An appraisal of Malaysia’s industrialization

A lot of people credited Mahatir, justifiably, as the prime minister who brought Malaysia into the industrial age. His predecessors started the ball rolling and Mahathir carried the fight forward, aided by petrol money, a generally hard working and intelligent population, stable political environment and good legislative background left by the British colonists. We are rightly proud of our country being able to transform its economic structure and we must also review the pros and cons of this sustained and continuing effort.

Every school going children can recite the FDI and job creation slogan, a boast rightly used by BN in election and other rallying calls. Manufacturers are bigger employers than say, traders and farmers so job creation is definitely an upside impact of industrialization.

However, one must question 2 issues here: 1) high percentage of jobs created are mostly low paying operator positions and 2) a very high percentages of these jobs are taken up by foreign workers.

I wrote earlier that Malaysia is not creating enough jobs were people are willing to pay top dollars for. Trying to remain competitive in the FDI market as a low cost manufacturing destination actually means holding back the advancement of benefit and welfare of the population. Employing a high number of foreign labourers also mean that general wage levels are down. Labour union movements, for historical reasons and also because of high foreign content, remained under developed.

As a result, Malaysia may have and still creating plenty of job opportunities but while quantity may be there, quality of jobs created may have much room for improvement. A telling sight is the housing area near Senawang Industrial Park where a lot of terrace houses suitable for middle level income demography are either unsold, left vacant or cramped with foreign workers. This would put a strain on banks’ profitability and ultimately interest rates available to diligent savers and retired Malaysian citizens.

Another development is the mushrooming of illegal factories. Around Selangor alone, I read somewhere in one of the Chinese newspapers that there were as many as 3,000 illegal factories. These factories could have an adverse impact on environment as well as human/workers’ right issues. One must question why so many people resort to operating illegal factories. Is the licensing process too much of a hindrance? Or are Malaysians too much of a profiteer and disregard their social responsibilities?

There are many successful industrial parks in Shah Alam and Penang populated by renowned international brands. There are also less formidable areas such as Silibin, Sungai Gadut, Alor Gajah Industrial Parks populated by lesser presence. This is no disrespect to the hard working SMI owners but one wonders that after about 30 years of industrialization, where is the renowned Malaysian brand? South Korea, devastated in the 1950’s by civil war while Malaysia prospered by tin demand as a result of that war, have come up with their Hyundai and Samsung.

It would be great if Malaysia can boast of renowned international brands and we can actually see these brands scatter among the various Malaysian states. People do not need to leave their home town to find employment opportunities and this represent less strain on national resources on traffic and logistic matters especially during festive seasons.

After the failure of Malaysia Electric Corporation, Proton and Badawi’s nasi kandar stall in Perth, I raised my fingers and count the renowned brand by Malaysians: 3 in 1 Old Town White Coffee (seen this in Hong Kong supermarkets), Jimmy Choo (exclaimed by Sarah Jessica Parker in Sex and the City) and Air Asia (by sponsoring BPL’s referee who until AA shows up, never had or seem to need a sponsor before).

Yes, we have moved forward in terms of changing Malaysia’s economic structure for the better but there are few key areas that we can improve on to raise the general level of living standards.

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