Paris Agreement on climate change
April 9, 2020
Lord Buddha in Crisis -Life As It Is (Part 1)
April 9, 2020

Malaysia must change its ways with China and India

The world is only getting more competitive. Unfortunately, Malaysia has probably only been falling backwards in relative development compared to many of our neighbours. Excluding Singapore (a developed country), Brunei (a country that is oil dependent) and Thailand, most other ASEAN countries have been growing faster than us, and they are expected to continue this trend till at least 2020 (see Table 1). Our regional giants, China and India are projected to grow at 6.05 and 7.3% respectively on the average through 2020. It seems logical to me that Malaysia should leverage on both China and India to speed up growth; through expanded trade and foreign direct investment (FDI) to and from these countries. For this to work though, the elected government in Malaysia must change their mind set when dealing with domestic issues as domestic issues too do have international  outcomes.

Being located midway through the shipping route between China and India, Malaysia has a long history of association with these countries. Being further coupled with the large population of ethnic Chinese and Indians, it is indeed disappointing that Malaysia has not been able to leverage to a greater extent on the growth success of both countries. China and India are ancient countries, but they are very different in structure. China is autocratic and opaque to the outsider while India is democratic and chaotic. The tension and distrust between these countries is evident from the persistent border disputes they have. As such, Malaysia could not only have become the conduit of trade for both China and India to ASEAN, but also a conduit for trade between both countries. Having been ahead in the development curve compared to both these countries, it is unfortunate that our policy makers did not identify the opportunities there. Instead, Singapore successfully plays that role well today.

India has an accumulated FDI of US$25 billion in Singapore, while Singapore is currently the second largest FDI source for India after Mauritius. Malaysian companies are mainly focused on construction in India. While it has to be acknowledged that Malaysia already has significant trade with both countries, with exports to China and India in 2015 at RM102bil and RM32bil respectively, so much more especially with India could have been done. While investments into Malaysia from China have been on the rise, the same cannot be said of India as well. Although the Prime Minister has made trips to both countries, there appears to be a lack of clear government policy in engaging these countries. Instead of leveraging on the relationships that the Chinese and Indian diaspora in Malaysia have with China and India respectively, some segments continue to rhetoric against these Malaysians. This is definitely a sticking point here; a non-existent issue in Singapore.

Most of the effort is carried out by private sector effort. When the Malaysian officials used to go to India, for instance, it is to lobby for an infrastructural project for one of the Malaysian contractors. However, even such opportunities are drying up. Do remember that we have a Special Envoy of Infrastructure to India and Southern Asia (with ministerial rank), YB Dato Sri’ Samy Vellu, who says that his job now is to get unemployed Malaysian construction workers employed in India.  Is this all we can do in India?

By 2050, China and India should take up two of the three largest economy spots in the world. We cannot ignore either country, instead engagement is the key. Besides cultural connections, Malaysia is also equidistant on their trade route. For long term benefits, Malaysia needs to greatly develop our political, cultural and educational ties with both countries. This will translate to closer economic ties in the longer term, including greater access to development capital from these countries in the future; perhaps even the Brics Bank. For this, we need our government to stop being myopic in their policy making.