September 23, 2012
Look beyond Suaram: Malaysia also depends on Foreign Funds
by Ahmad Fuad Rahmat (09-22-13)@http://www.freemalaysiatoday.com
The current witch-hunt against SUARAM for receiving foreign funds should not make us forget a key fact: that Malaysia’s overall approach to development is in fact dependent on foreign funding.
Malaysia’s “growth” is FDI funding
In 2010 Malaysian Foreign Direct Investment was the strongest in Asia.In 2011, the Malaysian government allowed for at least 17 service sub-sectors to be liberalized, permitting 100% foreign equity. These so called “sub sectors” include: private hospital services; medical and dental specialist services; architectural, engineering, accounting and taxation, legal services; courier services; education and training services; as well as telecommunication services.
Viewed closely these services that are open to foreign ownership are rather far reaching indeed: they even include “welfare services delivered through residential institutions to old person and the handicapped” and “child day-care services including day-care services for the handicapped.”
The fact that basic healthcare and education in Malaysia are open for foreign ownership should alarm us. Our fundamental needs are being put up for sale for the sake of foreign profits.
Lynas is just one example of what that has amounted to. Exxon Mobil, the largest company by revenue in the world, whose gross annual income is bigger than Malaysia’s, is also on the list, currently operating off the shores of Terengganu.
Attempts to attract foreign multinationals to run their treasury management services in Malaysia has compelled the government to offer them tax breaks of up to 70% for five years.
As of now, there is also much talk of the need to go beyond the 30% cap on foreign ownership of local banks, although the cap for Islamic banks, investment banks and insurance companies has been raised to 70%.
Malaysia’s real estate sector
Since 2006, any foreigner – who now has the same property rights as a Malaysian – wishing to purchase a piece of property worth more than RM 250,000 need not go through the Foreign Investment Committee (a division in the Prime Minister’s Department) nor do they have pay to the Real Property Gains Tax. The current ratio of foreign to local property ownership in Kuala Lumpur alone is 30:70.
Do Malaysians benefit?
The typical defensive and conservative response to all this is to say that foreign investment creates jobs while foreign funding for NGOs merely disrupts local politics.
This can’t be further from the truth. The liberalization of trade has been followed by a liberalization of hiring policies, as well. This impacts low wage employment in particular, an enticing prospect for corporations hell bent on operating with as little regulation as possible while paying workers as low as possible. According to REFSA, for every ten Malaysians in the workforce, there are four foreign workers.
With working class Malaysians having to compete with low wage foreign labour, can we really expect any improvement in wages for the 33% of Malaysia’s workforce earning RM700 per month?
How seriously then can we take BN’s allegation that the meagre help SUARAM receives from its international friends are “interfering with the internal affairs of a sovereign state”, when that is more accurately reserved for the government’s strategy for development as a whole?
The hypocritical scenario is clear for all to see: The government aims to liberalize the economy for as much foreign investment as possible. Development, according to this approach, is not about human rights, transparency, justice, academic freedom or quality of life but pure materialistic accumulation with the help of foreign investment. Globalization is to benefit the elites first and foremost, not the improvement of Malaysia’s democracy.
In the meantime it harasses an NGO which champions the rights of the average working Malaysian. When it can it maximizes the “foreigner” vs. “Malaysian” scare tactic, exercising the xenophobia it has mastered after decades of practice.
The government puts its Malay-nationalist-Keris-waving chauvinist hat when dealing with a racially insecure Malay middle class. But in front of the world’s wealthiest, it puts on its cosmopolitan reformist smile. The Rakyat loses either way.