Dr Mahathir Mohamed, Malaysian Deputy Prime Minister, Minister of Trade and Industry and chairman of the Cabinet committee on investments, has been visiting the United States on an investment promotion drive. In May, he led a similar mission to Western Europe, and before the year ends, he will have led missions to Japan and to Eastern Europe. That the second highest ranking minister should woo foreign businessmen so earnestly reflects the importance that the Malaysian Government attachest o foreign investments — and growing concern that investments are not coming in at the rate it had expected.

Unlike the Second Malaysian Plan, in which the public sector played a leading role, the current Third Plan (1976-80) envisages the private sector as the main catalyst for growth. The plan seeks an injection of 26,800 million ringgits (some $12,000 million) in private investments, or an annual growth of 10 per cent during the five years. As it turned out, non-oi! investments in 1976 and 1977 grew at only 3 and 6 per cent respectively, and this is very worrying for the economic planners.

There are various reasons for this shortfall — the sluggishness of the world economy, the domestic political uncertainties arising from the death of the Prime Minister, Mr Tun Razak, and the ill-timed, sweeping legislation, particularly the now repealed amendments to the petroleum development act and the Industrial Co-ordina-tion Act.

The manufacturing sector, on which the Government has placed high hopes, has been worst hit. In 1976, the Government approved 425 projects involving a total proposed capital of 1200 million ringgits and a job potential of 32,2 0. But last year only 400 projects, involving a job potential of 29,600, were approved. The third plan expects manufacturing to create 34,000 new jobs a year. Dr Mahathir strongly denies that local investors, mainly Chinese, are holding back. He argues that they are putting their money elsewhere, into such fields as construction and trading, rather than into manufacturing, which is an area where there is less confidence in venturing without foreign partners. Malaysia’s industrialisation programme has largely passed the importsubstitution stage, and industrialists must look for overseas markets to expand. But foreign markets are rather unfamiliar to most Malaysian businessmen. Dr Mahathir contends that if foreign investors were to start factories in Malaysia the local businessmen would JOIN in.

During his United States mission, the Malaysian Dep-

uty Prime Minister was able to speak with greater authority than during his earlier European tour.

The Government was returned in the July general elections with a large majority. Equally important, the ruling U.M.N.O. Party has confirmed the present leadership.

As a demonstration that he is able to deliver his pledges, Dr Mahathir pushed through the one-stop unit before he left on tour. Investors, who have often complained that bureaucratic red tape is one of their main frustrations, will now no longer have to run around half a dozen departments seeking approvals and licences. Officials at the onestop unit would do the running, and Dr Mahthir has made it clear that he expects results. In the United States the Malaysia mission was expected to clear up doubts about Malaysia’s stability and racial problems. To most Americans, South-East Asia and Vietnam are synonymous. and Vietnam means bad business.

Major new projects are now in the pipeline. She.ll

and Mitsubishi are committed to build a SIOOOM liquid natural gas plant in Sarawak. Shell is also studying the possibility of putting another few hundred million dollars into a coal project in the state, while the Malaysian oil company, Petronas, would build a urea plant. The American aluminium giant, Reynolds, is also planning a S4SOM smelting plant in East Malaysia if it can be guaranteed cheap electricity. These projects call for large amounts of foreign capital and expertise. But Malaysia is looking for fairly labour-intensive, mediumlevel technology projects, such as the tyre factory that Dunlop Malaysian Industries will be going into with the Kedah State Development Corporation. The factory will cost only SI2M, but it will create more jobs than the Reynolds aluminium smelter.

There are enormous opportunities for industries that could use the country’s vast agricultural resources of rubber, palm oil and timber. Malaysia produces $6OO million tonnes of rubber, yet less than 2 per cent is used within the country.