Malaysia 51, Uganda 52…..year 2008

In april last year, I have posted the index for econmic freedom 2007, tracked by The Wall Street Journal and The Heritage Foundation, Washington’s preeminent think tank. Malaysia was ranked NO. 48 in economic freedom in 2007.

How about this year. Well, an optimist will say it is almost the same, whereas a pessimist will say it has become worse.

In actual terms, we are ranked NO. 51 in economic freedom this year. In the company of Uganda (No. 52), Costa Rica (No.49). So do not laugh at countries of Africa and Central America. We are already in their company, and if we dont buck up, we may be like the African and Central AMerican countries in no time. NO joking matter!!

The top 8 places are occupied by : Hong Kong (No.1), Singapore, Ireland, Australia, USA, New Zealand, Canada, Chile . (ask yourself why are these countries always ranked top? ).The full list can be viewed here .

The Heritahe Foundation, in its FAQ, explained why economic freedom is important: ”

“Studies in previous editions of the Index confirm the tangible benefits of living in freer societies. Not only is a higher level of economic freedom clearly associated with a higher level of per capita gross domestic product (GDP), but GDP growth rates also increase as a country’s economic freedom score improves. ”   

Suppose you are a foreign investor with billion to invest. What is your priority for investing? You want to earn money, but you want to earn money in an environment that gives you the most freedom with your money. You must be able to have a say in how your company is going to be run, the cost of labour must not be too high, the people in the country of your investment must be efficient and have good productivity so that the best returns can be earned. You want to have a impartial  judiciary to guard your rights..meaning your money. You want to have a clean government so that you do not pay extra under the table, as corruption adds costs and time to doing business.

This index of economic freedom, which measures 10 factors, takes all these into account. For the full report on Malaysia, read here.

Malaysia fails miserably under the category : Investment freedom. We get only 40% mark for this category (40% is Fail in most countries, but according to Malaysian marking system, 40% is considered pass, any wonder why we are low down now?).

This is what the report said about this category:

Investment Freedom – 40%

Rules have been eased, but foreign investors still face such restrictions as limited voting shares, prior approval, and mandatory hiring of ethnic Malays. Investment is banned in the news media, lotteries, or security paper. Foreigners may own 100 percent of certain kinds of new companies, but most existing corporate equity requires that a 30 percent stake be Malay-owned, and foreign ownership is capped in most sectors. Certain kinds of investment are screened, though commercial operations can begin before approval. Residents and non-residents may hold foreign exchange accounts, subject in many cases to government approval. Nearly all capital transactions are prohibited, are subject to restrictions, or require government approval.

If you read the report carefully, it is because of the restriction placed… everything needs government approval, and that means red tapes, and possible avenue for corruption.

We get 50% for corruption. This is what the report said:

Freedom from Corruption – 50%

Corruption is perceived as present. Malaysia ranks 44th out of 163 countries in Transparency International’s Corruption Perceptions Index for 2006. Bribery is a criminal act, but perceptions of widespread corruption and “crony capitalism” persist.


Any wonder why the economy is half dead, progressing miserably at 5 % growth , which, if you take into account the actual inflation rate ( maybe as high as 4-5% while the official figure is only 3%), means that the economy is not growing at all.

The report also measures the net inflow of FDI.  Malaysia’s FDI is stated as $996 million whereas, the same report put Singapore net FDI as $14.6 billion. Even Thailand, has $3.4 billion of net FDI. Even Indonesia has 2.2 billion worth of FDI. What happened , MITI?

If we do not buck up fast, we will be overtaken by Thailand, that is for sure. But do not be surprised that African countries may overtake us… Uganda is just one rank below us.



9 Comments (+add yours?)

  1. daffodils
    May 24, 2008 @ 21:12:45

    We are poles apart when compared with the little red dot. A little country with not much resources can be the 2nd world’s freest economy. I think we have a lot of catching up, and probably a lot more to learn if we can swallow our pride.

    Here we have an outsider looking inside Singapore.

    Virtually all commercial operations are performed with transparency and speed, and private enterprise has boomed. Inflation is low, and foreign investment is welcomed and given equal treatment. There are no tariffs. Singapore’s legal system is efficient and highly protective of private property, and corruption is almost nonexistent.

    This is what we call good governance and management.


  2. yh
    May 24, 2008 @ 21:32:30

    if we take maahtir’s advice, one day we will be comparing with failed states such as Zimbabwee and Myanmar.
    That man is spewing racial venom again in his attempt to achieve his personal agenda. Any time, i rather have Badawi than him, if there are no other choices.


  3. steven
    May 25, 2008 @ 00:09:59

    which foreign investor is stupid enough to invest in Malaysia with all these racists governing the country demanding all sorts of privileges and special treatment given to one race only, raising racial tension often to hold on to political power, “mo gai tai”!!!!!!


  4. folo4
    May 26, 2008 @ 02:55:14


    it all seem to point at only one solution: leave Malaysia, denounce Malaysia, and forget about Malaysia

    it’s either that, or we become worse than Africans.


  5. Dr Hsu
    May 26, 2008 @ 12:41:39

    folo4 , not all have the means to leave Malaysia. So the best option, is not to leave but rather to talk until most people see the need for change. Then the government will have to change.

    Advocating for changes does not equate to denouncing. No government can improve without criticism, and that is why the USA has the the First amendment for freedom of speech and also Freedom of Information Act to release all government info.

    The blogs can play a role to give constructive criticism, not merely denouncing.


  6. folo4
    May 26, 2008 @ 15:42:26

    however, it is clearer than the sun itself that the present government does not pander to the base.

    I mean, look, everything the government does is all knee-jerk reaction from the rakyat, ever since the devastation that occurred at the 12th GE.

    why now? why not 10 years ago?

    and everyone knows it’s all just talk; Our government is now well-known for doing things too late, the wrong way, and what-have-you.

    we lost ALOT of ground over the years, and since the oil crisis is looming ever closer, the hope of Malaysia recovering lost ground grows ever dimmer.

    it is all because 50 nations- that’s alot of choice, mind you- does things better than Malaysia, and most of them don’t even have oil or gets devastated by nature all-year.

    And all rural Malaysians can do is wait.

    And hope for the best.


  7. monsterball
    May 26, 2008 @ 20:16:55

    Unfortunately….these are the fact…the people in the street may not know or understand.
    But..the chain reactions…are there..for everyone to feel….all prices goes up and up.
    And usually ..this is due to corruptions and massive mismanagements….playing race and religion by the government….to win votes..not to bring the country all.


  8. jeff
    May 28, 2008 @ 09:06:24

    umnoputras are very good at playing race n religion cards, ever since May 13th, they found out those cards worked out so well , monsterball!


  9. steven
    May 31, 2008 @ 00:50:19

    People like to equate criticizing or denouncing government with honest opinion by blogger, they just can not accept we live in a democracy where it is part of the elements of a free society, guess many Malaysians need to get educated by Dr hsu.


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