Wednesday, July 28, 2010

Aru You Kidding Me? Minister!

Hantu Laut

Are you kidding me?

Big drop in FDI, cause we are getting quality not quantity investments says Minister of International Trade and Industry Mustapha Mohammed here.

“We are beginning to attract quality investments,” he said.

“It doesn’t mean that if it’s RM1 billion investment you generate lots of benefit for the country.

Sorry! Minister! Couldn't agree with you, not if you care about the macroeconomic of this country.We need both, but quantity more.

“It could be only RM10 million but, in terms of job opportunities, there are more job opportunities that pay higher wages.” he said.

Are we going for more labour intensive industries? How could labour intensive be paying higher wages?

Wow! I wonder which book of economic tells him small investments can provide bigger employment, pay higher wages and generate lots of benefit for the country.If that is the case why don't we just stick to growing more oil palm and set up more garment factories.

He gave the example of a “quality” local company worth RM200 million employing 1,500 graduates with a starting pay of RM4,000 per month.

That translates into a staggering RM6,000,000 monthly salaries just for the graduate employees alone.Surely, there must be other category of employees like clerks,office boys,drivers,coffee lady and so on.He did not mention what the company's business is.If it is a manufacturing concern than there must be factory workers on the floor.They need to be paid too, unless those graduates are the factory workers.

The graduates total payroll in a year would come to RM72 million excluding other benefits and salaries of other employees.What about other recurring expenses?

Need I go any further to tell you why our FDI and economy are in trouble.

When you have minister like this going round the world telling foreign investors we want quality not quantity investments and himself can't even do simple arithmetic let alone understand the intricacies of economic terms, what would you expect to get in return? A runaway success to woo foreign investors or a botched mission because our minister sounds unconvincing.?

Maybe, Najib should recall Rafidah Aziz. The lady would have done a far better job than our 'quality man.'

The example he gave is subjective.At the end of the day what is most important is the value added product, the bottom line.Size of investment does play a major part to the kind of quality and quantity of the products or services.

There again, we are talking about the drop in total FDI value which means there is lack of confidence by foreign investors putting their money here.It's simple economic.The more money you put in the greater would be the economic output, unless the minister has found a new economic theory that says otherwise.

In 2009 our FDI plunged 81 per cent.Not only new FDI avoided us like a leper, existing foreign investments in the country are not expanding their businesses.

If thing can go wrong it will go wrong, most unfortunate, when it should not be so, even domestic investments are moving at snail pace.

MITI must not count the eggs in its basket but ask whether the eggs can hatch to produce more chicks.Not all approved investments get to the ground.They look good on papers but failed to turn into economic generators.

The measure of FDI is confidence.It is confidence in the political stability and fiscal policies of the nation that draws foreign investors to any country.These two top foreign investor's wish list before other considerations like the availability of suitable labour force, infrastructures and other logistics are taken into account.

Obviously, Malaysia is suffering from lack of confidence in its political stability and unflattering fiscal policies.

We have three serious headaches, political instability, a siege fiscal policy and brain drain.

Prime Minister Najib was not able to implement his New Economic Model (NEM) due to strong opposition from the rent seekers in UMNO and Perkasa under the pretext of..... Malays still need help.

The government have had the NEP close to 40 years, one should ask how come there are still many poor Malays.Isn't that telling how much the NEP had been abused.If the Malays can't progress in the past 40 years what makes the clouts think they can in the next 40 years if the mentality do not change.

As Malays I think we should be self-critical and self examine ourselves where we have gone wrong instead of putting the blame on other races for our misfortunes.Likewise, the non-Malays should not question what's enshrined in the constitution, there is always room for fine tuning the fine print by constitutional means.Spurting racist remarks are not going to help but would only worsen the problem.

We certainly don't want to be called 'land of the blind'.We are losing our best brains to other parts of the world because they can't see what best for them in this country.

We produced graduates by the thousands but the private sector shied away from employing them.Why? We, probably know the answer to that.Many end up joining the civil service, that has ballooned the civil service to over a million employees, probably, making it the biggest in the world and a huge burden on the budget.

The economic indicators looked grim and would continue to slide if the government do nothing to arrest the negative perceptions and start innovating a strong investment climate.

Our foreign exchange reserves felled by 25 per cent in 2009 which means we incurred huge forex losses and exodus of money in 2009.The human and capital flight will have long term effect on the nation's progress.

When the best of money and the best of brain abandoned the country than there must be something seriously wrong.You will not see the effect immediately but a gradual decline as more and more leave for greener pastures and the safe havens.In the first eight months of 2009 over 200,000 Malaysians migrated.

This is an English proverb that says "you might as well be hung for a sheep as for a lamb"

Najib's NEM can only succeed if he subscribes to the meaning of this proverb.It means since you have gone some of the way you might as well go all the way, the punishment is the same.

As I have said many times before, Najib needs a major cabinet reshuffle.Too many dead woods and non-performers in his administration.

Unfortunately, adding insult to injury, many of his ministers are not talking sense.


flyer168 said...

Just to share this...

Hope we can learn something from this article...

Groundhog Day Celebrates a Damaged Culture –
"...The findings of Shujiro Urata, Professor of Economics, School of Social Science, Waseda University, presented his observations at the US-China-Japan Trilateral Forum in November 11th, 1997 are still relevant:

World foreign direct investment (FDI) has grown rapidly since the early 1980s. Indeed, the rate of increase of world FDI was higher, compared with world trade from the early 1980s through the mid-1990s.

As a result of these new developments, FDI has become one of the most important means of integrating the world economy.
The role of FDI in the world economy would be significantly greater, if the impact of FDI on various economic activities is considered.

FDI enables investing firms to utilize their firm-specific assets such as technologies and managerial know-how efficiently, while FDI recipients can obtain not only the funds for investment but also efficient technologies and know-how.

Furthermore, FDI recipients can enjoy the benefits by gaining an access to various networks such as sales and procurement networks being developed by investing firms.

There are some factors that may be important for all types of FDI.

A well-functioning legal system is crucial as it provides protection of assets owned by foreign investors. Without security of assets, no foreign investors would undertake FDI.

Closely related to the point just noted is protection of intellectual property rights, as intellectual property is a source of competitive edge for most foreign direct investors.

These points may be summarized as the capability of providing credible commitment on the part of host government, or governance for short.

Another interesting observation on a number, this time the GDP was made:

Pattern One: GDP went up even as imports contracted.

Pattern Two: GDP went up even as exports also contracted.

There were more goods and services consumed…but we didn’t export any of them?

"And it does not help that Philippine society has citizens that behave like feudal subjects, half-brutes even – prompting "Jose Rizal" to reiterate the adage – "like people, like government."

James Fallows completes the circle of ground hog day:

Most of the things that now seem wrong with the economy–grotesque extremes of wealth and poverty, land-ownership disputes, monopolistic industries in cozy, corrupt cahoots with the government–have been wrong for decades.

It even gets glaring when one attempts to elevate the discussion to a rational and systematic discussion that the vacuous play possum and play the victim card to the hilt and would rather talk about how victimised they are instead of discussing solutions objectively measurable time-bound measurable solutions.

The victim chatter is pathetic, it sickening, and retarded. What’s worse – they are its enablers!

So, the long and short of it. The Philippine state of affairs (not just the SONA speech,) is all good – Situation Normal All Effed Up – SNAFU." Unquote.

If MAN does NOT WANT to WAKE-UP & NOT WANT to LEARN to take Positive Steps…

History will keep REPEATING itself – MAN will continue to be Sheeples aka Goyim!

Yes, we are the suckers that allowed the System to create our nation's ills, so please wake up & get out of the Bolehland mindset to see the bigger picture!

You be the judge.


Anonymous said...

Mustapha is speaking like an uneducated, fork-tongued politician and not like an economist. (btw he's an Econ graduate)

Could he live with his conscience having put such a silly explanation on FDI massive contraction?

Anonymous said...


I think it is about time....

you are waking up to what is happening on the ground, political sentiments and support aside...

it is funny and not suprising, your regular supporter eddy is not here to give a word of praise for this write up !!

we will be doomed if nothing is done to stop this rot, which is right at the core now....

Tpg2Sg said...

we will be doomed if nothing is done to stop this rot. Anon 2:15 PM

Not to worry lah, with Petronas "deep pocket", Bolehland dont need FDI. Hahaha!

SM said...

Bro HL,

Najib needs a major cabinet reshuffle?
Why bother?
1/ In the first place he placed them there.
2/ 75% (maybe more of these "ministers" say stupid things all the time, so you reshufle then & they will still be saying stupid things (albeit in a different ministry).
3/ After all these years, this type of answer / statement from a BN Minister should not surprise you!