On the Beat | By Wong Chun Wai

If we don’t watch it, we’ll be left behind

Regular visitors to Jakarta can feel the economic excitement as the government under Susilo Bambang Yudhoyono continues its pro-business approach by loosening its control in many areas. It doesn't come as a surprise that Indonesia has managed to overtake Malaysia in terms of foreign direct investments. 

The FDI in Malaysia, on the other hand, has dipped to RM14.69bil last year from RM17.09bil in 2004. For the first time since 1990, Indonesia has managed to overtake Malaysia – FDI to Indonesia surged by 117% to RM19.46bil last year. 

Indonesia may still have an image problem, particularly those relating to Islamic extremism, urban poverty and corruption, but the new administration's policy of economic self-discipline is beginning to pay off. It is the only country in the region that is cutting interest rates and revising its economic rate forecast upwards as consumption starts to move. Indonesia expects its GDP to be 5.9% this year from 5.6% last year. 

The Jakarta Stock Exchange is also one of the best-performing markets in the region over the past one year. 

It doesn't take an economist to notice Indonesia is giving Malaysia a serious run for the money. Unfortunately, many Malaysians still continue to treat our neighbour as a supplier of maids and other cheap labour. 

The tough times that the Indonesians have gone through have strengthened their resilience. In contrast, many of us are spoilt and have lost our competitive edge. The numbers and facts are there, but many prefer to believe the good times will roll on forever. 

Like it or not, Malaysia has fallen one notch in the latest Global Competitiveness Index (GCI) in the annual rankings published by the World Economic Forum. We are now ranked 26th.  

The only good news is that in Asia, Malaysia retained its sixth ranking, after Singapore, Japan, Hong Kong, Taiwan and South Korea. 

The rankings are based on nine areas – institutions, infrastructure, macro economy, health and primary education, higher education and training, market efficiency, technological readiness, business sophistication and innovation.  

No doubt there is no reason for us to be alarmed over the drop in FDI and ranking in the GCI, but it is still a wake-up call for us. 

Malaysia has strong points like a developed infrastructure, political stability and an educated workforce with the ability to use English, which put us ahead of our rivals, but we need to constantly improve ourselves. 

Many of the concerns have also been seriously addressed under the Ninth Malaysia Plan by Datuk Seri Abdullah Ahmad Badawi. 

While the 30% requirement of bumiputra ownership equity for businesses continue to be debated by investors, the country's reputation has been generally positive. 

The best-selling book, The World Is Flat, by Thomas Friedman, made over 15 references to Malaysia and they were all positive ones. 

The book, which focuses on the explosion of technology in doing businesses worldwide, should be compulsory reading for all Cabinet members and, for that matter, all senior government officials. Hopefully, it will jolt policy-makers in Malaysia who are still complacent, and those with the mistaken belief that Malaysia is way ahead, into action. 

There are reasons to be concerned, even worried, at what is taking place in Malaysia. We need to tone down on our political debates and certainly we need to exercise greater tolerance at dissenting views instead of just shutting down opinions we cannot accept. 

We need to look at the larger picture and to pull together our resources to compete in the international market. The fact is that the Malaysian market of 25 million people is just too small. The squabbling over the economic cake does not help one bit if we are not prepared to look for the cake elsewhere. 

Singaporeans have long looked outside their tiny nation for businesses and have put their money in key companies in neighbouring countries. 

The question is that, beyond the slogans and terms that politicians like to use at annual party meetings, what should Malaysians do to make ourselves sharp in a fast-paced global market? 

As Friedman says, the world has shrunk and the world is flattening as we become more connected. Malaysia needs to realise the forces at work because if we don't, we will be left behind.