International Trade and Industry Minister Tengku Zafrul Aziz’s proposal to position Malaysia as a strategic gateway for investment into ASEAN has received criticism from some quarters, which, in my opinion, is misguided.
Senior fellow at the Malaysian Institute of Economic Research Geoffrey Williams dismissed the proposal as “no longer relevant” and lacking “real vision for the future”, while economist Barjoyai Bardai emphasised the need for sustained commitment and resources to make the proposal a success.
Williams goes on to add that other countries like Vietnam and Indonesia have an expanding middle income, better education system and a more welcoming environment for foreigners, which is why the proposal for Malaysia to be a gateway is futile.
The facts, however, speak for themselves.
Malaysia’s economy is one of the wealthiest in Asia, despite its population of about 32 million people. Its Gross Domestic Product ranks fourth among ASEAN countries.
The per capita income of US$12,295 qualifies it as an upper-middle-income country, according to the World Bank, with Malaysia boasting one of the highest living standards in Southeast Asia and a low unemployment rate of 4.7% (IMF, October 2021).
However, for Tengku Zafrul’s proposal to work, there must be changes.
THE IMPORTANCE OF ENGLISH
Largely English-speaking, Malaysia has a competitive advantage over countries such as Vietnam and Indonesia which have only recently adopted English as a second language.
Despite their best efforts to advance the use of English, these countries face challenges with attracting quality English teachers who can teach communication, pronunciation and diction as opposed to advanced grammar which has little use in daily interactions.
Malaysia ranks third on the English Proficiency Index in ASEAN, right behind Singapore and the Philippines. This advantage would be lost if we continue to disregard English and relegate it. The decline of the standard of English can already be seen through the unemployment of undergraduate students due to their lack of proficiency in the language (Pemandu, 2016).
To compete in an increasingly globalised world, there needs to be a greater emphasis on English education in Malaysia, not less.
INFRASTRUCTURE
Malaysia is one of the most well-developed countries in Asia, a great choice for lifestyle, investment, and business, and ranks higher than both Indonesia and Vietnam for connectivity.
Since 2020, the Klang MRT line, the 2000km Pan-Borneo Highway and the West Coast Expressway have been completed, adding to the already existing roads and MRT system that has allowed the ease of travel from one end of the country to the other, while aiding trade between ASEAN and the rest of the world.
Malaysia has also been able to bridge the linguistic barrier between the north and south ASEAN nations due to its strategic location in the middle, surrounded by nine other ASEAN nations. In the north, Perlis, Kedah, Perak and Kelantan share a border with Thailand and people on either side speak both Thai and Malay.
In Sabah, the Malay diaspora extends to the southern part of the Philippines which has a porous border. Malaysia also shares a land border with Indonesia and Brunei in the island of Borneo. In the South, its border with Singapore allows thousands of people to commute each day for work and trade.
REMOVING CHOKEPOINTS
The arterial chokepoints for trade passageways, starting with Malaysia and Singapore need to be removed. Currently, the Johor–Singapore Causeway and the Tuas Link are both infamous for traffic congestion.
Both countries will need to take a leaf out of the island of Manhattan which is connected via 21 over-water bridges to the surrounding boroughs of New York, and to the neighbouring state of New Jersey, which strengthens its role as the hub of the entire region’s economy.
Malaysia and Singapore similarly need to be connected by at least a dozen bridges to help increase the flow of trade, thereby encouraging more foreign investment. It is great that the high-speed rail proposal between Singapore and Kuala Lumpur is being revisited, opening up the entire southern part of the peninsula. If at any point this rail link extends to the north from Kuala Lumpur to Bangkok, Singapore to Beijing by rail will become a reality.
Malaysia can also benefit from Singapore’s globally recognised Changi Airport, which receives over a million passengers each week. If there is a way for these millions of travellers to take a fast ferry from Changi to Malaysia’s southern state of Johor for a day trip, it dramatically increases Malaysia’s tourism economy. For this to work, however, the immigration barriers between the two countries must be removed or reduced, somewhat like the Australia-New Zealand relationship, or even the Schengen states.
MALAYSIA AS A SECOND HOME
Another way to solidify Malaysia’s position as the gateway of trade would be to aggressively push the Malaysia My 2nd Home (MM2H) scheme to foreign investors. As the place to live and invest in, we can expect a rise in foreign investments coming into Malaysia. Instead of tightening, rules should be relaxed to compete with the digital nomad visas of Indonesia, Vietnam, and Thailand.
If the above initiatives are implemented, Malaysia will earn the right to call itself the gateway into ASEAN. It is also important to note that Malaysia is the only country in the ASEAN that doesn’t have a single ethnic majority making it unique in the region. This has always been an economic blessing but something we are only now beginning to recognise.
SUPPORT FROM ASEAN
ASEAN members have made significant progress in improving infrastructure that promotes connectivity. The region’s Master Plan 2025 demonstrates its continued commitment. As other economic priorities emerge, ASEAN needs to remain focused on strengthening the region’s connectivity to reap the benefits of barrier-free travel.
In the past, ASEAN has shown it can move decisively toward an open and free travel environment. This attitude of cooperation and collaboration has resulted in many benefits for the region and its people. Only when these borders and tariffs are removed, and aggressive policies implemented to drive foreign investment in can Malaysia be a gateway to neighbouring countries.
Tengku Zafrul’s vision is pragmatic and visionary, but his battles will not be with ASEAN, but more at home.
By Vijay Eswaran, Founder and Executive Chairman of QI Group
