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3 Priority Areas That Asia’s Best Finance Ministers Need To Urgently Address – Spreading Benefits Of Economic Growth, Turn Around Government Related Corporations(GLCs) Poor Performance And Reversing The Progressive Decline In Foreign Direct Investment(FDI) Press Statement by Lim Guan Eng (Petaling Jaya, Wednesday): DAP congratulates the selection of Prime Minister and Finance Minister Datuk Abdullah Ahmad Badawi and Second Finance Minister Tan Sri Nor Mohamed Yakcop as the “Best Finance Ministers in Asia” by the Emerging Markets magazine. DAP hopes that Asia’s best Finance Ministers can urgently address 3 priority areas in our nation’s economic performance. First the benefits of our country’s economic growth of 8 % for the second quarter must be spread to ordinary Malaysians. DAP have received many grouses from businessmen and workers that they do not enjoy any of the 8 % economic growth. In fact some businessmen even question how the economy can be growing by 8% when his business has gone down by more than 20%. DAP does not dispute the economic growth figures but wants the government to realize that such growth is limited to industries and sectors that does not impact on ordinary Malaysians. The 2004/2005 Economic Report issued by the Ministry of Finance in September 2004 states that both the manufacturing and services sectors are expected to contribute nearly 90% of this year’s economic growth. As for the construction sector, with its direct and indirect benefits to the local population, the contribution to economic growth is almost nil. The government should try to assist the construction sector by ensuring that government contracts are spread to the many and not the few contractors. Further, the time has come to open up government contracts to non-bumi contractors. Even opening up 50% of government contracts to open tender system where all bumi and non-bumi contractors can bid would go a long way to help the long-suffering construction industry. Second the performance of GLCs such as Telekom and Tenaga require a complete review and overhaul. Energy, Water and Communications Minister Datuk Dr Lim Keng Yaik had refused to explain the 90 % drop in both Tenaga and Telekom estimated 2004 return of investment to the government. According to the Ministry of Finance Report Of Estimates of Government's Revenue 2005, Tenaga and Telekom was estimated to contribute RM 74.5 million and RM 98.3 million in 2004 before being revised downwards to only RM 7.2 million and RM 8 million.
Such low rates of return is
just not acceptable when Telekom has the second largest market
capitalisation in the KLSE at RM 35.62 billion and Tenaga has the
third largest capitalisation in the KLSE at RM 31.5 billion as at
30.8.2004. Third, Datuk Badawi must arrest the progressive decline in Foreign Direct Investment (FDI) into Malaysia is of grave concern. According the United Nations Conference on Trade and Development or UNCTAD’s 2004 World Investment Report, Malaysia’s FDI inflows declined from US$ 3.2 billion in 2002 to only US$ 2.5 billion in 2003. The top 10 recipients of FDI inflows in developing Asia for 2002 and 2003 were as follows:-
During the same period, Singapore’s FDI doubled to RM 11.4 whilst Malaysia’s FDI went down by 22%. As a developing country Malaysia needs FDI to assist in sustaining our economic growth to enable us to realize our Vision 2020 of becoming a developed nation. Except for Kazakhstan, every country’s FDI increased. There is a need to study and find the causes of such a decline so that FDI inflows can increase in 2004. (6/10/2004) * Lim Guan Eng, DAP Secretary-General |