7/30/2007

Malaysia's comparative advantage

Najib is saying it again to reassure foreign, esp Singaporean investors, that the IDR is a long term investment and there will be no flip flops of policies again. I think the Malaysian govt knows very well the problems and issues and is trying to alleviate the fears of investors. But talk is one thing. It is actions and concrete rules and regulations that the investors are waiting. And Najib also understand the huge comparative advantage which Johore has vis a vis Singapore in terms of land and labour cost. The Malaysian govt should exploit this fully as the ridiculous land and property prices and rentals in Singapore would make Malaysia extremely attractive. Why are the Malaysians waiting? This is the time to compete aggressively with Singapore and wrestle as many investments as they can to Johore. And it is so easy if they can ruin in the parochial and kampong mentality of the local politicians and keep them at bay. A rich and prosperous Johore is good for everyone. And Johore stands to gain to become the most developed and industrialised and modern state of Malaysia. Only if they have the political will to grab the bull by the horns.

15 comments:

Matilah_Singapura said...

> Johore stands to gain to become the most developed and industrialised and modern state of Malaysia. <

Bwahahaha... you must be joking!

If one was to give Malaysia an ENEMA, Johore is where one would stick in the pipe.

Why do you think Johore has lower wages? Lower wages ALONE, is not a "comparative advantage". Without the correct allocation of the factors of production, resulting in infrastructure etc., nothing will happen — i.e. Johore will still be a shithole den of criminals and whores.

They have had lower wages and cheaper land for DECADES. And they still haven't got their act together.

"Successful" cuntries actually have HIGHER wages, and the reason they can sustain a high level of wages along with its high purchasing power is BECAUSE they have, and are able to maintain a comparative advantage in the global marketplace.

"Comparative advantage" refers to the relative ability between countries to PRODUCE economic goods and services, not simply because the factors of land and labour are "cheaper".

redbean said...

that's why i said that they must use their comparative advantage to their advantage. and this can only happen if they get their acts together. low cost is only one factor, the infrastructure, pro biz govt, safety and security, educated and trained workforce, languague barriers, rule of law, etc must all be factored in as a whole.

would they want to play the international game or the kampong game, it is up to them. both live by a different set of rules. to ride with the world economy or to stand still?

Anonymous said...

Hmm, smooth language. Apt use of flowery words for effect. Septic but not vulgar.

Good good.. :)

Anonymous said...

Not everyone has the belief that national sovereignity should be pawned off to the forces of globalisation, all in the name of economic growth and progress. If you believe that is kampung game, then so be it. It is our choice, what's it to you ? To have the simplistic view that what works for Singapore will also work for Malaysia, is naive and foolish.

redbean said...

it is not a case of foolish or naive. and neither is it a case of surrendering sovereignty. any country that trades and ended up losing their sovereignty deserves to be called foolish.

but in the case of international trade and investment, it is a matter of national policy. it is whether a country wants to trade and engage the international community or want to remain isolated, like living in a kampong and be self sufficient, like myanmar.

obviously the malaysian leaders do not think so and wanted foreign investment and engage the world community. and for them to want to invite the world into malaysia, they can't be stupid or foolish. these are not appropriate adjectives to describe them. it is obvious that they don't believe in kampong mentality.

Anonymous said...

Every country has the right to institute measures designed to protect its national interests. Singapore does that as well. If you don't think you are getting a good deal, don't come to Malaysia. it's that simple. You want to come and do business, then play by our rules. If you can't, then don't come, by all means go to Cambodia or Vietnam. It is that simple.

Anonymous said...

You are right, the Malaysian government isn't foolish or naive. The foolish or naive is the one who is willing to pawn his/her country's sovereignity in the name of globalisation, by opening the doors wide open to foreigners competing with born and bred locals for economic and educational opportunites. Ring any bells, Redbean ? before you go around lecturing other countries on what they should do, you should perhaps look a little closer to home.

redbean said...

inter state relations, diplomacy, commerce etc are dealt with by bargaining, both parties push and pull, negotiate for the best deal for themselves. sometimes the negotiation may be tough, like the north koreans negotiating with the americans on the nuclear issue. they strategise, play hard to get, walk out of negotiations, boycott negotiations, just to get the best deal they want.

these are games that adults play in the international arena. there are no permanent enemies and no permanent friends, but a good deal. singaporeans will invest in malaysia when they are agreeable to the terms and conditions. no hard feelings, no emotions, no tantrums to throw.

tak boleh cakap, mauh tak mauh. tak mauh pergi lah. this kind of talks only good in backlanes when boys fight: ) betul lah?

redbean said...

this one i agree with you. i have been posting on this many times. we cannot give away our citizenships so easily as every citizen rightfully own a little bit of the country. every new citizen will take a bite of the total share.

have prs by all means and keep it that way. and prs must not have the same privilege as citizens.

Anonymous said...

No, that is the way things work everywhere, not just in back lanes, between fighting boys. You walk into a shop, find something you like, and then you ask for the price of the item and find it not to your liking. What do you do ? You can try and haggle with the shop owner, and see if he is willing to accommodate you. If not, you don't throw tantrums kicking and screaming that he/she sells the item to you at whatever price you demand. What you do is you walk out, and find another shop that may be selling the same item for a price that is closer to what you are willing to pay. It is called willing seller, willing buyer. Same principle applies to investing in other countries. Again I say, if you don't like what Malaysia is offering, please take your money elsewhere.

redbean said...

you are right in a way. singaporean investors will take their money elsewhere if the terms are not acceptable.

but your govt is not telling singaporeans to take their money elsewhere. they are talking like businessmen trying to convince singaporeans why idr is a good place to invest. and they know that if singaporeans dare not tread, other foreign investors will also think very carefully to put their money there.

this is what the chinese learnt in suzhou industrial park. the foreign companies are watching singapore very carefully and singapore must put their investments in first before they are willing to commit.

the idr will have some investments from singapore and foreigners for sure. but if it wants to really take off as a base for the big international companies, to be an international success, it is the buyers market. and looking at the scale of the idr and the money the federal govt is willing to put in, it has a very ambitious plan to grow very big. so they are thinking big.

would the malaysian govt tell the investors to take the money elsewhere if they are not happy?

Anonymous said...

Redbean, you are right about one thing, that it is a very ambitious plan. At the moment, it is just that, a plan and dream cooked up by a bunch of wet-behind-the-ears boys in the PMO. It is something that has been forced on to the Johor people. There is significant opposition to this from the Johor UMNO grassroots, the Singapore MM himself alluded to that in his recent comments. The Malaysian government may be singing the welcoming tune now, but trust me, if the groundswell of opposition gets too intense for it to be politically tenable, they will do another backflip, just like the backflip with the Free Access Zone. That is the risk that any investor will have to weigh up. If Singapore investors don't want to tread and as a result other investors too will stay away, the so be it. We'd rather not have foreign investment, then have hordes of foreigners come in competing with us born and bred citizens for a share of the economic spoils, just like what you guys are experiencing in Singapore right now.

redbean said...

there are some similarities in the feelings on the ground about the influx of foreigners in jb and in singapore. both the locals will be a bit edgy when they have to compete with foreigners even for a seat in the bus or train.

as long as the percentage of foreigners do not overwhelmed the locals, and foreigners do not receive more than fair treatment at the expense of locals, the singkies may be able to live with that. we do not object to foreign investments and creation of more jobs and opportunities. and we also have lesser space to move around.

in the case of johore, it is a huge piece of real estate and there are ample rooms for development and space for leisure. but the johoreans have all the right to do what they think is best, even not agreeing to the idr. between johore and the states and the people, you will have to work it out.

Anonymous said...

The likelihood of the Malaysian Government asking investors who are not happy to take their money elsewhere is very real. The Malay Ultras have been singing this tune for some time now, telling the Chinese and Indians who criticise the NEP to leave the country if they do not agree with the policy. And the Chinese and Indians are their own citizens.

What is there to stop the Malay Ultras if people like the two UNMO Youth chiefs take over the leadership. From their behavior in Parliament you can see that they are unique and not so moderate in their stance.

redbean said...

we all need to be sensible. umno youth like to play to the gallery. and they think that is fair game. but it is playing with fire. once damage is done, you cannot unwind the clock. look at palestine and israel, how to end the killing?

as national leaders, they need to take note that the world is watching.