Malaysia has always depended on foreign direct investment(FDI). That is the main model. It's that classic OPM concept-use other people's money for the development of the country. Let them bring in the capital, the technology and to give jobs to our people who will then spend in an assumed closed economy, to bring about growth for the nation.Hopefully, there will also be technology spin-offs in the form of component manufacturing and the development of knowledge intensive workers.
This concept works if our country is cost-competitive, the labour regulations are flexible and the tax incentives are great. Above all there must be political stability,low corruption,transparency and public safety.
If not, there will my a drop of FDI and the investments already in the country will also go away.
The other problem we have is the export economy model.
Every thing we produce must be premised on economies of scale to bring in good returns. Example: producing our cars. If we need to keep our plants going, we must sell enough cars overseas. If our car quality is not up to par, we lose!
Then there is the export of raw and refined commodities. These are subjected to the supply and demand of commodities and its substitutes. Prices in the world market fluctuates. Currency exchange can affect trade and profits.
So, how do we get on the good side of the world economy?
One-by making this country a great country to invest-good administration of laws, weeding out corruption and transparency.
Two-produce better and cheaper.
No comments:
Post a Comment