KUALA LUMPUR (Jan 27): Malaysia, as a small open economy, needs to overhaul trade policies to revitalise its position as the gateway of investment in Southeast Asia, says the Federation of Malaysian Manufacturers (FMM). 

In a statement, FMM president Tan Sri Soh Thian Lai said a recent proposal by the Minister of International Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz to position Malaysia as a strategic country and a quality investment destination is not without merit. 

“Reiterating Malaysia as the gateway to Asean is probably cliché. Malaysia is a small open economy, with a small domestic market. Hence, our development focus has primarily been on the global markets, with a particular focus on Asean,” he said. 

“[But] Malaysia has one of the youngest and well-educated working populations in this region, long established itself as one of the most integrated economies in the world with the highest per capita total trade in Asean (other than Singapore), not to mention the stable macroeconomic and regulatory environment, [so] it never gets old to position Malaysia as the gravity to Asean’s future. 

“What is needed is an overhaul of trade policies to revitalise Malaysia’s position in the future Asean,” he stressed. 

Further, Soh said foreign direct investment flows to Malaysia had been on a decline since 2016. The country is also facing a lot of competition for foreign investments from neighbours with bigger domestic markets, such as Indonesia, Thailand and Vietnam. 

“Being a maturing economy does not mean Malaysia can no longer compete for foreign investments. While investments may be flowing into our larger neighbours, no country has the comparative advantage to produce everything. Malaysia can also participate in the regional supply chain. While the manpower involved may not be large, it generates employment for highly skilled workers,” he said. 

According to Soh, Malaysia still has potential to offer foreign investors. Besides good infrastructure and a stable political environment, the country has all necessary resources, such as financing, manpower, security and a business-friendly regulatory framework, that are less prone to natural disasters.

“As Malaysia moves towards achieving high-income status, much reform needs to be done. This would require greater investment in human capital and policies to encourage innovation. Infrastructure facilities and institutional quality need to be enhanced. While Malaysia never lacks development ideas and planning, the problem has always been, and still is, on implementation. This pertinent problem needs to be addressed,” he added.