LETTERS: MALAYSIA- Globalisation, trade pacts create jobs

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THERE seems to be a flurry of comments against globalisation and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) lately.

Even one of the leading employers’ organisations has objected to this treaty for fear of being overwhelmed by foreign investors and investor-state dispute settlement issues.

While politics is brought into the equation, Vietnam has ratified the agreement.

This is the same dynamic and progressive economy that registered an impressive positive GDP growth of 0.3% in the second quarter while most of the Asean countries were languishing in massive negative territory.

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Certain economists have also spoken out against the CPTPP.

While the objections are many, we do not hear from these economists how we can create jobs and boost the economy in present trying times.

The usual solution is for the public sector to keep creating jobs.

Is this really the panacea when our civil servants per population ratio is already very high?

As much as we would like to stimulate and encourage domestic investments, the contributions of foreign investments cannot be denied.

I would just call them external investments which need not just come from the Western countries but can be from China as well.

This is the concept of the “and” and not the “or”.

We can promote both domestic and external investments without discriminating against the former.

By virtue of the size of the capital investments, the requirement of jobs through foreign direct investment (FDI) would help to alleviate the unemployment situation.

The spillover and multiplier effects cannot be emphasised enough.

There are some negative externalities but many would agree that there is a net plus to economic welfare.

For those who railed against FDI, let them show us where the new jobs are coming from.

The usual reply is the gig economy.

While the availability of additional options for employment is lauded, what is the impact in terms of numbers?

How many new e-hailing drivers or food delivery persons are needed when overall consumer demand is heading south? Additional supply of services in the wake of falling demand would lead to overall lower net income for the providers.

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Similarly, how many can earn consistent income by becoming e-commerce sellers and influencers?

This is not meant to take away the positive contribution of the digital economy.

However, is that sufficient to alleviate the prevailing unemployment problem?

Another point to note is unless the banking requirements are amended, it would be difficult for these people on variable income to apply for loans.

The salespeople who are on commission can attest to this as this has been an issue for many years.

On the topic of promoting domestic investments, the key success factor is the trite phrase of “lower cost of doing business”.

While tax incentives are lauded and targeted grants are welcomed, the fundamental factor is removing the layers of red tape and approval process to run a business.

Layers of regulation and approvals lead to opportunities for corruption and raises the costs of doing business.

For those who uphold corporate integrity, they are often penalised for going against the “systemic flow”.

Government agencies in such pressing times should be working hand in hand to facilitate and support business growth.

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While the Malaysian Investment Development Authority offers fiscal and tax incentives to promote domestic investments, the tax collection agencies could have different KPIs.

This situation becomes even more acute during the Covid economic crisis when the MCO had already severely impacted local businesses.

At the local levels, the situation is no different.

The policy makers are indeed supportive but the regulatory approvals take a different track.

Expediency and efficiency are paramount for the success of businesses.

Delays in approvals would lead to more economic uncertainties and could frustrate the business outcomes.

The other major component in economic revival is to boost demand.

The government has done well through the direct transfers and subsidies to consumers.

Over and above that, the government is the biggest buyer of goods and services.

Here, government procurement should be structured to support SMEs and minority-owned businesses.

For a start, 30% of all government procurement should be allocated for this targeted group.

There will be an open tender among this target group of suppliers where they compete against each other with the exclusion of the big boys.

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For cases where there are no suppliers from this target group, the tender will be opened to the larger suppliers as well.

This enables the government to support locally-owned SMEs and minority-owned businesses.

The pricing would be transparent as bidders would know where they stand amongst the competition.

Confidentiality is ensured as the names of the tenderers would not be revealed.

In such pressing times, the macro-economic objectives of employment and GDP growth are of paramount importance.

Providing SMEs with business opportunities is more economically productive than merely giving them handouts.

As for investments, the key question is: “Do they fulfil the twin objectives above?”

Let us not overstate the negatives and ignore the positives of new investments.

Seng H Yeoh is a consultant and business coach.

THE SUN DAILY.MY