FEW would dispute that foreign direct investments (FDIs) have contributed tremendously to Malay-sia’s economy.
Our economy started with agriculture and raw commodities such as natural rubber and tin. We exported lower value raw materials. The developed countries would convert them into higher value consumer products and sell those products back to us. We were obviously short-changed.
We produced rubber but we did not make tyres. We mined tin but we did not produce tin plating. At the end of the day, we were only enjoying the crumbs from the entire value chain of such commodities.
Later, our leaders realised that we as a nation would remain stuck in the low income trap if we do not move into the higher value manufacturing sector. We were fortunate that we had such farsighted leaders. Tun Dr Mahathir Mohamad was one who pushed hard for industrialisation.
It was not easy at first because we did not have the technology to industrialise or the market for industrialised products. Again we have to thank our leaders who had the bright idea of turning to foreign investors. But the strategy was not just to blindly bring in FDIs. We also prepared local staff to learn the tricks of the manufacturing business and improved our technology-receiving infrastructure.
Our education system was revamped to include the relevant curriculum to nurture our technology strength. Our universities became more involved in manufacturing research and development. Even the technology for agriculture witnessed positive change with more mechanization and improved productivity.
The entry of palm oil in the early 1980s was the right time for the industry to explore downstream value addition. We only sold crude palm oil for a short while. Soon, we were investing in the downstream sector of the palm oil industry.
The refining sector was not too difficult in terms of technology and market access. Local investors were able to undertake that sector. But when it came to oleochemicals, we had to partner with foreign investors to compete in the world market. So we welcomed the likes of Henkel and Proctor & Gamble partners. And it has been a success.
Now we are entering a new era of smart manufacturing and industry 4.0. There will be a rising global demand for new technology-rich products linked to sensors, super magnets and powerful batteries. One key ingredient in all such products are rare earths. As earlier declared by China’s Chairman Deng Xiaoping, the global supply of rare earths will be controlled by China. This is because China has the largest deposits of rare earths in the world. Australia is another country which similar low-radioactive rare earth deposits.
Malaysia also has deposits of rare earths; but ours have higher radioactivity because of higher thorium and uranium content. This explains the problems we faced with our earlier foray into processing rare earths near Ipoh. But we should not link that unfortunate experience with operations at Lynas, which processes rare earths from Australia, as these rare earths exhibit lower radioactivity. This fact has been corroborated by the expert review committee appointed by the government.
It is unwise to continue harassing Lynas to send its wastes back to Australia. If we do, we will be a laughing stock of the world because the facts cannot support such a decision. Our decisions must be based on sound science. This is exactly what we have been telling the French as they move to crucify palm oil.
By subjecting Lynas to new conditions that are not based on sound science, we are sending the wrong message to the world. Instead of harassing Lynas, it would be better for us to partner with the company to bring in new FDIs in downstream businesses that make use of rare earths. That would be a better bet for our economy, which needs new injections of investments to capture the opportunities of industry 4.0. Let us be fair to FDIs.
PROF DATUK DR AHMAD IBRAHIM
Fellow, Academy of Sciences