Malaysia Investors Lament Bureaucratic Red Tapism

Six years after the process of economic liberalisation was sparked off in the country, foreign investors continue to be bitten by the bug of bureaucratic redtape and rampant corruption ravaging the system.

The EPE Power Corporation BHD of Malaysia had a dream, that of being an independent power producer (IPP) in India. Today that dream lies shattered, says the firms senior executive, Abd Rahim Md Noh.

We have been at it for the past five years, since 1992. But still nothing definite has come about. We dont know where we stand, a frustrated Rahim Noh said, adding, in Malaysia there were only 12 IPPs and there was 30 per cent surplus power.

 

Noh was addressing a day-long interaction between a 40-member business delegation from Malaysia, Indian businessmen and state government officials here yesterday. Noh made his comments after going through a presentation on how investment proposals are cleared in 30 days in Andhra Pradesh.

State representatives, headed by minister for major industry Basheeruddin Babu Khan aided by principal secretary P C Parekh, tried to explain away the delays with power continues to be in the federal list. The statement did not convince anybody.

Malaysian industry minister Rafidah Aziz, answering a question, said Malaysian industrialists will invest only where a cost effective environment exists. What finally clinches an investment decision, she explained, is the total cost. You may give land at a cheap rate. You may offer other incentives. But, if these concessions get negated by side costs and hidden costs, it does not help. she said. On problems faced on the Indian side, an executive from ITC-Agro said that India was a major importer of palm oil from Malaysia. However, while Pakistan was extended credit, India was denied the same, he complained.

Admitting the fiscal concession, Aziz explained that a countervailing arrangement existed with countries buying certain other commodities as well. Added to this, was a condition on the quantity and, more importantly, concessions were restricted to countries which did not have the capacity to pay.

I am sure you are not one such country, she said.

Later, at a news conference, Aziz was inundated with questions on the quantum of investment that Malaysia proposed in Andhra Pradesh as also what it expected from the state by way of investment in Malaysia and the memoranda of understandings (MoUs) that would be signed during the visit.

Aziz answered that she was not interested in MoUs. What we need is understanding each other better. Even without MoUs we can ground projects.

No exercise has been undertaken to assess the quantum of Malaysian investment in Andhra Pradesh since this was for private industrialists of the two countries to discuss and work out, she said, adding that the Malaysian government was only a facilitator in this exercise.

Aziz was also not forthcoming on the Proton car project. She said the exercise was at a most preliminary stage and a technical team would visit India in early September to conduct a further study.

In so far as Malaysia was concerned, she said, it would not license anymore labour-intensive industries and was encouraging Malaysian companies in this area of activity to relocate or expand in countries which had abundant labour.

Malaysia, however, welcomed foreign investment in high value-added, high technology, skill intensive as well as knowledge-intensive industries, Aziz said.

She cautioned prospective Indian investors in Malaysia against seeking to circumvent procedures through consultants.

Come to the government. You will get all documents free. Also free advice on what and where to invest. The consultant, on the other hand, will charge for all this. And there is always a chance that some advice you take from him may not be in line with our perspective and you may be later reduced to tears, she said.

If you come to the government, not only will you get every document and advice free, but also get a cup of coffee, sometimes with biscuits, and at times with a piece of cake as well, she quipped.

Malaysia needs foreign investment of the order of US $10 billion per annum for the next 10 years to fulfill its Vision 2005. Last year, the inflow was $15.70 billion. In the first half of the current year, it was $ 5.8 billion. We seem to be on the right track, she said.

The minister said that Malaysia may be a small country but after the Afta (Asean Free Trade Area) becomes operational in 2003, there would be a single seven-nation Asean market in which tariffs for Asean-manufactured products would not exceed 5 per cent with the majority of them attracting zero tariff. This would be an ideal manufacturing base for Indian entrepreneurs, she said.

The delegation of Malaysian entrepreneurs are slated to have one-to-one discussions with their Indian counterparts today in as bid to identify joint ventures and finalise details.

The Malaysian team has been invited on a return visit by the state government after Chief Minister N Chandrababu Naidus tour to Malaysia in May. However, from the Malaysian industry ministers remarks it appeared as if she was more interested in marketing her country as a profitable and attractive investment destination rather than comment on bringing investment into Andhra Pradesh.