Economist warns of over-reliance on Chinese investments

 

With big Chinese money coming to Malaysia, it may lead to an over-dependence that will weaken the local firms, says economist Edmund Terrence Gomez.

PETALING JAYA: An economist has warned against heavy reliance on Chinese investments as they do not appear to be very promising for Malaysia in the long run.

Edmund Terrence Gomez from University Malaya said that although these investments generate employment and industrial development in the short term, there are concerns it will have an impact on domestic firms.

Speaking at a webinar on the launch of his book “China in Malaysia”, Gomez said domestic firms which are smaller may lose out to the more dominant Chinese firms and may soon be bought out.

For local firms to compete, he said they needed to invest in research and development (R&D) to move up the technological ladder and compete with these Chinese firms.

“We must have a vibrant domestic enterprise base if we want to make sure that these companies can be independent.” said Gomez.

However, he said the government needed to do more to inspire confidence in these privately-owned firms.

“Do we have policies where the state instils fear rather than trust in privately-owned firms? Do we have policies that alienate firms? Yes, we do,” he said.

In the past, critics against Chinese investments including Dr Mahathir Mohamad have raised concerns over sovereignty and economic inequality.

Gomez also said small domestic firms were lacking the talent needed to empower them to challenge foreign firms.

“I’m worried about the way education is moving. We need to create more individuals who can think and be independent and we can do that by revamping the curriculum.”

He added the education system must prepare students to adapt towards the new economy.

“Are they quick with that kind of education and move towards a rapidly changed economy. Is our education sound in that way? No.” - FMT