One of the larger issues that arises in the face of the global economic slowdown and recession is that the foreign investor-driven, export-oriented economic growth model is clearly not working, especially in times like this when global demand has shrunk. With global stagflation or recession staring at us, capacity is rising and the trickle of foreign investors is drying up.
We should be focusing more on building up a strong, resilient, sustainable domestic economy by providing basic services (housing, health care, food security, public transport, education) rather than relying on foreign investors and now, foreign retirees.
But getting federal funding for such essential services is a problem in the Pakatan-run states and I can sympathise with the Penang state government, which is searching high and low for investors to stave off the effects of job losses. All the same, hunting for foreign investors is at best a short-term solution that does not address the fundamental changes that have taken place in the global economy including the emergence of other low-cost countries such as Vietnam and China, which have much larger domestic markets. We should know by now that many foreign investors will not hesitate to pack up and head for the exit when the global economy goes slack, leaving their workers stranded.
Our region today is a vastly different place compared to the time in the 1970s when Lim Chong Eu successfully lured electronics investors from Japan and the United States to set up assembly plants in Penang.
So I was interested to read about Guan Eng leading a 52-member delegation on a five-day trade mission to South Korea. The NST carried this report yesterday:
GEORGE TOWN: Chief Minister Lim Guan Eng led a 52-member business delegation on a five-day trade and investment promotion trip to Seoul, South Korea, yesterday. The
Lim’s press secretary, Cheong Yin Fan, said companies from the private sector would promote a cluster of properties to Korean buyers at the Penang pavilion.
She said the state government wanted to promote the Malaysia My Second Home programme to Koreans.
Lim will meet epresentatives of Korean companies and investors in various sectors, which include medical devices, electronics, healthcare, education, tour, travel and recreation.
Among the members of the delegation is Deputy Chief Minister I Mohammad Fairus Khairuddin.
Now, it will be interesting to see how a Pakatan investment mission, with its commitment to CAT, differs from a BN junket. In this regard, my old friend Andrew (lots of Andrews around!) in Korea raises some questions, which, if taken in the right spirit, will give the Penang state government ample opportunity to demonstrate what CAT means in practice:
1) Why is this trip taking place now when the economic situation in Korea is really bad? The Korean Won has collapsed nearly 40 per cent this year. Thus, outward investment from Korea is more expensive and there is less outflow from Korea nowadays. Please note that the NST news report suggests that CM Lim & Co. want to attract Korean investment and retirees to come live in Malaysia.
2) The Korean economy is facing a major financial and emerging economic crisis due to massive financial (mainly debt) outflows. What makes Guan Eng & Co. so certain they will get Korean or other investors to invest in Penang? See Korea Times articles here and here.3) They are attending the Asia-Pacific Tourism Investment Conference and Expo 2008 in Seoul. Website of the APTIC is here. This is mainly a Tourism Investment Conference. What tangible benefits does the Penang Govt expect to gain from participating in this expo? …CM Lim (should) detail concrete specifics … (and not just talk about) prospective, hoped-for gains sometime down the future, etc.4) What is the total cost of this trip of Lim Guan Eng and 52 others to participate in APTIC?5) Who is footing the bill of Lim Guan Eng and 52 others to APTIC?6) Please provide a list of all those on this trip who currently are in State government and/or who work for any State/Federal government agency. Who is paying for their travel? Please provide specific answers.
This is an opportunity for the Penang state government to show CAT in action and to prove they are different from the BN.
As as aside, I will never understand some of these developers. They build all these expensive homes and condos in the hope of fatter profit margins at a time when many Malaysians are desperate for affordable homes here. And then when they cannot sell them locally, they go looking for foreign investors to buy these expensive properties, which are beyond the reach of most Malaysians.
Same goes for “health tourism”. Many Malaysians are finding it difficult to afford quality health care and there are long queues in our general hospitals, which are understaffed. And then they allow these upmarket private hospitals to be set up – which end up hunting abroad for patients (as many Malaysians cannot afford their services). But where do you think these private hospitals will pinch their medical staff from – if not invariably from the local state-run general hospitals, further aggravating the brain drain from the public hospitals and lengthening the waiting lists.