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Terror, counter-terror: Malaysia pays the
price
By Anil Netto
PENANG -
Malaysian leaders are facing a delicate dilemma in the
crackdown against suspected alleged Muslim militants
while at the same time trying to project a "moderate"
image.
On the one hand, the political fortunes
of the ruling coalition have changed after last year's
September 11 terrorist attacks on the United States
thanks to their projected "moderate" image and their
co-operation with the United States in the "war against
terrorism". The ruling coalition has subtly implied
through the arrests of dozens of unknown alleged Muslim
militants that Malaysians - and outsiders - have reason
to be wary of any alternative to its rule.
But
on the other hand, as the crackdown against the alleged
militants continues, the country's image as a safe haven
had already taken a dip even before the deadly bombings
in neighboring Indonesia on Saturday.
This is
seen in the increased checks that visitors from Malaysia
- and those from other Muslim nations - have been
subjected to at airports in the United States. The prime
minister and his deputy have not been spared such
heavy-handed checks. Others in the ruling coalition have
complained too, but their concern appears to center on
the lack of diplomatic immunity for national leaders as
opposed to the singling out of Malaysians and those from
Muslim-majority countries for extra scrutiny.
To
add insult to injury, Canada has imposed a visa ruling
on Malaysian visitors. Thousands of Malaysian students
study in both Canada and the United States and many
other Malaysians have settled in Canada.
Far
more serious is the drop in foreign direct investment in
Malaysia in recent months - attributed by the government
to the drying up of foreign funds available for
investment in Southeast Asia.
Malaysia posted a
drop in approved foreign direct investments last year,
from US$5.5 billion in 2000 to $5.0 billion in 2001. The
drop was said to be due to cutbacks in multinational
companies' investments as a result of lower global
economic growth prospects last year.
Indeed,
officials argue that this small drop should be viewed
against the backdrop of a drying up of global funds
available for investment. They point out that global
foreign direct investment (FDI) was estimated to have
dropped by 40 percent to $760 billion last year from
$1.3 trillion in 2000.
The United Nations
Conference on Trade and Development (UNCTAD), however,
reports that although FDI inflow into Southeast Asia was
stagnant at $13 billion in 2001, Singapore, Thailand and
the Philippines all recorded increases. By contrast, FDI
inflow for Malaysia in 2001 was "stagnant".
More
worryingly, for the first six months of this year,
approved FDI in Malaysia was barely $600 million,
according to the Malaysian Industrial Development
Authority. It is a cause for deep concern and has
prompted the government to step up efforts to boost
domestic demand.
In a survey of the top 10
favored manufacturing FDI destinations for Japanese
transnational corporations over the next three years
cited by UNCTAD, Malaysia fell to ninth position in 2001
from fifth the previous year, being overtaken by
countries such as India, Vietnam, Taiwan and South
Korea.
Of course China remains a top rival for
drawing in FDI away from Southeast Asia. While countries
like Malaysia and Thailand offer a better investment
package, China has the edge when in comes to such
factors as domestic market growth potential, labor
supply and production costs.
But it is the
perception of investors from the United States that is
of prime concern. In 2001, the United States continued
to maintain its lead position in Malaysia's FDI with
$900 million in investments, followed by Japan, China
and Singapore. How that would change post-September 11,
2001 - and now post-October 12, 2002 - is crucial, as
Malaysia is heavily dependent on the United States for
technology transfer and growth in such key sectors as
electronics and information technology.
If the
perceptions of US security and immigration officials rub
off on US investors interested in Southeast Asia, then
the investment prospects for countries such as Malaysia
are likely to look less than rosy.
To a certain
extent, the Malaysian leadership must share some of the
responsibility for this slide in investor interest. Out
of the more than 60 suspected militants detained since
the middle of 2001, none has been brought to trial. They
continue to languish in a security camp north of Kuala
Lumpur, along with political and other detainees, adding
to the uncertainty as to whether and to what extent
militant extremism is a threat to national security.
Investors hate uncertainty, and this also
includes the security angle. Malaysia can go a long way
toward dispelling such jitters by giving the detained
alleged militants a fair trial.
The other
uncertainty is about the extent of popular support for
the conservative Islamic Party (PAS), which made sharp
inroads during the last general election after the
sacking and jailing of ex-deputy premier Anwar Ibrahim.
By not embracing broad-based democratic reforms and
instead clamping down on basic freedoms, the ruling
coalition is unlikely to win back lost support from PAS
and Anwar's National Justice Party (Keadilan) in the
next election due by 2004.
Though there is no
imminent threat of Malaysia falling under a
fundamentalist central government, it is perceptions
that matter - and right now, it appears that the alleged
Southeast Asian links to terrorism must be worrying more
than a few prospective investors.
(©2002 Asia
Times Online Co, Ltd. All rights reserved. Please
contact content@atimes.com for
information on our sales and syndication policies.)
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