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Lesson from Malaysia

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I am writing this commentary in the airport in Kuala Lumpur, the Capital of Malaysia.

To describe Malaysia as a vibrant, energetic country would be an understatement. It is fast becoming yet another Asian Tiger joining the economies of Singapore, South Korea and Thailand.

Yet, it wasn’t so long ago that Malaysia was regarded as a poor second cousin to other Asian states, behind which it lagged economically.{{more}}

The country has oil. But that natural resource – important though it is – is not the main reason for this country’s transformation in the last 40 years into a middle-income country with a multi-sector economy. Prime Minister Najib Tun Razak credits the country’s transformation to the investment of its revenues from oil and gas in two areas – education and infrastructural development

Malaysia now has a highly competent, skilled work force and significant physical infrastructure including highways along which its production is moved to its port and airport, and its people easily transported for work and leisure. Apart from oil and gas, electronics is its biggest export and employer of both its skilled and semi-skilled population.

The Prime Minister is aiming to make Malaysia a high-income country by 2020, and it looks set to achieve it. The government and the private sector have joined in an investment programme designed to produce millions of new jobs and to upgrade the skills of the existing work force. While the government is the facilitator of the programme, the bulk of the investment is coming from the private sector, mostly local businessmen. They have set themselves on a course to establish high technology industries, medical technology and pharmaceuticals.

Malaysia has recovered well from the global financial crisis which started in late 2008. While in 2009 decreasing demand for consumer goods slowed economic growth, the economy has bounced back in 2010 and the foreign reserves of the Central Bank are healthy.

Kuala Lumpur is a hive of economic activity. Its roads are clogged with traffic, mostly one person to a car – an indication of years of state-subsidised gasoline, investment in roads and good salary levels. The skyline is dominated by structures immediately reminiscent of New York and Toronto – twin towers, not unlike the targets of 9/11 and a tower that resembles the CN Tower in Toronto almost exactly. The shops range from upmarket designer names – almost all of them, Gucci, Louis Vitton, name it and it is there – to market malls which also have designer name brands for items from handbags to clothing, except these are fakes, made mostly in Korea, but enjoying a brisk trade among Malaysian locals and foreigners alike.

English is the common language of the ethnic Malays and the Chinese community that have lived in Malaysia for decades. It helps greatly in doing business. And, while it might have been expected that China would be the dominant investor country, it is still the United States that is the source of the largest cumulative investment, followed by Germany and the United Kingdom.

The Prime Minister sports a large emblem of the number 1 on his lapel. So do most of the ministers and government employees. “One” signifies “One-Malaysia”, an attempt by the present government to make long-term residents of Malaysia, particularly the Chinese, feel that while they may not be Malay, they are Malaysian in a country whose society is one.

There is good reason for this. The Chinese are industrious, in addition to being well educated and well trained. They have made a significant contribution to Malaysia’s development and the present government is trying to stem a tide of Chinese emigration which deprives the country of business talent and capital. Years of preferences to the Malay population disadvantaged the Chinese who had to perform better to maintain their place in the society. Now the effort is build a “One-Malaysia” society that is inclusive, keeps talent at home, and is focussed on a strong economy.

Malaysia’s population is also over 60 per cent Muslim, but that does not stop it from being open to business from Europe and North America. As the Chairman of a large conglomerate put it, “Muslims yes, Money-makers too”. The country’s membership of the Commonwealth is part of a valuable heritage. English Common law and a parliamentary system similar to the countries of the Commonwealth Caribbean and Britain make it easy for investors from the US and the UK to do business in the country. And, if the high occupancy levels in the many top class hotels in the centre of City are anything to judge by, both investors and foreign contractors are taking a keen interest in Malaysia.

Sixty per cent of Malaysia’s 27 million people are connected to the Internet, and Google Inc, the owner of the world’s most popular search engine on the Internet, has just announced an investment of millions of dollars as part of its focus on south-east Asia.

While foreign investment is welcome, and several foreign companies are being awarded large infrastructural projects, the government is keen to promote local direct investment. It has announced plans to boost local direct investment through business linkages and domestic outsourcing.

There is little doubt that Malaysia will achieve its ambition of making its people high-income earners. Even if there is slippage from the projected date of 2020, it will be pretty close to it. The secret of its success has been the effort by successive government to use revenues for huge investments in education and the upgrading of skills so as to take advantage of internet broadband technology for the services sector and manufacturing industries.

Malaysia and its neighbour Singapore are Commonwealth countries that are doing very well in global economic terms, which shows that developing Commonwealth countries can learn from each other’s experiences in the development models they adopt. Caribbean and Pacific Commonwealth countries should invite a combination of government and business people from Malaysia and Singapore to share the lessons they’ve learned and the skills they’ve developed. Commonwealth countries of the South have shown they can be as successful as the rich countries of the North.

(The writer is a Consultant and former Caribbean diplomat)
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