Saturday, 30 June 2007

Protectionsim - does it work?

Sometimes its so refreshing to travel. Had the chance to spend a few days in Kuala Lumpur.

Malaysia is still Malaysia. They've got a good economy going for them, but this thing about protection of Malays seems a bit antiquated. That European envoy who commented on the ills of this system got plenty of coverage in the Malaysian media and plenty of attention from Malaysians, including ministers and their cohorts. And they all rejected his comment. But will the protectionist policy work though? And who are they protecting the Malays against? Apparently Malaysian Chinese, who are also their own Malaysian citizens.

They keep saying that they need Foreign Direct Investments (FDI) to help them with their growth targets so as to sustain economic well being and employment levels in their countries (such as Malaysia, Indonesia, Thailand, Vietnam & the other Asian economies). However they keep citing percentage growth rather than what the FDIs are doing to help their economies. A certain minister would say they managed to increase FDI by "x" percentage points over that of last year or over the figure 5 years ago. But do they realize that if there had not been such antiquated protectionist policies, FDI figures could have, and would probably have reached, a different level?

As long as they look politically good, as long as they can report an increment in FDI, they're happy. They never look at what others are attracting in terms of FDI. Have you ever heard the Malaysian trade minister saying that FDI growth in Malaysia is a "net" gain over those of the other Asian countries? That would really have qualifies as an achievement, right? Not percentage growth with our "eyes wide shut"? What's the point of boasting about the growth in FDI in your country when the others in Asia are enjoying growth in real terms, terms which accord them the opportunity to not only grow their economies but also to restructure them so they are better geared towards the era of globalisation and to better handle the threats of emerging economic behemoths like India and China?

This isn't only about Malaysia. The Indonesians, and possibly the Thais, are the same. Just because they had an extra one or two billion in FDI, they're happy and able to report to their respective parliaments and people that they've done great jobs in attracting foreign investments ( and hence deserve to be re-elected). The technocrats in those governments are Harvard trained, or trained in a foreign tertiary institution of equivalent stature. Surely they must have their mathematical models designed for "non protectionist" parameters to predict investments and growth in the ideal scenario.

This all boils down to politics I guess; but the immaturity of their growing middle class cannot be absolved of blame as well. This "new found" middle class is easily manipulated; and in the case of Indonesia and possibly Thailand as well, they can be easily coerced or bribed into speaking on behalf of their politicians' ends rather than what is REALLY good for their country and for their people. Sad isn't it, considering they have so many people below the poverty line who are not likely to be able to get out of the poverty trap in their lifetimes, or maybe even the lifetimes of their children?

Perhaps they'll have to stick to lontong sayur for the rest of their lives, which isn't bad for nutrition. Most of the impoverished cannot even afford lontong sayur. They need money to buy rice to make lontong and have to till their lands for the vegetables (sayur), assuming their lands have not been appropriated by corrupt officials to build golf courses or shopping malls.

But why do they elect governments after governments who have no wish to tend to their interests? They don't, actually. For a few US Dollars, these poor and impoverished people are prepared to sell their votes to the highest bidder, thereby letting them decide their fates, as well as theirs of their children.

Money politics, they say. So do they have any hope at all?

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