KUALA LUMPUR (March 5): Malaysia still lacks the incubating force to drive the growth of prospective businesses, like those within the renewable energy industry, says economist Jomo Kwame Sundaram.

“I think we have to think about how to resume industrialisation in the present circumstances. The world economy has changed a lot from the last time we were industrialising, which was in the 1990s,” Jomo said.

“We have to recognise that the situation has changed, and how we can industrialise in the present period, not on the basis of government subsidy and so on, but how do we incubate industry to be internationally competitive,” he told reporters after attending a panel discussion organised by Khazanah Research Institute on “Malaysian Input-Output Analysis and Industrial Policy”.

Jomo said there are significant opportunities in businesses to generate more sources of renewable energy, given Malaysia is the top exporter of photovoltaic solar panel to the US.

“But there are not enough Malaysian companies doing it; they are mainly foreign companies who happened to be based in Malaysia,” he said.

Jomo also pointed out that if Malaysia had emphasised more on research and development in the palm oil industry, the country would have been a world leader in this aspect.

“In 2006, the US decided to go with bioethanol, Europe decided to go with biodiesel, and the cheapest form of vegetable oil for biodiesel is actually palm oil. So if we have done more research and quickly pushed [the industry], we should be the world leader.

“Right now, of course Indonesia is producing more palm oil, but we should be leading the research. In the past, this shift [from manufacturing sector] to services sector had not really worked. A lot of services jobs created are traditional jobs, and expanding government employment is not really very productive services, and many of the things are not creating value,” he said.

Jomo said Malaysia needs to focus on its strengths and address its weaknesses to become much more internationally competitive in the future.

“It is not that we are starting off from scratch, a lot of things are there. It is just that we need to update, these are the challenges,” he added.