Last week, Senior Minister and Minister of International Trade and Industry (MITI), Azmin Ali, issued a media statement highlighting Malaysia’s position as the most attractive investment destination for foreign investors amongst Emerging Southeast Asian countries according to a report published by the Milken Institute, a global think tank.
The 2022 Global Opportunity Index measured the performance of seven Southeast Asian countries in areas such as Business Perception, Economic Fundamentals, Financial Services, Institutional Framework, and International Standards & Policy (Singapore was not included as it is considered a developed country.
Myamnar and Brunei were also excluded) The fact that Malaysia emerged with the highest ranking amongst the Emerging Markets and Developing Economies (EMDE) category of this report should not be surprising. Neither should Malaysia’s ranking on this report be something that the Senior Minister should be “boasting” about by issuing media statements.
Azmin should instead explain to Foreign Investors and the business community the “value added leadership” which he has provided as a Senior Minister and MITI Minister since he took up this position after the Sheraton Move in March 2020.
In my estimation, his “value-added” has been zero or perhaps even nett negative during these past 22 months especially on substantive policy issues and policy implementation.
As the most Senior of the Senior Ministers under former Prime Minister, Muhyiddin Yassin and under current Prime Minister Ismail Sabri, Azmin has failed to use his “esteemed” position to effectively lead industry and business during the COVID19 crisis and has lost many opportunities to reposition Malaysia to more strategically attract additional re-investments from existing players and to attract new players to invest in Malaysia in the services and manufacturing sectors.
It is not global think tanks like the Milken Institute which can testify to the current investment climate in Malaysia but existing multinationals in the country, many of whom are frustrated with the lack of direction and leadership in the current government, including from the Senior Minister in charge of MITI.
The fact that Malaysia continues to attract FDI under the present leadership is largely due to the hard work of the civil servants in MITI and the professionals heading other federal government agencies such as MIDA, MATRADE, Invest KL and MDEC and state investment promotion agencies such as Invest Penang and Invest Selangor.
For the sake of brevity, I will point out FIVE areas where Azmin has failed to manage existing investor issues and to set the strategic policy direction of the country moving forward – COVID19 response, ESG strategy, Human Resource Requirements, Trade & Free Trade Agreements (FTAs) and a choerent National Investment Strategy.
(i) COVID19 Response by MITI
I am sure that many foreign investors in Malaysia have not forgotten the manner in which the various Movement Control Orders (MCOs) were announced and implemented and the negative impact they had on production and supply chain activities in 2020 and 2021.
I only need to remind Azmin of the strong response by the CEO of the European Chambers of Commerce (EUROCHAM) following the lockdown impose on economic activity during MCO 2.0 in early 2020. Several chambers of commerce (German and Japan) and business councils (Dutch) also warned of the loss of investor confidence as a result of the way in which MCO 3.0 was implemented in the middle of 2021.
Although Azmin did intervene to arrange for an emergency meeting between then Prime Minister Muhyiddin Yassin and the chambers of commerce during the third lockdown, the damage to our international reputation among these Multinational Corporations (MNCs) was already done.
Part of the blame for needing these lockdowns should be on Azmin’s lack of leadership especially with regard to the failure to control the spread of and to explain the context on the so-called “factory clusters”.
When the number of COVID19 cases were reaching its peak in July 2021, many people blamed the continue operation of factories around the country even though cases from these “factory clusters” comprised only 5% to 10% of the total cases and the large majority of cases were via community spreading.
Finally, while MITI did arrange for a special vaccination program for the manufacturing sector via its PIKAS program, most of the workers in this sector ended up being vaccinated under the Ministry of Health’s PICK program, especially in the Klang Valley during the Operation Surge Capacity at the end of July / early August 2021.
As for the rollout of the COVID19 booster shots, MITI has not announced any special initiatives to arrange for 3rd vaccine shots for factory workers. The failure to rollout such initiatives, especially in light of the fast-spreading OMICRON variant, may lead to a re-emergence of “factory clusters” in the near future.
(ii) Environmental, Social and Governance (ESG) gameplan for MITI related industries and investments
It is surprising that MITI has not taken the lead to announce concrete steps and to demonstrate good industry examples on ESG related initiatives given the prominence that such issues at the international level.
As Senior Minister, Azmin could have taken the lead to showcase good used cases in various sectors of the economy where ESG is playing a key role. For example, Azmin could have looked for larger factories which have installed Malaysian made Solar PVs on its rooftops to drive down energy costs as well as the promote the Made in Malaysia brand.
He could have brought together different government ministries and agencies which are working on ESG related initiatives with MNCs and their suppliers such as providing decent housing for factory workers which is compliant with domestic as well as international regulations.
He could have asked MITI and MIDA to identify players in the automotive components and parts supply chain that could pivot into providing components for the emerging Electric Vehicle Industry in the region.
Instead, almost 2 years after the launch of the National Automotive Policy (NAP), MITI has only now established a ‘National Level Inter-Ministry Electric Vehicle (EV) Taskforce’ to discuss the development of the EV industry and the relevant ecosystem.
(iii) Human Resource Requirements for Foreign Investors
For many FDI projects to be successfully implemented, these MNCs require a mixture of local and foreign human resource talent. Importantly, the hiring of human resources for these projects, whether it is investments from new MNCs or reinvestments from existing MNCs, cannot be seen from a zero-sum perspective.
The hiring of one additional foreign talent does not mean that one local is deprived from such a job. What it does mean is that these FDIs will result in the creation of let’s say, 100 middle- and high-income jobs, out of which 30 positions will be for foreign talent and the rest of the 70 positions will be for Malaysians.
As a result of the increase in unemployment due to the COVID19 economic crisis, the Ministry of Human Resources put in a requirement that employers who want to hire expatriates must dvertise these jobs for 30 days in the MyFutureJobs.com portal which is managed by PERKESO.
While certain exemptions have been put in place for certain job categories, the process is still cumbersome for many MNCs and has increased their overall recruitment costs for these positions.
More importantly, the 30-day waiting period and uncertainties over whether or not the application for new expatriate hires will be approved will inevitably lead to delays in the successful rollout of FDI projects, especially those which are time sensitive.
As a Senior Minister, Azmin should take the lead in organizing and facilitating dialogue sessions between the chambers of commerce and the Ministry of Human Resources and relevant agencies such as PERKESO and Talentcorp so that there can be a frank exchange of views between the various stakeholders.
Importantly, MITI and MIDA should also push for an evaluation on the success rate of advertising on the MyFuturejobs.com portal for positions that MNCs want to be filled by expatriates (presumably because equivalent local talent for these positions is difficult to find).
(iv) Failure to outline a strategy for current and future Free Trade Agreements (FTAs)
One of Azmin Ali’s biggest failures is his inability to outline the strategic direction for MITI and the country with regards to existing and future FTAs. This includes making a strong public case on how past, current, and future FTAs will benefit the country overall and how SMEs in various sectors of the economy can benefit from these FTAs.
Apart from answering questions with prepared text by MITI officers in parliament, Azmin has never done any interviews with business news outlets such as BFM or The Edge on any MITI related issues including FTAs. This means that when Malaysia submitted the relevant documents to the ASEAN secretariat to confirm our ratification of RCEP on the 17th of January 2022, all we got was a press statement by MITI on the 21st of January 2022.
There was no spokesperson from MITI who was given the mandate to explain the positive implications of Malaysia ratifying RCEP. (It would have been ideal if that spokesperson was the MITI Minister himself) There have not been any programs announced for MITI to brief industry especially SMEs in the manufacturing sector on how to make full use of Malaysia’s entry into force of RCEP on the 18th of March 2022.
(Even though the Minister promised via a tweet to me on the 9th of January 2022 that he would organize a briefing to factory owners in my constituency on the benefits of RCEP, none of his officers from his office or from MITI has followed up with me).
The lack of strategic direction and public advocacy for FTAs by Azmin means that he still has not made any progress either within the cabinet or in the public sphere with regards to Malaysia’s position on whether or not to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) even though he has been the MITI Minister for coming to 2 years.
This lack of strategic direction also means that Azmin has not yet gotten the necessary cabinet mandate to restart negotiations on the EU-Malaysia Free Trade Agreement (FTA). The lack of prioritization by Azmin and his office with regards to FTAs may also explain the slow progress on the FTA between Malaysia and the European Free Trade Association comprising Switzerland, Norway, Iceland and Lichenstein (basically non-EU member countries in Europe) and the lack of any discussion with the UK on a potential FTA after the UK’s exit from the EU. (n contrast, Singapore and the UK signed an FTA in December 2020 which entered into force in February 2021)
(v) The absence of a coherent National Investment Strategy
Azmin has referred many times to National Investment Aspirations (NIA) during his almost 2 years at MITI Minister. What the country needs moving forward is a coherent National Investment Strategy to provide a strategic roadmap on what kind of FDI Malaysia wants to attract to different parts of the country according to different local capabilities, infrastructure, and human resources available.
Rather than making general statements such as the five main sectors under the NIA which has been highlighted during Pakatan Harapan’s time in government (and by the prior government), Azmin should take the lead in publishing a National Investment Strategy, complete with details on specific sub-sectors to focus on (such as Industry 4.0 related components and technologies in the Electrical & Electronics E&E sector, for example) and detailed roadmaps on how to create these ecosystems together with FDIs from new and existing MNCs and their local suppliers. At the rate things appear to be moving, we may see the establishment over yet another high-level committee before such an investment strategy comes to light.
Having observed Azmin in action as the Menteri Besar of Selangor, as the former Minister of Economic Affairs and now as MITI Minister, I cannot help but get the impression that he is the sort of person who likes to take credit for the good work of others, tries too hard to control his public image by minimizing media appearances where his lack of substantive knowledge may be exposed and is more worried about political posturing than on leading on policy matters and following up on policy implementation.
I think the following picture from Azmin’s “cleaning” efforts after last year’s flooding in Selangor sums up his working philosophy as a politician and minister – taking a picture after others have done the work of cleaning up and more concerned about his public image than doing the actual hard work of policy making and policy implementation.
Media Statement by Dr. Ong Kian Ming, Member of Parliament for Bangi and Assistant Political Education Director for the Democratic Action Party (DAP).