KUALA LUMPUR, 11 November 2002 — Starting with the Petronas Twin Towers Complex in Kuala Lumpur (KL’s) so-called “Golden Triangle” city center, Prime Minister Dr. Mahathir Mohamed’s 2020 vision has taken impressive shape by any standards.
A mere half an hour’s drive to the southeast, depending of course on KL’s notorious traffic jams, is Putrajaya, Malaysia Incorporated’s administrative capital, the world’s first self-styled “paperless” government office complex. A similar drive to the southwest, is Cyberjaya, the hi-tech and information technology hub which may yet hold the key to the 2020 Vision’s eventual success.
The southernmost coordinate of this development prism is completed by the futuristic Kuala Lumpur International Airport (KLIA), where arriving and departing passengers have to embark on a light rail transit ride before they can reclaim their luggage, or clear immigration to head toward the duty free manna. The Malaysians call this prism the Multimedia Super Corridor (MSC).
However, Malaysia Inc. is experiencing a dose of blurred vision. The East Asian financial crisis of 1997 was a body blow to the Malaysian psyche, but the Mahathir government, judging by its economic and financial reforms including pegging the ringgit to the US dollar; the imposition of capital controls and a repatriation tax on funds; and the adoption of far-reaching financial sector and capital markets master plans, seems to have successfully mitigated the worst impact of the crisis.
Like everybody else, Malaysia too has borne the brunt of fluctuating world oil prices (Malaysia only has about 10 years of proven reserves left at the current level of 650,000 barrels per day (bpd), although she still has huge natural gas reserves); the impact of international terrorism as highlighted in the region by the recent Bali bombings and the continuing turmoil in the world equities markets precipitated by ailing US and European economies even prior to the added effects of 9/11.
Not surprisingly, intellectuals and technocrats in Kuala Lumpur are calling for the reinventing of Malaysia Inc. Only a few years ago, Malaysia was one of the darlings of the global corporates, attracting huge FDI (foreign direct investment) flows and establishing itself as a manufacturing and assembly hub. Overnight, Malaysia became the world’s largest exporter of semiconductors, electric fans, air-conditioning systems, and other such items. But competition from “cheaper” neighboring locations such as China, Vietnam, Laos, and even Indonesia, has meant that FDI flows have inevitably slowed down. In 2001, for instance, Malaysia attracted $5.3 billion worth of FDI, compared with $4.5 billion at end October 2002.
Senior officials at the MSC argue that Malaysia is going through its different phases of economic development which started with a primary commodities exporter in the 1960s; to assembly and low-tech manufacturing in the 1970’s and 1980s; to high-tech manufacturing in the 1990’s. The 2020 Vision aims at transforming Malaysia into a fully developed economy by the end of the second decade of the new millennium. This, says the MSC, means transforming Malaysia into a K-economy (a knowledge-based economy). Senior officials are keen to confirm that phase 1 of the MSC project has been achieved one-and-a-half years ahead of schedule. There is an element of realism in the Malaysian approach — the recognition that the country was losing its comparative advantage in traditional economic sectors; that higher productivity through technology and value-added activities is essential; and that the information age and converging technologies are the best opportunities for socio-economic transformation, in other words reinventing Malaysia Inc.
The MSC vision is ambitious. Between 2003 and 2010, the project aims to have a web of corridors; 250 world class companies (it has currently 53 including Nokia, Sun Microsystems, Motorola, Lucent Technologies, Microsoft, Unisys, IBM, Shell, Ericsson, EDS, Cisco Systems, BT, Fujitsu, Siemens, and Intel); set global standards in flagship applications such as telehealth, smart schools, technoprenuer development, R&D cluster, electronic government, worldwide manufacturing web, multipurpose card technology, e-business, and a borderless marketing center; the establishment of harmonized framework of cyberlaws (it currently has a set of nine cyberlaws in place including intellectual property, digital signature, personal data protection, optical disc, electronic transaction, and computer crimes acts); and five intelligent cities linked to other global cybercities.
In its phase three vision which completes the 2020 project it aims to have 500 world class companies; to be the location for an International Cybercourt of Justice;12 intelligent cities linked to the global information highway; and become a global test-bed for new multimedia applications. This stresses the MSC, will be the platform for Malaysia Inc. to “leapfrog into leadership in the Information Age”.
MSC officials stress that the project’s initial success goes well beyond ordinary measurement. The main benefit has been the increased awareness and acceptability of the Malaysian population (of 24 million) of the importance of IT to economic growth. This has further been highlighted by the impressive rise in access to and Internet penetration by per capita per population. However, as often is the case, dreams are tempered with the hard realities of mundane policy implementation. Take for instance, the teaching of science and mathematics in Malaysian schools, the underpin of the Malaysia’s technovision. The Mahathir government recently declared that the teaching of these two core subjects has to be in English in all Malaysian schools to inject some degree of uniformity to the country’s education policy. Another sign that Malaysia Inc.’s vision has other problems is the lukewarm uptake by non-Bumiputras (non-Malays such as Chinese and Indians) of allocated places at junior science colleges run by the Advanced Skills Institute of the Malaysian Science and Research Association (MARA).
Malaysia’s multi-ethnic stability is the future to its economic prosperity. Evolution and not revolution has been the road to Malaysian nationhood. But as the ethnic riots in the late 1960s showed, the wrong course can easily precipitate a cauldron of uncertainties. Dr. Mahathir has succeeded in walking the tightrope of the multi-ethnic balance — making sure the Malays progressed econimically through the affirmative action of National Economic Policy (NEP), while at the same time wooing the main Chinese and Indian parties into the Barisan Nasional coalition together with the predominant Malay party UMNO.
UMNO is showing signs of some creaking both through internal factionalism and the challenges thrown by the Islamist party PAS, which control the state governments of Kelantan and Terrenganu. The reform of UMNO will be a key challenge to Deputy Premier Abdullah Badawi, the designated successor to Dr. Mahathir, who has publicly declared that he will retire in October 2003.
The best base for Malaysia Inc.’s future success and prosperity, however, is its economic management and fundamentals. The World Bank mid-term review of East Asian and Pacific countries rightly lauded Malaysia’s economic reforms and stressed that growth forecasts of 3.5 percent in 2002 and 5 percent in 2003 are well-founded. The Bank did have some concerns over falling FDI flows and the rising domestic debt of 75 percent of GDP.
The Malaysians are more upbeat. Their GDP forecast for 2003 is 6 percent rising to the target of 7 percent in 2004. Inflation is one of the lowest in the world at 1.4 percent. With $90 billion worth of exports in 2001, Malaysia is the 17th largest trading nation in the world. It currently enjoys both balance of payments and trade surpluses, and its international reserves total over $36 billion.
