Gateway Proposal: Are We Going Retro?

Our MITI Minister made a proposal to make Malaysia the gateway for investments into Asean. The Minister made this statement while speaking to Bernama ahead of the World Economic Forum (WEF) in Davos, Switzerland which he attended as Malaysia’s representative.

Malaysian Institute for Economic Research senior fellow (Geoffrey Williams) described it as “no longer relevant” and a narrative that is already out of date. We may need to step up our pace and attractiveness with the strong competition from Indonesia, Vietnam and Thailand who may have overtaken us. Offshore investments are already flowing directly into the big markets like Indonesia and Vietnam. Most investors are fully aware of these markets and don’t need a gateway. If there is a need, it is more likely to be Singapore acting as the gateway.

Other countries are not only bigger but are also growing faster than Malaysia, with more opportunities for investment. Less corruption, better education and a more welcoming environment will garner new investments. Malaysia is descending into irrelevance with net foreign direct investments (FDIs) to Malaysia falling since 2016. In fact, Malaysian companies are increasingly investing in other countries.

Malaysia needs value added investments in healthcare, the creative industries, leisure-based activities and those in AI and technology. The local R&D scene needs a fresh perspective. The target should be smaller companies that will actually create jobs, offer supply chain opportunities and promote long-term research and development for the country.

It will be useful for the Minister to re-evaluate Malaysia’s strategic positioning after discussing with MIDA and MITI officials. Please re-calibrate with some thought process rather than “off-the-cuff” remarks that remind us of the 70s and 80s.

References:

Zafrul’s “gateway” proposal gets the thumbs down, David Pillai, FMT, 27 Jan 2023

FDIs – more than meets the eye, Pankaj C Kumar, The Star, 27 Mar 2021