Dr M: When I was in government, I did a lot of silly things

Mahathir - wants T'ganu to set up iron-ore JV with Perwaja

"When I was in the government, I did a lot of silly things but I suppose one of the silly things that we see being done is that we have iron ore in this country but instead of giving to a local to mine we allow other people to come to Malaysia to mine and send the iron ore out of the country."

KUALA LUMPUR — Tun Dr Mahathir Mohamad said today the government must give tax holidays for domestic direct investment (DDI) to help spur economic growth and drive expansion from within the country.

The former prime minister said the public would gain more from DDI compared to foreign direct investment (FDI) because wealth would kept within Malaysia.

“If the government can give tax holidays for FDI, why not tax holiday for DDI? Give other perks as well because when the locals invest they make money and if they do transfer pricing then the government will come after them. So they will pay income tax. Locals and entrepreneurs are very much likely to pay taxes in this country. The nation also tends to gain a lot from DDI than FDI,” he said when witnessing the signing of an agreement between Perwaja Steel Holdings Bhd and Sinosteel Equipment & Engineering Co Ltd.

Dr Mahathir added that FDIs would not bring in foreign capital but instead foreign conglomerates would only use local financial resources and take profits out of the country.

“FDI was necessary because we needed them to create jobs for us. Today, our people are nearly all employed except for the Mat Rempits. And the jobs created by FDI go to foreign workers, and foreign workers send the money back to their countries. So we are not getting much from FDI.

“Foreign direct investments do not imply bringing in capital into the country because they bring only 10 per cent, the rest is borrowed from local banks. If possible foreign local banks. So there is not much to gain now,” he said.

Previously, Dr Mahathir has urged the government to focus on DDI and warned that Malaysia would not achieve Vision 2020 if the country continues to rely on FDI.

The agreement signed today will see China’s Sinosteel help build a new concentration and pelletisation plant which will cost RM200 million.

The project is part of the national steel producer's initiative to reduce its dependence on foreign sources for iron ore pellets.

The plant will be built on Perwaja’s existing 400-acre site in Kemaman. The project will commence in the first quarter of 2011 and will be operational by the end of 2012.

However Dr Mahathir expressed his disappointment that state authorities have yet to agree to a possible joint venture with Perwaja on the project.

“I must express my great disappointment because we are seeing a lot of iron ore from Malaysia being exported without any additional value. No added value to this export of iron ore. Here you see the private sector keen to invest and to make use of iron ore that is in the country. I would have thought that the states which have iron ore will be falling over themselves to be involved in this venture.

“The states should make available the areas which there is iron ore to Perwaja so that we don’t have to import raw iron from other countries. Of course, if you import it involves transportation of this very heavy raw material over thousands of miles. In fact, we have this plant right on top of the mine then you don’t have to consider the cost of transport anymore,” he said.

He added that it was ridiculous for the state governments to choose foreign over local investors.

“When I was in the government, I did a lot of silly things but I suppose one of the silly things that we see being done is that we have iron ore in this country but instead of giving to a local to mine we allow other people to come to Malaysia to mine and send the iron ore out of the country.

“But then, of course, the government sometimes does silly things as I did when I was in the government. Now that I am out of the government, it is so nice to able to criticise them,” he said. - Malaysian Insider