THE MALAYSIAN ECONOMY

The Malaysian economy has been facing severe problems in recent years, which started becoming apparent after the departure of the engineer of the best growth period in Malaysian history- Tun Dr. Mahathir Mohammad.

By the numbers- official figures show that approved investment for the first nine months of last year totaled RM19.1 billion, of which RM12.2 billion was foreign direct investment. That is a far cry from the RM62.8 billion of approved investments in the previous year, with just over RM46 billion in the form of foreign capital.

The KLSE shows a drop, which is an apt metaphor for the future of Malaysia's economy.

Sad huh?

The problems are deep and far ranging- starting with a climate that has failed to keep attracting investors. Previously, we could boast of low labour costs, a good business environment, and general harmony in the nation. No more. Other countries now have even cheaper labour markets, like China and Vietnam. Harmony in the nation is more endangered day by day, even without ethnic tensions. Just look at our crime rate, which has proved able to spook high-tech operations in the country's industrial areas- the heist of 47 million ringgit worth of Intel chips from an air cargo terminal in Penang comes to mind.

Bayan Lepas International Airport, a key entry point for foreign investors needs to beef up security if it doesn't want to be overlooked.

Worse, the idea of operating in the country is becoming a bit of a joke among multinational companies. Friendlier investment climates are found in locales like Singapore, Indonesia and Thailand. This is due to revolting bureaucracy, which means it is terribly difficult to start and do business. The Ease of Doing Business Index, published annually by the World Bank, ranks Malaysia 23rd in its 2010 list, a 2-place drop from 2009. Singapore ranked 1st in 2010, and 2009, while Indonesia recorded a 7-place jump from 2009.

Reversing the trend starts with the government. It needs to slash away the huge rainforest of red-tape (they're bigger than our REAL rainforests!) It needs to fix infrastructure, especially security related ones, at ports and other transport points, like airports and highways. And they need to create an education system that produces critical and creative thinkers, instead of students who simply memorise and regurgitate huge volumes of facts. This spurs the change to a real knowledge based economy (computers, services and solutions) instead of simply constructing hard drives, semiconductors and shoes.

In January 2009, Intel- the world's largest chipmaker- announced that it was shutting down operations in Malaysia. Personally, I'm not surprised.

If Malaysia is to keep its economy humming steadily in the years to come, these changes are necessary. More necessary is an immediate end to denial of the problem. And I wish that, like so many issues in this country, it won't be swept under the carpet after a brief outcry.