Malaysia’s drastic drop in AT Kearney’s 2013 Foreign Direct Investment Confidence Index to the bottom of 25 countries calls for the need to immediately reform the Government’s privatisation and procurement transparency and accountability

The Edge Financial Daily today reported that Malaysia has fallen sharply to 25^th position from 10^th on the AT Kearney’s 2013 Foreign Direct Investment (FDI) Confidence Index from the previous year even as emerging markets continue to attract FDI.

The report, based on a survey of 300 senior executives of the world’s leading corporations show that while these global corporations may have initially been “attracted” to the Prime Minister Dato’ Seri Najib Razak’s “Economic Transformation Programme” (ETP), such interest has completely fizzled.  The drop is so drastic, that we are now at the bottom of the table of 25 countries.

We are now behind fellow ASEAN countries, Singapore, Thailand and Indonesia, as well as other developing countries such as Poland, Chile and Argentina.

The drastic fall in Malaysia’s FDI confidence has to be strongly co-related with a fall in confidence with the Government’s ability to deliver its transformation promises, which have been in essence, more form than substance.

Despite the much touted programmes such as the ETP, Government Transformation Programme (GTP) and New Economic Model (NEM), successfully implementation of key reforms and projects have been far and few in between.  All multi-billion ringgit privatisation projects – whether it is highway concessions such as the RM5.1 billion West Coast Expressway (WCE) RM1.55 billion East Klang Valley Expressway (EKVE) and RM2.2 billion Kinrara-Damansara Expressway (KIDEX) or rail contract projects such as the estimated RM50 billion MRT system to MMC-Gamuda Joint Venture, continues to be awarded without any form of competitive or transparent tenders.

Even in cases where tenders were conducted, the award has been controversial such as the RM1.2 billion Ampang-LRT Extension project to George Kent Bhd, despite the company having submitted a higher bid and which was more famous for the manufacturing and supply of water pipes.

On top of the above, BN continues to flounder in its attempt to reduce corruption which continues the key issue plagueing the Najib administration.  Despite promises to fight corruption with the National Key Result Area (NKRA) launched in 2009, Malaysia’s standing in the Transparency International Corruption Perception Index has continued to decline over the period.

In addition, no attempts have been made to streamline the expenditure of the government, particularly in its spiralling operational expenses.  The report has cited that “the Malaysian economy has boomed due to government infrastructure spending, solid lending, and rising consumer demand fuelled by civil servant pay raises and cash handouts”.  It further warned that “the government will be under increasing pressure to balance the budget in the coming years as oil production declines and exploration costs rise”.

Hence we call upon the Government to immediately address the above shortcomings in its much-hyped transformation programmes so as to curb the decline in confidence in FDI into Malaysia.  Such decline in confidence when translated to actual decline in investments will end up in long-term negative consequences to the country’s economy. – The Rocket