Foreign investments and industrialization in Malaysia

Abstract

"..the available evidence suggests, at least tentatively, that neither the skills nor the funds brought in by foreign corporations will do much to advance Malaysia's industrial ambitions or ease her entry into new export markets.....A country seeking to deepen its industrial sector, increase manufacturing value added and widen its export possibilities cannot rely upon DFI to do the entire job" (World Bank 1985, v) "What is important to note is that DFI cannot be relied upon to build up an indigenous industrial base which is required for long. term, sustainable industrialisation. .... Future industrial policy must underscore the importance of domestic investment, ownership and control" (Abdullah Mhd Tahir, 1991, 7) The above two quotes focus on the questions; can direct foreign investment (DFI) be relied upon to generate sustainable industrial growth in Malaysia and what sort of industrial policy is required to regulate or replace DFI? These are the broad questions that I look at in this paper. In doing so, I raise the following further questions; - why is DFI so important in Malaysia?