This article first appeared in Forum, The Edge Malaysia Weekly on October 4, 2021 - October 10, 2021
Last year, during the 11.11 shopping sale, US$75 billion worth of goods were sold online on Alibaba’s platform globally. Malaysians spent a huge amount of money to buy new handphones, gadgets, T-shirts, beauty products, snacks and all things online. Malaysia was reported to have placed fourth in the list of top purchaser countries of the 11.11 global sale.
In a few years’ time, when the Digital Free Trade Zone (DFTZ) is in full operation, goods made overseas are expected to flood Malaysian shores much more easily. With DFTZ and more advanced automated warehouse systems, the product delivery time will be cut short. Consumers who buy something online will probably get their package in less than 24 hours, because all products would already be stored in the DFTZ located at the old low-cost airport terminal in Kuala Lumpur International Airport.
While we celebrate the arrival of the digital economy and advancement in online shopping, spurred by Covid-19 lockdowns, we as Malaysians must ask ourselves, what are we buying and what are we selling?
Look around your house. From laptops to gadgets, from shampoos to toothpaste, from kitchen ovens to coffee mugs, how many things are made in Malaysia? Malaysia is increasingly a consumption-driven nation instead of a producer-driven one.
Malaysia has been a trading nation since the time of the Sultanate of Malacca. Traders from China, India and Southeast Asia came to Melaka, Penang and other trading posts at the time to trade. Our merchants profited from trading. In those days, the country had many things to offer, including agricultural produce, spices, tin, rubber and timber. Our country became rich because of these international trades.
There is no problem in importing goods from other countries and selling them locally but the question is, what are we selling overseas today to bring back money to Malaysia?
In 2019, when I visited Alibaba in Hangzhou, I was told that the top five best-selling Malaysian products on Alibaba’s Tmall were No 1: white coffee, No 2: Julie’s Biscuits, No 3: white coffee, No 4: white coffee and No 5: white coffee. I was also briefed on what our neighbouring countries were selling. There were quite a variety of products and quite a few of them were of high value.
The officials from Alibaba kept asking me, what else can Malaysia sell to China?
The government has tabled the 12th Malaysia Plan (12MP) in parliament. This important plan will chart our country’s development goals and projects for the next five years. About RM400 billion will be spent on development projects in order to achieve the status of a high-income nation.
Despite the project announcements and the noises that come with it, the biggest question is, how to “Make Malaysia Great Again”?
To achieve the status of a high-income advanced nation by 2025 and eradicate poverty, Malaysia must refocus on returning to an export-led economy. Export-led strategies will force our companies to compete in the global marketplace. This will increase the quality and productivity of our companies and their products and services. More exports will also bring in much needed income for our country.
East Asian countries such as Japan, South Korea and China are the best examples of export-led economic models. Their single-minded focus on export has produced impeccable economic growth and eradicated poverty in one generation. As the saying goes, a rising tide lifts all boats.
In the 12MP, the government must refocus on “Made in Malaysia” policies and strategies. More funding, more thinking and new initiatives must be implemented.
To start off, we have to look into the agriculture and commodities segments. Malaysia has been a net importer of food for umpteen years. Our food imports are roughly RM50 billion a year with a trade deficit of about RM20 billion. However, we have not fully realised the potential of our agriculture sector.
Cameron Highlands has one of the best weather for agriculture in the world. It is a place full of potential to produce high-quality vegetables, fruits and flowers. With the right investment in agriculture technology, Cameron Highlands, Lojing Highlands and Kundasang can be high-value fresh vegetable producing areas for national consumption as well as export to Asia-Pacific. In this regard, the government could initiate a high-value agriculture export strategy called “Planted in Malaysia”.
Malaysians can also be great manufacturers of agriculture value-added products. Our 3-in-1 coffee industry is the best in the world, even though we do not produce coffee beans. We import RM1.5 billion worth of coffee beans annually, add value and export them to the world. On top of that, our 3-in-1 white coffee is one of the best-selling products in China. This example highlights the extent of the potential of Malaysia’s food industry.
The Japanese and Thais have been very successful in producing high-quality value-added food products such as instant noodles, snacks and even ice cream. Malaysia can fully utilise our local agriculture products to add value to high-quality downstream products for export.
Malaysia has tremendous potential in agrofood products because of our stringent halal certification. The global halal market is projected to be valued at US$2.6 trillion by 2024. The 12MP must involve investing in the necessary infrastructure, streamlining bureaucratic processes and opening up more markets for halal industries in Muslim markets globally. “Made Halal in Malaysia” is another important strategy in our export-led economy.
Next, we must look at our medium-tech manufacturing. During this pandemic, a few medium-tech companies such as Top Glove Corp Bhd and Supermax Corp Bhd have truly shown that Malaysia can produce great quality products that can dominate the global supply chain.
However, most of our mid-tech companies are small and medium enterprises (SMEs). They lack the opportunity to be competitive on a national and international level. Most mid-tech companies are suppliers to high-tech companies or the multinationals.
These SMEs have the potential to grow larger and become big corporations in the competitive international market. The Malaysian Investment Development Authority (MIDA) and Malaysia External Trade Development Corporation (MATRADE) could conduct long-term analysis and identify certain strategic sectors to assist our SMEs in growing.
When I had a discussion with the South Korean trade minister, he told me that South Korea will go big into the hydrogen fuel cell car segment because he wanted to create a new value chain independent of American electric car manufacturers and Japanese combustion engines. South Korea plans to get big companies such as Hyundai to lead this initiative and to create the new supply chain, and their SMEs will follow suit.
This is the kind of strategic thinking we need when it comes to country planning. This is of paramount importance, especially when the discussion of the 12MP is at hand.
Our best high-tech manufacturers are in the electrical and electronics sector, which accounts for 35% of total exports. Given the complexities of the global supply chain (GSC), our E&E sector is a critical part of the GSC. However, we are too reliant on foreign direct investment (FDI) in the high-tech segment.
As the global FDI market continues to shrink and competition for FDI intensifies, Malaysia might not be able to compete for these FDI in the future. Therefore, we must seriously look into local high-tech companies to assist them in growing into global companies. In this regard, the Taiwanese government has set the right policies in the past, which created global companies such as TSMC and Acer. Today, even the US is trying to get TSMC to set up a manufacturing plant in the US.
Thirty years ago, nobody would have believed that China would become the factory of the world. Twenty years ago, not many considered buying Samsung handphones. Ten years ago, nobody believed that Tesla could beat Toyota cars.
Nation-building is a work in progress. The 12MP is the plan after the global pandemic. It is an opportunity to reset, rebuild and revive. We must set the goal high to grow our companies to be national, regional and eventually global companies. Malaysia must make “Made in Malaysia” great again.
Sim Tze Tzin is a member of parliament for Bayan Baru, where the Silicon Valley of Malaysia is situated. He is also a former deputy minister of agriculture.
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