CME welcomes the proposal of a special committee to monitor investments in the country
THURSDAY, 6 April 2023: The Center for Market Education (CME) welcome former second finance minister Dato Johari Abdul Ghani’s proposal to set up a special committee under the international trade and industry ministry (MITI) to monitor investments in the country. According to the Titiwangsa MP, it is important to monitor the implementation of memorandums of understanding (MoUs) entered by Malaysian companies with foreign entities.
According to CME, there are three main phenomena to be monitored and properly communicated:
- The difference between MoUs, approved foreign direct investments (FDIs) and actual (implemented) FDIs;
- The transformation process from MoUs to approved FDIs and then to implemented FDIs;
- The eventual reasons behind non-materialized FDIs.
“If we look at FDI net inflow as percentage of GDP, 2021 showed a positive trend (5%), after four years in which the value was constantly below 3%. It is time to work on this positive signal to rebuild the investment hub vocation of Malaysia”, observed Dr Carmelo Ferlito, CME CEO.
FDI net inflows are the value of inward direct investment made by non-resident investors in the reporting economy, including reinvested earnings and intra-company loans, net of repatriation of capital and repayment of loans. The 1970-2021 trend of FDI net inflows as percentage of the GDP is reported in the graph below (World Bank data).
In order to both strengthen Malaysia’s ability to attract FDIs and to develop a proper communication strategy, CME proposes that MITI creates a FDI monitoring committee, joined by international Chambers of Commerce and Malaysian industry representatives. The tasks of the committee should be:
- Understanding the reasons which are eventually blocking investors to enter the country by listening to international and domestic industry players;
- Reviewing the reasons why approved investments do not turn into implemented investments;
- Communicating simultaneous data about approved and implemented FDIs;
- Drafting proposals to strengthen Malaysia’s investment attractiveness.
According to CME, among the most important issues surrounding investment attractiveness, two in particular need to be stressed: labour legislation and banking regulation. In fact, too many limitations are impeding the emergence of a vibrant labour market both at talent and low-skilled workers’ level; furthermore, restrictive banking rules are making impossible or extremely long for big corporations with a complex structure to obtain the opening of a bank account, with the rising risk of appointment of fake directors and shareholders and therefore deteriorating the legal framework surrounding investments in Malaysia.
“A regular revision of the investments, to understand what is right and what is wrong, and a constant dialogue with industry players, are key elements for revitalizing Malaysia’s vocation to international trade and investments”, concluded Dr Ferlito.
About CME: The Center for Market Education (CME) is a boutique think-tank based in Kuala Lumpur, Malaysia, and Jakarta, Indonesia.
As an academic and educational institution, CME aims to promote a more pluralistic and multidisciplinary approach to economics and to spread the knowledge of a sounder economics, grounded in the understanding of market forces.
In order to do so, CME is not only involved in academic initiatives, but it organizes seminars, webinars and tailor-made economics classes for students, journalists, businesspeople and professionals who wish to better understand the relevance of economics for their daily lives and activities.
Economics matters and needs to be presented in a fashion in which the link with reality is clearly visible. In this sense, we look not only at theoretical economics but also at policy making, with an emphasis on the unintended consequences generated by political actions. Visit https://marketedu.me/.