Wednesday July 25, 2012

Sacrificing for long-term benefits

I REFER to the letter “Stop selling out for short-term gains” (Sunday Star, July 22).

An open economy, amongst others, involves bilateral quid pro quo that results in increases to both countries’ economic well-being.

This is the basis of international trade theory and unless economic theory is faulty, all open economies gain from such an exchange.

Malaysia, being not only an open economy but an exporting one at that, serves itself best when it engages itself with its trading partners in mutual benefit.

Being a very small nation (compared to many of its trading partners), Malaysia can ill afford to behave like a large importing nation e.g. the United States.

Further, there are no “free lunches” in international trade. Therefore, in order to ensure that the broader economy benefits from relationships with its trading partners, Malaysia should continue to participate in equivalent exchanges, such as offering infrastructure projects or other capital investments in return for a market for its exports.

Taking the belief that all large infrastructure projects are awarded based on a transparent and equitable process, there is no reason why the bidder with the most cost-effective and efficient proposal should not be given the award.

Should local participation be a concern for the writer, the awarding party can easily craft local participation clauses into the contract (akin to local content requirements for CKD cars) to ensure that local enterprises have the opportunity to participate in the project.

Further, taking up the writer’s point on foreign companies being “price competitive”, one should look at how local turnkey contractors could, as he put it, “penetrate the global market”, if we continue to be protected under the auspices of “protecting local”.

The fact that locals lose out on local tenders simply means, assuming no foul play, that we are not good enough.

Therefore, given that we, as he claims “consistently” lose out to other international players means that we should up our ante in all aspects: delivery, timeliness, quality and of course, price.

Otherwise, we’ll continue to reap the benefits of protection without any motivation to improve our delivery and services, as Malaysia continues to “protect local” while falling further behind amongst its emerging market peers in global competitiveness.

Lastly, to paraphrase the article’s title, Malaysia is not selling out for short-term gains. On the contrary, Malaysia is sacrificing short-term gains for the long-term benefits of international trade and exchanges, for the country, its enterprises and its rakyat.

Lose the kampung mentality and think global.

DAVID TK TAN

Kuala Lumpur

News

Wednesday July 25, 2012

Sacrificing for long-term benefits