1
The Role of Multinational Companies in Southeast Asia: Case Study of Malaysia
Syed Shahab Uddin
A thesis submitted to the Federal Urdu University of Arts, Sciences and Technology for
the degree of Doctor of Philosophy in International Relations
Research Supervisor
Dr. Syed Waseem Uddin Associate Professor Department of International Relations, FUUAST
Department of International Relations, Federal Urdu University of Arts, Sciences and Technology
Abdul Haq Campus, Karachi.
2
Dedicate to
Dr. Mahathir Bin Mohammad
Former Prime Minister of Malaysia
Who Sketched the
Golden Economy of Malaysia
.
3
List of Tables
2.1 The temperature of selected Malaysian states.
2.2 Quantities of Malaysian ethnic in the selected regions.
2.3 Chinese population in various towns.
2.4 Population and area which estimated on 2002.
2.5 State wise population which according to census of 2000.
2.6 The national account from the year 2001-2003.
2.7 Federal budget (RM) from 2000 to 2002.
2.8 Development expenditure of federal government of Malaysia from 2000 to 2002.
2.9 Major crops of Malaysia which mentioned from 2000 to 2002.
2.10 Malaysian agriculture production from 1991 to 1995.
2.11 Mining activity for copper, iron, silver, and gold from 1991 to 1995.
2.12 Malaysian production figure from 2000 to 2002.
2.13 Percentage of employment sector wise from 1993 to 1995.
4
2.14 Malay participation in commercial and industrial activities from 2000 to 2002.
2.15 Chat of foreign investment (US$ Billion) from 1990 to 1995.
2.16 Figures (RM million) of external trade of Malaysia of the year 2005.
2.17 Performance of Kuala Lumpur stock exchange (RM Billion) from 1993 to 1996.
2.18 Major listed companies (M$ billion) on the Kuala Lumpur stock exchange in the year 1996.
2.19 Leading Malaysian telecommunication companies listed in Kuala
Lumpur Stock Exchange.
3.1 World’s 500 largest Multinational Companies.
3.2 Top 100 MNCs industry composition wise.
3.3 World’s leading multinational companies of 1997.
3.4 Top 100 Economies and multinational companies in 1998.
3.5 25 largest European multinational companies in 1999.
3.6 World’s 500 largest multinational companies in 1999.
3.7 The 25 largest developing and emerging market of 1999.
5
3.8 The regional and distribution Flows of Private Foreign Direct
Investment in Developing Countries.
3.9 Inflow and out flow of FDI between developed and developing countries.
3.10 Flow of Financial Resources to Developing Countries from Industrial
Countries from 1960 to 1978.
3.11 Largest motors Vehicle companies.
3.12 Global distribution of assets of the World’s leading automotive multinational companies.
3.13 Collected payments of royalties and license fees from the developed countries from 1980-1997.
3.14 The royalties and license fess receipts from 1982-1998.
3.15 R&D expenditures of US affiliated MNCs from 1982-1998.
3.16 Largest Canadian multinational companies in 1999.
3.17 25 largest Japanese multinational companies in 1999.
3.18 World export and developing export from 1980 1999.
3.19 25 largest U.S multinational companies in 1999.
3.20 Inter industries trade between developed countries.
6
3.21 Share of import of selected developed countries in 1990.
3.22 World largest economic units with public balance sheets.
3.23 FDI Inflows and Outflows by Region, from 1970-1980.
3.24 The Malaysian share capital holder from 1971-83.
3.25 The Malaysian economic system and the government policies and institutions.
3.26 The foreign investments in projects by tax incentive of Malaysia.
3.27 Sales destinations of US and Japanese investment in Malaysia, in the year of 1973 and 1977.
3.28 Inflow of foreign investment ratio in Malaysia from 1981 to 1995.
3.29 The Malaysian foreign investment country wise in 1983.
3.30 The ration of foreign investment from 1986-1993 in Malaysia.
3.31 Ratio of foreign investment in Malaysia by industry from 1981 to 1990.
4.1 Tin Production in Malaya and rest of the World 1870s-1920s.
4.2 Employment by occupation and race 1970.
4.3 Degree of urbanization by ethnic group from 1970 to 1975.
4.4 Growth of Indian Population in Malaya from 1871to 1941.
7
4.5 Approximate collective individual incomes by Race 1957.
4.6 Student enrolment in each faculty at the University of Malaya by Race in 1962-63 sessions.
4.7 Educational level by ethnic group.
4.8 Production of tin-in-concentrates by country ('000 metric tonnes) from
1929 to 1982.
4.9 Total graduates by community group (1959 to 1970).
4.10 The mean incomes of households by ethnic group 1957 to 1970.
4.11 Membership of registered professionals by ethnic group 1970.
4.12 GDP per capita, sectoral shares of GDP and Urbanization by state,
1970.
4.13 Malaysia and Singapore: ethnic composition of population, 1970
(thousands).
4.14 Growth of Chinese Population in Malaya from 1871 to 1941.
4.15 The Immigrant and Malay Population in the Straits Settlements in
1871.
4.16 Public development expenditure under the First and Second
Malaysian Plans.
8
4.17 Proportion of population which is poor by sector Percentage wise from
1970 1990.
4.18 Peninsular Malaysia: Households in poverty by Race 1970.
4.19 Mean household incomes of Peninsular Malaysia of 1970.
4.20 Communal composition of land ownership in Kuala Lumpur of 1968.
4.21 Communal composition of share capital ownership in limited companies in West Malaysia 1969.
4.22 Growths in money supply and prices in percentage of Malaysia from
1972 to 1990.
4.23 Energy prices US$ per liter in Malaysia from 1973 1981.
4.24 Selected socio-economic targets of the New Economic Policy from 1970 to 1990.
4.25 Incidence of poverty from 1957 to 1985 and targeted 1990.
4.26 Ownership of the corporate sector of Malaysia from 1971 to 1990.
4.27 Percentage distribution of output of tin-in-concentrates by mining method in selected countries in 1978.
4.28 Composition of gross domestic products and employment from 1970 to 1990.
4.29 Malaysia’s income distribution of selected years (1970 to 1990).
9
4.30 Mineral Production of 1961.
4.31 Distribution of Factories by States in 1959.
4.32 Shares of total exports by sector of origin percentage wise from 1980 to
1990.
4.33 Malaysian population and labour force from 1980 to 1990.
4.34 Mean monthly gross household incomes (1995 and 1999).
4.35 Composition of foreign trade of Malaysia, 1971 (million US$).
5.1 Sector wise shares of GDP in selected Southeast Asian countries from
1970 to 1998.
5.2 Net Private Capital Flows in Five Asian Economics from 1996 to 1998.
5.3 Total Factor Productivity (TFP) Growth Comparison of selected
Southeast Asian countries.
5.4 Capital Flows to GDP ratios, by Types of Flows and by Country.
5.5 FDI Inflows to East Asia, from 1990 to 1998 (Millions US$; % of total).
5.6 Gross Domestic Saving and Investment in 1996.
5.7 Outward Direct Investment by Japanese Firms in selected Southeast
Asian Countries.
5.8 Distribution of Debt in 1996 in selected Southeast Asian countries.
10
5.9 Return on Equity of the Non-financial PLCs, 1990-1997 in selected
Southeast Asian countries.
5.10 Foreign Ownership of the Publicly Listed Companies in selected
Southeast Asian countries.
5.11 Annual Growth Rates of Real Gross Domestic Product Per Capita,
1973-96.
5.12 Bank Lending, Corporate Bonds, and Equity Markets in 1997 in selected Southeast Asian countries.
5.13 Life expectancy in selected East Asian and other countries.
5.14 Adult literacy rate in selected Southeast Asian and other countries.
5.15 Means of Enhancing Control in the Publicly Listed Companies in selected Southeast Asian Countries.
5.16 Control of the Publicly Listed Companies in 1996 in selected Southeast
Asian countries.
5.17 Agricultural Export and Import Value among Japan, China and Other
Countries in 2000.
5.18 Share of Agriculture in GDP, Export, Import and Employment in
ASEAN, 2000.
5.19 Percentage Change in Gross Domestic Product in East Asia, 1996-2001.
11
5.20 Summary of Macro-economic Statistics for Malaysia, 1995-2005.
5.21 Debt-Equity Ratios of the Corporate Sectors, 1990-1997.
5.22 Real Economy indicators for Malaysia.
5.23 Ownership Composition in 1997 in selected Southeast Asian countries.
5.24 Financing of the Non-Financial Publicly Listed Companies in selected
Southeast Asian countries.
5.25 Ownership Concentration in selected Southeast Asian countries.
5.26 Financial Indicators 1996-99.
5.27 The First Year when the Share in Value Added Became Higher than
The Threshold Percentage.
5.28 The First Year when the L-Sector Share in Value Added Became Lower than The Threshold Percentage.
5.29 Top Ten Commodities that ASEAN Countries Exported to Japan, 1996-
2000.
5.30 Under five mortality rate in selected East Asian and other countries.
5.31 Top Ten Commodities that Japan exported to ASEAN Countries, 1996-
2000.
5.32 Total Trade (Exports plus Imports) and Regional Breakdown of East
Asian Trade, Average for 1990-1998.
12
5.33 Simple Average Applied Tariff rate in selected Southeast Asian countries.
6.1 Ranking in doing business in Malaysia in 2009.
6.2 World Bank report of Ease doing business in Malaysia in 2009.
6.3 Net FDI in selected East Asian Countries including percentage of GDP from 1990 to 1995.
6.4 Corruption rank of comparable Southeast Asian and selected countries.
6.5 Net capital flow of Malaysia from 1972 to 1985.
6.6 Frequency distribution of tariff rate imposed by Malaysia from 1978 to
1983.
6.7 Energy indicator of Malaysia intensity in GDP, from 1985 to 1993.
6.8 Malaysian exports to ASEAN countries by selected commodities from
1976 to 1984.
6.9 Comparison of simple averages of tariff rates in Malaysia, from 1978 to
1982.
6.10 Summary of items excluded under across-the-board exchanges in
Malaysia.
6.11 Worker’s remittances received by Malaysia from 1995 to 2003.
13
6.12 Average annual net foreign direct investment and its shares of total investment by Malaysia fro, 1967 to 1985.
6.13 Malaysian merchandise imports from 1995 to 2003.
6.14 Profile of a small-medium enterprise.
6.15 Cross tabulation analysis of a small-medium enterprise.
6.16 Profile of small-medium enterprises.
6.17 Rates of import duty on various automobiles by engine capacity percentage wise.
6.18 Percentage of new structure of duties on vehicles for CBU units.
6.19 Malaysian import commodities from 1976 to 1984.
6.20 Percentage of new structure of duties on vehicles for CKD units.
6.21 Local content programme for passenger and commercial vehicles from
1992 to 1996.
6.22 Status of margins of performance extended by selected Southeast
Asian countries of 1996.
6.23 Malaysian automobile procedure and their products.
6.24 Export ratio for Japanese and US affinities in Malaysia from 1975 to
1982 sector wise.
14
6.25 Income tax rates in selected countries including Malaysia for manufacturing and services sectors
6.26 Net inward portfolio equity flows to Malaysia from 1995 to 2003
(Billions of US Dollars).
6.27 Net inwards foreign direct investments to Malaysia from 1995 to 2003
(Billions of US Dollar).
6.28 Net inwards debt flows to Malaysia from 1995 to 2003 (Billions of US
Dollar).
6.29 Net private flows to Malaysia from 1995 to 2003 (Billions of US Dollar).
6.30 Net capital flow of Malaysia from 1970 to 1985.
6.31 Net inwards short-terms debt flows to Malaysia from 1995 to 2003
(Billions of US Dollar).
6.32 Japanese and US foreign direct investment in Malaysia from 1976 to
1984 sector wise.
6.33 Merchandise exports of Malaysia from 1995 to 2003 (Billions of US
Dollar).
6.34 Labour and other costs in selected Southeast Asian countries from
1992 to 1994.
15
List of Figures
2.1 Map of Malaysia
2.2 Map of Southeast Asia
3.1 Head & Shoulders Shampoo
3.2 Pert Shampoo
3.3 Lux Soaps
3.4 Sun Silk Shampoo
3.5 Palmolive Soaps
3.6 Safe Guard Soaps
3.7 Rexona Soaps
3.8 Life Buoy Soaps
3.9 Dove Soaps
3.10 Colgate Tooth Paste
3.11 Signal Tooth Paste
3.12 Macleans Tooth Paste
3.13 Close-Up Tooth Paste
16
3.14 Fair & Lovely Creams
3.15 Ponds Creams
3.16 Baby Lotion
3.17 Baby Shampoo
3.18 Slice Juices
3.19 Nido Milk
3.20 Every Day Milk
3.21 Milo Juices
3.22 Ovaltine Chocolates
3.23 Nesvita Bones
3.24 Milk Cream
3.25 Nescafe Coffee
3.26 Kitkat Chocolates
3.27 Maggi
3.28 Cerelac
3.29 Corn Flakes
3.30 Polo Chocolates
17
Abbreviations
ADP Asian Development Bank
ASEAN Association of South East Asian Nations
CSR Corporate Social Responsibility
EU European Union
FDI Foreign Direct Investment
FELCRA Federal Land Consolidation and Rehabilitation Authority
FELDA Federal Land Development Authority
FIC Foreign Investment Committee
FIDA Federal Industrial Development Authority
GDP Gross Domestic Product
GNP Gross National Products
HICOM Heavy Industrial Corporation of Malaysia
HRD Human Resources Development
HRDF Human Resource Department Fund
ICA Industrial Coordination Act
IT Information Technology
JV Joint Venture
KLSE Kuala Lumpur Stock Exchange
LDC Less Developed Countries
LEP Look East Policy
MIDA Malaysian Industrial Development Authority
18
MIDF Malaysian Industrial Development Finance
MNCs Multinational Companies
MSC Multi Media Super Corridor
MTDC Malaysian Technology Development Corporation
NAFTA North American Free Trade Area
NATO North Atlantic Treaty Organization
NDP New Development Plan
NEP New Economic Policy
NGOs Non-Governmental Organizations
R & D Research and Development
RISDA Rubber Industry Small Holders Development Authority
RM Ringgit Malaysia
SEDC the State Economic Development Corporation
SMEs Small and Medium Enterprises
UDA Urban Development Authority
UK United Kingdom
UMNO United Malay National Organization
US United States
WTO World Trade Organization
19
Abstract
The research of study to know the economic and international business are suitable in order to explain the particular role and existing of Multinational
Companies in the South East Asia and specially in Malaysia, the base of this study to describe the process of realism in between of Multinational
Companies and South East Asia relationship as well as towards Malaysia, the core role of Multinational Companies in Malaysia since two decades of the 20th century i.e. from the period of ruling of Dr. Mahathir, in this respect two sets of Questionnaires customers were supplied in all the big cities of Malaysia, this questionnaires from the Managers of Multinational
Companies and from Multinational Customers show the total response rate estimated at 62% which is suitable for the study.
The above results also supported with secondary data as confirmed all research hypotheses, so pointed out that in manufacturing and services industries dominant the multinational business in Malaysia due to joint venture, in Malaysian foreign joint ventures found of MNCs in the cross borders as well as marketing, trading, manufacturing, consulting, contracting Banking, hotel and insurance field, so multinational group operating across the national border i.e. no need with international production.
It is further mention here that the respondents perceived the competitors of the Multinational Companies are in process in Malaysia in economic,
20 marketing, and technology field, and the contribution of the Multinational
Companies in socio economic developments found as positive in Malaysia.
The Researcher of this study also given attention to some aims and objectives for the success of the business of the Multinational Companies in business as related with local cultural awareness found positive in
Malaysia, as well as covered some important issue of the Islamic culture in this study, as the help full for the Multinational Companies to obtained more awareness about cultural needs, values and also to sensitiveness of the people generally and Muslims community of Malaysia.
21
Table of Contents
Acknowledgements
List of Tables
List of Figures
Abbreviations
Abstract
Chapters
1. Conceptual Framework and Research Methodology
1.1 Research Problems and Objectives
1.2 Hypotheses of Study
1.3 Significance and contributions of the study
1.4 Proposed Multinational Role Model: A Conceptual Frames
Work
1.5 Research and Statistical Method
2. The Malaysian Environment for Multinational
Investment
2.1 Background Information
2.2 Government Structure
22
2.3 Non-Muslims and the Features of Malaysian Society
2.4 The Malaysian Economy
2.5 Rules and Regulations for Multinationals
3. Different Aspects of Multinational Companies
3.1 Performance in Developed countries of MNCs
3.2 Reservation of Developing Countries of Multinational
Companies
3.3 Historical Survey of Malaysian Economic Growth
3.4 Public Interest Issues
3.5 Products of Multinationals and Islamic and Cultural issues
of Malaysian Society
4. Socio-Economic Discrepancies and New Economic Policy
4.1 Inequalities in Colonial Era
4.2 Corrective Actions of the Government
4.3 Re-Engineering of Socio-Economy Sector
4.4 Impact of New Economic Policy (NEP) on Malaysian
Economy
4.5 Foreign Investment under New Economic Policy (NEP)
23
5. Asian Financial Crisis with special reference to
Multinationals
5.1 Origin of the Financial Crisis in the Region
5.2 Inter-related impact of the crisis
5.3 Reforms Measures by the Malaysian Government
5.4 Role of the Multinationals for Rehabilitation after the Crisis
6. The Characteristics of International Business in
Malaysia
6.1 The Nature of Foreign Business Culture in Malaysia
6.2 Chinese-Malaysia Bilateral Economic Partnership
6.3 The Role of Multinationals in Manufacturing Sector
6.4 International Investment in Services providing firms
6.5 Japanese investment in Malaysia
7. Conclusion
7.1 Interpretations of Surveys
7.2 Researcher’s Recommendations Related to the Role of
Multinational Companies in Malaysia
24
7.3 Areas of Further Research
7.4 Conclusion
Appendices
1. Questionnaire A: The Role of Multinational Companies in Malaysia as
observed by Malaysian Citizens.
2. Questionnaire B: The Role of Multinational Companies in Malaysia as
observed by Managers of MNCs in Malaysia.
3. Southeast Asia Desires New Attitude to the Multinationals: A
Supplementary Analysis
4. Muslims and Non-Muslims Respondents’ Views and Recommendations
Related to the Role of Multinational Companies in Malaysia.
5. Names of Multinational Companies Operation in Malaysia.
Bibliography
25
Chapter One
Conceptual Framework and Research Methodology
Multinational Companies (MNCs) are carrying on the business in all over the world, the role of these companies are very vital in the process of
Foreign investment, purpose of such investment first to get the resources and secondly take over the charges for the success in the field, it is no doubt that multinational companies are leading and playing their part in the world to control of manufacturing process, but also active in travel and tours and banking services. Multinational companies also super sided on communication, transport and power services and also extended I.T network and space technology in the world.
Multinational companies having remarkable activities in agriculture, petrochemical, air lines and lot of other industries, inspite of such successful role of Multinational Companies, they are also facing some difficulties due to removal of local resources and deprivation of rights for the employment and income, decrease the industrial development of the host Nations which can create unavoidable circumstance for such nations.
26
Now researcher would like to draw the attention on the Multinational
Companies role in the South East Asia and especially in Malaysia, as the
Multinational Companies taken part for the success both in product and manpower in the best interest of humanity. It is fact that Multinational
Companies played great part in the development of Malaysia, but also contributed for production, marketing Joint Venture (JV) and in other field.
The definition of Multinational Companies based on the group of companies, these companies are manufacturing and sale the products to the nearest countries through the networks as well as partnership.
Researcher also observed the business activities in Malaysia and found that Multinational Companies are the leading group of the developed and under developed countries, hence the opponent started anti activities such as violence, agitation etc against the Multinational Companies. So base of this research to let us know either the act of the Multinational Companies in the interest of the region especially in Malaysia.
It is fact that politically most of the countries agreed the Multinational
Companies playing best role for the business and having experience in the international market. It can not be ignored that Multinational Companies taken start to introduce new technology and the products in the field of trade in foreign countries and given power and competition strategy.
In the recent past, so many researches carried on the role of
Multinational Companies in the development of East Asian Countries, but
27 this study on this topic have covered process of development as well as contribution in Multinational and International business, in fact that government and Multinational Companies are facing foreign pressure for the investment on the part of the Government and on the other side the
Multinational Companies struggling against the competitors, the famous product in the international marketing maintained the control of power and quality successful in between the Multinational Companies and government, but non confidence act create refusal effect on the atmosphere of investment when the positive atmosphere in marketing field. It is further observed that Multinational Companies having operational systems which is not possible for the government to do so, while the Multinational
Companies applying the technology as required for product.
This study consist with Seven Chapter, the first chapter comprised with the purpose and concept of research as well as method of the study, In second chapter researcher has mentioned about the investment atmosphere in Malaysia, the third chapter viewing again on the theories as prepared by
Multinational Companies for the development of Malaysia. In the fourth chapter described the new strategy of economic, when the fifth chapter presents about the financial issues facing by Malaysia and also
Multinational act included with the economic rehabilitations, in sixth chapter mentioned the role of world wide business in Malaysia and as usual the last and seven chapter contains with final conclusion as well as recommendation.
28
1.1 Research Problems and Objectives.
Researcher has tried through this study to make the step for the awareness of presentation and character of the Multinational Companies in
South East Asia as well as in Malaysia. The main problems and issue facing in the research has given in the following paragraphs.
1.1.1 Cultural Issue:
The difference in between the sense of Muslim and non Muslim given in this study the sense of Multinational Companies also determined of the other group in order to aware the differences in culture or the religious collaboration, in fact the literature added for the knowledge regarding the limit of present socio-economic theory regional politics in the activities of
Multinational Companies, the other studies point out the necessity of cultural process in the success of Multinational Companies in Malaysia.
Do the Multinational Companies carrying on the business in Malaysia must be well aware regarding Islamic cultural and ethical values?, Do the
Muslim respondents more related regarding the importance of these values?
Do the Non-Muslim Multinational Managers of Malaysia having few knowledge of cultural religious and ethical values?
29
Do the effect on the local society of the western values brought due to the presence of Multinational Companies? Do the perceptions differ to some extent from those of the local Respondents?
1.1.2 Competitiveness of Multinational Companies:
The following issues made on the matter of Multinational Companies.
Do MNCs by virtue of advantages in the field of Marketing, Management,
Finance and technology, some of them globally and some are the locally oriented?
Are There globally and locally oriented Multinational Companies operating in Malaysia? Do the global scanning of MNC a operating in
Malaysia under the influence of number of variables?
1.1.3 Problems Caused and Constraints Faced by Multinational
Companies in Malaysia:
Do the presence and the operations of Multinational Companies in
Malaysia as assessed by the host constituents? Do the understandings of the Managers of Multinational differ from the local respondents?
30
1.1.4 Contributions of Multinational Companies to the Host
Countries
Do the multinational having the positive contributions with host country socio-economic developments and economic growth? Do the understandings of the Multinational Companies manager differ from the multinational customers?
1.1.5 Positive Efforts of Multinational Companies During Asian
Financial Crisis in the Malaysia
Is It fact that when the Asian Financial crisis hit the region, the
Multinational Companies played the vital role in the rehabilitation of
Malaysian economy? and performed Export-oriented role in the operations in Malaysia, Did the Malaysian economy fastly recover as compare with any other region with help of Multinational Companies?
1.2 Hypotheses of Study
The supposition of study as under:
1.2.1 Cultural Issue
31
The Multinational Companies carrying on the business in Malaysia must be well aware regarding Islamic cultural and ethical values, the Muslim respondents more related regarding the importance of these values.
Non-Muslim Multinational Managers of Malaysia having few knowledge of cultural religious and ethical values.
The effect on the local society of the western values brought due to the presence of Multinational Companies, the perception differs to some extent from those of the local Respondents.
1.2.2 Competitiveness of Multinational Companies
MNC by virtue of advantages in the field of Marketing, Management,
Finance and technology, some of them globally and some are the locally oriented.
There are globally and locally oriented Multinational Companies operating in Malaysia, the global scanning of MNC a operating in Malaysia under the influence of number of variables.
32
1.2.3 Problems Caused and Constraints Faced by Multinational
Companies
In Malaysia the presence and the operations of Multinational
Companies as assessed by the host constituents, the understanding of the
Manager of Multinational differ from the local respondents.
1.2.4 Contribution of Multinational Companies to the Host
Countries
The multinational having the positive contributions with host country socio-economic developments and economic growth, the understanding of the Multinational Companies manager differ from the multinational customers.
1.2.5 Positive Efforts of Multinational Companies During Asian
Financial Crisis in the Malaysia
It is fact that when the Asian Financial crisis hit the region, the
Multinational Companies played the vital role in the rehabilitation of
33
Malaysian economy and performed Export-oriented role in the operations in Malaysia, the Malaysian economy fastly recovered as compare with any other region with help of Multinational Companies.
1.3 Significance and Contributions of the Study
The purpose of the research to apply for the knowledge and main act of the Multinational Companies in Malaysia, the following paragraphs describe the main difficulties in the research.
In this study, researcher has stated the discrimination in Muslims and non Muslims, the feelings of the Multinational Companies were found against the other, as this difference due to religion, according to study that
Multinational Companies successfully carrying on the business in
Malaysia, on asking from answering persons about their feelings for religions and social issues which disturbed the action of Multinational
Companies in Malaysia.
Researcher would like to highlight here that the Multinational
Companies must be aware about the Islamic moral philosopher in order to carry on the business and investment in Malaysia, now the question is that the managers of other religion having knowledge of culture of Malaysia and other issues, but in is very much difficult for the Multinational
Companies to change values of culture in Malaysia. Its is the matter of understanding that the role of Multinational Companies in respect of their
34 competitors in the Southeast Asia, now this question is also arised that is the products of Multinational Companies can be supplied in the local market as manufactured in their nation or in Malaysia? The answering countries also asked regarding the difficulties faced due to the
Multinational Companies or they are agreed or not agreed with such difficulties or not agreed with such difficulties related with business, manpower and other resources, the answering countries further asked for the pressure delay less qualified staff, not familiar to communicate in the language of other countries.
This study also included the issue of Multinational Companies that is they plays part for the development of economic of the country, is the host country is suffering due to the operation of Multinational Companies.
Is the feeling of the customer against the managers of Multinational
Companies? Is during the financial inflation the Multinational Companies redeveloped the economy of Malaysia, so it is evident that the
Multinational Companies played the vital role during such period. The
Multinational Companies must be aware about the culture of Islam particularly in Malaysia for carrying on the business successfully.
Researcher would like to focus that there are some competitors in the field of supply, administration and financial and other related matter of
Multinational Companies in Malaysia, the Multinational Companies also facing lot of difficulties due to existence in Malaysia.
35
The study also presents that the Multinational Companies are taking part in the development of economic process of Malaysia in order to give groom on this project during the tenure of hard days in Malaysia, but some local parties found against the managers of Multinational Companies on few issues, as included in this study, researcher further add here business process in Malaysia as wide going on worldwide in service and manufacture also obtained the information and understanding in respect of
Southeast Asia particularly in Malaysia.
In this study, researcher provided the worldwide business in the shape of joint business and also that Multinational Companies continuously in the process throughout the board an extended the manufacturing teamwork, in the business of the present regime and played vital role in national and international basis, (1) the Multinational Companies having best ability to carry on all type of business within their jurisdiction but also, extends the profit and position, in fact there is no balance in between the
Multinational Companies and production, (2) in the world market the products consists with electronic appliance, Rubber etc and other related services, it has close coordination with manager of the Multinational
Companies. (3)
It is researcher point of view that the Multinational Companies based on under control around the boarder of the nation, it is also mentioned here that the Multinational Companies having partnership with such Nations,
36 having no their own control and there is the gap in completely own control and partnership base if the Multinational Companies around the boundaries of the countries, (4) there is no evidence regarding the presence of company for the production on the worldwide.
The main purpose of this study to get information regarding the business of the Multinational Companies in the country of Malaysia, it is also found in consultation, trading field on international basis, it is also found that due to fresh employment in the companies, hence effected the exiting jobs, but is s fact that such new created joint venture investment very much beneficial for the economy and also provide necessary services in the field.
Researcher would like to distinguish here that the interested part of the study as few popular scholars of the business on International became aware that the Multinational Companies having best understanding on the board and also received the benefit in market as related to Malaysia, but the research based on the culture of Islam, its is further add here that before this study some studies conducted on the Multinational Companies, carrying on the business in Southeast Asia, but nobody else studied on the important issue of Islamic culture, it is the responsibility of the leader of the
Nation to attract the Multinational Companies for the investment.
Tindall (5) describe Multinational Companies (MNCs) as “an enterprise which takes out operations, such as production of goods or the
37 specification of services, in more than one country through component units which are subject to some quantify of central control. Researcher would like to distinguish that, according to Robock (6) “the basic idea in any definition of Multinational Companies (MNCs) is that of a number of allied trade organizations which role equivalent in another countries.” Bhardwaj
(7) defines it as an enterprise, which attach in overseas value-added activities and internalizes middle product markets across boundaries.” before going ahead it is useful to give a better idea of what is meant by
Multinational Companies (MNCs) and to justify the selection of that particular term.
This study will be based on the values of the Islamic culture as well as the part of the Multinational Companies in Southeast Asia particularly in
Malaysia, it is very important issue in this study to provide the process of the Islamic values and it is in the knowledge of the Multinational
Companies for carrying on the business or to make the strategy for the investment in the Islamic countries and in Malaysia.
The study will provide the assistance with the large institution all over the world and to get knowledge of Islam, in order to understand by the
Multinational Companies and their mangers and other persons who have no much knowledge about the Islam, hence it is helpful to maintain their performance in Malaysia and worldwide Islamic countries, by this way the investors of the Multinational Companies solve their difficulties but also benefit economical in the Islamic countries and by this positive approach is
38 very much useful for the Multinational Companies and for the economic experts, and the scholars of the business who are interested to examine the study in depth of the Multinational Companies in Malaysia.
1.4 Proposed Multinational Role Model: A Conceptual Frames
Work
In fact that the understand of the Multinational Companies is cleared and also offer to maintain a way completely in between the distance of theory and practical of Multinational Companies, the foreign investment in host countries is not available in the real resource which allowed to realize the income from the under developed countries in the field of oil and mineral projects. This study is made to realize the role of the Multinational
Companies in the business specially in Malaysia on the polices of the
Multinational Companies utilize the strength financially to declare the conditions on the host countries, this study particularly pointed out the vital role of the Multinational Companies in the economic field in
Southeast Asia specially in Malaysia as well as described the process of the
Multinational Companies assisting in development of technology and the manufacturing strategy. (8)
In views of the above discussion researcher thinks that the Multinational
Companies by operating Foreign Direct Investment (FDI) to the foreign countries providing the great strength to control the foreign companies for making the decision, the assets as created the income can be acquired
39 through the process in large number of countries, on this way multinational means company having own control and arrange the assets in other countries, as legally such companies are the multinational because they having control over the companies carrying on in the different countries. (9)
Researcher further like to mention here that the international means not appropriate amount the theorists and economist, it always known as the
Multinational Companies, for the term as applied just to used for
Multinational Companies, but not allowed for the label to be used for the operations of the Multinational Companies, when the foreign process maintained minimum percentage of all the operations of the enterprise.
In this study researcher also included my thinking about the increase in the investment as directly to the under development countries during the recent regime as provided by the Multinational Companies, when the development ration of economic in Malaysia, the act of the Multinational
Companies in this study to include the value activities in the market, partnership, production manage the project finance issue which have provided more and more facilities, according to other researchers that
Multinational Companies can be divided into two grade i.e. National and
International, (10) it has also called as the enterprise which produced the goods and the services in most of the countries, but in this study.
40
Researcher would like to define that the Multinational Companies mean such business enterprises, carrying on their business in other countries with affiliation, there are other definitions such as necessary to note that
Multinational Companies carrying on their business activities in their own country and out of the country, (11) because the purpose of this research to find out the influence upon the success of the Multinational Companies in
Malaysia and now relates with culture sales promotion and other measures, (12) it is the large field of research on the Multinational
Companies and other researchers by using other reasonable process to get the results in different ways. It is further stated that Islamic culture as well as application on the business activities of the Multinational Companies also included this study; researcher believed that the application on the business based on the belief upon the Holy Quran and Sunnah.
It is fact that everybody must be agreed with researchers’ point of view that the Multinational Companies can be merged due to no perfection in the goods or the Market, (13) as it can disturb the process of international market foreign investments no doubt that on the basis of knowledge of
Islam, get better competitive facilities in the market of Malaysia, to process the role the Multinational Companies face disturbances in their business but also pressure of competitors from other Multinational Companies, shortage of work force, and local skilled manpower.
1.5 Research and Statistical Method
41
Researcher examined the problems during the research by using the questionnaire to the mangers of the Multinational Companies, the same were sent through the Email service to managers of the Multinational
Companies, it was done on the sampling procedures, but due to change of some email address, a few questionnaire returned without read, when some sent the message through the email and regretted to fill the questionnaire.
Such questionnaire were sent with the covering letter for the assurance that all the information will be kept confidentially, some mangers of the company refused to give any answer and one of the manger of the
Multinational Companies sent back the questionnaire without any answer while stating that “we can’t do it as we have an agreement with Malaysia
Government”.
Researcher has prepared every attempt to enhance the questionnaire take back by special follow-ups, mails and telephone calls, but a lot of just rejected to co-operate or contribute in the survey as explained above, by assessment, researcher ensured that they were properly accomplished by calling the concerned respondents or by sending them a reminder message, out of total 100 mailed to key managers of Multinational Companies , 51 properly completed questionnaires were returned to the researcher, the 51 percent response rate accomplished in this study is much higher while 47 completed questionnaires obtained by Mamarinta P. Mababaya in his research work. (14) He carried out this institutional case study while serving
42 as Director of the Westminister Business School (Department of Economics
& Quantitative Methods) University of Westminister London. (15)
The customers surveyed illustrated, most of whom having achieved college degrees and holding key place managers, professors, engineers, medical doctors, architects, accountants, instructors and administrative officers, advisers or consultants, who can understand English language.
Percent of the customer respondents have doctoral and master’s degrees, a pilot study was also prepared for preferred customers of products or services of Multinational Companies (MNCs), using a questionnaire with a seven-point response scale. The total number of questionnaire for customers of Multinational Companies (MNCs) was 280, of which 185 was returned properly completed, this represents a good response rate of 66 percent.
In fact researcher here tried to obtain the information in respect of
Islamic culture as based upon the Holy Quran and Hadis/Sunnah, theoretical literature of the Multinational Companies, data on Southeast
Asia particularly Malaysia, and multinational business, which have obtained through the libraries of Malaysia, Saudi Arabia and Pakistan.
43
References:
1. Hood, Neil. and Stephen, Young. The Economics of Multinational
Companies. London: Longman group, 1979, p. 2.
2. The Economist. Dictionary of Economics. London: Profiles Book
Ltd, 1998, P. 286.
3. Craig, J. G. “Multinational Co—operative: An Alternative for
World Development” Western Producer Prairir Books Saskatoon
1976 p-2.
4. Buckley, J. Peter and Casson Mark “The Future of Multinational
Enterprises” The MacMillan Press Ltd. New York 1976 p-11.
5. Tindall, Robert Emmett “Multinational Enterprises” Oceana
Publications New York 1975 p-12.
6. Robock H. Stefan “International Business and Multinational
Enterprises” Richard D. IRWIN, Inc. New York 1983 p-8.
7. Bhardwaj, Arjun “Globalization and Multinational Corporation in
South Asia: Towards Building a Partnership for Sustainable
Development” Regional Center for Strategic Studies Colombo 2001
p-12.
44
8. Wassemuddin, Syed and Shahabuddin, Syed. “The Role of
Multinational Companies in International Relations” Research
Journal of Social Science Karachi 2004 p-48.
9. Saeed, Nazir “An Economic for Foreign Direct Investment and its
impact on Trade and Growth of Pakistan” Department of
Economics (Unpublished dissertation of Ph. D.) Islamia University
Bhawalpur 2001 p-3.
10. Salahuddin, Syed. “The Politics of International Economic
Relations” Comprehensive Book Services Karachi 1997 p-38-39.
11. Abbasi, Farhat Jamal “International Relations” Maktaba –e- Fareedi
Karachi 2002 p-416.
12. Shahid, M. Imtiaz “International Relations” Carvan Enterprises
Lahore 2002 p-388.
13. Dunning, H. John “The Multinational Enterprises” George Allen &
UNWIN Ltd. London 1971 p-17.
14. Mababaya, Mamarinta “The Role of Multinational Companies in
the Middle East: Case of Saudi Arabia” University of Westminster
(Unpublished dissertation of Ph. D.) 2002 p-204.
15. Ibid p-iii.
45
Chapter Two
The Malaysian Environment for Multinational
Investment
Researcher would like to draw the attention in this chapter in respect of national interest having various aspects related with the polices enforced by the Government, researcher also mentioned the performance and creation of environment for the investment which is attract full for the foreign companies as well as rules for the Multinationals, regarding some aspects in southeast Asia particularly in Malaysia.
It is fact that from the year 1970 to date given best performance in the economic, in this tenure seen the economy of Malaysia so increased and became in the great style in the field of trade and industries, the investors of the foreign also played vital part to fulfill the Government strategy hence the investment process increase time to time in Malaysia.
2.1 Background Information
According to the background, Malaysia having two regions i.e. east and west Malaysia also called as the Peninsular Malaysia, at the south side island of Malay at the west border of Thailand, and at the north side
Malaysia is situated when on the south coast side Singapore is situated, the
46 north of Borneo island situated east Malaysia and very small portion of the
Malaysia consisted with Borneo and Brunei.
2.1.1 Geography and Climate
The Sabah and Sarawak far from the South China Sea, the Malaysian
Island which at the distance of 740km in the north side of state of Johar, when the Sabah and Sarawak at the distance of 1.120 km in west hog point
(Sabah) from the Tanjung, the frontier land of Malaysia to the North of
Thailand, (1) at south side it is the boarder of Singapore, at the west side near the straits of Malacca and Sumatra island of Indonesia, Philippines and Brunei are also the nearest neighbours, Here figure no. 2.1 shows map of Southeast Asia and figure no. 2.2 shows map of Malaysia.
The Malaysian federation consists with 13 stats out of which eleven states on the island of Malay, in the North of Thailand and the island of republic of Singapore at the down side, (2) when Sabah and Sarawak situated on Borneo Island at the distance of 500 miles and in the east of
Malaysian Island in the sea of South China.
The climate of Malaysia during all the year found high temperature and humidity in the east coast of Malaysian island the rainy season remains from November to February, island of the west coast part particularly in
April, (3) May and October faced thunderstorm. Its is evident from the table
47 no. 2.1 that the temperature in some area of the Malaysia island having equal average, the temperature of Malaysia island always high, but in other region rainfall seasons, (4) Here table no. 2.1 illustrates the temperature of selected Malaysian states.
Table 2.1
The temperature of selected Malaysian states
It is also pointed out that during the monsoon in north east of the
Malaysia the temperature found drop, because the low temperature on the basis of rainfall in the monsoon and overcast. (5)
2.1.2 The People of Malaysia
The Malaysia independent state of ethnic, the Malaya community in majority, there are Indians and Chinese nationals the ethnic population in
Malaysia shown in the following table 2.2 as obtained from the reports of statistics department of Malaysia.
Table No. 2.2
Quantities of Malaysian ethnic in the selected regions
48
Researcher would like to focus that In Malaysia, there are the races having difference in education, profession, language, religion, nature, the
Malaysian people also in the field of agriculture in the rural areas of
Malaysia, after entering in urban areas the industries in Malaysia has been increased, the number of Chinese as showing in table 2.3 are residing in various towns of Malaysia.
Table no. 2.3
Chinese population in various towns
Source : Various annual reports of Department of Statistics, Putrajaya Malaysia
During the research It has been found that the majority of Chinese people are residing in the island of West Coast states of Malaysia including in towns and industrial area and carrying on business in urban areas, they have also large share in the wealth of Malaysia, (6) the origin of the Chinese called as Cantonese when in the category of Indians consists with Pakistan,
Sri Lanka and Bangladesh nationals.
Table no. 2.4
Population and area which estimated on 2002
Source : Various annual reports of Department of Statistics, Putrajaya Malaysia
49
It is noticeable factor that there are different tribes in Sabah where in the tribe of Kadazans are in majority, when the people of Sarawak mostly are national grown, the areas of city of the Sabah and Sarawak different, in this study the growth and estimated population of Malaysia also given in the table 2.4, it is also pointed out that more than 50% population residing in urban areas, (7) as the majority of rural areas migrated in urban areas, the ratio of jobless people of Malaysia is low, hence most of the labour comes from Pakistan, Philippines, Indonesia and Bangladesh for the recruitment on low skill employments, (8) when the skilled men comes from India,
Japan and China.
Table no 2.5
State wise population which according to census of 2000
Source : Various annual reports of Department of Statistics, Putrajaya Malaysia
It is fact that Kuala Lumpur is the largest city of Malaysia and Ipoh,
Johar Baharu, Petaling Jays, Kelang, Kuala Terengganu and George Town are also included in big cities of Malaysia, the urban larger region are
Kuala Lumpur, Petaling jays and Kelang as the part of Kelang valley cities and mostly in the state of Selangor, on the basis of great opportunities of employment created in the capital of Kelang valley, the Kuala Lumpur area of metropolitan extended up to the federal border, the population as per the census showing in Table no 2.5.
50
2.1.3 Language and Religions
During the research on language and religions researcher feels that these issues plays vital role in development of the society, while it has also found the Malays and the Malayan peoples called as bumiputera, ratio of Chinese in the population of Malaysia reasonable and Indian ethnic Indonesian,
Thai, Europeans and Australian residing in Malaysia is very low percentage, there are reasonable population of Dayak ethnic residing in
East Malaysia, when the Chinese are in Sarawak, in Malaysia English
Chinese and Tamil language spoken but Bahasa is the national language of
Malaysia. (9) There is no restriction in Malaysia on religion and the Islam more than 50 percent is the official religion, the importance also given to
Confucianism and Daoism as well as Hinduism from the Indians.
2.1.4 Education
According to researcher that the education is the most important source of development of the country, in Malaysia minor ages of children get free education and thereafter it is on the optional. In Malaysia the parent of children can choose the language of instruction either Bahasa, Chinese or
Tamil, the primary language of all secondary schools is Bahasa, when the second compulsory language is English, there are lot of higher educational institutions with nine universities. (10)
51
Informative point is that the Malaysia declared the education as compulsory, private schools running without any financial assistance from the Government, during the year 2003, the English language made compulsory for Science and Math for the primary schools the age limit is six years for the secondary education start from 12 years of age, (11) the student allowed to attend in technical and vocational classes in lieu of academic education of final four years, in the year 1995 total fourteen universities were in progress but in the year 1994 the Malaysian
Government presented a bill to grant permission to the universities of foreign countries to open the branches in Malaysia.
2.2 Government Structure
The kingdom of Malaysia based on the federation of Malaya constitution was established in the year 1963 with the collaboration of Singapore,
Sarawak and Sabah but in 1965 Singapore became independent; (12) the leader of county is Yang di-Pertuan Agong for the period of five years, the prime minister serves with majority basis, the total number of parliament member are 219 when the senate members up to 70 house representatives elected for the period of five years, it is pointed out that the king as the head of Malaysia as well as the by head of Malaysia elected out of nine rulers of the state, (13) the parliament consists with Dewan Negara senate and Dewan Rakyat, i.e. the representatives of the house.
2.2.1 Judiciary
52
Researcher would like to distinguish that there are two high courts, one for west and one for east Malaysia serving under the federal court, i.e. the
Supreme Court in Malaysia who precedes the appeal cases of high courts, the head of high court called as the Chief Judge and head of Federal courts called as Chief Justice, all these judges and Chief Justice are appointed on the recommendation of prime minister by Yang di-Pertuan Agong, (14) all the lover sessions and magistrate working under the Islamic rules and the cases of Muslims prosecuted in these courts.
2.2.2 The Infrastructure
As a matter of fact that In Malaysia, the process of partnership in between public and foreign is increasing and the responsibility of share in investment on the part of public sector which also the province of water, roads and mass transit, as well as the investment of the private sector in telecommunication, electricity and roads increasing continuously, (15) the private finance for infrastructure funding also improved with the increase of new project.
The road sources about 25000 kilometers is the best way for Southeast
Asia which Malaysia as well as with Thailand and Singapore, the North
South highway made the travel time decreased three hours.
53
There are three major ports such as Penang, Kelang and Johore of
Malaysian island having the way by road and rail, the new port was also started 25 km north Kuantan, (16) the National air line services of Malaysia is “Malaysia Airline System”
2.2.3 Transportation and Communication
Researcher would like to highlight that the railroads and road system is exist since the British regime, there are so many international Airports such as Kuala Lumpur International Airport in Sepang, Port Kelang, George
Town are the main sea ports in the west region of Malaysia, the road network needs development, (17) the major route for cargo exit not fulfill requirement of exports increasing time to time in Malaysia.
The new North-South Expressway connected Johar Baharu in the South linked with central Malaysia, on the island of Singapore new way also built, while the Railways connected with island of Malaysia in Sabah, the double track of Railway lines on the length of island of the Malaysia. The urban rail tracking system based on the same system as applied in
Singapore; hence the load of the traffic will be decreased, as the project on the consortium of UK Company Taylor Woodrow International and AEG
Westinghouse Transport System GMBH was constructed according to the agreement, it has pointed out that due to increase in the foreign trade the main Ports of Malaysia always over loaded, so to recover such problem new Ports in Sarawak and Sabah and other places in Malaysia are
54 constructed. (18) It is also found that more than fifty percent cargoes going through Singapore, so transportation charges increased the exports cost.
2.3 Non-Muslims and the Features of Malaysian Society
It has stated in the foregoing paragraphs that Malaysia is in historical country which played vital role in the development. Large number of people from India and China came in Malaysia, (19) which divided the people in Muslim Malays and Muslims of India and China, all and every person having religion freedom but no permission for the propaganda of religion in Malaysia. (20)
Chinese and Indians some persons have converted in Islamic religion such as Iban, Kadazan Orang Ash, (21) mostly king and parliament member are from Muslims religion the Malaysian non Muslims having no knowledge about Islam because there were no school for the study of Islam since the British regime, at present Muslims can attend the Islamic Studies in special classes but it in un-officially, (22) as anti-Muslims newspapers of
Malaysia projected the Muslims as terrorists and extremists.
According to history of Chinese and Indians, they are immigrants in the past era the Chinese were financially very strong they were running industries in Malaysia when the Indians were found in the field of trade,
Banks, Industry, Doctor, Lawyers and Teachers. (23)
55
After the independence the Malays were given rights of land under the constitution of Malaysia. During the research it has come to know that
Hindu of India, Buddhist and Chinese were under pressure of Islam because this religion is great honor in Malaysia, (24) it is fact that there were no differences in Islam and other religion, but it has pointed out that on some issues non-Muslims are under fear of Islam.
1) It is fact that after Malaysian independence due to powerful political
position the non-Muslims very much upset on the view that the
Government of Malaysia going on the polices of Islamism, but also
damage their identities. (25)
2) According to my views that the concept was not clearly explained to
the non-Muslims so no any problems created by the Muslims group
they also want to clarify the dispute.
3) It is the matter that no evidence of the part of non-Muslims as the
citizen taxpayer or the leader on behalf of Islam.
4) The two large parties on Muslims side such as United Malay
National Organization (UMNO) and Pan Malaysia Islamic parties
taken step for the solution hence created differences.
5) As per the researcher it has also found that the non- Muslims no step
to know what is the Islam nor from the part of the Government tried
56
to take awareness nor attempted for the Islamic process, it is the
reason that the leading Ministers and other staff were non-Muslims
and after the independence they were changed by Muslim authority.
6) The Islamic concept always presented as negative and fear able and
never shown on positive manner in media and created disputes in
Muslims and Christians of Indonesia, hence fear ness developed in
non-Muslims that through research in this study researcher came to
aware that the religion of Islam is the declared official by the
Malaysia Government when the other such as Indian, Chinese
declared as the non-Muslim religion, but particularly the Christianity
are against and opposed against the religion of Islam.
In fact the lesson of religion of Islam not the name of only worship of the
Almighty God, it is guide to follow the way of life as directed by the
Almighty Allah and the last messenger Holy Prophet (Peace Be upon him),
(26) it is also the name of relationship in between the men and women, father, son, daughter, brother, sister, guidance for good relationship with the neighbours and to prove yourself as generous in non-Muslims through your best behavior, kindness, lore and respect and there is no difference in between all Muslims except piety as defined in the Holy Quran and our
Holy Prophet (Peace Be upon him). (27)
The constitution of Malaysia given equal rights to all the religion groups and also maintained to provide justice, democracy and respect to the
57 values in accordance to Holy Quran and guidance of Holy Prophet (Peace be upon him). It is ended blessing of Almighty Allah given advantage, command and the restriction on the basis of Holy Quran and our Holy
Prophet (Peace Be upon him).
No any western country giving the respect to the Human rights such as given in Holy Quran as well as guaranteed by our Holy Prophet (Peace Be upon him), it is no doubt that the life of mankind either Muslims and non-
Muslims without any preference of color, religion and race must be save as defined in the religion of Islam. So it is also the responsibility of the
Muslims Government to ensure the safety of life and properties of Muslims but also non-Muslims residing in the same countries, provide equal facilities of Health, Education equally and without any difference.
2.4 The Malaysian Economy
It has pointed out through this dissertation that the trading facilities for the local and foreign investor has been provided in Malaysia are under:
1 Development of industries.
2 Competition of Malaysian economy with various fields.
3 Apply the best possible process in the interest of manufacturing.
58
4 To make the traders to operate the projects.
5 To provide target to get incentive through the investment in the
projects.
6 For increasing the investment from the foreign investors, grant
license in order to operate the projects in Australia.
7 To offer facilities to the foreign investors to participate in projects
started by Malaysian Government.
8 Not impose any limit on the projects as going on as per policy of the
Government.
9 To maintain the easy facilities for the investors to bring the capital
and for the partnership with the trader so Malaysia.
10 To create the economic development and resources for the consumer.
For the improvement and development of the country economic,
provide reasonable opportunities to the traders all over the world to
bring the investment in order to declare the greatest market in South
Asia. (28)
According to the research, It has been found that the economy earlier in
Malaysia on the basis of export and supplier of rubber, palm oil, tin and
59 hardware, (29) the New Development Plan (NDP) as designed for the period of thirty years by the Malaysian Government to develop the country completely, which efforts show through the annual account report of the nation given in the following Table no 2.6.
Table No. 2.6
The national account from the year 2001-2003
Source: Annual Reports from 2001 to 2003 of Bank Negara Malaysia, Kuala Lumpur
Researcher would also like to mention that in the above table shown the annual average between the years 1992 to 1996, it is not meet the requirement if the target but it is reasonable as compared from the world standard, (30) the budget as given by the federal Government of Malaysia, showing the report in Table 2.7.
Table no. 2.7
Federal budget (RM) from 2000 to 2002
Source : Annual Reports from 2001 to 2002 of Bank Negara Malaysia, Kuala Lumpur
The government of Malaysia determined their vision up to year 2020 for the development of the nation, hence made the heavy investment in order to make the Kuala Lumpur as modern and to enter the Malaysia in digital era, as the Malaysian Government confident on export of computer microchips and other appliances. This country was also faced economical
60 crisis like other Asian countries, so due to such crisis may be the vision
2020 in delay, (31) the expenditures on account of development of Malaysia showing in Table 2.8.
Table No. 2.8
Development expenditure of federal government of Malaysia from 2000 to
2002
Source : Annual Reports from 2001 to 2002 of Bank Negara Malaysia, Kuala Lumpur
As per budget of the federal Government during the years 1990-2002 the expenditure in economy was 6.2% per annum, (32) the revenue of $23 billion and expenditure of $20 billion shown in budget, as showing in Table 2.8
2.4.1 Agriculture
In this research work, it is noted that the land of Malaysia used for plantation, it is fact that Palm oil produced and exports by Malaysia including other products such as sugar can, coca, coconut, pepper and the pineapples, (33) Malaysia also export cassava and bananas, main products of
Malaysia also showing in Table no 2.9.
61
Table No. 2.9
Major crops of Malaysia which mentioned from 2000 to 2002
Source : Statistical Appendix of IMF, Malaysia: (October 2001)
Researcher also pointed out in the study that due to shortage and transfer of labour disturbed the output of agricultural due to low cost economic resulting reduces the foreign investment such as transport and power and communication, in the year 2003 the value of exports as estimated at 6.5% on account of manufacturing of Palm oil. (34) As per report of the Asian Development Bank (ADB) the agriculture increased at the annual rate of 0.5% as well as pointed out by Bank Negara Malaysia
(B.N.M) 3.0% increased in the year 2002 when in 2003 it increased at 5.5%,
(35) the production of agriculture in Malaysia shown in Table 2.10.
Table No. 2.10
Malaysian agriculture production from 1991 to 1995
Source : Annual Reports from 1991 to 1995 of Bank Negara Malaysia, Kuala Lumpur
It is also noted that since 1970 the natural gas and Petroleum increased, the mineral fuels providing 10% of the total export revenue of Malaysia, (36) for the production of tin the Malaysia also leading in the world, in the field
62 of mining products such as copper, iron, silver and gold shown in Table
2.11.
Table no. 211
Mining activity for copper, iron, silver, and gold from 1991 to 1995
Source : Various reports of World Bureau of Metals Statistics for Malaysia
It is interesting aspect that the contribution of mining estimated at 100% is showing, (37) in the year 2000 0.4% appointed labour engaged and the gas reserves was fount at 2.12000 cm cum when the petroleum reserves 3000m barrels, (38) in the year 2002 from 33 oil fields of Malaysia production of petroleum estimated at 833,000 barrel per day and also in the year 2003 the crude petroleum exported as 5.0% of the total income on account of export.
(39) Malaysia also leading produce of tin, bauxite, copper, iron, gold and coal and the during the year 1990-2002 the annual rate of mining sector increased at 4.3%, in the following Table no 2.12 showing the production figure of Malaysia.
Table no. 2.12
Malaysian production figure from 2000 to 2002
Source : Minerals and Geo-science Dept. US Geological Survey, UN Statistical Yearbook for Asia Pacific
2.4.2 Manufacturing Sector
63
The supporting data illustrate that there are great opportunities for the investors to invest their wealth in the open economy country of Malaysia in all the sectors of industry, construction, agriculture etc. During the last 20 years manufacturing process of tin and rubber increased on the basis of goods export and import. (40)
The Government of Malaysia encouraged for the investment directly in the sector of industry and implemented on the planning of economic planning unit, they also appreciated to all the foreign investor.
According to researcher point of view that during the years 1996 to 2000 the growth in manufacturing unit by 10.7% annually when thereafter for next ten years expected increase of 16% annually in manufacturing exports, the Gross Domestic Product (GDP) share increased to 29.4% as compared with25% in the year 1995. (41)
In the sector of manufacturing of Malaysia the annual average increased to 12%. The seventh and tenth years manufacturing plan made for the increase of product in the manufacturing field in Malaysia, according to the said plan during first five years the average of 10.7% per annum growth and then 8.5% for the same, as per researcher the manufacturing having great share in the economy by increasing 13% in the year 1970 and thereafter in 1995 it was 25%, (42) it was also agreed by the Government of
Malaysia for the setting heavy industries corporation to identify such industry projects with Malaysian or foreign partners, to encourage high
64 technology without need of more labour, the employment percentage shown from 1993 to 1995 for the period of three year in Table no 2.13.
Table no. 2.13
Percentage of employment sector wise from 1993 to 1995
Source : Annual Reports from 1993 to 1995 of Bank Negara Malaysia, Kuala Lumpur
In this table researcher also shown about the labour in manufacturing field at the average of 27.6% which includes electrical machineries, food products, metal products, non electrical machinery, transport equipment, rubber, plastic, chemical and wool products as well as furniture. (43)
2.4.3 Industry Sector
Under this sector it is evident that Malaysia is going on the way of modern economy and also giving encouragement to the private economy and its fact that it is possible through the support developments planning and efficient management, the Malaysian Government with collaboration of Mitsubishi Motors of Japan establishment national car manufacturer, pen Sahan oto mobile, also running many enterprises, Majlis Amanah
Raayat, Urban Development Authority (UDA), The State Economic
Development Corporation (SEDC), and Malaysian Industrial Development
65
Finance (MIDF). (44) Here table no. 2.14 shows Industrial and commercial process for the period from 2000 to 2002 as shown in table no 2.14.
Table no. 2.14
Participation in commercial and industrial activities from 2000 to 2002
Source : Various reports of Department of Statistics, Putrajaya Malaysia
Various policies of Malaysia presently favoring to the Multinational
Companies, Malaysian Government facing great difficulties due to shortage of labour productivity, to resolve this issue, the Government making Multi Media Super Corridor (MSC) near Kuala Lumpur at 750 square kilometer, in order to increase in the costs 10 year tax free facilities offered to the foreign investors, (45) lot of foreign companies such N.P and telegraph as well as Microsoft, IBM, Sony, Apple Computer, Siemens and other investors, the details of foreign investment for the period from 1990 to 1995 showing in the following Table no 2.15.
Table No. 2.15
Chat of foreign investment (US $ Billion) from 1990 to 1995
Source : Annual Reports from 1990 to 1995 of Bank Negara Malaysia, Kuala Lumpur
2.4.4 Trade
66
As mentioned in the details that the export companies having facilities of exemption from the duties when the materials not available in Malaysia, in the year 1991 the export and import of rubber, (46) pepper and mineral were declared free from taxes, the details of Malaysian trade for the year
2005 shown in Table no 2.16.
Table no. 2.16
(RM million) of external trade of Malaysia of the year 2005
Source : Annual Reports from 2005 of Bank Negara Malaysia, Kuala Lumpur
It is noted that in the year 1993 the import was greater that export growth, all the import found necessary and can’t decreased with export, it is also found that 27.3% imports as supplied by Japan in 1995, in the development of Malaysia export is playing vital role, as the economic of
Malaysia got success on the basis of high export, as it has so increased during year from 1985 to 1995 its increased average estimated at 28% per annum, up to 1995 out as the total export 2/3 average from the exports of electronics products. (47)
In the year 1995 20.7% of the exports as estimated by USA. In Table no
2.16 the growth of annual average export showing as expected 12 %, (48) when the stock exchange performance of Kuala Lumpur showing in Table no 2.17.
Table No. 2.17
67
Performance of Kuala Lumpur stock exchange (RM Billion) from 1993 to 1996
Source : Annual Reports from 1993 to 1996 of Bank Negara Malaysia, Kuala Lumpur
Researcher would like to focus that for the development and promotion the financial market plays great role in the country reduction in stock exchange Kuala Lumpur trading commission shown in Table no 2.17. In
Singapore the largest Association of South East Asian Nations (ASEAN) capital just behind Tokyo, Osaka, Hong Kong and Sydney, (49) the name of large companies in the year 1996 enlisted on stock exchange of Kuala
Lumpur, (50) showing in Table no 2.18. In the services sector of Malaysia the financial services growing, for reference please Table no 2.18.
Table No. 2.18
Major listed companies (M$ billion) on the Kuala Lumpur stock exchange in the year 1996
Source : Investors Digest( Kuala Lumpur Stock Exchange) January 1997 p-45
The former single largest telecommunication company of Malaysia dominates the market but due to competition in the field some other telecommunication companies were given license. It is further mention here that the World Bank given a class category to the Malaysian
Telecommunication organization, (51) postal code system computerized in all over the county as well as other related services, the list of
68 telecommunication companies of Malaysia of stock exchange showing on
Table no 2.19.
Table No. 2.19
Leading Malaysian telecommunication companies listed in Kuala Lumpur Stock Exchange
Source: Annual Reports from 1996 of Bank Negara Malaysia, Kuala Lumpur
In the year 1996 there were telephone, cellular and Pay-Phone companies; under the U-turn policy issued the licenses to the telecom companies
2.5 Rules and Regulations for Multinationals
The policy of foreign investment of the Government of Malaysia fairly need to checks and control as well as to design such attractive plan for the foreign investment, in order to run foreign investment there are some main objects.
It is further pointed out that fruitful atmosphere is need for the foreign investment and also provide new opportunities to the investors of the foreign countries, (52) the Multinational Companies in Malaysia required with the rights of business and legal process, for the purpose of investment the investor of foreign countries need to get prior approval from ministry
69 of International Trade and industry and also registration of the business under the Malaysian Registration Act. (53)
It is need for the partnership business that two or more persons can form the firms of partnerships in Malaysia in accordance with the agreement and partnership Act; (54) the partnership firm will be registered with the Register of Business under the registration Act.
It is pointed out that to convert the private company into public company the following formalities will be fulfilled.
1. Registered office established in Malaysia along with books of account
and other documents.
2. Not hold shares in the company, public company share required one
vote and private company provide voting rights to share holder.
3. Only residence of Malaysia will be the secretary of the Company and
the age of Directors will not be mote than 70 years, the Director also
must be the resident of Malaysia.
4. Company’s account will be audited by the chartered accountant in
Malaysia.
2.5.1 Joint Ventures
70
The local limited liabilities company form the partnership with foreigners when the professional partnerships will be treated out side such liability company.
The joint venture having Articles of Association as issued by the
Ministry of Commerce as the specimen, on such document the company will be registered, (55) the joint venture companion will be established as per
Malaysian Law.
The foreign investors who invested to establish joint venture with the partner of Malaysia must approach with Malaysian Industrial
Development Authority (MIDA) who issued the Directory and Book on the subject of investment in manufacturing field of Malaysia along with polices and other knowledge. (56)
2.5.2 Foreign Investment Regulations
Malaysia always gives favor to the foreigners for the investment for development of business, according to Malaysian constitution of any dispute, it is settled at international centre of Washington D.C. on the basis of their member since 1966, (57) so IMF rules also applied for free transfer of currency, the exchange control process as not unequal, the investors also offered different attractive polices to the new investors, the majority of projects of Malaysia depend on local market for the export. (58)
71
2.5.3 Regulation for Transfer of Technology of Malaysia for
Multinationals
Under the Malaysian rules offers for transfer of technology to the
Multinational Companies, (59) for this purpose all the manufacturers before executing of the agreement must obtain the approval from the Ministry of
Trade and Industry, (60) in this respect the validity of license will be for five years, in this period the training expenditures will be paid by the licensors and the agreement for the license will be approved by the concerned ministry. (61)
In the agreements for the transfer of technology also mentioned the rights of license which will be executed on Joint Venture basis, technical assistance, trademark, commission on sales and management. In view of this research it has found that there are favorable and attractive environment for the foreign investment in Malaysia.
72
References:
1. The Market of Asia Pacific. Aldeshiot UK: Gower Publishing Co, p-
10.
2. Shahid, Imtiaz. Modern Muslim World. Lahore: Al Faisal, 2005. P-
525.
3. OOI, Jan-Bee. Land, People and the economy of Malaya. Oxford UK:
Oxford University Press, 1962. P-44.
4. World Guide. Victoria Australia: Hardie Grant Books, 2003. P-469.
5. Donald, W. Fryer. Emerging Southeast Asia. London: Philips & Sons,
1972. P-233.
6. Paul, J. Davidson. Investment in Southeast Asia. Singapore:
Buttewarth-Heineman, 1997. P-9.
7. Malaysia: Current Economic Situation. London: The Bank of Credit
and Commerce International, 1982. P-2.
8. The Eurpa World year Book. London: Eurpa Publication, 2004. P-
2756.
73
9. Qasim, Mehmood. Islamic World. Lahore: Al Faisal, 2001. P-386.
10. Mohammad, Mahathir. Bin. Dr. The Way Forwarded. London:
Wedenfeld & Nicolson, 1998. P-35.
11. Waseenuddin, Syed & Shahabuddin, Syed. Article The Services of
Dr. Mahathir for the development of Malaysia. Karachi: Research
Journal of Social sciences, 2010. P-74.
12. Waheed, Abdul. Encyclopedia of World Nations. Lahore:
Nigarishat, 1998. P-824.
13. Ibid.
14. World Guide. Victoria Australia: Hardie Grant Books, 2003. P-470.
15. Colm, Foy. Investing in Asia. Singapore: Asian Development Bank,
1996. P-168.
16. Thomas, J. Lindblad. Foreign Investment in the Southeast Asia in
the Twenty Century. Australia National University, 1997. P-30.
17. Mohammad, Mahathir. Bin. Dr. The Challenges. Kuala Java
Malaysia: Penlanuk Publication, 2002. P-126.
74
18. Guy, J. Parker. Diversity and the Development of Southeast Asia.
Singapore: McGraw-Hill Books, 1980. P-95.
19. Lim, Chong-yah. Economic Development of Modern Malaya.
London: Oxford University Press, 1967. P-115.
20. A. G. Kenwood. The Growth of International Economy. Sydney:
University of Queensland, 1983. P-70.
21. Hans-Dieter, Ever. Modernization of Southeast Asia. London:
Oxford University Press, 1973. p-xviii.
22. Chonder, R. Social Survey of household. Kuala Lumpur: 1967-8
1976. P-66.
23. Malaysian Constitution Part 1.3(1).
24. John, Kerry. King. Southeast Asia in Perspective. New York: Mc-
Millan Company, 1959. P-xiv.
25. J.C. Daruvala. Tension of Economic Development in South-
Southeast Asia. Bombay: Allied Publishers, 1961. P-41.
75
26. Osman, Chauh. Chinese Muslims in Malaysia. Kuala Lumpur:
International Islamic University, 2001. P-113.
27. Malaysian Constitution Part 1.11 (1).
28. Joseph, E. Stiglitz. Globalization and its Discontents. London: Allen
Lame Publishers, 2002. P-102.
29. Mohammad Mahathir Bin Dr. “Multimedia Super Corridor”
Pelanduk Publications 1998 Negara Malaysia P-9.
30. The Social Implications of the Southeast Asian Financial Crisis.
Korea: Korea Development Institute, 1998. P-332.
31. Mohammad Mahathir Bin Dr. “Multimedia Super Corridor”
Pelanduk Publications 1998 Negara Malaysia P-30.
32. The Social Implications of the Southeast Asian Financial Crisis.
Korea: Korea Development Institute, 1998. P-333.
33. John-Wong. ASEAN Economic in Perspective. Singapore: McMillan
International College Edition, 1980. P-49.
34. Lim, David. Reading on Malaysian Economic Development. Kuala
Lumpur: Oxford University Press, p-128.
76
35. Ibid.
36. The Muslim World and the Future Economic Order. London: The
Islamic Circle of Europe, 1979. P-202.
37. Lim, Chong-yah. Economic Development of Modern Malaya.
London: oxford University Press, 1967. P-46.
38. Mining Magazine Malaysia’s Tin case Production V170 no. 3,
March 1994. P-177.
39. The Social Implications of the Southeast Asian Financial Crisis.
Korea: Korea Development Institute, 1998. P-333.
40. Toru, Yonagihara. East Asia development Experience. Singapore:
Institute of Development economic, p-119.
41. Mohammad Mahathir Bin Dr. “Multimedia Super Corridor”
Pelanduk Publications 1998 Negara Malaysia p-77.
42. Toru, Yonagihara. East Asia development Experience. Singapore:
Institute of Development economic, p-119.
77
43. The Social Implications of the Southeast Asian Financial Crisis.
Korea: Korea Development Institute, 1998. P-332.
44. Mohammad, Mahathir. Bin. Dr. Globalization and its new realities.
Putrajaya Malaysia: Pekndumk Publications, 2002. P-78.
45. Mohammad, Mahathir. Bin. Dr. Multimedia Super Corridor. Negara
Malaysia: Pelanduk Publications, 1998. P-38.
46. SEIJI, Naya. Towards ASEAN Trade Area. Malaysia: Institute of
Strategic and International Studies, 1987. P-29.
47. Praduma, B. Rana. ASEAN Exchange Rate. Singapore: Institute of
Southeast Asian Studies, 1981. P-68.
48. Jacob, Berntein. Trading the International Future Markets. New
York: New York Institute of Finance, 2000. P-63.
49. Juzhong, Zhong. Corporate Governance and Finance in East Asia.
Manila: Asian development Bank, 2000. P-65.
50. Mohammad, Mahathir. Bin. Dr. The Challenges. Kuala Java
Malaysia: Penlanuk Publication, 2002. P-127.
78
51. Mohammad, Mahathir. Bin. Dr. Multimedia Super Corridor. Negara
Malaysia: Pelanduk Publications, 1998. P-22.
52. Jain, C. Subhash. Towards Global Business Confederation. West
Port USA: Prager Publishers, 2003. P-62.
53. H.W. Singer. Technology Transfer by Multinationals. New Delhi:
Asish Publishing House, 1998. P-747.
54. William, E. James. Asian Development. San Francisco: International
Center for Economic Growth, 1987. P-47.
55. Toru, Yonagihara. East Asia development Experience. Singapore:
Institute of Development economic, p-283.
56. Thomas, J. Lindblad. Foreign Investment in the Southeast Asia in
the Twenty Century. Australia National University, 1997. P-109.
57. Malaysian Industrial Development Authority Annual Report.
Kuala Lumpur: 1979. P-70.
58. Osada, Hiroshi. Deeping Industrial Linkages Among East Asian
Countries. Tokyo: Institute of Developing Economic, 1998. P-4.
79
59. Toru, Yonagihara. East Asia development Experience. Singapore:
Institute of Development economic, p-230.
60. Richard, E. Caves. Multinational Enterprises and the Economic
Analysis. Cambridge: University Press, 1982. P-202.
61. Lloyd, R. Vasey. ASEAN Positive Strategies for Foreign
Investment. Hawaii USA: The University Press, 1978. P-135.
80
Chapter Three
Different Aspects of Multinational Companies
It is fact that the main object of the former studies based on the business of Multinational Companies role and process of direct investment in developed and underdeveloped countries, while researcher has taken to describe the different aspects of Multinational Companies particularly in the field of transfer of technology. During the regime of monopolies of
English and Dutch chartered companies since before the 17th century the
Multinational Companies presented the greatest role as in the 19th century seen the growth in the textile and mining overseas European investment, (1) the main resources for the growth having the opportunities in the advance technology and present the same in world markets. (2)
3.1 Performance in Developed Countries of MNCs
In the world wide trading the role of Multinational Companies very much vital and covered 1/5th of the GDP global, on domestic and world basis the Multinational Companies act continuously increasing, the list of greatest 500 Multinational Companies showing in Table no 3.1.
81
Table No. 3.1
World’s 500 largest Multinational Companies
Source: Rugman Alan “The end of globalization” AMACOM 2001 New York p- 8
It is mentioned that the business of Multinational Companies is going on the world basis; it is also using world class resources through new products and services, no doubt that Multinational Companies made the procedure and setup of industrial activity on international basis, the details of 100 top Multinational Companies given in Table no 3.2.
Table No. 3.2
Top 100 MNCs industry composition wise
Source: Jain C. Subhash “Towards a global business confederation” praeger Publishers, 2003 West Port p-14
It is also observed that 60,000 companies are qualified as multinational, having 500,000 companies are the collaboration, (3) 25% i.e. the value of
Multinational Companies on international basis while one trillion U.S
Dollars on account of sales of foreign affiliated companies in local and
82 international, (4) the list of largest Multinational Companies of the world of
1997 given in Table No 3.3.
Table no. 3.3
World’s leading multinational companies of 1997
Source: Rugman Alan “The end of globalization” AMACOM 2001 New York p- 11
The Multinational Companies are consists with large firms, the economic position compared with the economics of other countries, showing the top most one hundred economies and Multinational
Companies in Table No 3.4.
Table No. 3.4
Top 100 Economies and multinational companies in 1998
Source: Rugman Alan “The end of globalization” AMACOM 2001 New York p- 58
Another important aspect is that there are other necessary activity of the
Multinational Companies operations as created on account of export and imports, it has pointed out that 50% imports and exports of U.S on the basis of transactions, (5) according to the evidence of increase from the Japan and
European Multinational Companies, same mentioned in Table 3.5.
Table No. 3.5
25 largest European multinational companies in 1999
83
Source: Rugman Alan “The end of globalization” AMACOM 2001 New York p- 158
Wherein showing 25 greatest Multinational Companies of Europe in the year 1999.
3.1.1 Multinational and Foreign Direct Investment Flow
In the light of study, It has found that increasing in economic continuously on the basis of Foreign Direct Investment (F.D.I) and the growth in trading related to the production as well as rising of F.D.I during last 24 years 60% increased found in the industrial production, while the rate in international trading at 2% per annum has been increased 210% for this period or 4.8% per annum, in the rate of FDI found 780% increased during the tenure 1973-1997, (6) In Table No 3.6 showing 500 greatest
Multinational Companies.
Table no. 3.6
World’s 500 largest multinational companies in 1999
Source: Rugman Alan “The end of globalization” AMACOM 2001 New York p- 139
84
The discussion on the increase of FDI made in the year 1980 on the basis of world wide, (7) the detail of 25 largest marketing showing in table no. 3.7.
Table no. 3.7
The 25 largest developing and emerging market of 1999
Source: Rugman Alan “The end of globalization” AMACOM 2001 New York p- 73
As per researcher, supporting data illustrate that the result from F.D.I in
China and South East Asia found very high in 1990 and in the year 1996 the
China obtained F.D.I in flows by the China, (8) in Table No 3.8 given the distribution flows F.D.I in the developing countries.
Table No. 3.8
The regional and distribution Flows of Private Foreign Direct Investment in Developing Countries
Source: Frank Isaiah “ Foreign Enterprises in Developing Countries” The Johns Hopins University Press London p-20
In the year 1970 to 1980 increased the share from 18% to 40% in U.S., as it was the situation in the year 1960 and in the beginning of the year 1970 when the U.S companies under influence of F.D.I outflows due to heavy investment in the other countries, (9) in between the developed and under
85 developed countries showing the inflow and outflow of F.D.I in Table No
3.9.
Table No. 3.9
Inflow and out flow of FDI between developed and developing countries
Source: various reports of World Bank during 1999-2000
The outflows and inflows of F.D.I always found in the developed countries, from 1972 to 1978 flow and private flows of F.D.I, (10) as the flow from industrial countries during 1960 to 1978 of the financial resources showing in Table No 3.10.
Table no. 3.10
Flow of Financial Resources to Developing Countries from Industrial Countries from 1960 to 1978
Source: Frank Isaiah “ Foreign Enterprises in Developing Countries” The Johns Hopins University Press London p-10
According to the analysis, it is in home and host nations having different sectors and industries as related to the Multinational Companies, the services of F.D.I is growing in the total outward stock in the developed countries, (11) in the Table No 3.11 showing the companies of Motor Vehicle.
86
Table no. 3.11
Largest motors Vehicle companies
Source: Rugman Alan “The end of globalization” AMACOM 2001 New York p- 145
3.1.2 Transfer of Technology and Knowledge
The Multinational Companies plays great part in the capacity of developer, for the comparison of imperfect world Markets it is necessary to aware about two features regarding indivisible and public good, as every thing of knowledge is individual and indivisible, so knowledge producers are so much and struggling with each other, the leading automotive
Multinational Companies assets distribution showing in the Table no 3.12.
Table no. 3.12
Global distribution of assets of the World’s leading automotive multinational companies
Source: Rugman Alan “The end of globalization” AMACOM 2001 New York p- 154
87
In this research, it has pointed out that the property of public, which is supplied by anyone to other person without any restriction to the supplies, also the achievement provide all the changes in mind, it is necessary that the social efficiency must be soft for all the knowledge all the license fees and loyalties collected from developed countries as showing a Table no
3.13.
Table No. 3.13
Collected payments of royalties and license fees from the developed countries from 1980-1997
Source: Bureau of Economic Analysis 1999, IMF
The amount of license fees and royalty for the transfer of knowledge and technology at the increased rate of F.D.I flows, the amount of the technology increased in 1983 from 12 billion United States (U.S) Dollars to
65 billion U.S Dollars in 1999. (12) The developed countries dominated the amount of license feed and royalties in comparison concealed F.D.I stock regional stock; in fact the developed countries are sources of share on use of the technology. In the year 1990 50% of license fee and royalties has received by the U.S when Japan 10%, United Kingdom (U.K) 90%,
Germany 6% and France 10% share has been received, (13) during the year
88
1982-1998 the details of receipts of license fees and royalties showing Table
No 3.14.
Table No. 3.14
The royalties and license fess receipts from 1982-1998
Source: Bureau of Economic Analysis Deutsche Bundesbank 2000, IMF
On account of developed countries 98.3% of all receipts and 88.3% of all payments, out of which 1/3rd of payments and 1/5th of the receipts as the high rate of share holding by the South Korea of the group of developing countries, the foreign markets are very fast in respect of exports as well as by way of production in the foreign countries, (14) the expenditures of
Research and Development (R&D) of Multinational Companies as affiliated with U.S. during the year 1982-1998 shows in Table no 3.15.
Table No. 3.15
R&D expenditures of US affiliated MNCs from 1982-1998
Source: Bureau of Economic Analysis 1999, IMF
89
As most of the large companies perform the Research and Development
(R&D) work at home country the expenditure on account of R&D in respect of Multinational Companies at 10% including increase of international flows of knowledge and technology. (15) The knowledge production always performed in the home country. In the year 1999 the amount of 23.3 billion
American Dollars on account of license fees and royalties received by US parent companies when the foreign Multinational Companies has received
7.7 billion US Dollars, (16) the largest Multinational Companies of Canada as showing in Table No 3.16.
Table no. 3.16
Largest Canadian Multinational Companies in 1999
Source: Rugman Alan “The end of globalization” AMACOM 2001 New York p- 160
As a matter of fact, it is unavoidable factor that since 1980 trade process mostly found in developed countries, Inspite of including of export countries of Asia no change occurred in the developed countries in Table
No 3.17 showing in Multinational Companies of Japan.
Table no. 3.17
25 largest Japanese multinational companies in 1999
90
Source: Rugman Alan “The end of globalization” AMACOM 2001 New York p- 159
3.1.3 World Trade with Multinational Companies
In fact the share of developed countries going on with the same industry as given in the world market by imperfect competition of inter industry trade, (17) the world export and developing countries export during the year
1980-1999 as showing in Table no 3.18.
Table No. 3.18
World export and developing export from 1980 1999
Source: Bureau of Economic Analysis 2000, IMF
Raw material and the share of imported goods mentioned with the share of imported input is high at 50%, (18) in this respect 25 multinational companies of U.S of 1999 showing in Table 3.19.
Table no. 3.19
25 largest U.S multinational companies in 1999
Source: Rugman Alan “The end of globalization” AMACOM 2001 New York p- 157
91
It is interesting aspects that the shares in the production of goods obtained in the same field of the industries, the leader of the company of technology field in the foreign country on account of another reason regarding the import, the trade of inter industries in between the developed countries showing in Table No 3.20.
Table No. 3.20
Inter industries trade between developed countries
Source: Bureau of Economic Analysis 1999, IMF
The companies used import share of the goods as no doubt has increased 14.2% to 19.9% during the period of 1970 to 1990, that means 36% is increased in the tenure of 20 years, (19) imports of more goods maintain the link in between the foreign production and international trading, the affiliated companies in foreign countries continuously growing up.
The Multinational Companies having great trading relationship in between parent and affiliated companies more than 50% of all the
American Multinational Companies were exports in intermediate goods, (20) it is correct that the foreign production can be changed, there are great new trading opportunities available internationally, in the year 1990 selected developed countries import share description showing in Table No 3.21.
Table No. 3.21
92
Share of import of selected developed countries in 1990
Source: Bureau of Economic Analysis 1997, IMF
It is fact that as per documentary evidence the intra-firm trading share of the total share as estimated on third, the U.S Multinational Companies share increased during the last twenty years, when the export of foreign
Multinational Companies of U.S affiliation to the share in total U.S export, so in the trading field the role of Multinational Companies more than 35% and the U.S Multinational Companies total export estimated at 65%, (21) it is important to note that in U.S imports that part of U.S and foreign
Multinational Companies is very vital.
Researcher further highlight that in the world wide trade the position of
Multinational Companies is very much import because one third of international trades going on through the Multinational Companies, it is also related with the developed countries.
3.2 Reservation of Developing Countries of Multinational
Companies
Researcher would like to highlight that Multinational Companies having relationship with the developing countries, the farmer communist criticized against the Multinational Companies and declared as neo-
93 colonialism, in the year 1980 the competitive environment for the interest of Multinational Companies totally changed by the creation of technology,
(22) political and economic pressure, the information technologies taken over the control for privatization on the basis of sales of more than billion of changes due to collapse of communism and economy, as the
Multinational Companies in the worldwide economy is the competitive forces.
3.2.1 Away from Chartered
The collision of Multinational Companies on the economies of host companies is increasing, so accordingly to the host country that since 300 years ago it is disputed that the character of Multinational Companies has changed.
1. It is further mentioned that the Multinational Companies act as the
barriers of the entrance, when in the past Multinational Companies
act was protected through the character, when the present style of
the Multinational Companies act supporting through the rights and
branded products.
2. On the basis of exclusive rights the Multinational Companies always
control the main industries of the host country’s economy, the
mining and agriculture field controlled by the Multinational
Companies as per old style when through the new style the
94
Multinational Companies control the chemicals and electronic
industries.
3. The Multinational Companies control the trading field in the
capacity of group of chartered companies, but Multinational
Companies imposed the ban on the imported raw materials and
products and to control the export of finished products.
4. The Multinational Companies failed to provide the experience to the
under developed countries, obtained the manages and skilled
workers on old style but in the modern style the Multinational
Companies not depending upon the emigrant population and partly
in manage activities at the Head Office.
5. The Multinational Companies directed of foreign investment in such
areas where the military or the political power in the country, in the
North Atlantic Treaty Organization (NATO) countries seen
positively in cross investment. When the negative effects found in
the developing countries on direct foreign investment.
The new and old style relationship in Multinational Countries now the question is that why during such period when relation of Multinational
Companies and host countries with common, it is due to speed development of the Multinational Companies, the large number of
Multinational Companies having ownership worldwide and their mangers
95 are not accountable. It is pointed out the difference of technology and resources based Multinational Companies, the Multinational Companies mostly performed their process in high technology through the skilled labors, when the use of unskilled labor required in resource based process,
(23) it is usual practice for the investment of Multinational Companies to hire unskilled workers as supply in the poor host countries, if the investment made in the poor countries by thy Multinational Companies.
The industries of technology less than the resource based industries, hence the interest of host country against the Multinational Companies found weak. So no accountability from the host country will be possible, if any firm easily stop the investment and go any where.
3.2.2 Focus of Profit Earning
The best strategy base done the set of condition, Researcher would like to say here that worldwide strategy relates with condition, as the F.D.I was the main source regarding transfer the manufacturing process to the developing countries as all the planet proceeding to the industrial process, but it is fact that Multinational Companies not apply the said process as they have different strategies on the basis of the main profit.
As the strategy of the Multinational Companies on FDI inflows, the
Multinational Companies always is seeking to make investment in developing countries, out of these countries that for transfer of
96 manufacturing practice from the developed countries, to developing countries the FDI was the most important way, here it is very interesting point that multinational companies not going on the same policy, as they follow other policies for different countries.
In fact the multinational companies having the interest for the investment in all the developing countries of small division, these countries not more than 15 or 20, there is some competition against the FDI, (24) as the investment not competing the core countries in respect of FDI, or go to any one of the said countries not treated on account of investment, as go to other developing or the transitional countries, the FDI which is not go outside the group countries, the economic units as well as balance sheet given in table no. 3.22.
Table no. 3.22
World largest economic units with public balance sheets
Source: Molyneux John “World Prospects” Bryant Press Limited 1987 Ontario p- 134
It has pointed out that most of the multinational companies giving performance their own interest upon the national development interest, so it is impossible to expect for the promotion of local department from such foreign companies, there are some risks on property out of the country, on restoration of capital, currency practice or the devaluation in political matters, so it need to get high profit on account of compensation regarding the risks, but the high rate creates doubt for the host countries, (25) as the compensation on account of high profits to clear such doubt and also get
97 relief from the pressure of payment of balance, so it is necessary for the compensation for risks give favour to the demand. (26)
Further strategy of multinational companies based on tradition and operation, to obtain the land on Greenfield in the developing countries for plantations new employment and machinery, from early of 1990 by applying new strategy large number of multinational companies going to include in the economies of the developing countries and purchasing the companies, there is no confusion for the merger. (27)
3.2.3 Issues of Conflicts
In this dissertation, researcher found other areas of the conflict as different from company to company and country to country, for the solution interest of the parties, the rights as defend the result of the company and also included license fee and transfer of rights, it is fact that the policy and direction of the research of the corporation not according to the interests and requirements of the developing country. The Less
Developed Countries (LDC) showing the doubt regarding Multinational
Companies, the economic relationship converted to the economic relationship of the client, when the industry and the investment became successful financially the developing countries forwarded for the success financially, (28) as it is given the influence to the investor of the foreign countries and the Multinational Companies, the political process not like to builds up against the Multinational Companies.
98
The reason of creation the conflicts in between the host and
Multinational Companies is investment in the raw material as produced by the Multinational Companies, as the developing countries not satisfied with the role of Multinational Companies and they are using their bargaining authority in the development and raw material export, (29) the inflow and outflows of FDI showing in Table no 3.23.
Table No. 3.23
FDI Inflows and Outflows by Region, from 1970-1980
Source: Dixon, C.J “Multinational Corporation and the Third World” Croom Helm Publishers 1986 London p-43
The direct foreign investment based on the technology industries, research and development, the multinational corporation can cooperate in the development of economic of the host country, the capital inflows enclosed by outflows at the high grade, and it has complaint from various officials regarding the training of local personnel and it is necessary to give encouragement to the private enterprise. (30)
It is not correct that various Government feeling that the Multinational
Companies caused disturbance in the economic planning and it will also create tension between the Multinational Companies and local
99
Government, as Multinational Companies to be with home countries and always used the foreign policy through the local government.
The advantage of technology is another serious issue, according to this stating that plants and establishment of joint venture in foreign countries is the great loss by competitive position in the world, some countries given their views on the interference economically and politically, by way of local government of the multinational corporation. There are other regions in the field of economies of the development facing controversy and not stable on the issue of benefits and private foreign investment cost, (31) it has pointed out that there is no influence on economic, investment saving as well as manufacturing form Multinational Companies, and basically note agreed with the style and character of the development.
3.3 Historical Survey of Malaysian Economic Growth
As stated in the forgoing related matter that in the development of economic of Malaysia the Multinational Companies having great role by using foreign capital, technology through the world markets, the foreign capital mainly used in mining, agriculture and construction field.
3.3.1 Colonial and Colonial affected era of Malaysia.
In this topic highlighting some great role of western colonies and foreign capital in Malaysia, in the past the tin mining purchased from the Chinese
100 miners, but western capital directly, hence established the foreign interest in Malaysia, the operation of road, railway, construction and others main basis of the foreign process in Malaysia, the foreign capital still strong, the ownership control going on since 1975, (32) so the direct foreign investment strong in the field of Export-Oriented manufacture, oil mining, beverages and tobacco as the substitute import industries.
Since post colonialism the economy of the Malaysia became most dynamic in LDCs, in the year 1970 extended the rate 7.5% per annum, inspite of diversification of the sources, (33) it is still on top in producing of rubber and tin, Malaysia also is the great producer of palm oil, pepper and hardwood, now the Malaysia is became the main exports of crude petroleum. (34) In the year 1970 GDP rate increased and in the year 1980 arrived to 20.5% and extended up to 26.6% in the year 1990. (35)
It is further noted that for the implementation the programs the private sector very Much struggled and for the development of the industrial by way of technology the Government of Malaysia recommended the foreign investment, (36) so the national and foreign investors taken the favor of the government for the investment the private foreign investment included with direct and group sectors in Malaysia, after 1957 the Malaysian
Government given support to the direct foreign investment in the country.
(37) For this purpose not restricted for any ownership barriers allowed the tariffs and domestic producing firms were given facilities, so in the year
1960s the ownership of all the foreign industries gone high.
101
The Government of Malaysia when suffered with slow distribution in national Markets, unemployment and poverty, enforced investment incentives act in the year 1968, (38) due to political crisis and decrease in prices, no favor to the import sector and restricted the growth of food, beverages, textiles and garments and metal but also.
3.3.2 Economy Transformation towards Centralization
In the year 1967 passed the industrial relations Act when in 1960 make amendments in the employment Act, in 1964 Malaysian Government followed the formation of Federal Industrial Development Authority
(FIDA) and thereafter it was changes to Malaysian Industrial Development
Authority (MIDA) as well as in the year 1970 given capital investment committee, in the next year 1971 presented the free trade zone to function as the tariff free zone, manufacturing warehouse duly license holder was also established, (39) in Table no 3.24 showing the Malaysian share capital holder from 1971 to 1983. Here table no. 3.24 shows that the Malaysian share capital holder from 1971-83.
102
Table No. 3.24
The Malaysian share capital holder from 1971-83
Source: Fourth Malaysian Plan, 1981
Researcher distinguish that out of total share capital more than 60% foreign equity found in agriculture, trade, mining and manufacturing in
Malaysia during year 1970 in corporate sector the capital of foreign share decreased from 62% to 24% from 1971 to 1983 and also increase during the said period at Malaysia from 4.1 billion to 16.7 billion Malaysian Dollar. (40)
During the tenure form 1971 to 1979 there were large number of investors of Japan, Singapore and Britain in Malaysia, in manufacturing the total foreign investment of 62%, (41) in the year 1979 and estimated foreign investment i.e. 06% in 1983, but 22% or 29% of foreign assets in electronic,
(42) electrical and industries were decreased in Malaysia, when the foreign investors having importance in food manufacturing, non-metalic, mineral products, chemicals and beverages as well as Tobacco and metal products.
(43) The economic system and Malaysian government policies showing in table no. 3.25.
Table no. 3.25
The Malaysian economic system and the government policies and institutions
103
Source: MITI Malaysia “ International Trade and Industry Report 1995-1996 p-2620
In the year 1970, the Malaysian Industrial Development Authority
(MIDA) attended for foreign direct investment (FDI) successfully, but it astonished that British and Singapore capital dominated the ownership of
US and Japanese capital in the year 1960 and particularly electronics and thereafter the electronics and textile industries as declared the important industrial for the country and during the year 1970 the manufacturing industries of electronic, electric, textile and the garments became more successful, (44) in this chapter the foreign investment in the project as the tax incentive of Malaysian government shown in table no. 3.26.
Table no. 3.26
The foreign investments in projects by tax incentive of Malaysia
Note: PS = pioneer status, ITC = investment tax credit, LUR = labor utilization relief, LI = location incentives.
Source: Vincebtcable “Developing with foreign Investment” Croom Helm 1987 New York p-113
It is also found during the study that under Industrial Coordination Act
(ICA) of 1975, the ownership of the foreign investment fell in the substitute industries and also included domestic market producing firms in the field, on the basis of the above, referred Act of Malaysia, the local ownership based upon the percentage share, for the export market the above referred condition lifted from the FTZ and LMW firms, so due to imposing of
104 industrial coordination act (ICA) the emphasis was increased from 1980 to
1985 on the development of domestic industries, (45) in the said act also included the condition of license as required for the transfer of technology under the ministry of Trade and Industry in Malaysia, but not mentioned for monitoring, selection and ex-post assessment, the sales destinations for the investment in Malaysia from US and Japan in 1973 and 1977 as showing in table no. 3.27.
Table no. 3.27
Sales destinations of US and Japanese investment in Malaysia, in the year of 1973 and 1977
Source: Vincebtcable “Developing with foreign Investment” Croom Helm 1987 New York p-107
3.3.3 The Role of Dr. Mahathir
Research pointed out that the development basically on the basis of foreign capital but not equal in the technical change and also no reason for increasing the costs, the Malaysian government introduced the Look East
Policy (LEP) in the years 1981 which was supported by the heavy industries, as for the growth of such industries, the government established
Heavy Industrial Corporation of Malaysia (HICOM), so the investment made in the production of cement, steel and vehicles for the operations and support foreign technology also created, the local capital reduced the foreign investment in the manufacturing of the above industries, (46) from
105
1981 to 1995 the inflow ratio of the foreign investment in Malaysia illustrated in table no. 3.28.
Table no. 3.28
Inflow of foreign investment ratio in Malaysia from 1981 to 1995
Source: Yanagihara Toru, “East Asian Developing Experience” Institute of developing Economic Tokyo p-163
In the year 1985 decreased the business by investment policy of the
Malaysia as required under Industrial Coordination Act (ICA) 1975 and reformed the policy for the purpose of new economic, the Malaysian government further introduced the promotion of investment act 1986, (47) due to which given attraction and encouragement for higher value export- oriented industries and development of skill and high technology, the foreign investment of Malaysian government showing country wise of 1983 in table no. 3.29.
Table no. 3.29
The Malaysian foreign investment country wise in 1983
Source: Vincebtcable “Developing with foreign Investment” Croom Helm 1987 New York p-104
106
Another element found during that study that for the development of heavy industries and domestic reproduction through Japan Dr. Mahathir utilized great efforts, also made the policy for reduce the government expenditures and particularly for the exemption state-supported and under
HICOM-led programme of heavy industries, joint-ventures with Japanese firms, (48) the HICOM basically made financing by borrowing at very low interest rate from the government of Japan, the Western Corridor of Island of Malaysia given the encouragement to impose the selection to utilize the financial incentives resources of high technology in respect of necessary conditions for the forms in the year 1991, (49) from 1986 to 1993 the ratio of the foreign investment of Malaysian government showing in table no. 3.30.
Table no. 3.30
The ration of foreign investment from 1986-1993 in Malaysia
Source: Yanagihara Toru, “East Asian Developing Experience” Institute of developing Economic Tokyo p-159
During the year 1991 to 1995 the direct and group foreign investment estimated at 6 billion US Dollars annually between the year 1990 to 1995 the Foreign Direct Investment (FDI) increased from 2 billion US Dollar to 6 billion US Dollar, when the foreign Investment on group basis estimated at
1 billion US Dollar. (50)
Researcher has already mentioned in the forgoing chapter that in New
Economic Policy (NEP) period the foreign capital inflows hold the
107 importance in the transformation of industrial sector, during the years 1995
Japan was the greatest foreign invertors in Malaysian estimated more than
50 percent of the total Investment, when the foreign investment increased swiftly specially labour from Singapore to Malaysia.
The foreign invertors mostly invested for the electronic goods and component in Malaysia through the Joint-Venture (JV), (51) it is fact that status of Malaysia as the newly market and new industrial country, but there is some confliction that whether the number of foreign investment will be increased in future from the quantity from 1991 to 1995, there is the main limitation of slow process, since 1993 the disinvestment of the state estimated only at 30 billion Malaysian Ringit, (52) as given benefit to the business of Malay community, the foreign investment in industry of
Malaysia from 1981 to 1990 as shown in table no. 3.31.
Table no. 3.31
Ratio of foreign investment in Malaysia by industry from 1981 to 1990
Source: Yanagihara Toru, “East Asian Developing Experience” Institute of developing Economic Tokyo p-172
Researcher would like to mention here that Malaysia is the hard favorite destination for investment for Taiwan’s Multination Companies in the field
108 of Information Technology (IT) and Medicine, it is fact that Dr. Mahathir having powerful political leadership in the administration, (53) made the
Malaysia by political stability, for the Malaysian government Taiwan having significant source of FDI.
Dr. Mahathir was really interested to influence the companies of Taiwan for the transfer of high-tech technology in Malaysia; Dr. Mahathir also attracted Taiwan entrepreneurs for the investment in his country.
In 270 projects, Taiwan Government invested 2.383 Billion U.S Dollars, but in the year 1992 the investment dropped to 602 million U.S Dollars in
237 projects thereafter invested the amount of 1.149 billion U.S Dollars in
10 projects in 1994 and invested in 79 projects the amount of 10 million U.S
Dollars in 1996 and in the end of 2002 the investment from Tai was as estimated at 9.2 billion Dollars as the third great investor in Malaysia. In
1990 the Malaysian Government to keep the Taiwan Multinational
Companies for the investment in the country was under pressure. (54)
The government of Malaysia formed Human Resource Department
Fund (HRDF) in the year 1993 for the purpose of training in private sector, the ratio of the loan to the GDP estimated 170% at the end of 1997, (55) the growing of such process is the main reason of the financial crisis, Thailand face the problems of financial assets.
109
The Government of Malaysian committed for the protection of foreign direct investment from the capital control, in fact that the transfer in trade pattern reflected the changing in between China and Malaysia investment process.
It is also noted that the change of Chinese investment to Malaysia, provided the great resources to Malaysia it the production of Rubber, Tin and Palm Oil, the investor from China moved in the manufacturing sector of Malaysia. (56)
The Malaysia and China both the countries agreed to maintain economic relationship with each other, as the Malaysia and China made best economic cooperation with each other in trade Investment, Banking,
Finance, Education, Medicine, Security, Science and Technology,
Information, Health, Transport, Environment, Agriculture, Forestry,
Mining, Culture, Tourism and Sports.
3.3.4 Malaysia after Dr. Mahathir
No doubt that the regime of Dr. Mahatir on the basis of great struggle came in position to get economic development and decreased the poverty in Malaysia, hence this country included in the 20 top most countries in the world in foreign direct investment when the China and India in top two and US, Russia, Brazil in top five position, Vietnam and Thailand was on
6th and 12th in the rank. (57)
110
In Malaysia, manufacturing sector more than 60 countries invested in more than 3000 companies from the Multinational Companies hence made on of the top in the world manufacturing activities for the export products and FDI concentrated in the developed country, before the Asian financial crisis, Malaysia achieved the fast rate per capital GDP through the policy, most of the multinational make multinational companies, at present 1052 regional established approved including 67 operation Headquarters, 182
International procurement centre, (58) 29 Regional Distribution centre, 579 representative offices and 195 regional offices, USA, Germany and Japan were the main sources for foreign investment. (59)
Malaysia during the period of sixties was only dependent upon the agriculture and primary commodities, but in the present regime Malaysia is the country of high technology and large industries of the economy, having mineral resources wealth, this country not taken rest and going on the way of success through the Multinational Companies, great opportunities for the investment in support services.
According to policies of the Malaysian Government created best environment and opportunities for the development and profit made this country being the manufacturer and exporter in the region and also achieving development objectives for the country. Malaysian Government made and meet the commitment for continue efforts through the support of business community. (60)
111
Malaysian is depend upon export development and foreign investment, as the investors of the foreign countries holds 100% equity in the projects of
Malaysian manufacturing sector, hence on the basis of such ratio acquired the opportunities for the investments in the new projects and also with the existing companies.
The tax rate for the resident and non-resident Malaysian companies in the year 2007 at 27% and in the year 2008 26% but in this year decrease upto 25%, under the income tax Act 1967 and promotion of investments
Act 1986 the Malaysian Government offered tax incentives for the manufacturing projects, such as investment Tax Allowance, (61) Re- investment Allowance, Pioneer status, incentives for the high technology industries, incentives for strategic projects and setup of international,
Regional operations an also offered young educated investors and workforce on the competitive costs in Asia, (62) it is fact that the workforce of the Malaysia in quality wise very best, education ratio more than 94 % and since last few years the labours demand increased more than 3.3%. (63)
It has found from the above referred research that foreign direct investment played great role in the development of Malaysia. This investment still dominant in process of petroleum and mining and in local ownership food processing Iron, Steel, Automobile assembly foreign capital dominant still exports, when electric and electronic in Malaysia sill dominated by the foreign ownership.
112
3.4 Public Interest Issues
In all over the world the controversies in political economy going on from Multinational Companies, at present the neo-classical school not agreed that neo-liberal market forces to allow the prices in way of environmental practices as well as it is also found that different level of environmental conditions generating from foreign and local firms.
There is no difference as evident that the issues of environment made in the relocation by lower machinery of Multinational from the developed sites. In some studies presented the true fact of the relationship in between
Multinational and environment in Malaysia.
In the present research on this topic pointed out that the environment consideration for the development of policies in Malaysia under pressure from the non government organizations in Malaysia, as the government policies general look after for application of few regulations, in Malaysia the Non-Governmental Organizations (NGOs) are involved for the better environment regulations in the world.
In the year 1970 NGOs taken up the issues of environment but the government given attention to the development policy but no consideration for environment, (64) in 1990 the pressure group convince the
Government for the setup of environment standard. (65)
113
It is state earlier that to continue the operation excess were made environment sensitive projects, the political process reduced the environment regulations, (66) in this respect outside the Government NGOs also made such efforts.
The environment practices basically come from the NGOs as initiated from 1990, (67) the NGOs influences only successfully made when on the platform of Government as the feudal practices have designed. (68)
In view of above facts it is pointed out that Multinational Companies are the main tool in the international trade, apply of high-tech and development, flow of investment, transfer of technology, further add here that the developed countries are he beneficiation of Multinational
Companies when under developing countries still facing lot of problems i.e. poverty, conditional capital flow, religious issues, non transfer of technology and political interference of Multinational Companies.
3.5 Products of Multinationals and Islamic and Cultural issues of Malaysian Society
In this chapter, researcher would like to mentioned regarding the intensity and assurance of Muslims of Malaysia for the Islam so that apply the Holy Quranic instructions and Sunnah, it has been discussed in
114 previous chapter that the religion of Islam being the foundation of political and cultural society of Malaysia, the constitution of Malaysia based upon the Religion of Islam, which is the National Religion hence the meaning of
Malay the person who agreed with the Muslim Religion, Parti Islam (PAS)
(69) the opposition party of the Malaysia is so interested and struggling to execute the Islam as the main constitution of the country, Islam is the official state religion and all the ethnic Malays are called as the Muslim as per Malaysian constitution, (70) it is further mentioned here that in many other Muslim countries, Malaysia is going through a period of increased focus on the Religion of Islam and to determine the public values plays important Role in Malaysia.
It can’t be avoided that the Ex Prime Minister Dr. Mahathir earliest policy statements stressed adding Islamic values in the administration, it was not essential policy it was not for creation an Islamic state or enforce the Shariat completely, Dr. Mahathir given the sense to the Malaysian community, his politics also provided psychological unity not only for
Muslims but for all over the world.
It has noted that Dr. Mahathir continuously emphasized the representative, the use of Islamic terminologies and greeting, the Islam program broadcast on the Radio and television, but more authentic program initiated through the International Islam University, introduction of Islamic Banking and Insurance Systems so now in Asia has Islamiztion of law proceeded more methodically than in Malaysia.
115
In the previous chapter researcher has referred that the Islam is official religion in Malaysia, Malaysian laws, Courts and the constitutional amendments given more powers to the Islamic legal authorities, in the political filed Islam plays a defining role and also given awareness of law and policy at the Federal and State level, the government of Malaysia seeking to protect the Islam as the defining characteristics of Malaysia, the political agenda and aims presents great challenges for the Government of
Malaysia.
The Facts cannot be ignored that the Ex-Prime Minister of Malaysia Dr.
Mahathir who well organized the Malaysia, rehabilitated the energy of
Islam in Malaysia in fact the protection of two tiered justice system has an important negotiation for Islam, allowed to maintain the independent
Shariat Court Systems for the ruling on the Civil Law and religion matters, as Holy Quran given clear advise to all the Muslims that when you make the Quran for your guidance and a Book of Law, (71) Allah will favour him with the blessing and also treatment of their mental, psychological, moral and cultural diseases. (72)
There is no doubt that Dr. Mahathir approach to the role of Islam in
Malaysia was to support the concept of Islam as related with Malaysian cultural and national identity, he had also proclaimed loudly that Malaysia is not just a Islamic nation but also Islamic fundamentalist state.
116
In this connection, the Islam is the religion of nature so made the difference in between the Halal and Haram meals and precipitations in interest of life and good health and also declared Haram to such things which are harmful for the mankind. (73)
It is further submitted that the Islam has intimated all the persons that
Holy Quran not permitted them to remain in bad condition as they were before its knowledge, but involves them in a greater loss than before, (74) as the Holy Quran came and declared the difference in between Truth and
Falsehood and no excuse to remain in their previous conciliation of ignorance, so they are in the case fully responsible for their difference and if they committed the crime after that, they will be punishable, in this connection I would like to mentioned here some prohibited products of
Multinational Companies for as figures.
Head & Shoulders Shampoo
Figure no. 3.1
Pert Shampoo
Figure no. 3.2
117
Lux Soaps
Figure no. 3.3
Sun Silk Shampoo
Figure no. 3.4
Palmolive Soaps
Figure no. 3.5
Safe Guard Soaps
Figure no. 3.6
Rexona Soaps
Figure no. 3.7
Life Buoy Soaps
118
Figure no. 3.8
Dove Soaps
Figure no. 3.9
Colgate Tooth Paste
Figure no. 3.10
Signal Tooth Paste
Figure no. 3.11
Macleans Tooth Paste
Figure no. 3.12
Close-Up Tooth Paste
Figure no. 3.13
119
Fair & Lovely Creams
Figure no. 3.14
Ponds Creams
Figure no. 3.15
Baby Lotion
Figure no. 3.16
Baby Shampoo
Figure no. 3.17
Slice Juices
Figure no. 3.18
120
Nido Milk
Figure no. 3.19
Every Day Milk
Figure no. 3.20
Milo Juices
Figure no. 3.21
Ovaltine Chocolates
Figure no. 3.22
Nesvita Bones
Figure no. 3.23
121
Milk Cream
Figure no. 3.24
Nescafe Coffee
Figure no. 3.25
Kitkat Chocolates
Figure no. 3.26
Maggi
Figure no. 3.27
Cerelac
Figure no. 3.28
122
Corn Flakes
Figure no. 3.29
Polo Chocolates
Figure no. 3.30
In this respect, it is fact that the products as manufactured by the
Multinational Companies, some portion of prohibited element for the
Muslims and not used as per Islamic point of view those products of
Multinational Companies such as tooth paste, shaving creams, chewing gums, chocolates, sweets, Biscuits, corn flakes, Toffees, canes foods, juices and some other life saving medicines were found enriched with fats of
Haram animals and Alcohol.
As per Muslim Scholar Ahmed Raqr (75) that the Multinational
Companies products as made in Europe and USA, must have included with some portion of Pig’s meat, it has been observed that the fats of Pig also included in Dry Milk as imported from Japan, USA and other
European countries, (76) as well as Lipsticks and toothpaste also containing with Pig’s fats.
123
So it is necessary for the Multinational Companies to concentrate if they need to win the confidence of the Malaysian Customers markets and in
South East Asia so they must consider the Islamic values and religious culture in Muslim countries particularly in Malaysia and for Islam society.
124
References:
1. Allen, C. G. Western Enterprises in Indonesia and Malaya. London:
George Allen & UNwin Ltd, 1957. P-103.
2. Jones, Geoffrey. Merchants to Multinationals. New York: Oxford
University Press, 2000. P-278.
3. Azeem, Syed. Multinational Companies. Lahore: Dar us Shaoor, 2002.
P-158.
4. Molyneux, Jhon. World Prospects. Ontario: Prentice-Hall, 1987. P-133.
5. Dunning, H. John. The World Largest Industrial Enterprises. UK:
Gower Publishing Co. Ltd, P-47.
6. The Role of Trade and Investment Policies in the Implementation of the Monterrey Consensus: Regional Prospective. Thailand: UNESCAP,
2005. P-14.
7. Taylor, Michael. The Geography of Multinationals. London: Croom
Helm Publishers, 1982. P-150.
8. Foy, Colm. Investing in Asia. Development Center of the Organization for Economic Co-operation and Development, 1996. P-39.
9. Rainer, Hellmann. Transnational Control of Multinational Enterprises.
New York: Praeger Publishers, 1977. P-12.
125
10. Todaro, P. Michael. Economic Development in the Third World.
London: Longman Publishers, 1997. P-468.
11. Manser, W. A. P. The Financial Role of Multinational Enterprises. UK:
Cassell and Co. Ltd, 1973. P-46.
12. Safrion, A. E. Multinational Governments and International
Technology Transfer. Croom Helm Publishers, P-31.
13. Mee, F. Jhon. International Business and Multinational Enterprises.
USA: Richard D. Irwin Inc, 1983. P-162.
14. Frank, Isjah. Foreign Enterprises in Developing Countries. London:
The Johns Hopkins University Press, P-58.
15. Laviper, G. Farid. Controlling Multinational Enterprises. Colorado:
West view Press, 1976. P-18.
16. Rugman, M. Alan. Inside the Multinationals. London: Croom Helm
Press, 1981. P-125.
17. Donald, C. MacCharies. Trade Among Multinationals, Intra-Industry trade and National Competitiveness. London: Routledge Publishers, 1987.
P-3.
18. Donner, G. Frederic. The World-wide Industrial Enterprises. New
York: McGraw-Hill Book Co, 1967. P-48.
126
19. Kenwood, A. G. The Growth of the International Economy 1820-1980.
London: George Allen & UnWin Publishers, 1983. P-269.
20. Donald, C. Mac-Charies. Trade Among Multinationals, Intra-Industry trade and National Competitiveness. London: Routledge Publishers, 1987.
P-24.
21. Boarman, M. Patrick. Multinational Corporations and Government.
New York: Praeger Publishers, 1975. P-56.
22. Backman, Jules. Multinational Corporation, Trade and Dollar in the
Seventies. New York: New York University Press, 1974. P-2.
23. Kujwa, Duone. International Labor and Multinational Enterprises.
New York: Praeger Publishers, 1975. P-9.
24. Casson, Mark. Alternative to the Multinational Enterprises. London:
The Mac-Millan Press, 1979. P-83.
25. Hahlo, H. R. Nationalism and the Multinational Enterprises. New
York: OCEANA Publications Inc, 1973. P11-12.
26. Akins, A. Adeoye. The Expropriation of Multinational Property in the
Third World. New York: Praeger Publishers, 1980. P-232.
27. Curzon, Gerade. The Multinational Enterprises in a Hostile World.
London: The Mac-Millan Press, 1977. P-12.
127
28. Masood, Mufti. Conspiracy of Multinational Companies against
Islam. Lahore: Ilm wa Irfan Publishers, 2003. P-146.
29. Moram, H. Theodore. Multinational Corporations and the Politics of
Dependence. New Jersey: Princeton University Press, 1974. P-63.
30. Buckleg, J. Peter. Multinational Enterprises in Less Developed
Countries. London: Mac-Millan Publishers, 1991. P-195.
31. Dunning, H. John. The Multinational Enterprises. London: Gearge
Allen & UNWIN Ltd, 1971. P-64.
32. Lim, David. Economic Growth and Development in West Malaysia.
London: Oxford University Press, 1973. P-28.
33. Wawn, Brian. The Economies of ASEAN Countries. Hong Kong: The
Mac-Millan Press Ltd, 1982. P-53.
34. Kasper, Wolfgang. Malaysia: A Study in Successful Economic
Development. USA: American Enterprises Institute for Public Policy
Research, 1974. P-13.
35. The Current Economic Situation. London: Prepared by BCCI, 1982. P-
24.
36. Zhuang, Juzhong. Corporate Governance and Finance in East Asia.
Manila: Asian Development Bank, 2000. P-37.
128
37. Lim, David. Economic Growth and Development in West Malaysia.
London: Oxford University Press, 1973. P-153.
38. Wong, John. ASEAN Economic in Perspective. Singapore: Mac-Millan
International College Edition, 1976. P-66.
39. Dixon, Chris. Southeast Asia in the World Economy. London:
Cambridge University Press, 1991. P-188.
40. H, Crouch. Government and Society in Malaysia. Ithaca Cornel
University Press, 1996. P-222.
41. Southeast Asia’s economy in the 1970s. London: Asian Development
Bank Longman, 1971. P-289.
42. James, E. William. Asian Development. San Francisco: International
Center for Economic Growth, 1987. P-115.
43. Mills, A. Lennox. Southeast Asia. Minnesota: North Central Publishing
Co, 1964. P-294.
44. Wu, Yuan-Li. Economic Development in Southeast Asia. USA: Hoover
Institution Publications, 1980. P-15.
45. Yanagihara, Toru. East Asian Development Experience. Tokyo:
Institute of developing Economics, 1998. P-170.
46. Vincebtcable. Developing with Foreign Investment. New York:
Croom Helm Publishers, 1987. P-120.
129
47. Wawn, Brian. The Economies of ASEAN Countries. Hong Kong: The
MacMillan Press Ltd, 1982. P-53.
48. Yanagihara, Toru. East Asian Development Experience. Tokyo:
Institute of developing Economics, 1998. P-253.
49. Foy, Colm. Investing in Asia. Development center of the Organization for economic co-operation and development, 1996. P-216.
50. Sano, Takao. Deeping Industrial Linkage among East Asian
Countries. Tokyo: Institute of developing economic, 1998. P-43.
51. Yamazawa, Ippei. Towards ASEAN-Japan Comprehensive Economic partnership. Chiba Japan: Institute of developing economies, 2003. P-76.
52. Dixon, Chris. Southeast Asia in the World Economy. London:
Cambridge University Press, 1991. P-190.
53. Mahathir, Mohammad. Bin. Dr. Multimedia Super Corridor. Malaysia:
Pelandak Publications, 1998. P-23.
54. Dixon, Chris. Southeast Asia in the World Economy. London:
Cambridge University Press, 1991. P-15.
55. BUDD, Colin. The New Economic Diplomacy. Wiltshire UK: British
Library Cataloguing in publishing data, 2004. P-88.
56. Wu, Yuan-li. Economic Development in Southeast Asia. USA: Hoover
Institute Publications, 1980. P-103.
130
57. The World Investment Prospects Survey 2007-2008. EDI by the United
Nations Conference on Trade and development, P-11.
58.The Social Implication of the Southeast Asian Financial Crisis. Korea:
Korea development institute, 1998. P-335.
59. Stiglit, E. Joseph. Rethinking the East Asian Miracle. Lahore: Pak Book
Corporation, 2001. P-3.
60. Dixon, Chris. Southeast Asia in the World Economy. London:
Cambridge University Press, 1991. P-186.
61. Mahathir, Mohammad. Bin. Dr. Multimedia Super Corridor.
Malaysia: Pelandak Publications, 1998. P-47.
62. Mahathir, Mohammad. Bin. Dr. The Way Forward. London:
Wedenfeld & Nicolson, 1998. P-35.
63. Yanagihara, Toru. East Asian Development Experience. Tokyo:
Institute of developing Economics, 1998. P-171.
64. DOE. Environment Quality Report. Kuala Lumpur: Department of
Environment, 1990-1997. P-10.
65. Rugman, Alan. The end of Globalization. USA: Printed by AMACON,
2001. P-37.
66. Gumit, K. S. Environmental Audit. Alam Sekitar, 1993. 18 (1), P-5.
131
67. Rugman, Alan. The end of Globalization. USA: Printed by AMACON,
2001. P-44.
68. Sham, S. Economic Development and Environment Management in
Malaysia. New Zealand Geographer, 1993. 49 (2). P-64.
69. Hamidi, Khalil. Ahmed. Muslim World. (Urdu) Lahore: Islamic
Research Academy, 1993. P-366.
70. Alam, Israr. Condition of Religious Values of Islam. (Urdu) Lahore:
Fazli Books, 2004. P-330.
71. Azad, Abul, Kalam. Concept of Freedom in Islam. (Urdu) Lahore:
Maktaba-e-Jamal, 2004. P- 104.
72. Baqi, Halook. Noor. (Dr.) Realities of Science and Qur’an. (Urdu)
Karachi: Indus Publishing Co, 1996. P- 232.
73. Rehman, Afzal. Economic Doctrine of Islam. Lahore: Islamic
Publications Ltd, 1976. P-5.
74. Daily Nawa-e- Waqt. Lahore: 22 April, 1988. P- 8.
75. Monthly Terjuman –ul-Qur’an. Lahore: May, 1988. P- 22.
76. Mufti, Masood. Conspiracy of Multinational Companies against
Islam. Lahore: Ilm –wa- Irfan Publishers. P- 112.
132
Chapter Four
Socio-Economic Discrepancies and New Economic
Policy
There is positive process for the social and economic non-balance between the large ethnic groups in multi racial society of the Malaysian government, the implementation of the New Economic Policy (NEP) is focused in this chapter. The main purpose of this policy to redistribute the wealth and re-structure of society, the New Economic Policy (NEP) was introduced in the year 1971 so during this period up to 1990 the Malaysian government successfully completed 20 years long period, this policy was introduced to attract the foreign investment and multinational business in
Malaysia.
It is fact that before the arrival of European colonial powers in Malaysia
(Portuguese in 511, Dutch in 1640 and the Britain in 1795), the un-equality in social and economic in different groups of Malaysia basically un- dividable in the development, as the multi-racial Malaysia was a British colony called as Malaya
4.1 Inequalities in Colonial Era
133
The European presence started in the 1785 in Malacca, 1786 in Penang and in Singapore in 1524 situated in west coast, on the boom demand in
Europe of mineral resources, (1) created the interest to the British to make control on the Malaya states, it was begin with federation of Malaya states on the basis of tin resources the Perak, Selangor, Negeri and Sembian became rich the production of tin in Malaya and other parts of the world i.e.. during 1870 to 1920 showing in table 4.1.
Table no. 4.1
Tin Production in Malaya and rest of the World 1870s-1920s
Source: Statistics of International Tin research and development council
In the year 1890 the population of Malaysia increased, it was significant in the straits settlement and federated Malaya states particularly in Perak and Selangor; (2) the majority of Malaya and other Malaysians was only 32% in the year 1911 in straits settlement and 41% in federated Malaya states, (3) the employment and race in 1970 showing in the Table no 4.2.
Table no. 4.2
Employment by occupation and race 1970
Source: Source: Dixon Chris’ Southeast Asia in the World economy’ Cambridge University Press p-182
134
The majority of population based on the immigrant labour, but it was changed to the commercial sector of Tin and Rubber products, as these products in 1900 were the main sources of Peninsular Malaysian economy.
In fact that from 1931 to 1935, (4) 85% of Mining workers were Chinese, and also 97% paddy farmers Malaya, (5) estate workers of rubber 68% of Indians ethnic group from 1970 to 1975 showing in Table 4.3.
Table No. 4.3
Degree of urbanization by ethnic group from 1970 to 1975
Source: Mehden, F.R. Communalism, industrial policy and income distribution in Malaysia, Asian Survey p-61
It is further mention here that due to natural recourses, labour, market power and other facilities the regional economics has changed due to this inequality in ethnic groups and in the income of the region, poverty and public service, low immigrants labour were found in regional development most of the people still working in agriculture sector in Malaya, hence faced lot of problem such as poverty, income, low productivity and unemployment in the country, the ratio of residents of rural areas dropped
85% in 1970, (6) from the year 1871 to 1941 the growth of Indian population in Malaya shows in Table no 4.4.
135
Table no. 4.4
Growth of Indian Population in Malaya from 1871 to 1941
Source: Bee’ ooi Jin “Land, People, and Economy in Malaya” p. 117
The establishments of the transportation system and other public utilities have increased the commercial activities of British. In 1885 for the linkage in Perak and Selangor to port Swettenham built the rail roads in
Malaysia when in 1923 through west coast states north-south rail road was constructed, (7) it is further add that until after the Second World War no road net work was available for Kelantan and Tereanganu, the investment in transportation depend upon the growth capacity of region, the collective individual incomes 1957 showing in Table no 4.5.
Table no. 4.5
Approximate collective individual incomes by Race 1957
Source: Silcock T H “The political economy of independence Malaya, Singapore Eastern University Press 1963 p-3
136
The public utilities were depend upon the west-coast states, about 85% of west-coast states were holding electric supply facility in the year 1954 and also the population ratio was high in east coast states as provided in the Malaysian Government education policy.(8) In fact that for the
Malaysian people the education was found in the rural area, in this chapter it has more clarified in the enrolment of each faculty in the University of
Malaya during the session of 1962-63 shown in Table no 4.6.
Table No. 4.6
Student enrolment in each faculty at the University of Malaya by
Race in 1962-63 sessions
Source: : Silcock T H “The political economy of independence Malaya, Singapore Eastern University Press 1963 p-3
Malaysia was declared as multi racial society, it was divided in different dimensions i.e. regionally, economically and religious when in all the groups’ further division on the basis of language, in religious group there was several school of thoughts, when in ethnic or the racial group in economic, social and regional dimensions ethnic wise educational level showing in Table No 4.7.
137
Table No. 4.7
Educational level by ethnic group
Source: SRM Media Index Survey 1979, Peninsula Malaysia
The feature of Malaysia particularly in the early years of independence, it is fact that Malays mainly growers of Rice in Rural area, in the urban areas Chinese dominated the commercial field when the Indians and
Tamils were rubber plantation Labour, from 1929 to 1982 the production of
Tin-in-concentrates by county 000MT Shown in Table no 4.8.
Table no. 4.8
Production of tin-in-concentrates by country ('000 metric tonnes) from 1929 to 1982
Source: Cassom Mark “Multinational and World Trade” Allen UNWIN 1986 London p-239
It is the matter of fact that it is impossible for the ethnic groups to the continue their process due to lack of inter joining, the differences in ethnic group due to indirect religious educational social and economic issues, (9) before going forward it is necessary to point out the reasons and the
138 sources of such difference, the total the graduates of the community group from the year 1959 to 1970, shown in Table no 4.9.
Table No. 4.9
Total graduates by community group (1959 to 1970).
Source: Report of National Economic Consultative Council 1991 Kuala Lumpur p-94.
It is further noted that the inheritance due to dual economy policy in
Malaysia for the period of 172 years, as from the British Rules in fact that the dual economics on the basis of economic activity and geographic link, large sale production and the commercial process also use modern technology the product was exported to the international markets, (10) it was also on the west coast side.
The other process of the economy was the small scale of traditional method of the production i.e. paddy farming coconut farming coffee farming as well as fishing in the eastern and north side of the Malaysia from the period from 1957 to 1970 the income of the household of the ethnic group showing in the Table no 4.10.
Table No. 4.10
The mean incomes of households by ethnic group 1957 to 1970
139
Source: Inequality and poverty in Malaysia Oxford University press 1983 p-147.
The inherited policy of the economic continued in the Malayan independence in 1957 and the economic of the dualist become worst, the economic imbalance of the existing regime can be verified with the following five sector.
1. The traditional rural sector as included with un-economic rubber
small holder single cropped paddy traditional livestock and
agricultural produce, fishing and pump mining for the tin
product.
2. This sector also included with the agriculture estate i.e. Rubber,
Oil Pam, Coconut, Tea and Coca, the land development schemes
and double cropped paddy commercial forestry fishing and
modern tin mining.
3. The above rural sector include such pars of Manufacturing,
Construction, Transport and Services work as done from the
modern equipment or the techniques, as well as small Artisans,
traders, hawkers, stall holders, households servants and other.
140
4. Modern urban sector including high-tech technology,
manufacturing, construction trading, utilities, transport,
communication, profession, tourism and modern services.
5. The federal states, local government, public authorities, police and
armed forces including government sector.
Researcher would like to distinguish that the average incomes of the workers of the economic activities group. As the modern urban sector as well as medium income as referred to modern rural sector when the low income pertains to the traditional urban factor and rural sector, (11) the rural sector based upon the low income states, the ethnic group 1970 of registered professional membership shows in table no. 4.11.
Table No. 4.11
Membership of registered professionals by ethnic group 1970
Source: Report of National Economic Consultative Council 1991 Kuala Lumpur p-94
The large percentage of income of workers in the year 1970 was one and on behalf to two times of medium level of the income when the percentage of the low level of income about three to four times and in the West
Malaysia 60% of the workers pointed out in the modern urban sector, as well as in government and modern rural more than 1/5th, (12) the sector
141 share of GDP, per capita GDP and state urbanization in 1970 showing in the table no. 4.12.
Table No. 4.12
GDP per capita, sectoral shares of GDP and Urbanization by state,
1970
Source: Salih K “Decentralization policy, growth pole approach and resource frontier development” Oxford Pergoman Press p-12.
The identification of ethnic group and economic activity the majority of the Malaysian lived in the Northern States and the workers of Malaya works in the traditional rural sector, when various Malaysia lived in South and West states it is pointed out that income of Malaysian people less than the non Malaya and disparities of the region in Malaysia have no more difference than the past.
To support researcher opinion, it is described that from 1957 to 1970 monthly income of the household distribution in between the ethnic group giving the gap in between the Malaya and the Non-Malaya when the ratio of Chinese-Malaya increased from 2.16 to 2.25, (13) during the same tenure monthly income of the household distributed in between the urban and rural areas, in 1957 the monthly income of urban-rural increased from 1.84
142 to 2.14 till 1970, (14) the ethnic composition of population in 1970 of the
Malaysia and Singapore shown in Table No 4.13.
Table No. 4.13
Malaysia and Singapore: ethnic composition of population, 1970 (thousands).
Source: Census of Population 1970 Malaysia.
During this study it is also noted the linkages with the establishment of the manufacturing sector regarding levels of the regional income, some industrial region were situated in west coast of Peninsular Malaysia, the changes in structure in west coast of the Peninsular Malaysia started early, main contribution in GDP was agriculture and minerals sector when employment was taken over by the manufacturing sector, (15) the urban process as well as infrastructure facilities attracted the share of foreign investment in the sector of manufacturing, the manufacturer establishment and paid employees distribution in Peninsular Malaysia was un-equal in the region, the Selangor and Perak like developed region of Malaysia obtained successful growth and left behind very far the other region, according to the data of census of 1959 wherein declared the Selangor, (16)
Perak, Penang and Johar as the main manufacturing region estimated at
70% of the total manufacturing establishment, 76% of gross output, 77% of the total industries employment, (17) in the data of the census given the improvement in manufacturing, the total number of manufacturing
143 establishment in the regions stabilized up to 70% as well as gross output increased in total industrial employment up to 82%.
Researcher would like to mention here that 95% industrial estates situated particularly in Selangor and Penang the infrastructure well developed and increased skilled labour force in Selangor, from the year
1968 to 1971 the foreign direct investment increase up to 65% in the value in Selangor. (18)
As a matter of fact that inequality on the regional basis in Malaya economic development depends upon the historical background; it can be separated in internal and external reasons, internally due to un-equality distribution i.e. resources of tin and allocation of modern agriculture, when the external it was due to utilization of colonial policy and for the selection of location of international migration in Malaya the growth of Chinese population from 1871 to 1941 showing in Table No 4.14.
Table no. 4.14
Growth of Chinese Population in Malaya from 1871 to 1941
Source: Bee’ ooi Jin “Land, People, and Economy in Malaya” p. 113
There were three main harbors such as Malacca, Penang and Singapore in Malaysia, on the basis of strategically location the European colonialism
144 started in Malaya for the purpose of trade, after the direct intervention of
British inequality of the region worst created labour strategy and imbalance the growth in Malaysia and Malaya can be divided into two regions based on level of development. (19) In fact that there was large concentration in the developed regions, in the said regions there was great degree of urban as there were main towns and cities, it is further add here that various as due to various industrial estates and direct foreign investment concentration became high standard of living and income, the straits settlements of immigrant and Malaya population in the year 1871
Showing in Table No 4.15.
Table no. 4.15
The Immigrant and Malay Population in the Straits Settlements in 1871
Source: Bee’ ooi Jin “Land, People, and Economy in Malaya” p. 108
In the under development states the economy was depend upon the traditional agriculture, the linkage with the developed regions became low productivity, unemployment income and increasing in the poverty. (20)
It is pointed out that mostly of Malaya residing in the under developed countries particularly in rural areas and holding traditional agriculture sector and low monthly income, due to un-equality effect created the tensions among the races and riot on 13 may 1969, (21) due to incident of 13
145 may, the Government taken immediate action and introduced New
Economic Policy to remove the gap in the year 1971.
4.2 Corrective Actions of the Government
No doubt that Malaysia is exist in the heart of the South Asia and having resources having favorable climate for the foreign investors with attractive market, after 1957 the Malaya took global politics control through the success in the election, (22) the Chinese were living in the urban areas and took over the control on the economy of the Nation, as per first and second
Malaysian plan under which showing in public development expenditure in Table No. 4.16.
Table No. 4.16
Public development expenditure under the First and Second Malaysian Plans
Source: Second Malaysia plan, 1971-1975, 1971 pp.22,
As far as the political issue, the political leaders of Malaysia having program for the unity and nationhood, the New Economic Policy plan was launched for the period of twenty years i.e. from 1971 to 1990, to control the goals of the development of Malaysia reduction in the poverty was very important, under this new policy, the leaders of Malaysia introduced
146 the affirmative policy. Researcher further pointed out the policy as made for the cooperation of Bumiputras, means the son of soil, mostly in rural poverty to obtain the increased for the year 1990, the son of soil owned 23% of corporate shares in 1995 and compared by 1.9% in 1970, (23) in the same year Chinese owned 27% and up to middle of 1990 it was increased up to
41%, the record of economic of the Malaysia one of the Asia best percentage, Poor by sector percentage wise proportion of the population from 1970 to 1990 Shows in Table No. 4.17.
Table No. 4.17
Proportion of population which is poor by sector Percentage wise from 1970 1990
Source: Fourth Malaysia plan, 1981-85, 1981, pp.34,
The Government strong leaders expressed clearly for the economic and social development the strategy consists with direct foreign investments on the basis of government control, dynamic programs supporting health care, education and skill training. For example the policy makers of the
Government and pointed out to the Islamic teaching of set of sufficiency for the economic development to maintain social stability economic growth used. (24)
The successor of Malaysia Governments seeking to provide guidance for the economic development rewards, at one way through the partnership
147 between the public and the private sectors, the Government of Malaysia seeking to formulate the philosophy and strategy and development the political leaders for the specific need played very vital character in shaping for the development of Malaysia.
It is the agreed point for all that the former Prime Minister Dr. Mahathir made his policy with the strategy for the NEP adjustment, so far restructuring the Malaysian society, required readjustment Malaysian economic environment and to solve the financial difficulties of Malaysian
Government, Dr. Mahathir suggested to look east and idea of Malaysia incorporated.
The first stage of step of re-adjustment by way of economic as hold in the year 1984 economic difficulty the series of second stage step restriction on the foreign investment in the year 1985, 1986 and 1988 Dr. Mahathir taken two great political steps for the readjustment of economic. (25)
During the general election held in 1982 Dr. Mahathir replaced 45%
United Malaya National Organization (UMNO) leaders for the lower house of the Parliament and from legislative assemblies of the state, the new persons selected as qualified from higher education institutions and universities, (26) Therefore in the general election large number of new qualified candidates as the members of the supreme council and also as the
Deputy Vice President so Dr. Mahathir got success and support in his party but also in the Government.
148
In the said general assembly in 1984 Dr. Mahathir also changed the department from the Minister of Finance to Minister of Trade and Industry and from the Business world he appointed Mr. Tun Daim Zuinuddin, the economic policy moved from Tengku Razaleish to Dr. Mahathir and Tun
Daim in the year 1985 Tun Daim announced the measure for the restriction of liberalization, (27) and Dr. Mahathir on the basis of his political power with the strong political leader ship able to display personal initiative for the re-adjustment of the New Economic Policy.
As per researcher point of view the main challenge for the modern
Malaysia create common nation in between large ethnic group as divided in economic, social, cultural and religious lines. (28)
It is noted that in Malaysian economic debates the main issues is the role of the government in the post independence economy, from the year 1970 to 1990 in 20 years New Economic Policy was made to reduce ethnic economic gap and the poverty as the large investment from the government side in physical infrastructure, education and health, when the oil revenue has covered the economic growth sufficiently, (29) after the independence the Malaysian economy changed from Primary exports to diversified economy with industrial sector, it is also brought the changes in balance among the rural and urban population. (30)
149
Researcher further mentioned here that during the period of colonial particularly in Malaysia economy was clear in sense of trade, foreign capital inflows and immigration of labour from India, China, Indonesia, and Philippines, the unequal division propagated the economic wealth hence the involvement became in the open marked, the economic policy of the Government in the year 1960 was moved and given the support in
1970s and 1980s, (31) on the basis of New Economic Policy of the
Government large number of the population came in the urban town areas, on such policies the amount of labour wages increased.
It is noted that the growth of economic very much impressive during fourteen years of the New Economic Policy, during the year 1970 average
7.8% and in between 1982 and 1984 it was 6.9%, (32) and also given relaxation in Foreign Direct Investment in order to increase the sources, the economy as contracted at 1% in 1985, in Table No 4.18 Showing the household poverty in race1970.
Table No. 4.18
Peninsular Malaysia: Households in poverty by Race 1970
Source: Third Malaysia plan, 1976-1980, pp.22,
Further included that for the decrease the poverty the targets sets under the New Economic Policy, its mean all poverty, so the issue of the poverty seriously affects the various groups particularly rubber, rice and other
150 small holders of Malaya in view of the improvement in the Rubber prices,
Rice Scheme, Land development and speedily increase in manufacturing in the year 1970, (33) in fact north and east i.e. Kelaatan, Kedah, Trengganu
Perils, Sarawak as the poorest areas in Malaysia the household income of
Peninsular Malaysia of 1970 Showing in Table No 4.19.
Table No. 4.19
Mean household incomes of Peninsular Malaysia of 1970
Source: Third Malaysia plan, 1976-1980 , pp.22,
The other issue of ownership increase in Malaya as achieved by Public
Enterprises, trustee for the Malaya, out the enterprises, the Perbadanan
Nasional Berhad (PERNAS), (34) the Council of Trust for Indigenous People
(MARA), the Urban Development Authority (UDA) the State Economic
Development Corporations the Bumiputra, Investment Fund, Bank
Bumiputra are the most important enterprises of Malaya, with the interest owned and joint ventures companies, training urban development, share transfer and land development it is no doubt that without the Government cooperation, Malays not in position to achieve the targets of New Economic
Policy, hence Malaysian Government making the planning to transfer its holding to individual Malays through the unit trust scheme of 1981 under the National Equity Corporation, (35) land ownership in Kuala Lumpur of
1968 Showing in Table No. 4.20.
151
Table No. 4.20
Communal composition of land ownership in Kuala Lumpur of 1968
Source: Directory of Kuala Lumpur Munciple Government cited in Von Vorys, p-242,
The targets in employment sector sets under the New Economic Policy.
In the year 1980 the Malaysian share in Primary Sector was 68% but in the year 1990 it was decreased at 59% when in secondary sector the share was increased from 40% to 59%, (36) same mentioned in Table No 4.21 that the communal composition in the West Malaysia share capital ownership in the limited companies.
Table No. 4.21
Communal composition of share capital ownership in limited companies in West Malaysia 1969
Source: Second Malaysia plan, 1971-1975, pp-40
It has pointed out in the study that the Malaysian Government has clearly made structure to achieve the targets in the framework, by this process given the opportunities to non-Malaya and Malaya. In the field of agriculture not possible that the growth rats exceed 5% to 6% per annum in manufacturing construction and services industries need high rates of growth. (37)
152
The Malays seeking favor so that take the opportunities with Malaysian
Chinese and Indians. According to the research in this study that Malays has keep their attention on un-equalities in between the race, the new policy is temporary but it has made institutional and looking to prove difficult to back it after 1990. (38) In the Malays found a large gap in between the direct beneficiaries of the New Policy.
In this study it is also found that this New Economic Policy provides the opportunities to the Malaysian Government to play the vital role of increasing in all the economy sectors. During the period from 1976 to 1980 only domestic fund or the private investment came from Federal
Government, also included bodies i.e. Perbadanan Nasional Berhad
Council of Trust for indigenous people, the Urban Development Authority
(UDA) and State Economic Development Corporation (SEDCs) for the loan and grants for land development, Rubber Replanting and housing. (39)
The above bodies plays important role in the production of Oil and natural gas through National Petroleum Corporation as well as production of agricultural goods Paddy, Rice, Rubber, Palm Oil and Tobacco. (40)
This fact can’t be avoided that inspite of the Government role the private investment also increased, in the year 1975 it was decreased but made increased in 1976 under the industrial coordination Act regarding licensing for the manufacturing establishment, (41) by Petroleum Development Act,
153 hence pressurized on the control of the Government on the Petroleum
Industry, the growth in money supply and percentage of prices from 1972 to 1990 of Malaysia Showing in Table No. 4.22.
Table No. 4.22
Growths in money supply and prices in percentage of Malaysia from 1972 to 1990
Source: International financial statistics of Malaysia, IMF pp-70
As the strategy of the Government for the year 1980 played important role for the expansion of the investment for the private sector, the public investment is planned to decrease in the real terms in 1985, (42) the
Government aimed for the re-structural of society and refer the poverty, to implement on the policy the Government leaders played great role, the efforts as decreased the fear ness arised from the industrial coordination
Act and Petroleum Development Act, thereafter amended in both the Act.
The surplus energy in Malaysia short advantage in the year 1980 than in
1970, in the second half of the 1970 the increase in price and control of wage was more difficult, (43) but Malaysia was handling the issues very competently from 1973 to 1981 in Malaysia energy prices US Dollar per liter Showing in Table No 4.23.
Table No. 4.23
Energy prices US$ per liter in Malaysia from 1973 1981
154
Source: Wawn Brian, “The Economies of ASEAN Countries” The MacMillan Press 1982 Hong Kong p-63
The economic interest replaced by political interest, the New Policy of
Malaysia well placed to achieve growth.
4.3 Re-Engineering of Socio-Economy Sector
During the year from 1950-1960 economic development was very much popular, as the maximum growth strategy of economy, this strategy served success support the economy there are differences in activities between and not effective with the problem of social and economic in Malaysian Society.
It is well known that the process of New Economic Policy ended in 1990, this policy developed on the achievements to observe the process of eliminate the poverty and restructuring society in order to improve the income and standard of living of the poorest states the development is necessary in Table 4.24 Showing selected socio-economic targets from 1970 to 1990.
Table No. 4.24
Selected socio-economic targets of the New Economic Policy from 1970 to 1990
Source: Second Malaysian outline perspective plan 1991-2000 National Press Kuala Lumpur p-20
155
According to researcher view that the growth and equal distribution are the main goals of the New Economic Policy, it is fact that imbalance in the country to promote the reasonable sharing of benefits of economic growth of Malaysian, there are two main goals of New Economic Policy, i.e. suppression of poverty without any difference in between of race and ethnic group and secondly the re-structuring of Malaysian society, this consist with four concrete objectives such as re-structuring of employment patterns, ownership in the corporate sector, commercial and industrial community made new growth in rural sector, the main purpose of these goals to develop the economic position of the bumiputera and specially the
Malays at its core, the two objectives of the re-structuring program, employment patterns and the ownership in corporate sector. (44)
It is further ensure that the employment in the economy sector and by occupational levels change the racial composition of the country, the incidence of poverty from 1957 to 1985 and targeted 1990 Showing in Table
No. 4.25.
156
Table No. 4.25
Incidence of poverty from 1957 to 1985 and targeted 1990
Source: Rani H. Osman “The Economic Aspects” 1-57-1-87 p-5
Researcher thinking is that the purpose of the policy to encourage the special employment of bumiputera in professional occupations, this policy also enables them to employed in the higher grade industries as well as reflect the forceful Malaya nationalist claimed that Malay during the colonial period permit to engage successor lawful place in society. (45)
As per the above the purpose of this policy to eliminate the poverty reduce the in-equality of racial inequality, it is also include the Malay capitals class, Malay partners and employee Malay executives as the joint ventures projects. (46)
From the results of this policy generally enjoyed by the Member of
Malays, specially in education and modern employment the expanding of economy and public spending benefited the Chinese contractor. (47)
The period from 1987 to 1997 played great role in the growth of economy of Malaysia. The new economic policy also made the contribution for the reduction of ethnic identification with economic function enhances the business community.
157
For the restructuring target the Malaya Government confident these are the step for social and economy affected.
1. Malaya and other persons will own 30% of the total commercial and
industrial activities in all categories.
2. Industrial and Commercial community of Malaya manage the
training and human resource programs.
3. In modern Rural mid Urban sectors made the employment
procedure.
4. To establish new industrial activities in new developed area.
For the achievement the above objects the government may clear it will play interfering role, according to the said now economic policy the
Government must participate directly for creating wide range of the productive enterprises it would be possible by owned enterprises and joint venture.
4.4 Impact of New Economic Policy (NEP) on Malaysian
Economy
158
It is further mentioned here that New Economic Policy serves Malaysian social and economical survival to approach the developed world, to eliminate poverty and betterment economic balance in terms of employment patterns, in this respect share in ownership and control and wealth as the main targets to achieve during the period from 1971 to 190, the ownership of the corporate sector of Malaysia Showing in Table No.
4.26.
Table No. 4.26
Ownership of the corporate sector of Malaysia from 1971 to 1990
Source: Fourth Malaysia plan, 1981-85, 1981, pp.62, 176
To destroy the poverty based upon the rural and agricultural development, for decrease the ratio of poverty, three main steps given for the implementation.
By improve the provision of social service the quality of life of the
poor persons, i.e. housing, health, education and utilities.
To increase the income for the improvement of the poverty in Malaya
through modern techniques and with better facility i.e. land,
planting, marketing and technical assistance.
159
For the Inter-Sector provide the opportunities of the employment, in
this respect education, training, financial and technical skills
provided for the betterment of economy.
It is necessary to achieve the above mention objects by restructuring of the procedures of employment.
In fact some social and economic institutions were established in order to provide cooperation to the sons of soil, as per the management of
Government distributed the land in Malaysia through Federal Land
Development Authority (FELDA), the Federal Land Consolidation and
Rehabilitation Authority (FELCRA) and Rubber Industry Small Holders
Development Authority (RISDA), (48) more direct role also given to thee institutions for the socio-economic standing of the Bumiputera.
As per the details it is found that for the growth the export promotion planning was applied and in 1980 great industrial process was pushed in
Malaysia, so due to the manufacturing sectors contribution to growth was decreased, in the year 1981 the total export increased from RM27,190 to
RM220,890 in the year 1997. (49)
As the total export in manufacturing sector during the period from 1980 and 2000 increased from 22% to 85%, (50) when in the total export of agriculture field decreased from 26.3% to 6.1% if we see in the past it is pointed out that the agricultural good i.e. Rubber and Tin dominated the
160 export of Malaysia, (51) in this Table No. 4.27 in the selected countries in
1978 showing the ration of distribution of tin-in-concentrate by way of mining.
Table no. 4.27
Percentage distribution of output of tin-in-concentrates by mining method in selected countries in 1978
Source: Cassom Mark “Multinational and World Trade” Allen UNWIN 1986 London p-246
In the year 1970 the agricultural contribution to GDP decline from 29% to 18.7% in 1990. When in the manufacturing sector it was increased in the year 1970 from 13.91% to 27% in 1990 as well as share in this sector increased from 11.4% in the year 1970 to 19.5% in the year 1990, (52) Table
No. 4.28 given the gross domestic products and unemployment in between
1970 to 1990.
Table No. 4.28
Composition of gross domestic products and employment from 1970 to 1990
Source: Second Malaysian outline perspective plan 1991-2000 National Press Kuala Lumpur p-20
161
The development in the manufacturing field plays vital role in the industrial process of Malaysia, the investor taken great interest in underdeveloped states in 1972 particularly the export of agriculture sector dropped from 11.7% in 1995 to 6.1% in 2000, (53) as far as the employment issue manufacturing field provides 25.3% of total employment and 27.6% increased in 2000. (54)
During the period from 1970 to 1990 by N.E.P the monthly average of income of household in Malaysia increased from $M 264 to $ 1167, (55) in this period the median income slightly increased both in Rural and Urban areas, in the year 1995 the ratio of poverty decreased from 8.7% to 6.1% in
1997 but due to incidence the ratio of poverty in Rural and Urban areas found at 10.9% and 2.1%, (56) it is on record that the ratio of distribution of income of low 40% when in the middle recorded top 20% of the household, the resources of income of lower 40 % increased from RM693 in the year
1995 to RM865 in 1999, the income share of the household in Malaysia increased from 13.7% in 1995 to 14% in the year 1999, (57) the distribution of selected year from 1970 to 1990 in Malaysia as Showing in Table No 4.29.
Table No. 4.29
Income distribution of selected years (1970 to 1990)
Source: Seventh Malaysian Plan 1996-2000 National Press Kuala Lumpur p-29
162
It is very clear to illustrate that there is great link regarding the levels of regional income with the manufacturing field, after the independence and implement of New Economic Policy, Malaysian Government made steps for the development of manufacturing activities, it is fact that Malaysia was the supplier of tin and rubber to the world, after 1957, (58) Malaysia started the development for manufacturing and construction sector pioneer industries ordinance was introduced in the year 1958 for the increase private sector investment, (59) the Mineral production in 1961 Showing in
Table No 4.30.
Table No. 4.30
Mineral Production of 1961
Source: Bee-Jin’OOi “ Land, People and economy in Malaya” Longman’s 1962 p.295
According to information in the data that the share of the agricultural sector in the total GDP and employment declined, the ratio of employment in the agriculture field decreased from 52.2% in 1970 when in the year 1997 it was only15.2% and in the same year GDP decreased from 23.3% and in
1997 6.3%, the growth rate of annual output during 1980 to 1989 decreased to 12.2%. (60)
In the under developed countries, states or the district, government announced the concept of development area for industrial activities, after the execution of New Economic Policy Malaysia introduced the incentive
163 scheme the industries in East Coast of Peninsular Malaya were obtained additional incentive under the promotion of investment Act 1986. (61) It is further add that due to low manufacturing activities the economic field depends upon the agricultural sector, (62) the distribution of the factories of the states in the year 1959 Showing in Table No 4.31.
Table No. 4.31
Distribution of Factories by States in 1959
Source: Bee-Jin’OOi “ Land, People and economy in Malaya” Longman’s 1962 p.325
Researcher explain that large existing industrial estates in the under developed states increased but mostly situated in small medium industry, in the under developed states 41% of the industrial estates while 26% are situated in the developed states, (63) Private sector were developed by the industrial area, it was 30% high than the private sector and also the ratio of industrial area was high in the developed states.
It is no doubt that the annual out put average rate and distribution are high in the developed states, the activities of Malaysia island in the distribution of manufacturing not changed due to New Economic Policy in the year 1970 the main source of development was the exports of the goods, in the same year agricultural exports decreased the share form
52.1% and up to 1980, (64) it was only 35.8% total exports share from 1980 to
1990 as Shown in Table No. 4.32.
164
Table No. 4.32
Shares of total exports by sector of origin percentage wise from 1980 to 1990
Source: Fifth Malaysian Plan 1986-1990 National Press Kuala Lumpur p-12
The manufacturing field has shown the growth rate at 10.9% per year, the planning for the industrialization only to fulfill the requirements of
New Economic Policy objectives, (65) the preference given for the employment, development of small, medium and heavy industries.
The development for the manufacturing process came from the export extension i.e. textiles and particularly electronics industry wherein given remarkable rate of export at 69% per annum, as well as found the increase in the manufacturing activities in under developed states, (66) due to unequal economic development it has affected the structure in under developed states, the population and labour force of Malaysia from 1980 to
1990 Showing in Table No 4.33.
Table No. 4.33
Malaysian population and labour force from 1980 to 1990
Source: Fourth Malaysian Plan 1981-1985, Kuala Lumpur p-72
165
Other step of the study is providing the growth in manufacturer area from 1980s, on the basis of exports of the commodities, (67) for the encouragement in the field tax motivation given.
After independence and particularly 1970 was looking for the increase in economic opportunity through the economic activities in under developed states, till the year 1999 the total manufacturing output was 12 times high then under developed states, (68) the details of gross monthly household income in the year 1995 and 1999 Show in Table No 4.34.
Table No. 4.34
Mean monthly gross household incomes (1995 and 1999)
Source: Eighth Malaysian Plan 2001-2005 National Press Kuala Lumpur p-10
Researcher mentioned in foregoing paragraph in this chapter that in the large developed states the manufacturing activities, mostly depend upon the export product when in the under developed states the activities based on resource of wood and rubber products and food industries which consist with domestic market.
On the conversion in between developed and under developed states in the island of Malaysian not taken place, the flow of change in technology was dominated by the developed states. The transfer of technology, human resource development i.e. education and training and making the
166 knowledge through Research and Development under Human Resources
Development (HRD) given production growth in more developed states.
(69)
4.5 Foreign Investment under New Economic Policy
During the study researcher pointed out that the foreign investment plays vital role in the Malaysian economy during the colonial the British investment dominated the agricultural, mining and commercial sectors, in the recent period Malaysian government participated in the foreign investment and growth over the 1980s. (70) As the Malaysian Government very well known that foreign skills and technology is benefited due to restriction of resources Multinational Corporations, given the marketing skill and the ability to use the pressure against the home governments.
It is necessary for the investors either domestic or for the foreign investment to process through the Malaysian industrial development authority, under this policy the foreign investment not for more than 30% of the total investment which is not allowed to all the investment foreign majority having 100% ownership, (71) allowed only to certain cases for the manufacturing projects for the export markets or using high technology.
New foreign investment found in non-labour manufacturing including with Oil and LNG, now the opportunities in Agricultural is limited, (72) it is also pointed out that main foreign investors come from Japan, British,
167
Singapore, Hong Kong, U.S.A and West Germany in Malaysia, the
Malaysian trade foreign composition Shown in Table No 4.35.
Table No. 4.35
Composition of foreign trade of Malaysia, 1971 (million US$)
Source: Rubber Statistics Handbook Malaysia 1971, Department of Statistics, Kuala Lumpur
The powerful Malaysian sector started the process for the development of the manufacturing sector as formed low in 10% of GDP in the year 1960, so in this year the annual Rate of 12% and in the year 1970 it was 13%. (73)
It is further submitted that in the year 1960 the development was depend upon the consumer goods such as food household appliances when in the year 1970 the resources based upon textiles clothing and wood import also other goods i.e. chemicals, (74) electrical machinery and motor vehicle exports at low rate South Korea and Taiwan.
In accordance with the New Economy Policy objectives the manufacturing growth in GDP and employment greater that agriculture, while manufacturing is the main source for raising the income and providing the employment for Malaysia.
After through study and research in this chapter and in view of the facts and figures it has found that the New Economy Policy of Malaysia given
168 growth in income, employment, attraction for the foreign investors, also through these policies gives the benefit to the lower income groups, reduce the poverty and equally distribution of income also gives help to Malaysia to hold the title as “Asian Tiger”.
169
REFERENCES:
1. Vasil, R. L. Politics in a Plural Society – A Study of a Non-Communal
Political Party in West Malaysia. Kuala Lumpur: Oxford University Press,
1971. P-3.
2. Andaya, W. Barbara. A History of Malaysia. London: MacMillan, 1986.
P-36.
3. Parmer, J. N. See. Colonial Labour Policy and Administration: A
History of Labour and Rubber Plantation in Malaya 1910-1941. New
York: Locust valley, 1960. P-110.
4. Schlote, Werner. British Overseas Trade: from 1700 to the 1930. Oxford
UK: Basil Blackwell, 1952. P-96.
5. Smith, T. E. Population Growth in Malaya. London: Royal Institute of
International Affairs, 1952. P-20.
6. Means, P. Gordon. Malaysian Politics. New York: MacMillan & Co.,
1970. p-26.
7. Furnivall, J. S. Colonial Policy and Practice. New York: New York
University Press, 1956. p-304.
8. Mills, A. Lennox. Southeast Asia-Illusion and reality in Politics and
Economics. London: Oxford University Press, 1964. p-24.
170
9. Yusuff, Agud. Mohammad. Consociational Politics: The Malaysian
Experiences. Kuala Lumpur: Percetakan Pemuda Enterprises, 1992. p-7.
10. Swee, Keng. Goh. Entrepreneurship in a Plural Economy. Malaysia
Economic Review, vol. III. April, 1958. p-3.
11. Butwell, Richard. Southeast Asia Today and Tomorrow – A Political
Analysis. London: Frederick A. Praeger Publishers, 1961. p-33.
12. Courtnay, P. P. A Geography of Trade and Development in Malaya.
London: G.Bell and Sons, 1972. p-142.
13. Silcock, T. H. Readings in Malayan Economics. Singapore: Eastern
Universities Press, 1961. p-78.
14. Hoffmann, L. Industrial Growth, Employment and Foreign
Investment in Peninsular Malaysia. Kuala Lumpur: Oxford University
Press, 1980. p-21.
15. Rajah, Rasiah. Market, Government and Malaysia’s New Economic
Policy. Cambridge Journal of economics, 2001. vol. 25, p-57.
16. Firdous, H. Abdullah. Redical Malay Politics. Selangor: Pelanduk
Publications, 1985. p-149 .
17. Ben-David, D. Trade and Convergence among Countries.” Journal of
International Economics. 1996. vol. 40, p-279.
171
18. Courtnay. P. P. A Geography of Trade and Development in Malaya.
London: G.Bell and Sons, 1972. p-142.
19. Silcock, T. H. The Politics Economy of Independent Malaya – A Case
Study in Development. Canberra: The Australian National University,
1963. p-62.
20. Cowan, C. D. The Economic Development of Southeast Asia. London:
George Allen & UNWIN Ltd., 1964. p-139.
21. Kasper, Wolfgang. Malaysia – A Study in Successful Economic
Development. Washington DC: American Enterprises Institute for Public
Policy Research, 1974. p-36.
22. Crozier, Brain. Southeast Asia in Turmoil. Victoria: Penguin
Publishers, 1965. p-30.
23. Dixon, Chris. Southeast Asia in the World-Economy. New York:
Cambridge University Press, 1991. p-186.
24. Matsumoto, S. Southeast Asia in a Changing World. Tokyo: Institute of
Developing Economies, 1979. p-185.
25. Southeast Asia’s Economy in the 70s. London: Asian Development
Bank Butler & Tanner Ltd., p-385.
26. Mohammad, Mahathir. Bin. Dr. Asia ka Muqaddama. (Urdu translate)
Lahore: Jamhori Publisher, 2003. P-27.
172
27. Sano, Takao. Deepening Industrial Linkage among East Asian
Countries. Tokyo: Institute of Developing Economies, 1998. p-7.
28. Buchanan, Keith. The Southeast Asian World. New York: Taplinger
Publishing Company, 1967. p-129.
29. Dixon, Chris. Southeast Asia in the World-Economy. New York:
Cambridge University Press, 1991. p-183.
30. Ibid p-189.
31. Jomo, K. S. Development Policy and Income Inequalities in
Peninsular Malaysia. Kuala Lumpur: Institute of Advance Studies, 1986. p-
106.
32. Fryer, W. Donald. Emerging Southeast Asia. London: George Philips &
Sons Limited, p-277.
33. Horii, Kenzo. Rice Economy and Land Tenure in West Malaysia.
Tokyo: Institute of Developing Economy, 1981. p-36.
34. Dixon, Chris. Southeast Asia in the World-Economy. New York:
Cambridge University Press, 1991. p-185.
35. Southeast Asia’s Economy in the 70s. London: Asian Development
Bank Butler & Tanner Ltd., p-200.
36. Fryer, W. Donald. Emerging Southeast Asia. London: George Philips &
Sons Limited, p-291.
173
37. James, E. William. Asian Development. USA: University of Wisconsin
Press, 1987. p-48.
38. Dixon, Chris. Southeast Asia in the World-Economy. New York:
Cambridge University Press, 1991. p-190.
39. Yanagihara, Toru. East Asian Development Experiences. Tokyo:
Institute of Development Economic, p-171.
40. Mahathir, Mohammad. Bin. Dr. The Challenges. Selangor: Pelanduk
Publications, 2002. p-126.
41. Southeast Asia’s Economy in the 70s. London: Asian Development
Bank Butler & Tanner Ltd., p-388.
42. Ibid p-319.
43. Fryer, W. Donald. Emerging Southeast Asia. London: George Philips &
Sons Limited, p-297.
44. Kelley, A. C. Economic and Demographic Change: A Synthesis of
Model, Findings and Prospective. Italy: United Nations Population Fund,
1998. p-23.
45. Lim, David. Economic growth and Development in West Malaysia
1947-1970. Kuala Lumpur: Oxford University Press, 1973. p-297.
46. Southeast Asia’s Economy in the 70s. London: Asian Development
Bank Butler & Tanner Ltd., p-661.
174
47. Yah-Chong, Lim. Economic Development of Modern Malaya. New
York: Oxford University Press, 1967. p-235.
48. Mahathir, Mohammad. Bin. Dr. The Way Forward. London:
Weidenfeld & Nicolson, 1998. p-63.
49. Wong, John. ASEAN Economies in Perspective. Singapore: MacMillan
International College Edition, p-64.
50. The Market of Asia / Pacific: Malaysia. UK: Gower Publishing Co.
Ltd., 1981. p-100.
51. Yanagihara, Toru. East Asian Development Experiences. Tokyo:
Institute of Development Economic, p-170.
52. Foy, Colm. Investing in Asia. Development Center of the Organization for Economic Co-operation and Development, 1996. p-223.
53. Mahathir, Mohammad. Bin, Dr. The Way Forward. London:
Weidenfeld & Nicolson, 1998. p-90.
54- Yanagihara, Toru. East Asian Development Experiences. Tokyo:
Institute of Development Economic, p-180.
55. Mahathir, Mohammad. Bin, Dr. The Way Forward. London:
Weidenfeld & Nicolson, 1998. p-58.
56. Silcock, T. H. Readings in Malayan Economics. Singapore: Eastern
Universities Press, 1961. p-255.
175
57. Mahathir, Mohammad. Bin. Dr. Globalization and the New Realities.
Subang Jaya: Pelandduk Publications, 2002. p-121.
58. Sano. Takao. Deepening Industrial Linkage among East Asian
Countries. Tokyo: Institute of Developing Economies, 1998. p-4.
59. Lim, David. Reading on Malaysian Economic Development. Kuala
Lumpur: Oxford University Press, 1975. p-216.
60. Foy, Colm. Investing in Asia. Development Center of the Organization for Economic Co-operation and Development, 1996. p-220.
61. Sondgrass, D. R. Inequalities and Economic Development in
Malaysia. Kuala Lumpur: Oxford University Press, 1980. p-62.
62. The Market of Asia / Pacific: Malaysia. UK: Gower Publishing Co.
Ltd., 1981. p-81.
63. Lim, David. Reading on Malaysian Economic Development. Kuala
Lumpur: Oxford University Press, 1975. p-311.
64. Rana, B. Pradumna. ASEAN Exchange Rate. Pasir Panjang: Institute of
Southeast Asian Studies, 1981. p-78.
65. Malaysian Current Economic Situation. London: Bank of credit and commerce International, 1982. p-11.
66. Rana, B. Pradumna. ASEAN Exchange Rate. Pasir Panjang: Institute of
Southeast Asian Studies, 1981. -p-7.
176
67. Wong, John. ASEAN Economies in Perspective. Singapore: MacMillan
International College Edition, p-66.
68. Daruvala, J. C. Professor. Tensions of economic development in
South-east Asia. Madras India: Allied Publishers Pvt. Ltd., 1961. p-150.
69. Mahathir, Mohannad. Bin. Dr. Multimedia Super Corridor. Selangor:
Pelanduk Publishers, 1998. p-76.
70. Leinbach, T. R. Transportation and Development of Malaya. Annals of the Association of American Geographers, 1975. vol. 65, p-283.
71. Lefeber, Louis. Regional Development Experience and Prospects in
South and Southeast Asia. Geneva: United Nations Research Institute for
Social Development, 1971. p-23.
72. Malaysian Current Economic Situation. London: Bank of Credit and
Commerce International, 1982. p- 25.
73. Southeast Asia in United States Policy. New York: Affairs on Foreign
Relations, 1963. p-281.
74. BEE-JIN, OOI. Land, People and Economy in Malaya. Singapore:
Longmans Publishers, 1962. p-319.
177
Chapter Five
Asian Financial Crisis with Special Reference to
Multinationals
Researcher would like to describe some issue of the origin and nature of
Asian Financial Crisis in Malaysia and given attention on the role of
Multinational Companies regarding economic and social impact, it has observed that due to un-equal distribution of wealth the economic position was weak, so no effected of the Asian Financial Crisis on Malaysia, researcher further mention in this chapter that the existing of Multinational
Companies plays great role to save the economy from the crisis.
It is well aware that the previous strong position of the country was badly affected due to the structural weakness and also there was no social policies to protect such loss of source of revenue and income, this crisis challenge the policy to restore the Pro-human development perspective in the development planning of the country.
5.1 Origin of the Financial Crisis in the Region
Researcher would like to distinguish here that the reason of devaluation of Thai baht in 1997 was losing of the confidence of the investors, hence
178 they invested on other economies in the region and also maintained weak
U.S. Dollars for their currencies, during early of 1997 the Malaysian currency at RM 2.5 against the American Dollars the Malaysian currency came under pressure due fallen of Thai baht on 2nd July 1997, the efforts of the authorities for the defense of Malaysian currency was empty in July, the cost was estimated at RM 9 Billion, than over 3.5 Billion American
Dollars, (1) the Malaysian currency followed the Thai baht, Indonesian
Rupiah and the Pilipino Peso and fell lowest rate in January 1998.
On the basis of low foreign exchange value of Malaysian assets, the stock market totally fell down, the Kuala Lumpur stock exchange dropped from 1300 in 1997 to lower than 500 in January 1998 and around 300 in
August 1998 up to 262 in September 1998. (2)
When the stock market fell down, caused to provide institution to make the boundary calls, hence the loan providers of foreign countries taken back their short terms loans.
It has also noted that the local and foreign investors were worried about the complication to take the position in Malaysian and other country currencies, hence fallen down the value of currencies in their stock and other markets and better in their stock and other markets and better variety of the investment options, the fund managers were better variety of investment options in order to select to more their funds easily than before
179 particularly on low amount on the restrictions from the Malaysia and other authorities.
According to the foregoing paragraph that the no confidence of the investor given loss to the region, heavy sale of the local stocks by foreign countries funds and also hit the exchange rate of the Malaysian currency with the U.S. Dollars, in this respect it is further mentioned that the Central
Bank, Negara Bank of Malaysia have reported that on account to defend the Malaysian country four billion U.S. Dollars spend, in the year 1997 the
Malaysian currency exchange rate was around 2.48 against the U.S. Dollars and in January 1988 the currency rate all the time on low rate of 4.88 against the U.S. Dollars as the reduction in this account almost found at
50%, (3) and KLSE suffered with loss in value estimated more than 60%, in selected countries of Southeast Asia from 1970 to 1998, sector wise share of
GDP Showing in the Table No. 5.1.
Table No. 5.1
Sector wise shares of GDP in selected Southeast Asian countries from 1970 to 1998
Source: Shahid Yousuf “Rethinking the East Asia Miracle” Pak Book Corporation 2002 Lahore p-60
180
From the financial point of view, it is historical fact that due to unexpected crisis found against the structural weakness of the economy of the county, regarding the inequalities of wealth distribution matter has already been mentioned in chapter three, but is also fact on the record that from the year 1991 the economic rate in the country continuously extended its output, in 1996 the growth rate of GDP was estimated at 10%, (4) due to such growth rate pointed out great in flows of the foreign capital through the foreign labour and Multinational Companies, private capital flow estimated at 9.6% when 20% of the foreign workers of the labour force of the country from 1996 to 1998 net private capital flows in five Asian economics given in Table No. 5.2.
Table No. 5.2
Net Private Capital Flows in Five Asian Economics from 1996 to 1998
Source: Islamic Economic Studies Vol. 9, No. 2 March 2002, p-3
It should not be neglected that the efficiency of the subordinate and incorrect allocation of the resources in economy. These two main points can’t be ignored. As per the calculation of the Ministry International Trade and Industry, the total factor of productivity from the year 1987 to 1995 produced only 1.8%, while during the year 1997 the growth percentage of the total factor productivity was pointed out as negative by limited stock growth the growth has instead been driven primarily, whereas increased the use of the capital, it was mentioned in the incremental capital output
181 ratio during 1987-1992 at 3.8% when in the year 1993-1996 noted as 4.8%, (5) the comparison of selected South East Asian countries with total factor productivity growth shows in Table No. 5.3.
Table No. 5.3
Total Factor Productivity (TFP) Growth Comparison of selected Southeast Asian countries
Source: Shahid Yousuf “Rethinking the East Asia Miracle” Pak Book Corporation 2002 Lahore p-77
As a matter of fact, it is unavoidable factor that the loss of the product in the era of the financial crisis, particularly when the Government drawn and made implement of industrial and economic measures, the said policies prepared on the importance for preparing the work force with technical and industrial skills and both forward and backward, extend the value added activities, increase of productivity of the manufactured sector, capital flows to GDP ratio, by flows and the country as Shown in Table No.
5.4.
Table No. 5.4
Capital Flows to GDP ratios, by Types of Flows and by Country
Source: Shahid Yousuf “Rethinking the East Asia Miracle” Pak Book Corporation 2002 Lahore p-66
182
During the depth study, researcher felt that the industry fall that unlike other industries of foreign countries hence researcher found that the linkages of the industry in Malaysia were week, as the Malaysian country shifted the capital intensive industrial production which was related with higher value activities when the manufacturing sector was in low value activities, so it is necessary to create more human resources for the industries for the development of human resources by increasing the institution and support system when in this way the real progress is limited. Researcher further noted that the economy of the Malaysian country was weak when during the second half of the year 1990 the previous speedy growth rate of export on sharp decline, there are three reasons of this situation i.e. demand for semi conductors decrease in the world, second holding to more or less fixed exchange rate of Malaysian policy, two main countries Japan and China’s currencies not long before foreign direct investment that Malaysia received from Japan, the FDI inflows to the East Asia from 1990 to 1998 Shows in Table No. 5.5.
Table No. 5.5
FDI Inflows to East Asia, from 1990 to 1998 (Millions US$; % of total)
Source: Ippei Yamazawa “Towards ASEAN-Japan Comprehensive Economic Partnership” Institute of developing economic 2003 Tokyo, p-96
It is very interesting aspect that the structure of inter country manufacturing trade had became positively inflexible and note sufficiently
183 change the rate. In 1980 and 1990 to 1996 the foreign markets demand was powerful. (6) So the Malaysian Government not improves the value of the currency through the devaluation, the power of the Ringgit was apparent to be the source of weakness.
Table No. 5.6
Gross Domestic Saving and Investment in 1996
Source: Shahid Yousuf “Rethinking the East Asia Miracle” Pak Book Corporation 2002 Lahore p-58
Another factor found during the study that In the year 1995 deficit of
RM18.7 million or 9% of Gross National Products (GNP) while the saving rate and Malaysia at 38.40% of GNP during the year 1995 and 1997 the
GDP investment above the 45% the gross domestic saving and investment in the year 1996 shown in table no 5.6.
In fact during this process current account deficit mostly financial by short term capital so such nature not sustainable in long term in the year
1997 the reserve investment was estimated at RM9.9 billion in this investment the main contribution in RM14.8 million current account deficit in the year 1996, (7) the transfer of funds by the foreign workers in Malaysia return to their own countries many of legal and illegal million of foreign workers outflow of RM3 billion per year Japanese firms direct investment in selected south East Asian countries shown in table no 5.7.
184
Table No. 5.7
Outward Direct Investment by Japanese Firms in selected Southeast Asian Countries
Source: Ippei Yamazawa “Towards ASEAN-Japan Comprehensive Economic Partnership” Institute of developing economic 2003 Tokyo, p-9
The increase in Malaysian external arrears not the effected of the above situation as the Malaysia depend upon the domestic loan the increasing high annual loan during the tenure of 1992 to 1994 it was 12.2% when in the year 1995 it was gone up to 28.6% because there was great difference in between the low foreign borrowing rate and high percentage in the growth of loan the financial groups started the increase in short term borrowing and particularly foreign banks for the long term domestic lending. (8)
It is much cleared to mention here that in the year 1990 the said trend was growing three years before the crisis high increase was depend upon the investment in the non productive financed by the short term foreign capital in the domestic economy through the improper controlled financial by the short term foreign capital in the domestic economy through the improper controlled financial system hence the high growth of such type created some damage on the environment on the basis of cheap foreign capital as well as labour the human resources was completely neglected in the selected Southeast Asia countries the distribution of debt of 1996 showing in table no 5.8.
Table No. 5.8
185
Distribution of Debt in 1996 in selected Southeast Asian countries
Source: Juzhong Zhuang “Corporate Governance and Finance in East Asia” Asian Development Bank 2000 Manila, p- 51
Researcher would like to focus that uneconomical process of growth created the crisis in labour intensive, labour provision the employment in the country but the agricultural growth decreased the rural poverty for the education and health sectors high budget given gain to the social and economic and helpful to secure firm foundation to the impact of the crisis the return on equity of the non financial PLC 1990-1997 in the selected
Southeast Asian countries shown in table no 5.9.
Table No. 5.9
Return on Equity of the Non-financial PLCs, 1990-1997 in selected Southeast Asian countries
Source: Juzhong Zhuang “Corporate Governance and Finance in East Asia” Asian Development Bank 2000 Manila, p- 53 5.2 Inter-Related Impact of the Crisis
No doubt that due to slow down of the domestic demand on declining the country currency the imports of the luxury goods also became slow and on the other hand it was expected to increase in the resource based export.
The demand of electrical appliances seriously affected the growth rate of export during the year 1995 & 1996 of Malaysia exports particularly export
186 to Japan, U.S.A & the European Union, (9) because it was the greatest export market for the Malaysia from Jan 1998 the export displayed upwards trend in the Malaysian currency particularly in the sectors such as palm oil & rubber.
In this regard, the other most important issue related with private sector, as discourage the private consumption investment the high cost of the goods & the services are the main reason of the decrease in private consumption while on the other hand due to the lack of confidence on domestic economic also reduced the private investment, ownership of the publicly list companies of the foreign countries in selected Southeast Asian countries show in table no. 5.10.
Table No. 5.10
Foreign Ownership of the Publicly Listed Companies in selected Southeast Asian countries
Source: Juzhong Zhuang “Corporate Governance and Finance in East Asia” Asian Development Bank 2000 Manila, p- 26
In this dissertation, researcher also pointed out the reduction in expenditure and investment in the public sector as expected cutting in the expense on account of operation & cancellation of infrastructure & major projects in Malaysia, due to such crisis created in the field of investment consumption & expenditures the Malaysian government only expected the growth from net exports so in the year 1998 the growth in GDP estimated
187 at 0.9%, when the Malaysian government in the month of march 1998 estimated the growth rate at 2-3%, (10) the annual rates of growth in real gross domestic product per capita, 1973-96 showing in table no. 5.11.
Table No. 5.11
Annual Growth Rates of Real Gross Domestic Product per Capita, 1973-96
Source: Shahid Yousuf “Rethinking the East Asia Miracle” Pak Book Corporation 2002 Lahore p-2
One thing more, which researcher would like to mention here that the private sector expected the increase between 8% & 12% in the inflation rate in the year 1998 & 1999 because the growth in the rate of Malaysian country still in dangerous, the no of importers of the goods going less & the margin of the profit also gone low the Malaysian prices of goods services down & no more export cost expected to increase the fixed income earners tried to get high standard of living in Malaysia, in the year 1998 good increase found in the local & imported price.
At the end of 1998 the economic position slow down & the rate of unemployment was increased 4.5% - 5.5% which was 3.5% higher as per the announcement of the Malaysian government in the budget in March
1998 due to this inflation most of the corporate sectors suffered with shortage of money. (11)
188
The condition of the financial sector also down due to slow economic growth and high interest rate, the amount of total loan outstanding estimated at Malaysian Ringgit. 419.5 billion and at the end of march 1998 ratio of backer sector up to 9.1% hence due to low position of the Malaysian currency companies faced financial pressure, (12) it is factor that the banking system loans loss provision at the comfortable rate average 64.6% of the highest rate of loan corporate bonds bank lending and equity markets in selected Southeast Asian countries in 1997 shows in table no 5.12.
Table No. 5.12
Bank Lending, Corporate Bonds, and Equity Markets in 1997 in selected Southeast Asian countries
Source: Juzhong Zhuang “Corporate Governance and Finance in East Asia” Asian Development Bank 2000 Manila, p- 49
Researcher also pointed out that the slowdown of the economic growth at 4.5% i.e. during last 5 years the average of 8.9% and till the end of 1998 the inflate rate between 7% to 8% when the increase in the unemployment rate at 2-3% these at 2 million migrated workers, (13) the life expectancy in the selected Southeast Asian and other countries illustrated in table no 5.13.
Table No. 5.13
Life expectancy in selected East Asian and other countries
Source: The social implication of the Southeast Asian Financial Crisis – Korea development institute 1998 Korea p-10
189
The cut of 20% in the budget announced in the year 1998 has compensated by adding 3.7 billion Malaysian Ringet and the 18% available on account of assistance to the helpless groups suffered with crisis as well funds for the small farmers, (14) micro credit for the small businessmen, health development of skills training and higher education facilities, the audit literacy rate in selected Southeast Asian and other countries shows in table no 5.14.
Table No. 5.14
Adult literacy rate in selected Southeast Asian and other countries
Source: The social implication of the Southeast Asian Financial Crisis – Korea development institute 1998 Korea p-11
According to view that in the month of February 1998 the labour shortage were at 46900 vacancies in manufacturing sector and 36500 in the plantation sector, new graduated persons also face problem of unemployment in the labour marked. The Malaysian government had to face problem as under.
As per order the deduction will be made as 10% from the salary of
the minister 5% will be deducted from the salary of the civil servant,
when the ban imposed on the annual increment of the salaries of
higher grade of civil servants, and also decided not to employed the
labour force in the government organization various workers were
ice-appointed only on the basis of low wages.
190
The small and medium size of enterprises were hit on the deduction
in demand and high cost of the working capital need since the
month of July 1997 more than 2000 businessmen gone bank corrupt.
On dramatic assets deflation in the stock and property market were
economically in crises at the end of 1997 the stock market came
down 50% and at the end of 1998 the prices of the property may be
fall up to 40% household income from the assets.
The depreciation of Malaysian currency at 31.4% against trading
partner problem for the Malaysian household it is estimated that the
inflation rate increased by 7% - 8% in the year 1998 from 2.7% on the
year 1997 it is also pointed out that the household had to increase the
rate in the toll charges, city, bus, taxi and airline, electricity and
water rates from the private service provider in the year 1997 which
has made impact on the household lower income of urban areas.
It has also noted that decline of household income and increase in the medical fees i.e. made on the increase of imported drugs of 30% when in
60% of drugs using in Malaysia, in the number of patients seeking for the treatment are in between 15% to 50%, (15) on the announcement of the country budget health care shifted from private to public health care centre.
191
Another element found during the study that for the admission at 15,964 places available at the 10 public universities in Malaysia, in this respect
27,118 applications were received to the unit Pusat University in the year
1995, it is further pointed out that about 50 to 80 thousand Malaysian students studying abroad out of them 12, 794 students were sponsored by the Malaysian Government, (16) in the selected Southeast Asian countries means of enhancing control in the public listed companies Showing in
Table No. 5.15.
Table No. 5.15
Means of Enhancing Control in the Publicly Listed Companies in selected Southeast Asian Countries
Source: Juzhong Zhuang “Corporate Governance and Finance in East Asia” Asian Development Bank 2000 Manila, p- 27
In this connection, due to decrease in household and Government income and rising in the secondary education cost in out of the country, in public sector demand in abroad for secondary education was increased for the 40,222 seats in the year 112,000 applications were received, according to this that 64% of students looking for the admission in higher education in local institutions, (17) in selected South Asian countries the control of the public listed companies in 1996 as Shown in Table No. 5.16.
Table No. 5.16
Control of the Publicly Listed Companies in 1996 in selected Southeast Asian countries
192
Source: Juzhong Zhuang “Corporate Governance and Finance in East Asia” Asian Development Bank 2000 Manila, p- 26
Here researcher confidently mention that the growth in economic sector in the previous decade was the powerful competition on the urban sector, according to the official report during the first five months of 1998, as per report in the construction field found 768,400 employed person, the figure as gross under the representation migrated worker for which the expenditure was reduced, (18) such workers without any documents, particularly un-employment, wages cuts, non-payment of wages up to four months.
It is another interesting point to note down that the household were really hit by the crisis which included middle income professional with advance payment, the majority of the professional and the self employment saved, during the year 1985 many of them resorted to immigration and the labour markets of Singapore, Taiwan and Japan, the agricultural export and export value among Japan, China and other countries in the year 2000
Showing in Table No. 5.17.
Table No. 5.17
Agricultural Export and Import Value among Japan, China and Other
Countries in 2000
193
Source: Ippei Yamazawa “Towards ASEAN-Japan Comprehensive Economic Partnership” Institute of developing economic 2003 Tokyo, p-60
Supporting data illustrate that the Look East Policy (LEP) was important for the justification of the involvement of the Malaysian Government in the field of economy, it was started with the New Economic Policy in the year
1970 it have already been discussed in chapter three, it is fact that the adoption of Look East Policy given a new dimension in state interference in economy sector, the Japanese model operated in 1980 during Look East
Policy, (19) no doubt that the Japanese model enabled the defenders of the
NEP to disagree, as stated in the foregoing paragraphs that the damaged shape by the way of crisis was not compared with its neighbors due to successful straight of the Malaysian Government to secure these groups, therefore the defense of structure back to the old foundation of redistribution, so for this purpose guidance from the state needed to meet the international competition.
5.3 Reforms Measures by the Malaysian Government
Researcher stresses that the Banking system basically strong, while some of the financial institutions facing adverse development and problem continuously in the financial markets, due to recent reflection of stress as conducted by the Bank Negara as the Central Bank of Malaysia and given
194 the reasons that four Banks need re-capitalization under the conditions to comply with minimum 8%, as mention below.
All banking institutions to intensive and supervision with testing
their positions on monthly basis, so it is necessary for the Banking
institutions to take corrective actions.
On transparency of the financial system it is need that the Banks must
issue the data on key indicators of sound financial position.
Loan classification and provision standard in order to reflect the
international practice.
It is necessary that banking institutions to meet with the minimum
risk weighted capital ratio on the basis of every quarter.
Tight the guidelines on lending the single customer when the limit on
single customer will be reduced from 30% to 25% if total capital. (20)
As researcher aware of this fact that the Malaysian government conducted sixth of its trade with New Industrialized economic of Asia all the economics slow down due to crisis, due to Malaysian currency decline the real impact made on the trading sector of Malaysia presently the products of Malaysia as the powerful competitive in the international
195 market, it has noted that in the region of Malaysia other economics have the experienced market deprecation in the currencies, the percentage of share of agriculture in GDP Export Import and employment in ASEAN
2000 Shown in Table No. 5.18.
Table No. 5.18
Share of Agriculture in GDP, Export, Import and Employment in ASEAN,
2000
Source: Ippei Yamazawa “Towards ASEAN-Japan Comprehensive Economic Partnership” Institute of developing economic 2003 Tokyo, p-59
The next important issue is that the other issue as increased the competition between the countries in order to obtain market share of trade on the situation Malaysia likely to create trading links with the new market, another fact is that the South East Asia started to conduct internal regional trading with each other, it is also in line with ASEAN goal of reducing the shared trading conducted in U.S. Dollars, the percentage change in the gross domestic product in East Asia 1996-2001 Shows in
Table No. 5.19.
Table No. 5.19
Percentage Change in Gross Domestic Product in East Asia, 1996-2001
196
Source: Shahid Yousuf “Rethinking the East Asia Miracle” Pak Book Corporation 2002 Lahore p-3
On un-expected crisis calls for the re-assessment of the policy, this is consisting with the following facts.
The high increased in the prices of the food shown that the country is
depend upon the import of food due to neglect the production of the
agricultural which was in the year 1998 grown 0.9% and 633,753
hectares of agricultural land idle when on the imports of food spend
KM a billion, the above estimated given by the university Putra of
Malaysia in 1997. (21)
It is another aspect which has criticized on the cheap foreign labour,
as delay in the development of the high value and technological
industrial base the public also add the urgency and also demanded to
present the clear policy on the foreign labour.
The industry faced the water crisis which has now privatized due to
inefficiency and inequity and it is the great privatization of
infrastructural services can engender, such crisis have gained a new
edge.
The issue of water depends upon the excess industrial waste
pollution of rainfall flows area, in 1998 given the sharp relief.
197
the process of national investment not sufficient in the field of health education, skill training and housing, so in absence of adequate social society net for the poor person, it was the direct effects regarding the economic crisis, so required for the educated workforce and increasing closure of emigration and employment opportunities.
It can’t be avoided that the response of the Malaysian Government was characterized by three key decisions.
1. Ill-advised as attempts to effect upon the Malaysian market forces as
well as on the economy policy.
2. Without the assistance of IMF the Government of Malaysia turns
towards the macro-economic policy.
3. Decision of the Malaysian Government for capital controls for the
support of inflation of the financial system,
Other reason regarding the traditional policy response to the financial problems and need of assistance for the improvement of the issue through
IMF, so that to undertake economic and financial reforms and also possible to apply necessary macro-economic adjustment, Malaysian Macro- economic policy from 1995 to 2005 Shown in Table No. 5.20.
198
Table No. 5.20
Summary of Macro-economic Statistics for Malaysia, 1995-2005
Source: Islamic Economic Studies Vol. 9, No. 2 March 2002, p-9
It is also can’t be avoided that the Thailand and Indonesia going for the remedy of their weaknesses in this remedy Korea also included with these countries, but the crisis of their countries so in deep and found that it is out of control, so these countries decided to approach IMF for obtaining assistance to solve the crisis and agreed to follow the condition of IMF and had to implement the tight financial policies, enforce structural reformation in the financial field, Malaysian Government not contacted for the help to
IMF, (22) but made some efforts for a year to follow tight monetary policy, by raising interest rates, during the year 1990 to 1997 Debt-Equity Ratios of the corporate sectors as Shown in Table No. 5.21.
Table No. 5.21
Debt-Equity Ratios of the Corporate Sectors, 1990-1997
Source: Juzhong Zhuang “Corporate Governance and Finance in East Asia” Asian Development Bank 2000 Manila, p- 51
The supporting data illustrate that the Malaysian Government reduced the allowances of their employees, many foreign workers left, but without any tight financial policy and conventional tools improved the issue, (23) the
199 real economy indicators for Malaysian Government Shown in Table No.
5.22.
Table No. 5.22
Real Economy indicators for Malaysia
Source: Islamic Economic Studies Vol. 9, No. 2 March 2002, p-5
It is also pointed out in this study that due to the restriction process, the freedom of the beneficiary decreased. As the economical position of the
Malaysia was very weak, because the policy makers were agreed for the imposition of control on capital flow like a better solution, at one side the said decision was better, as required confidence in the new support for the liberalization.
Here it is emphasized by the researcher that in the month of February
1998 the Government of Malaysia announced for the securities commission to govern the distribution of share holding of the companies to include in
Kuala Lumpur Stock Exchange (KLSE), it is further add that the minimum number of shares is 750 or 1000 depend upon that the company’s paid-up capital less or more than the Malaysian currency of RM 100 million. (24) In the month of May, 1985 the Korean Government shown foreign equity ownership and liberal hostile of the foreigners in Indonesia and the related agency permitted to the companies for the additional equity directly to the public and not to the limited companies to offer the same directly to the
200 public, (25) in selected Southeast Asian countries ownership composition in
1997 Shown in Table No. 5.23.
Table No. 5.23
Ownership Composition in 1997 in selected Southeast Asian countries
Source: Juzhong Zhuang “Corporate Governance and Finance in East Asia” Asian Development Bank 2000 Manila, p- 24
It is noticeable factor that the finance committee recommended the code of corporate governance in the year 1999, (26) which was requires, that 1/3rd of the members of the Board for independent Directors and also recommended for the nomination of the payment committees consist with wholly or mainly non-executive Directors, the said code also made the additional function for the adult committee, financing of the Non-Financial
Public listed companies in the selected Southeast Asian countries as Shown in Table No. 5.24.
Table No. 5.24
Financing of the Non-Financial Publicly Listed Companies in selected
Southeast Asian countries
Source: Juzhong Zhuang “Corporate Governance and Finance in East Asia” Asian Development Bank 2000 Manila, p- 52
In this connection, researcher wish to highlight here that the above referred code also recommends that incase the board failed to take action
201 on the basis of finding of the audit committee, the Director of the committee as required under the listing rules of KLSE, it was directed for the increasing the position of nominee directors and voting by mails among other changes, during the month of march 1999 the KLSE imposed the restrictions on the number of directorship to extend the level of corporate governance according to this the Directors are not allowed to hold the position more than 25 Directorship, (27) in selected Southeast Asian countries ownership concentration Shows in Table No. 5.25.
Table No. 5.25
Ownership Concentration in selected Southeast Asian countries
Source: Juzhong Zhuang “Corporate Governance and Finance in East Asia” Asian Development Bank 2000 Manila, p- 22
It has pointed out that the amended securities industry act was enforced since 1st November 1998, according to finance committee report on corporate governance also recommend the code of the restrictions on the rights of voting of the controlling shareholders in related on connected directions in the companies act. KLSE imposed the restrictions on the number of directorship in the month of March 1999, the equality of information and the timeliness of announcement for the shareholders and the investors enhanced disclosure shares to protect the interest of the shareholder, specially the minority, in this respect the Financial indicators
1996-99 Shown in the Table No. 5.26.
202
Table No. 5.26
Financial Indicators 1996-99
Source: Islamic Economic Studies Vol. 9, No. 2 March 2002, p-6
5.4 Role of the Multinationals for the Rehabilitation after the
Crisis
Another dimension of this study regarding the reason for the recovery, which had to do the Malaysian economy re-structure, it is well managed area with the export of manufacturing, as this sector having great
Malaysian economy wherein the Multinationals Companies also playing vital role in the export of this manufacturing sector, the share in value added became higher than the threshold percentage of the first year Shows in Table No. 5.27.
Table No. 5.27
The First Year when the Share in Value Added Became Higher than The
Threshold Percentage
Source: Shahid Yousuf “Rethinking the East Asia Miracle” Pak Book Corporation 2002 Lahore p-63
Researcher realized it very much that in the year 1997 the manufacturing sector estimated at 36% of the total GDP and the export figures of the total
203 exports in Malaysian at 81% wherein the Multinational Companies contributed by way of electronics export in the year 1997 and the figures of amount as estimated at RM 80.8 billion i.e. 37% of the total exports in
Malaysian. (28)
Facts and figures can not be neglected that the role of the Multinational
Companies in the consumer electronics as well as in electronics industries estimated at 93% and 91% in Malaysia, (29) the presence of other industries with Multinational Companies, it is also important to note that the year
1995 on the basis of great role of the Multinational Companies found 73% of the total export, the L-sector share in value added became lover than threshold percentage in the first year Shown in Table No. 5.28.
Table No. 5.28
The First Year when the L-Sector Share in Value Added Became Lower than the Threshold Percentage
Source: Shahid Yousuf “Rethinking the East Asia Miracle” Pak Book Corporation 2002 Lahore p-63
To support the arguments, researcher would like to mention here that during the period of downturn and higher capacity in the cycle of the industry from 1996 to 1998 created the crisis in Malaysia, it is also necessary to add here that the value of exports in U.S Dollars declined from
78.7 billion U.S Dollars to 73.3 U.S Dollars during the period 1997 and 1998 and in the same year export volume increased by 1.1% (WTO 2001.3) but also 111% growth in electronics export in the country, when the exports to
204
ASEAN also low in the year 1998 at 19.2% due to European union and U.S increase at 4.2% and 8.3% respectively. (30)
In the light of depth study, researcher realized that the business relation of Malaysia and Japan in the economic field having great history than the
Association of South East Asian Nations, the member countries of ASEAN comprised with Indonesia, Malaysia, Philippines, Singapore and Thailand, it is forwarding to cover the entire South East Asia with the addition of five members.
According to researcher view that the South East Asian Nations given attention towards Japan, they have great pride that Asian nation has made on the top, in hte70s and 80s Japan was the leading character of East Asian economic development. It I no doubt that the Malaysia by way of overflow effects acquired Japan economic miracle.
The Multinational Companies of Japan have played great role through industrial networking for integrating the South East Asian economics top ten commodities exported to Japan by the ASEAN countries from 1996 to
2000 as Shown in Table No. 5.29.
Table No. 5.29
Top Ten Commodities that ASEAN Countries Exported to Japan, 1996-2000
205
Source: Ippei Yamazawa “Towards ASEAN-Japan Comprehensive Economic Partnership” Institute of developing economic 2003 Tokyo, p-61
One thing more, which researcher would like to distinguish here that the Malaysia and Japan sustainable integrated economically through the trade and investment, ASEAN and Japan as the group of the economic partnership which really contributed to the economic resilience of Malaysia and Japan. (31) ASEAN is the small region as compared with European
Union (EU) or with the North American Free Trade Area (NAFTA) except china, as the population of China is double, in selected East Asian and other countries five mortality rate, Shown in Table No. 5.30.
Table No. 5.30
Under five mortality rate in selected East Asian and other countries
Source: The social implication of the Southeast Asian Financial Crisis – Korea development institute 1998 Korea p-9
The concept of Malaysia to serve to go away from negative process about the willingness of Japan, the initiative process of Malaysia and Japan to be confident, not on the expense of US and Japan or US-ASEAN economic relation as the Malaysian and Japanese concept served as the model for others, top ten commodities as exported by Japan to the ASEAN countries in 1996-2000 as Shown in Table No. 5.31.
206
Table No. 5.31
Top Ten Commodities that Japan exported to ASEAN Countries, 1996-2000
Source: Ippei Yamazawa “Towards ASEAN-Japan Comprehensive Economic Partnership” Institute of developing economic 2003 Tokyo, p-62
Here researcher vision is very cleared to mention that the ASEAN having regional free trade area not only with Japan but such activities at present underway, hence researcher would like to highlight regarding comprehensive partnership in Japan, in this respect sated that the word of comprehensive not only cover all ASEAN countries and trades but also going all the way in the vertical sense, (32) the Japan make bilateral free trade area arrangements as done in between Singapore and Japan, total trade exports and imports and regional breakdown of East Asian Trade, average 1990-1998 Shown in Table No. 5.32.
Table No. 5.32
Total Trade (Exports plus Imports) and Regional Breakdown of East Asian Trade, Average for 1990-1998
Source: Ippei Yamazawa “Towards ASEAN-Japan Comprehensive Economic Partnership” Institute of developing economic 2003 Tokyo, p-92
It is further included that the tiredness of Japanese and ASEAN provide highly pertinent context for Malaysian-Japanese economic relations this
207 economic relations must go beyond trade and investment, in selected South
East Asian countries simple average applied tariff rate in Table No. 5.33.
Table No. 5.33
Simple Average Applied Tariff rate in selected Southeast Asian countries
Source: Ippei Yamazawa “Towards ASEAN-Japan Comprehensive Economic Partnership” Institute of developing economic 2003 Tokyo, p-13
The Asian financial crisis exposed the risks of the Asian countries, in fact that the economic relations in between Malaysia and Japan include with program for the post crisis. (33) There are various research conducted on the topic and think tanks both Malaysian and Japanese economic relation and
ASEAN cooperation among them can go on this way .
In view of the facts as described in this chapter it has found that
Malaysia suffered with the crisis economically and politically due to which this country faced great financial crisis, which also impact on a very large part of Malaysian business as well as Malaysian Chinese business, most of the Chinese businessman survived because they were not fixed in unconsidered over borrowing from the foreign source and had generally well managed enterprises due to joint venture with the Multinational
Companies.
208
References:
1. Human Development Report. (UNDP), table no. 15, 2000. p-210.
2. Pepinsky, Thomas. Institutions, Economic Recovery, and Macro-
Economic Vulnerability in Indonesia and Malaysia. Berkeley: Institute of
Asian studies, 2006. p-27.
3. Tourres, Marie-Aimee. The Tragedy That Did Not Happen. Malaysia:
Institute of Strategic and International Studies, 2003. p-193.
4. Chin, Kok. Fay. Malaysia’s Post-Crisis Bank Restructuring. Singapore:
Singapore University Press, 2004. p-206.
5. Tourres, Marie-Aimee. The Tragedy That Did Not Happen. Malaysia:
Institute of Strategic and International Studies, 2003. p-188.
6. Mathews, J. A. Strategy and the Crystal Crisis. California Management
Review, Vol. 47, No. 2. 2005. p-25.
7. Bank Negara Report. Kuala Lumpur: 1998. p-43.
8. Jomo, K. S. Were Malaysia’s Capital Controls Effective? Singapore:
Singapore University Press, 2004. p-178.
209
9. Huston, E. & Kearney, C. The Asian Financial Crisis and the Role of
IMF. JAPE, vol. 4, no. 3, p-408.
10. Khoo, Boo. Teik. Elections and Democracy in Malaysia. Bangi
Malaysia: University Kebangsaan Malaysia Press, 2005. p-23.
11. Bank Negara Report. Kuala Lumpur: 1998. p-89.
12. Gomez, T. Why Dr. Mahathir axed Dam. Far Eastern Economic
Review, 5th July, 2001. p-4.
13. World Development Report. (UNDP), table no. 17, 2000 / 2001. p-306
14. Lee, Poh. Ping. China’s Economy Rise and its Impact on Malaysian
Chinese Business. Singapore: ISEAS, 2006. p-177.
15. WTO Trade Policy Review: Malaysia. 2001. WT/TPR/S/92, p-3.
16. Ariff, Mohammad. The Malaysian Economic Experience and its
Relevance for the OIC member Countries. Islamic Economic Studies, vo.l
6, no. 1, p-37.
17. Ibid p-24.
18. Malaysia’s Billionaires Club. Malaysia: The Star, 10 February, 2007.
210
19. Khoo, Boo. Teik. Elections and Democracy in Malaysia. Bangi
Malaysia: University Kebangsaan Malaysia Press, 2005. p-26.
20. Case, William. Malaysia: New Reforms, Old Continuities, Tense
Ambiguities. University of Hong Kong, working paper series no. 51,
September, 2003.
21. Jomo, K. G. Malaysia from Miracle to Debacle. London: Zeb book limited, 1998. p-45.
22. Athukorala, P. Malaysian Trade policy and the 2001 WTO Trade
Policy Review. The World Economy, 2002. p-129.
23. New Straits Times. Kuala Lumpur: 25 July, 2000.
24. Ibrahim, Mansor. H. Co-integration and Granger Causality Tests of
Stock Price and Exchange Rate Interactions in Malaysia. ASEAN
Economic Bulletin, vol. 17, no. 1, p-37.
25. Ibid p-40.
26. Kawai, Masahira. The International Role of the US Dollar, the Euro, and the Japanese Yen in East Asia’s Exchange Arrangement. Kuala
Lumpur: National Economic Outlook, 2001. p-14.
211
27. The Social Implication of the Southeast Asian Financial Crisis. Korea:
Korea Development Institute, 1998. p- 333.
28. Athukorala, P. FDI in Crisis and Recovery: Lessons from the 1997-98
Crisis. Hill, H. and Lindblad, T.(eds), Australian Economic History
Review, 2003. p-20.
29. Tham, Siew. Yean. Malaysia: Managing FDI in a Globalizing
Economy (Asian Experience). Houndmills Palgrave MacMillan, 2004. p-
220.
30. Mathews, J. A. Strategy and the Crystal Crisis. California Management
Review, Vo.l 47, No. 2, 2005. p-25.
31. Ippei, Yamazawa. Towards ASEAN-Japan Comprehensive Economic
Partnership. Tokyo: Institute of Developing Economic, 2003. p-53
32. Ibid p-101.
33. Woo, Wing. Thye. The Unorthodox Origins of the Asian Currency
Crisis- Evidence from Logic Estimation. Asian Economic Bulletin, 2000. vol. 17, no. 9, p-130.
212
Chapter Six
The Characteristics of International Business in Malaysia
The study in this chapter on theoretical background and synthesis of foreign firms as operating under the Malaysian Government’s guideline, most of the Multinational Companies have done to improve the working conditions in developing investment having a great part of the host countries through free markets and macro stability create attraction for the broad investment, which also gives growth, technical transformation of technology and experts.
Multinational Companies have great source of finance particularly in such developing countries whose financial position is poor, the foreign investment also having important part in developing countries as well as
Malaysia. Malaysia is the main exporter and manufacturer of electronic appliances and main producer of oil, natural gas and other raw materials.
6.1. The Nature of Foreign Business Culture in Malaysia
Researcher would like to highlight that for the foreign investment,
Malaysia important region in the developing world, the Multinational
213
Companies invested the amounts more than forty countries and more than
3000 projects in the manufacturing area of Malaysia.
During the study, researcher found that the details the Multinational
Companies also encouraged for the employment in Malaysia, the foreign paid-up capital of U.S. Dollars 2 million for the manufacturing companies,
(1) in this respect, approval will be granted up to ten emigrant posts with five key posts and for the executive posts employed up to ten years, the manufacturing companies of Malaysia, approval for the employment of emigrant technical posts, R&D posts will be granted on the basis of request.
The passes on the basis of five years will be granted to the key post, (2) with multiple entry visa valid only during the tenure of their employment.
Supporting data illustrates that the Malaysian courts performed fair act for resolve the disputes, it is fact and on record that Malaysian is on the ranked 63rd in the ranking of World Bank’s Global, the Malaysian courts takes 600 days for the finalization, commenced from the date of filling the case, (3) in Malaysia in the year 2009 ranking for carrying on the business as
Shown in Table no. 6.1.
214
Table No. 6.1
Ranking in doing business in Malaysia in 2009
Source: Market report of Malaysia 2008 / 2009, Norwegian University of Science and Technology p-27
It can’t be avoided that on the basis of government preference policies connect the foreign investors with the local firms with foreign and domestic firms on Bumiputra partners at 30% in share capital, from 2003 particularly in the manufacturing field allowed total foreign ownership in
Malaysia because it is exempted from foreign investment committed guidelines, also permitted the foreign investors to take stakes in the telecommunication companies up to 61%, in shipping companies 70%, 51% in insurance and 49% in forwarding Agencies. (4)
Researcher also mentioned here that the Malaysian government advised to the foreign investors and Multinational Companies to follow the government policies and obtain licenses in the following fields.
For start of the company, the incorporation certificate must be
obtained with minimum two Resident Directors up to 30% of the
company equity hold by the Multinational Companies, in Malaysia
most of the companies registered in the capacity of limited
companies, such as limited by shares, guarantee and unlimited type
of companies.
215
Malaysian government allowed the Multinational Companies to
carry on the business in all the field except wholesale and retail
trade, for some business approved from Domestic Trade Division,
Ministry of International Trade and industry is necessary and also
Multinational Companies commission of Malaysia.
The government of Malaysia allowed the registration of sole
proprietorship under the Registration of Business ordinance 1965, (5)
but under this ordinance no foreign individual or Multinational
Companies can be registered.
Malaysia government also not permitted to the companies or the
foreign individuals for registration as the Partnership Company or
firm. (6)
There are partnership business but not less than two and not more than
2 partners under the Registration of Business ordinance 1965.
It is also pointed out during the study that for the purchase of property, the Multinational Companies must obtain permission from the foreign investment Committee, for the purchase of properties at the cost more than
216
100,000 U.S. Dollars the foreigners are welcome in Malaysia, in respect of easy registration process of property rank the Malaysian Government is
81st out of 175 countries for the investment, it is reported that the investment Rules applied under the promotion of investment Act of 1986 and industrial coordination Act of 1975, (7) it is also included in the report of the World Bank’s Ease of Doing Business that the setup of the business very easy in Malaysia as compared with other South East Asian Countries, the report of World Bank regarding Ease doing business in Malaysia in
2009 as Shown in Table No. 6.2.
Table No. 6.2
World Bank report of Ease doing business in Malaysia in 2009
Source: Market report of Malaysia 2008 / 2009, Norwegian University of Science and Technology p-27
From the financial point of view, it is historical fact that regarding financial position the Malaysian government is on the high rank from other popular FDI destination in the region, its mean that Malaysia is the leading country regarding protective regulations for the investors, for the correct procedures the Multinational Companies can take local representatives to assist in registration process, in the selected East Asian Countries as well as percentage of GDP from 1990 to 1995 net FDI Shown in Table No. 6.3.
217
Table No. 6.3
Net FDI in selected East Asian Countries including percentage of GDP from 1990 to 1995
Source: Foy, Colm “Investing in Asia” OECD development center 1996 p-219
Researcher feels that for the setup of company in Malaysia there are various practical issues and procedures requires to consider, there is government body i.e. companies commission of Malaysia same as the
International Business Registrar which is easier for the small firms to register, according to the companies Act 1965 and registration of Business
Act 1965 not allowed the foreign firms to do business in Malaysia without participation, the government made the setup in the name of Malaysian
Technology Development Corporation (MTDC) in 1992, (8) the former
Prime Minister Dr. Mahathir Bin Mohammad also launched Multimedia
Super Corridor in the year 1996 for the attraction of foreign technology companies and for the success in high technology manufacturing, (9) through this process the government seeks to forward the country up the value chain, as the part of Multimedia Super Corridor the former Prime
Minister of Malaysia Dr. Mahathir Mohammed opened Cyberjaya as the high technology area of 50 Kilometers outside the Kuala Lumpur in the year 1997. (10)
218
As a matter of fact, it is unavoidable factor that social responsibility concerns with Multinational, Corporate Social Responsibility (CSR) as the commitment of business and for improvement of equality of life of the employees and their families with local community, Bursa Malaysia i.e.
Malaysian News Papers have performed CSR survey in 2007. (11) The corruption rank of comparable South East Asian and selected countries
Shown in Table No. 6.4.
Table No. 6.4
Corruption rank of comparable Southeast Asian and selected countries
Source: Market report of Malaysia 2008 / 2009, Norwegian University of Science and Technology p-38
In this connection, It was found that corporation survey result in the poor category Showed at 11.5%, when 28.5% below the average and 27.5% in the average, (12) so in the above average remaining 32.5% of the companies, the area of diversity and environment need attention.
6.2 Chinese-Malaysia Bilateral Economic Partnership
In this Para, researcher would like mention regarding integration of
Malaysia in global economy, it is fact that who are seeking to critical of the government or reflective of the socialism failure, so these process surely push to invite the investment, generate the jobs and economic growth, in
219 this respect Foreign Investment Committee (FIC) play new role wherein the investors will make declaration that they will follow the conditions imposed from the Foreign Investment Committee, Here table no. 6.5 illustrates net capital flow of Malaysia from 1972 to 1985.
Table No. 6.5
Net capital flow of Malaysia from 1972 to 1985
Source: James, E. William “Asian Development” ICEG press 1987 p-149
The interesting point of the study is that the volume increased from 289 million U.S. Dollars in 1981 and in 1987 reached up to 557 million U.S.
Dollars then again in 1998 and 1183 million U.S Dollars in 1990, from the post cold war era China bilateral trade continuously grown up; the total trade in the year 1991 was 1.33 billion U.S Dollars and then increases up to
4.26 billion U.S Dollars in 1998. Singapore was overtook as China’s largest trading partner in the Association of Southeast Asian Nation first time in the year 2002, (13) China exported 1.5% i.e. 5 billion U.S Dollars to Malaysia.
Interesting aspect of this study is that the Government of Malaysia lifted the restrictions on the businessmen to facilitate the Malaysian businessman, who carrying on the business in China and Malaysia also released the control not insist the business delegation to China require official from the
Ministry of Interior, both the government singed Trade Agreement, (14) the frequency distribution of tariff rate imposed by Malaysia from 1978 to 1983
220
Shown in Table No. 6.6, the net capital flow of Malaysia from 1972 to 1985
showing in Table No. 6.6.
Table No. 6.6
Frequency distribution of tariff rate imposed by Malaysia from 1978 to 1983
Source: NAYA, Seiji “ASEAN Trade Area” ISIS Malaysia 1987 p-30
It is much cleared to mention here that the Exports from Malaysia to
China transferred from primary in 1970 to the manufacturing sector in
1990, it is further mentioned that 49.1% of electronic products 10.6% of
chemical and chemical products when the machinery appliances and part
as the main exports (405%) in the year 2001, the imports from China
depend upon the manufacturing field such as electrical and electrical
products at 52.7%, machinery, appliances and parts (7.2%) chemicals and
chemical products (5.5%) and textile and clothing 4.6%, (15) it evident that
Sino-Malaysian trade relations more complimentary in GDP from 1985 to
1993 energy indicator of Malaysia intensity Shown in Table No. 6.7.
Table no. 6.7
Energy indicator of Malaysia intensity in GDP, from 1985 to 1993
Source: Foy, Colm “Investing in Asia” OECD development center 1996 p-161
221
Another dimension of this study is that the economic cooperation in between Malaysia and China covered the field of trade, investment, defense, security, science, technology, health, banking, finance, education, medicine, transport, environment, mining, culture, tourism information, agricultural, forestry, and youth sports, both the countries made positive act investment, during the period from June 1993 to August 1994 about 49 investment agreements for amount of one billion U.S Dollars singed in between both countries.
It is unavoidable factor that the shifting process reflected the investment process in between Malaysia and China investment in Malaysia basically depend in metal and related sector at 39%, electronics and electrical 33%.
Light manufacturing 14% machinery and equipment at 8%, petroleum and chemical at 5% and non metal and minerals 3%, (16) Malaysian exports to
ASEAN countries by selected commodities from 1976 to 1984 Shown in
Table No. 6.8.
Table no. 6.8
Malaysian exports to ASEAN countries by selected commodities from 1976 to 1984
Source: NAYA, Seiji “ASEAN Trade Area” ISIS Malaysia 1987 p-59
In the year 1997 the investment was noted at 400 million U.S Dollars in
Malaysia, consist with real estate, manufacturing services and infrastructure facilities, Dr. Mahathir former Prime Minister of Malaysia of
222
during his tenure talked with Mr. Zhu Ronji Chinese Prime Minister on the
trade and investment in automobile, banking and soft tissue, so two
Malaysian companies, Lion Forest Industries and enterprise corporation
entered in an agreement, on the basis of Joint Venture the equity of the
Malaysian companies estimated at 60% when in the joint investment
project share of the Chinese company estimated at 40%,(17) in Malaysia the
comparison of simple averages of tariff rates from 1978 to 1982 as Shown in
Table No. 6.9.
Table No. 6.9
Comparison of simple averages of tariff rates in Malaysia, from 1978 to
1982.
Source: NAYA, Seiji “ASEAN Trade Area” ISIS Malaysia 1987 p-30
One thing more, which researcher would like to mention here that the
memorandum of understanding was signed in between the Ministry of
Environment Malaysia and china as the declaration of political objective.
Dr. Mahathir the former Prime Minister of Malaysia was sure regarding
successful strength in future because both the countries were very closed to
resolve the problems, according to the view of the Chinese Prime Minister
that there are no any dispute on any issue in between China and Malaysia,
(18) the summary of items excluded under across the board exchange in
Malaysia Shown in Table No. 6.10.
Table no. 6.10
223
Summary of items excluded under across-the-board exchanges in Malaysia
Source: NAYA, Seiji “ASEAN Trade Area” ISIS Malaysia 1987 p-25
It is interesting aspect is that in Malaysia and ASEAN states the FDI drop not necessary to be in zero, as in Malaysia the Multinational
Companies increase the FDI, it is fact that in Penang Malaysia specially in the field of electrical and electronics the Multinational Companies invested
60% amount of total exports in Malaysia when the other countries such as
Indonesia and Vietnam can compete with China due to their lower cost labour, (19) remittances of the worker received by Malaysian Government from the year 1995 to 2003 Shown in Table No. 6.11.
Table no. 6.11
Worker’s remittances received by Malaysia from 1995 to 2003
Source: Studies in trade and investment UNESCAP publications, 2005 New York p-30
It is noticeable point that in china the economic development will be in benefit in the relationship of the Malaysia and China it also noted that Dr.
Mahathir the former Prime Minister of Malaysia was concerned with China labour market which has weak FDI and he adopts the economic strategy to take the advantage of the positives, Ex Prime Minister took measures ranging from liberalizing visas, (20) given encouragement to the people of
Malaysia to study the Chinese language, changing Look East Policy to include beside Japan, learning from China etc, the average of annual net
224 foreign direct investment and shares of the total investment by Malaysia from 1967 to 1985 Shown in Table No. 6.12.
Table no. 6.12
Average annual net foreign direct investment and its shares of total investment by Malaysia fro, 1967 to 1985
Source: James, E. William “Asian Development” ICEG press 1987 p-138
6.3 The Role of Multinationals in Manufacturing Sector
It is researcher own view that in the last decade the economic targets of
Malaysian achieved by the manufacturing sector, plays the role like a engine for the growth, the capability of the manufacturing sector under the large Multinational Companies in Malaysia, but there are few companies who hold the technological development through direct or indirect transfer of technology from the Multinational Companies.
In this connection, researcher feels that the reduction in trade barriers and tariff on the basis of economic integration and World Trade
Organization (WTO), who given the opportunities to the small and medium firms to include in the foreign market, so by using the important strategy expanding their business in international markets, these enterprises also the source of improvement generating export opportunities and of future success, in the year 2007, (21) they contributed
225
4.3 billion RM i.e. 20% of the Malaysian gross domestic product in 1990 and during the period of 17 years increased 12%, (22) Malaysian merchandise imports from 1995 to 2003 Shows in Table No. 6.13.
Table no. 6.13
Malaysian merchandise imports from 1995 to 2003
Source: Studies in trade and investment UNESCAP publications, 2005 New York p-32
It is historical point to note down here that the increased in the total
GDP it is evident that Small and Medium Enterprises (SMEs) has the ability to make development in existing and new industries on comparing with other countries the Malaysian enterprises creditable contribution of share as Germany 57% share, (23) Italy 36.7%, Taiwan 31.4%, Japan 20.3% and
Republic of Korea share 16%, (24) the profile of the small and medium enterprise Showing in Table No. 6.14.
Table no. 6.14
Profile of a small-medium enterprise
Source: IPEDR vol.10 (2011) IACSIT Press, Singapore P-180
Researcher would like to intimates that mostly small and medium enterprises of Malaysia took part in the international business activities as the Malaysian market is small hence it is necessary to expend their market and obtain more and more revenue for the country, (25) for this achievement
226 these enterprises apply various methods and strategies, the cross tabulation analysis of small-medium enterprise Shown in Table No. 6.15.
Table no. 6.15
Cross tabulation analysis of a small-medium enterprise
Source: IPEDR vol.10 (2011) IACSIT Press, Singapore P-181
It is also pointed out that out of 109 companies 75% used mode of entry for export, (26) Small-Medium Enterprises (SMEs) are small in size along with lack of sources, so found that few SMEs were in position to use completely owned subsidiary because it is the most expensive method, so there are some small-medium enterprises (SMEs) for such expansion, (27) in this respect another profile of small-medium enterprises Shown in Table
No. 6.16.
Table no. 6.16
Profile of small-medium enterprises
Source: IPEDR vol.10 (2011) IACSIT Press, Singapore P-180
During the study, researcher has found that the government of Malaysia having experience to promote the automobile industry specially national
Auto production sector, in this respect the Malaysian government applied the policy of tariff and non-tariff for the survival of automobile industry hence this industry in position to achieve the higher point in the
227 production i.e. half million units of vehicle in the year 2002, there are two national auto manufacturing company i.e. PROTON and PERODUA contributed in the vehicle production, (28) this industry face the challenges from neighbor countries specially from Thailand, therefore these two auto manufacturers with the cooperation of Multinational Companies took proactive measures, the rate of import duty on various automobiles by engine capacity percentage wise Shown in Table No. 6.17.
Table no. 6.17
Rates of import duty on various automobiles by engine capacity percentage wise
Source: Journal of Economic cooperation 27.1 (2006) p-106
To support researcher arguments, it is intimated that the automobile industry is one of the largest manufacturing sector in the world, 10% of
Japanese and American output and employment fulfilled from this industry, in Japanese manufacturing share employment and exports estimated at 7.4% 6.2 per and 17.9% in the year 1980, the total number of employment of the European Union’s 12 members countries at ECU 80 billion and 1 million workers the Germany, (29) France, Italy, Spain, and the
United Kingdom are the top five producing countries, this sector contributed 20% to its GDP and surplus amount of the region trade estimated at ECU 22 billion in 1991. The income of the automobile stock is expected as faster of the income level, it is also direct and indirect links
228 with other sectors, (30) the percentage of the new structure of duties on vehicles for the CBU units as Shown in Table No. 6.18.
Table no. 6.18
Percentage of new structure of duties on vehicles for CBU units
Source: Journal of Economic cooperation 27.1 (2006) p-106
It is another point to note down that the Malaysian government involved in the promotion of the automobile industry, researcher has already mentioned in the previous chapters that New Economic Policy was implemented in the year 1971 and the Malaysian government represented the great role for the promotion of automobile industry, here the commodities as imported by the Malaysia from 1976 to 1984 Shown in the
Table No. 6.19.
Table no. 6.19
Malaysian import commodities from 1976 to 1984
Source: NAYA, Seiji “ASEAN Trade Area” ISIS Malaysia 1987 p-60
Supporting data illustrate that the new process effected in the year 1980, main purpose of the Malaysian automobile industry, specially through the small and medium firms, for the development and promotion of the automobile industry, the Malaysian government has introduced different
229 policies mainly national car project, (31) the percentage of the new structure of duties on the vehicles for CKD units Shown in Table No. 6.20.
Table No. 6.20
Percentage of new structure of duties on vehicles for CKD units
Source: Journal of Economic cooperation 27.1 (2006) p-107
Researcher also distinguish here that the Malaysian government appreciated the participation of the Bumiputra in the automobile industry and for the investment, in the year 1970 Malaysian government considered to issue the licenses to the new assemblers on the condition to allocate more and more shares to Bumiputra or installation of assembly plants in the rural area on the investment of the State Economic Development
Corporation, (32) the government also promote economic development specially in Sabah and Sarawak as the part of new assemble companies such as Sarawak Motor Industries, the Pernassime Darby Holding, a holding company its controlled company was established in the year 1972.
(33)
It is further mentioned that Permodalan Nasional Berhad as the trust agency of the government and individual Bumiputra obtained the shares in two Chinese Dinubatd Cinoabues, i.e. UMN Toyota Motor sdn. Bhd, in the first national automobile company i.e. proton the government backed company HICOM sdn. bhd at 70% of total equity of the government, the
230 remaining shares taken by two Japanese Companies such as Mitsubishi
Corporation and Mitsubishi Motor Company at 15%, in the year 1992 the said company was hold the membership of Kula Lumpur Stock Exchange, its share holders were HICOM holding as Estimated at 26.0% share holding and other local and Multinational Companies at 41.38% share holding, (34) the local content program for passengers and commercial vehicles from
1992 to 1996 Shown in Table No. 6.21.
Table No. 6.21
Local content programme for passenger and commercial vehicles from
1992 to 1996
Source: Journal of Economic cooperation 27.1 (2006) p-108
Researcher would like to intimates that Malaysia gives incentives under promotion of investment Acts 1986, there are nine assemblers, four manufactures, three composite body sports car makers, 23 franchise holders.
As during the period of Malaysian Independence Automobile production was under 100,000 units and contributed several assemblers, from the year 1986 to 1988 the automobile sector was seriously in crisis because the production of passengers and commercial vehicles under the
85000 units and after recovery of economy position in 1987, Malaysian
Government automobile production gone up in the year 1991 and the
231 production level increased up to 200,000 units, (35) the status of margins of performance extended by the selected South East Asian countries of 1996 a
Showing in Table No. 6.22.
Table no. 6.22
Status of margins of performance extended by selected Southeast Asian countries of 1996
ource: NAYA, Seiji “ASEAN Trade Area” ISIS Malaysia 1987 p-23
The next critical issue is that the production of automobiles gone high position on the basis of powerful economic performance in 1997, the auto production estimated more than 400,000 units; (36) it has been already mentioned in the last chapter that in July 1997 the economic crisis hitted the production of passengers and commercial vehicles, on slow down in construction and general business activates affected the sales and purchase agreements and also increase in the rates, other cause was the contraction of the capacity utilization of automobile industry from 88.2% in 1197 to
35% in 1998 but thereafter found increase in the production and in the year
2002 gone more than 450,000 and received demands for new vehicles from the market, (37) the procedures and the products of Malaysian automobile
Shown in Table No. 6.23.
Table no. 6.23
Malaysian automobile procedure and their products
232
Source: Journal of Economic cooperation 27.1 (2006) p-111
As a matter of fact, it is unavoidable factor that two national companies
PROTON and PERODUA being the large procedures of the automobile industry in Malaysia, both these companies produced 79% of the total manufacturing of vehicles, inspite of domination of four national automobile firms the business relationship still exists in between national and non national producers except INOKOM and MTB, (38) in the year 2002
PROTON and PERIDUA produced 91% of the total passengers vehicles as compared with non-national producers at about 9%, against the production
41.3% of national automaker the non-national producers produced 58.7% of the total commercial vehicles, the automakers of Malaysia recently produced more than 200,000 and 100,000 units of vehicles, during the period from 2000 to 2002, the total production were dropped 100,000 and
7,000 units per year of national and non-national producers.
It should not be neglected that more than 80% of the local automobile production for the local market when remaining 20% of passenger and commercial vehicles exported, United Kingdom, Germany and France were the top three markets for the (39) exports of passenger cars, when the USA,
Taiwan and Singapore were the top three markets for the exports of commercial vehicles, during the period 1997-1998 the export value of passenger and commercial vehicles increased upto 61% on decreased of
233 export volume 3%, (40) the export ration for Japanese and US in Malaysian from 1975 to 1982 sector wise Shown in Table No. 6.24.
Table No. 6.24
Export ratio for Japanese and US affinities in Malaysia from 1975 to 1982 sector wise
Source: James, E. William “Asian Development” ICEG press 1987 p-144
The supporting data illustrates that presently fourteen international automakers i.e. General Motors BMW Mercedes Benz, Ford, Toyota, Nissan
Honda and Mitsubishi established the manufacturing plants in the country for the export of vehicles, (41) 36% CBU production was exported to ASEAN
South Africa and America in 2000, (42) presently expected half million unit production to hit one million units of 2005 i.e. 362,100 units for passenger cars 579,000 units for pickups and 50,900 units for trucks, it may be give some strength to Thailand in passenger cars production and also challenges to the national automakers so they have to cooperate with
Multinationals automakers, (43) as PERODUA control already in the hands of Japanese Daihatsu, (44) Proton have entered into agreement with German automaker Volkswagen AG(VW) on 26 October 2004, (45) it increase the production and market of the national car company and also use the
Proton resources for jointly design and development of cars in Malaysia.
Table No. 6.25
234
Income tax rates in selected countries including Malaysia for manufacturing and services sectors
Source: Foy, Colm “Investing in Asia” OECD development center 1996 p-216
6.4 International Investment in Services Providing Firms
Here it is emphasized that on the basis of revolution of technology and advancement in communications, transportation and information technology broken the trade barriers, and also at present on the fast promotion of Multinational Companies in service sector has changed the domination in international business, in the year 2007 the trade in service of 23% of total international trade and 65% of total World FD1 as contributed in the service sector by the Multinational Companies, (46) the net inward portfolio equity flows to Malaysia from 1995 to 2003 Showing
In Table 6.26.
Table No. 6.26
Net inward portfolio equity flows to Malaysia from 1995 to 2003 (Billions of
US Dollars)
Source: Studies in trade and investment UNESCAP publications, 2005 New York p-27
235
No doubt that on the basis of high income and income growth Malaysia is most successful newly industrialized country, wherein the service sector is the main part played in national economic development, in the year 2008 service industries produced Malaysian GDP at 46% and labour force involvement at 51%,(47) at present the main source of Malaysia on outward direct investment, the FDI flows in the year 2008 more than 14.06 billion
U.S Dollars, the total FDI stock found equivalent to 30% of GDP, the net inward FDI flows estimated at 8.05 billion U.S Dollars, (48) from 1995 to 2003 net inward foreign direct investments in Malaysia Shows in Table No. 6.27.
Table no. 6.27
Net inwards foreign direct investments to Malaysia from 1995 to 2003
(Billions of US Dollar)
Source: Studies in trade and investment UNESCAP publications, 2005 New York p-26
It is noticeable factor that the worldwide strategies of Malaysian service firms is necessary gives cooperation to the policy makers in respect of future practice and international market developments, (49) main object of the research to explain the behavior and decision for the international expansion, (50) from 1995 to 2003 net inwards debt flows (Billion of U.S
Dollars) to Malaysian Shown in Table No. 6.28.
Table no. 6.28
Net inwards debt flows to Malaysia from 1995 to 2003 (Billions of US
Dollar).
236
Source: Studies in trade and investment UNESCAP publications, 2005 New York p-28
In this connection, researcher would like to highlight here that for suitable entry process the firms shall follow the procedure in order to get best return from the Multinationals operations, the economy of Malaysia is increasing, lot of Malaysian companies include in the International
Markets, as well as increase in overseas resources.
6.5 Japanese Investment in Malaysia
It has pointed out that the Malaysian and Japanese Governments having friendly and cultural partnership and investment links since long time, on the basis of Look East Policy of Malaysian and Japanese firms investment maintained good business relationship in between Malaysia and Japan, as the Malaysia is main economic partner of Japan and having solid and close business relationship in between the two countries and going on more stable day by day. It has also pointed out that in the year, Japan was the third biggest export country for the Malaysia (at 10.4 billion U.S Dollars i.e.
11.2% of the total export) and also the great source of import (estimated at
14.2 billion U.S Dollars i.e. 17.8% of the total imports) when the Malaysian was also the top ten trade partner in the field of export as the partner of
Japan. In the year 2002 Malaysia exported industrial goods to Japan of
86.6% when for the remaining 13.4% exported agricultural, (51) forestry and fishery goods, net private flows to Malaysia from 1995 to 2003 (Billion of
U.S Dollars) Shown in Table No. 6.29.
237
Table no. 6.29
Net private flows to Malaysia from 1995 to 2003 (Billions of US Dollar)
Source: Studies in trade and investment UNESCAP publications, 2005 New York p-25
Researcher realized it very much that during the period from January to
September 2003 Japan was on the rank of second greatest investor, in this tenure according to the estimate of ministry of International Trade and
Industry Malaysia, the number investors from Japan to Malaysia for 12% of the total investors, further add here that 1337 companies participated with
Japanese capital out of these, (52) 554 companies are the members of Japan chamber of Trade and Industry Malaysia and employed 220,000 people in manufacturing sector in Malaysia, (53) for the free trade agreements also perusal in order to increase the strength in the region, for the achievements such benefits the partnership agreement in between ASEAN and Japan and in between ASEAN and China has been executed, (54) the net capital flow of
Malaysia from 1970 to 1985 Shows in Table No. 6.30.
Table no. 6.30
Net capital flow of Malaysia from 1970 to 1985
Source: James, E. William “Asian Development” ICEG press 1987 p-153
Another dimension of this study that for economic partnership bilateral contact is very much necessary, because there is great chance for business relationship in between Japan and Malaysia, Japanese exports given the views on the impact of macro-economic partnership in between Japan and
238
Malaysia, the real GDP of Japan increase at 0.08% i.e. 3,404 million U.S
Dollars when the Malaysian real GDP increase Shown at 5.07% i.e. 5,379 million U.S Dollars, for the export the changes in trade volume at 0.29% and for import at 0.06% in Japan, when 5.24% for import and 5.31% for export in Malaysia, (55) the net inwards short terms debt flows to Malaysia from 1995 to 2003 in billions of U.S Dollars as Shown in Table No. 6.31.
Table no. 6.31
Net inwards short-terms debt flows to Malaysia from 1995 to 2003 (Billions of US Dollar).
Source: Studies in trade and investment UNESCAP publications, 2005 New York p-29
In addition, researcher would like to distinguish that on the request of
Japanese Malaysia maintained high tariff rates on automobiles and spare parts, electrical machinery, iron and steel and textiles, (56) Multinational
Companies of Japan maintained their business in all over the ASEAN region, the Malaysian government suggested for the joint consultation for the technical assistance and cooperation under the Japan-Malaysia economic partnership Malaysian government also appreciated on the partnership with Japan in agricultural projects, productions, processing and marketing of the products, Japanese government offered for conducting the meeting in Japan and Malaysia, (57) the Japanese and US
239 foreign direct investment in Malaysia from 1976 to 1984 sector wise as
Shown in Table No. 6.32.
Table no. 6.32
Japanese and US foreign direct investment in Malaysia from 1976 to 1984 sector wise
Source: James, E. William “Asian Development” ICEG press 1987 p-142
Ground realities cannot be neglected that the Japan government looking for the other countries in the region of ASEAN and also interested to include elements in investment rules, the Government of Japan also appreciated for measures direct investment in the manufacturing and service sector, (58) but there is restrictions on present foreign direct invest and non-manufacturing sector, the merchandise export of Malaysia from
1995 to 2003 in Billions of U.S Dollars Showing in Table No. 6.33.
Table no. 6.33
Merchandise exports of Malaysia from 1995 to 2003 (Billions of US Dollar)
Source: Studies in trade and investment UNESCAP publications, 2005 New York p-31
To support researcher arguments, it is felt that the Malaysia stated that investment rules should address concern of not only multinational but also
240 domestic investor Japanese business also introduced the efforts of transfer of technology.
In the light of depth research work, researcher intimates that the
Japanese intention to incorporate business environment encashment for the expansion business activities in Japan and Malaysia it is necessary to execute the economic partnership the business sector of Japan mentioned about some items for maintaining better business environment in Malaysia, the employment related matters, human resource development and government administrative services procedures for the change of the process as well as the improvement of advance tax payment system, (59) labour and other costs in the selected South East Asian Countries from 1992 to 1994 Shown in Table No. 6.34.
Table no. 6.34
Labour and other costs in selected Southeast Asian countries from 1992 to
1994
Source: Foy, Colm “Investing in Asia” OECD development center 1996 p-216
This is researcher observation that the Malaysian government noticed that he establishment of group to allow the private sector involvement, (60) the government shared on the need to continue the discussion on this issue.
The Malaysian government proposed to work with the Japanese counter parts in the development of industries.
241
Therefore in view of the above facts it is mentioned here that the development in manufacturing and services sector of Malaysia since the last two decades has facilitated, it is also pointed out that in this chapter most of the links between the Multinational Companies and local firms need to more stronger in order to fulfill the global economic challenges.
242
REFERENCES:
1. Yanagihara, Toru. East Asian Development Experience. Tokyo: Institute of Developing Economies, p-175.
2. Kasper, Wolgang. Malaysia: A Study of Successful Economic
Development. Washington: American Enterprise Institute for Public Policy
Research, 1974. p-36.
3. The Europa World Year Book 2004. London: Europa Publication, p-2772.
4. Vasey, R. Lloyd. ASEAN Positive Strategy for Foreign Investment.
Hawaii: The University Press, 1978. p-105.
5. Yanagihara, Toru. East Asian Development Experience. Tokyo: Institute of Developing Economies, p-177.
6. Davidson, J. Paul. Investment in Southeast Asia Policy and Law.
Singapore: Butterworth-Heinemann, 1997. p-98.
7. Vasey, R. Lloyd. ASEAN Positive Strategy for Foreign Investment.
Hawaii: The University Press, 1978. p-104.
8. Dixon, Chris. Southeast Asia in the World-Economy. Cambridge:
Cambridge University Press, 1991. p-186.
9. Mohammad, Mahathir. Bin. Dr. Multimedia Super Corridor. Negara
Malaysia: Pelanduk Publications, 1998. p-8.
243
I0. Ibid p-10.
11. Davidson, J. Paul. Investment in Southeast Asia Policy and Law.
Singapore: Butterworth-Heinemann, 1997.p-139.
12. Anti-Corruption Policies in Asia and the Pacific: the Legal and
Institutional Framework. Manila: Asian Development Bank, 2004. p-39.
13. Dixon, Chris. Southeast Asia in the World-Economy. Cambridge:
Cambridge University Press, 1991. p-226.
14. Ibid p-226.
15. Thoburn, John. Multinationals, Mining and Development: A Case
Study of Tin Industry. Hampshire: Gower Publishing Company, 1981. P-
61.
16. Ibid p-30.
17. Yamazawa, Ippei. Toward ASEAN-Japan Comprehensive Economic
Partnership. Chiba: Institute of Developing Economies, 2003. p-78.
18. Stiglitz, Joseph. E. Rethinking the East Asia Miracle. Lahore: Pak Book
Corporation, 2001. p-57.
19. Foy, Colm. Investing in Asia. Development Center of the Organization for Economic Co-operation and Development, 1996. p-224.
20. ASEAN the Next 30 Years. Bruxelles: World of Information 1998, 1998. p-72.
244
21. P. L. Chee. Small Industries in Malaysia. Kuala Lumpur: Berita
Publishing Sdn. Bhd., 1986. p-19.
22. P. P. Mc-Dougall. International Entrepreneurship: The Intersection of
Two Research Paths. Academy of Management Journal, Vol. 43, 2000. p-
147.
23. F. C. Own Small and Medium Industries in Malaysia: Economic
Efficiency and Entrepreneurship. The Developing Economies, vol. 28,1990. p-39.
24. C. Harrie. and L. B. Chye The Role of SMEs in National Economies in
East Asia. Elgar :Cheltenham, 2002. p-75.
25. W. J. Burpitt. and D. A. Rondinelli. Small firm’s Motivations for
Exporting: To Earn and Learn? Journal of Small Business Management, vol. 38, 2000. p-11.
26. J. Johnson. and J. E. Vahlne. The Internationalization Process of the
Firm: A Model of Knowledge Development and Increasing Foreign
Market Commitments. Journal of International Business Studies, vol-8,
1977. p-25.
27. J. L. Calof. Adapting to Foreign Market: Explaining
Internationalization. International Business Review, vol. 4, 1995. p-117.
28. Darina, Osman. How Far is the National Automobile Prepared Itself.
Dewan Ekonomi, 2003. p-22.
245
29.. Automobile and Components Parts Industry. Kuala Lumpur:
MACPMA Directory 1996-97, 1996. p-7.
30. Malaysia Mid-Term Review of the first Malaysia Plan 1966-70 Kuala
Lumpur, 1969.
31. Malaysia, Interim Review of Development in Malaya under the
Second Five Years Plan. Kuala Lumpur. 1963 p-5.
32. Aslam, Mohammad. Tariff Reductions and Trade Performance: A
Case of Malaysia. Kuala Lumpur: MEc Dissertation, University of
Malaysia, 1993. p-201.
33. MITI, Malaysia’s Implementation of WTO Agreement on Trade
Related Investment Measures. vol. (2), 1999. p-10.
34. Rosli, Mohd. National Car II Dewan Masyarakat. April, 1994. p-17.
35. Terai, Maya. Asian Auto Market has Dropped 30% from its Peak to 4
Million Units. Asian Automotive Business Review, vol. 10, no. 3, 1999. p-6.
36. Wells, Peter. and Micheal, Rawlinson. The New European Automobile
Industries. London: St.Martin’s Press, 1994. p-100.
37. Rosli, Mohd. Entrepreneurship, Economic Development and the
Automobile Industry: A Study of the Asian Model and Malaysian
Experience. Kuala Lumpur: Ph.D Thesis, University of Malaya, 2004. p-295.
246
38. Soon, Zi-Hur. Making of the Detroit of Asia. Asian Chemical News,
Malaysia, p-10.
39. Mutoh, Hiromichi. The Automobile Industry: In Ryutaro Komiya et al
(eds) Industrial Policy of Japan. California: Academic Press inc., 1988. p-
307.
40. Smitka, Michael. J. Competitive ties: Sub-contracting in the Japanese
Automotive Industries. New York: Columbia University Press, 1991. p-18.
41. MITI, (Malaysia) International Trade and Industry Report. 1995-96. p-
228.
42. UNIDO, Malaysia: Sustainable the Industrial Investment Momentum.
United Kingdom: Basil Blackwell Ltd, 1991. P-21.
43. Torri, Takashi. Changing the Manufacturing Sector, Re-Organizing
Automobile Assemblers and Developing the Auto Components Industry under the New Economic Policy of Malaysia. The developing Economies, vol. XXIX, no. 4, 1991. p-120.
44. Kazumi, Goto. The Main Issue of the East Asian Miracle: the World
Bank Report as Assessment by UK Critics. OECF Journal of Development
Assistance, vol. 1, no 1, July, 1995. p-17.
45. Ueno, Hiroya. The Automotive Industry of Japan in Kazuo Sato (ed)
Industry and Business in Japan. New York: ME Sharpe inc, 1980. p-139.
247
46. S. Z. Ahmend. The Internationalization Process of Third World
Multinational Firms: A Study of Malaysia’s Government-Linked
Corporations. International Journal of Business Research, vol-8 (5), 2008. p-
39.
47. I. Ekeledo. Foreign Market Entry Mode Choice of Services Forms: A
Contingency Perspective. Journal of Academy of Marketing Science, vol.
26 (a), 1998. p-275.
48. F. F. Clairmont. Malaysia: the Unstoppable Tiger? Economic and
Political Weekly, vol. 29 (37), 1994. p-219.
49. J. H. Dunning. Trade, Location of Economic Activity and the Men: A
Search for an Eclectic Approach in the International Allocation of
Economic Activity. London: B. Ohlinet al ed, Macmillan, 1997. p-118.
50. S. Z. Ahmed. and P. J. Kitchen. Transnational Corporation from Asian
Developing Countries: the Internationalization Characteristics and
Business Strategies of Sim Darby Berhad. International Journal of
Business Science and Applied Management, vol. 3 (2), 2008. p-26.
51. Turbull, Peter. Buyer-Supplier Relations in the UK Automotive
Industry: Strategic Implications of the Japanese Manufacturing models.
Strategic management Journal, Vol. 13, 1992. p-159.
52. Sadler, David. The Geographic of Just-in-Time: Japanese Investment and the Automotive Components Industry in West Europe. Economic
Geography, vol. 70, no. 1, 1994. p-40.
248
53. Mirza, Hafiz. Multinationals and Growth of Singapore Economy.
London: Croom Helm, 1986. p-83.
54. J. Johnson. and L. G. Mattson. Internationalization in Industrial
System: A Network Approach. London: Croom Helm, 1988. p-194.
55. ASEAN the Next 30 Years. Bruxelles: World of Information 1998, 1998. p-72.
56. Kojima, K. Japan and a New World Economic Order. Tokyo: Chaeles E.
Tutle & co., 1977. p-143.
57. Matsumoto, S. Southeast Asia in a Changing World. Tokyo: Institute of
Developing Economies, 1979. p-144.
58. V. Papyrina. When, How, and With What Success? The Joint Effect of
Entry Timing Mode on Survival of Japanese Subsidiaries in China.
Journal of International Marketing, vol. 15 (3), 2007. p-89.
59. Yamazawa, Ippei. Toward ASEAN-Japan Comprehensive Economic
Partnership. Chiba: Institute of Developing Economies, 2003. p-75.
60. Vincetcable. Developing with Foreign Investment. New York: Croom
Helm, 1987. p-102.
249
Chapter Seven
Conclusion
In this chapter, researcher made on standard empirical research procedures, started from the profile of the respondents and also covers empirical findings as interpreted in view of existing theories and secondary information.
In the foregoing chapter discussed regarding Multinational Companies dynamic role as managerial, marketing, technical skills, research and development, economic growth of host country foreign exchange flows, employment, human resources development, cultural Knowledge and protection, it is also identify the vital role of Multinational Companies in
Malaysia, international trade, Joint Venture in between the Multinational and national firms, franchise and supply of the technology.
7.1 Interpretations of Survey:
There are two Groups i.e. multinational managers and multinational customers for targeted survey, in this respect it is found that there are 66% non Muslims multinational managers and 44% are the Muslims, in the educational sector only two managers of multinational having doctorate
250 degrees, 17 managers of Master Degree and 32 having College degree, in the residence sector there are 32% of Multinational respondents stayed in
Malaysia more than 15 years, when 20% stayed more than 10 years, and
22% are in Malaysia since more than 5 years when the others less than 5 years.
In Malaysia there are 185 multinational customers out of which 38% are non Muslims and 62% found of Muslims, in the educational fields 16 multinational customers having doctorate degrees, 32 are holding Master
Degrees, 131 are college degrees when the other 6 respondents are under- graduate, regarding staying percentage it has found that 25% customers residing in Malaysia more than 15 years, 25% more than 10 years, 23% are more than 5 years when the others less than 5 years.
7.1.1 Cultural Issues:
Hypothesis: The Multinational Companies carrying on the business in
Malaysia must be well aware regarding Islamic cultural and ethical values, the Muslim respondents more related regarding the importance of these values.
Findings: In fact the findings of this research consisted with the view that Multinational Companies Managers and other groups agreed with
Islamic cultural and ethical values are very much important to be understood by Multinational Companies for business or investment in
251
Malaysia and for the culture local cultural and ethical values to be understood for the same purpose, in this study no difference found in the categories of the respondents related with Multinational Companies
Managers, the result of Multinational Companies customers found on the high Scale of rating from 5 to 7.
Generally Multinational Companies Managers and MNC Customers in cultural and ethical variable on high scored without any difference in the field of education, religious and period of residency in Malaysia but differ in the perceptions in both the groups for usury, according to result that chi- square value regarding religious background at the score.01 level which clearly shown that difference in Muslims and non-Muslims based on the perception.
In respect of religious background the average of Muslim Managers are
5 when on 7-1 bipolar scale non-Muslims are 4, as per the test the difference in Muslim and non-Muslims perceptions not statistically
Significant, from all over it has pointed out the residence of the MNCs managers so longer in Malaysia, the prohibitions of red meat importance must be in the knowledge of Multinational Companies and for the
Managers having score 5, regarding red meat Muslims scored 6 nos. when the non-Muslims having 4 numbers.
During this study researcher found that it is very much necessary for the
Multinational Companies to know the respect and kindness to the women
252 as other cultural variable wherein multinational managers scored around 6, so it has came to know that Multinational Companies Managers agreed with the matter of respect and kindness to women, and further pointed out that Muslims and non-Muslims Managers of Multinational Companies have no difference in the perceptions of the importance of respect and kindness.
Analyses and Clarification: In this study positively showing the Islamic teaching appeal to the different persons as well as Non-Muslims, the long stay people in Malaysia know how the Muslims are attached with Islam they believed that religion of Islam is providing complete and better way for the life without any difference of race, colour and social structure, which is fully proof from the Holy Quran and Sunnah.
Researcher has already referred that selected cultural and ethical values analyzed completely, the Multinational Corporations interested for planning and carrying on the business in the Muslim countries such as
Malaysia as they well know about the Islamic Culture, it is further mentioned that the business transactions, must be executed through the contracts in writing duly signed by the concerned parties and the witness.
All the Businessmen interested to established the Business in Malaysia or any other Muslim Country, must follow the basic business legal ethics, both parties in business protect their business from bribery, because in
253 view of religion of Islam the robbery and bribery major offense, also forbids all the illegal business process.
It is no doubt that the red meat prohibited in Islam as referred in the foregoing paragraphs and all the Muslims are agreed, as the food whatever scarified on stone, by killing headlong fall, not allowed to the Muslims to eat such food, so the Multinational Companies having well knowledge about the prohibitions of food, hence can’t offend the Muslim Customers these companies will run their business if they research and take knowledge that what the Muslims customer want.
The hard working is also important in Islam, encourage the charity to the real needy and poor person and discourage the begging practice, the compensation and reward system for the workers on the basis of merit, and contribution in the business allowed in Islam, salaries to the employees must be paid within the time period as fixed by the employers, five times regular prayer is also the main part of Islam, as well as pay Zakat to the needy person and perform fasting and Hajj in the prescribed month.
The Multinational Companies Managers perceptions based on their own ethical values, for example the Manager of Multinational Companies are the smokers without their religious backgrounds as it is their practice, but also prohibited in Islam because it is bad practice for his personal Health but also bad effects on the health of other persons, the self freedom at limits
254 laid down in the Holy Quran and Sunnah, Islam also protect the human right.
In the principle and practice the status of men and women is equal moral and religious duties of men and women also same, inspite of exceptions, it is favor the women, under particular position in menstruation periods Islam has exemption to the women in religious duties such as prayer and fasting, also free to perform prayers in the mosque, in Islamic religion given her regard in the role of household, mother and wife, she have allowed to get education and attend in the various fields such as medicine, Nursing, Midwifery, Social Science and natural Sciences.
It is agreed in this study the importance of agreement of Islamic cultural values and ethics must be understood by the Multinational Companies, in the Arabic term of Allah i.e. one and only True God, all things and all humans are created on the heavens and on the earth by Allah including
Moon, Sun, Stars, Planet all other animate and inanimate, Allah is not only the God of Muslims but also the absolute Lordship of the entire universe a referred in the Holy Quran and the Sunnah.
The Muslims and the non-Muslims having needed that Islamic value to be understood by the Multinational firms, the positive perceptions of the
Islamic cultural and ethical values of the Non Muslims respondents also explained the fact as the majority living in Malaysia for more than five
255 years, it is further noted that all the respondents of Multinational
Companies managers and customers are educated.
It can’t be denied that few Muslim Respondents given the need for the
Muslims and non-Muslims as referral by Holy Quran and Sunnah, so if the people having better knowledge of true Islamic teaching the opposition of
Islam will not be success in their bad motives, as the Muslims having all the time remember and fear Allah by righteous and pious. No doubt that the true Muslims are the assets and no any liabilities to any societies so it is the truth for the Muslims and the Islamic culture, as operating by the
Multinational Companies in the South East Asia and other Muslim countries.
It is found during the study that the Customers of Multinational
Companies related for the importance of the Islamic cultural and ethical values must be understood by the Multinational Companies than
Managers of the Multinational Companies, as 62% of the customer respondents are Muslims and believed on the verses of Holy Quran that
Islam is the perfect and complete religion.
Hypothesis: Non-Muslim Multinational Managers of Malaysia having few knowledge of cultural religious and ethical values.
Findings: It has found that except of religious field, non-Muslim
Multinational Companies managers of Malaysia understood the Malaysian
256 cultural and ethical values, according to the customer that non-Muslim
MNCs managers no knowledge regarding the doctrines and beliefs of
Islamic religion.
Analyses and Clarification: It is noted that except of religious field
MNC non-Muslim managers in Malaysia having the knowledge of Islamic cultural and ethical values as explained their long period of residence in
Malaysia and it is pointed out that more than 50% stayed in Malaysia for 10 to 15 year period.
It has also pointed out that during the month of Ramadan in Malaysia the working hours decreased from eight to six working hours and also the
Muslims who during this month spend more time at night in special prayer and reading the Holy Quran hence the business starts one or two hours late, the Multinational Companies adjust their working hours, the non-
Muslim not eat anything at public place and gives respect to the Muslims during the fasting period.
It can’t be avoided that culture difference significant and trouble for the
Multinational Companies, in South East Asia the Islamic culture is distinctive, there are opportunities for the foreign company who are interested to carry on Business in Malaysia.
257
Hypothesis: The effect on the local society of the western values brought due to the presence of Multinational Companies, the perception differs to some extent from those of the local Respondents.
Findings: Generally the findings negate the above hypothesis; the
Mangers of MNC having scored 5 on the bipolar 7-1 scale, when on the given response scale Muslims Managers scored 4 the non Muslim
Managers of Multinational Companies scored 6, on education 50% of Ph.Ds perceived the impact of the western value on the society as positive when the other 50% have its impact on the society as negative master degree of
19% have impact of western values on the local society as positive when the 25% impact as positive, 19% of Master Degree have impact of the western culture on the local society as negative when the 13% un-decided.
Analysis and Clarification: On the positive impact of local society of the western values due to the presence of Multinational Companies shows completely it is noted the western values of hard work, efficiency and time consciousness as considered by the Respondents in Positive way on the local society, the local requirements for the contemporary approached to the production, management, finance and marketing must have been considered in positive manner of western values.
It has indirect survey result that Multinational Companies operates as per the needs nature and demands of the local society in Malaysia, infarct the majority of the respondents are educated and they are Muslims.
258
7.1.2 Competitiveness of Multinational Companies.
Hypothesis: MNC by virtue of advantages in the field of Marketing,
Management, Finance and technology, some of them globally and some are the locally oriented.
Findings: it is confirmed that the competitors of the Multinational
Companies as functioning in Malaysia in economic, management, marketing and technology, the test value also found not suitable, on the 7-1 response scale score of 4, the Managers of the Multinational Companies indifferent with the feed stock role in competitors of the Multinational
Companies in Malaysia, the combined percentage in MNCs production in
Malaysia is so good at 79%, when 15 years and above at 66%, 10 to less than 15 years at 50%, 5 to less than 10 year at 66% and below five years, according to survey that 70% of Muslim Managers stated that the product system of Multinational Companies is very good and only 6% of Muslim
Managers stated as good , when 39% non Muslim managers stated that the product system of Multinational Companies in Malaysia very good and
29% of non-Muslim Manager declared that it is good, when other indifferent respondents of Muslim Managers at 6% and non-Muslims
Managers 21%.
Analysis and Clarification: There are various reasons of the impact of influence of the competitors of the international firms, it has identified four
259 parts of the inter-linked impacts on the local firm of a country to complete effectively in international markets, the Respondents found the advantages of the Multinational Companies in the field of Management, Marketing and
Finance, so on the response scale of 7-1 given the score of 4. One of the reason that various respondents were from multinational firms and not owned the production branches in Malaysia.
It has also discussed in Chapter No.3 about the emersion of direct foreign investment across the world, the tradition production i.e. Land
Labour and the money determine the competitors advantage.
It has found the combined view on the international capital in the literature, the competitive international industry contact to allow for the cooperation between the firms.
Hypothesis: There are globally and locally oriented Multinational
Companies operating in Malaysia, the global scanning of MNC a operating in Malaysia under the influence of number of variables.
Findings: In Malaysia some Multinational Companies operating as globally oriented on the basis of integration and coordination when the other on the basis of global they also important in the global activities and local culture, the Managers of the Multinational Companies found the culture as the important impact in the activities of Global Scanning of
MNCs.
260
Analysis and Clarification: The Global Company operates with the product and services as related with global and fulfill the universal requirements, the electronic products capacitors resistor fall under the universal products, when some products requires marked specific, known as the local pressures i.e. differences in the need of customers, differences in the distributional channels need to adopt market structure as well as host Government demands.
According to researcher views the business of the Multinational
Companies in the South East Asia reflect the combination of global integration as well as local response, however it is based on the nature of demand in each market, it is fact that various markets having own requirements, therefore the need for the responsiveness.
It have been positive contribution of global scanning ability of the
Multinational improved the transportation services, computer network, they are in position to provide these services directly or indirectly, through these services it helps to identify the opportunities threats and other information for the Multinational Companies.
This study is based upon to find out that no doubt the culture is important factor in the activities of global scanning of Multinational
Companies, as they are able to identify the difference of cross culture also have to take awareness regarding culture and cultural differences in the
261 national and organization, the nationals i.e. Muslims and Japanese having true value and qualities of trust, hard work, teamwork, consensus, shared the responsibility, loyalty, as the necessary parts of any successful partnership.
7.1.3 Problems Caused and Faced by the Multinational
Companies
Hypothesis: In Malaysia the presence and the operations of
Multinational Companies as assessed by the host constituents, the understanding of the Manager of Multinational differ from the local respondents.
Findings: As per the survey of customer came to aware number of economic and non-economic problems the Managers of the Multinational
Companies differ from the customer, Multinational Companies created fourteen problems.
The problems on the part of the Multinational Companies such as environment pollution un-necessary competition with the local industries, foreign exchange great out flow, profit repatriation, discrimination in employment, favoritism, materialism, perpetuation of colonial mentality and local culture distortion Multinational Companies Mangers only agreed on two problems, i.e. great outflow of foreign currency and profit repatriation on 7-1 bipolar scale scored 5 particularly in these two problems
262 for the distortion of local culture caused by MNCs as compared in between
Muslims and Non-Muslims found the Muslim customers on the positive side of the scale at 69% , out of them 32% agreed on the distortion of local culture due to Multinational Companies, when 05 level reflecting the difference in the perceptions of respondents.
Analysis and Clarification: There is no doubt of the contribution to human welfare across the globe, the instruments of negative externalities affect the lives of many people’s it is fact that from the multinational production there are many problems of pollution as well as sea, lakes, steam and pollution of air.
This study illustrates that on these problems strong protests have been made against the Multinational for dumping industrial wastes United
Nations Environment Program has obtained all the parties as well as enterprises or the companies as involved in the production, management and distribution.
7.1.4 Contributions of Multinational Companies to the Host
Country
Hypothesis: the multinational having the positive contributions with host country socio-economic developments and economic growth, the understanding of the Multinational Companies manager differ from the multinational customers.
263
Findings: it has been agreed by the Respondents with the positive contribution to the host country’s socio-economic developments and overall economic developments and economic growth as 82% of the
Mangers of Multinational Companies agreed and responded positively, when no decided by 16% Managers and the 2% on the Negative side, not found any differences in the perceptions of the Respondents, 82% Muslim
Managers of the Multinational Companies found on the positive side of agree-disagree scale, and 82% of the Non-Muslim Manager on the negative side.
As mentioned by the respondents of the Multinational that they have contributed positively to Malaysia facing the factors i.e. foreign exchange flow, transfer of technology, Management skills, Marketing skills, human resources development, supply of technologies, employment of local nationals country’s economic growth and investment and contribution to the National infrastructure.
Analysis and clarification: Multinational Companies global made contributions as one or another benefited way every society, in the capacity of agents in the field of transfer of Technology, advance research for technology and development, the activities of Multinational R&D resulted in improved consumer welfare across the world, Multinational Companies are completely responsible for increasing all aspects of business life including electronic Banking, satellite communication facilities, best
264 electronic infrastructure state of Art communication network services i.e. internet, transport and logic services and all other facilities in the interest of human being.
It is further stated that the opposition persons of the Multinational
Companies having doubt about the previous industrial and commercial development, due to which they supported the strikes, boycott and violence against the Multinational Companies. The Multinational
Companies all the time welcomed as the partner in Malaysia.
There is way wherein the Multinational Companies through the transfer of technology contributed to the development of the host nation, in
Malaysia the Foreign capital investment Law encourage the foreign investors needed technology by Joint Venture, various Malaysian private entrepreneurs as well as the companies interested for the joint ventures with the foreign countries business, according to the principle the transfer of technology occurs in such market the owner or the supplier transfer the technology to the buyer or licensee all the necessary information for the transfer.
The owners of technology of the Multinational Companies contribute with the host country’s field of employment, capital and directly and or indirectly productivity, the Multinational firms also provide efficiency gains to the host country regarding more efficient technical, Managerial,
265
Marketing or the productivity skills to the local firms, the host nation will acquired the direct benefits from the foreign direct investment.
The study also showing the positive role of the Multinational
Companies in the developing manpower skills, in the scientific, technical and managerial fields, it is also pointed out that in the host countries the existence of Multinational have favorable effect on the competitive process of the host country, it will also support the proposition that the existence of powerful Multinational Companies entrants hold indirect efficiency gains to the host country.
7.1.5 Positive efforts of Multinational Companies during Asian
Financial Crisis in Malaysia
Hypothesis: it is fact that when the Asian Financial crisis hit the region, the Multinational Companies played the vital role in the rehabilitation of Malaysian economy and performed Export-oriented role in the operations in Malaysia, the Malaysian economy swiftly recovered as compare with any other region with help of Multinational Companies.
Finding: Both the groups of customers and Managers of the
Multinational Companies mutually agreed on the role of the Multinational
Companies particularly during the period of crisis, to reduce the circular death during the crisis of currency provided export pointed out put, the
266
88% of Multinational Companies responded on the positive side, no decision from 10% side and 2% on the Negative side.
Analysis and Clarification: In the field of export oriented the
Multinational Companies played best role, particularly in the export of electronics items and joint venture in between Multinational Companies and Malaysian firms, it is found that the large size of the Malaysian economy and Multinational Companies having possess upon the
Manufacturing sector.
As no doubt that through the over flow effects the Malaysian economy has gained the experience from the Japanese economic miracle, it is evident that the crisis of currency the Japanese Multinational Corporations operating in Region also performed great role in Malaysian economy through the industrial networking, these MNCs also executed value added in the consumer electronics, it is also mentioned that the other industries with the higher Multinational Companies existence also noted smaller contractors of output and employment.
7.2 Researchers Recommendations Related to the Role of
Multinational Companies in Malaysia
267
1. It will also cooperate with new generations of global managers and
the employees, bearing in the mind the clear trend for the interior
disciplinary education in the 21st century, the idea of redefine the
international dimension of business school curricula applies and
other disciplines i.e. social sciences, arts, humanities and physical
science, so the universities and colleges may consider the possibility
of the Islamic culture in the general college being taken in the first
two years of college work, it is to undertake the future researches on
the subject of international business in the South East Asia.
2. The Muslim business, Political and Academic leader are duty bound
to convey the message of Islam and Islamic culture to non-Muslims,
it is the importance as given the South East Asian Region in
International business, existing international business including
elective on the Islamic culture as per the authentic teaching of the
Holy Quran and the Sunnah.
3. Due to the reason for the economic backward of the Islamic world,
Islam has been misconstrued, so for the international community to
appreciate Islam and clear it from all the misconceptions attached,
The Malaysian missions or the Embassies overseas require the new
expatriates, as well as those employed by the MNCs, who working
in Malaysia to attend brief orientation on the Islamic culture, as the
268
option every Malaysian Embassy may have its own Islamic Affairs
dept that will have an expanded mission.
4. If the Malaysian companies determine to enhance competitiveness in
today’s dynamic Business locally and internationally, ass the local
companies may aim to go beyond the domestic operations.
5. The present technology as obsolete at the certain point in time in
future, the possibility for the local company to produce parts or
services as the critical factors for smooth function of the joint
ventures business also required to be explored as the part of
agreement.
6. It is necessary to obtained the Business relationship in between the
Malaysian and foreign partners, the Joint Venture agreement also
appreciate the foreign company to commit for the regular supply of
Marketing and related information it is further concern the
provision in the Agreement requiring the foreign company in order
to provide man power and execute development training programs
to the local staff.
269
7. The advantages are quite diverse also include financing capability,
financial system, product management, marketing system,
technology and other assets, the local partner seeking the
concessions from the multinational firm on the issues of human
resources development , and research of Marketing, the Malaysian
companies ask the Government of Malaysia to acquire the
multinational business to participate actively in R&D Activities.
8. The Muslim countries to learn how the Multinational Companies
played the great Role in the economic development, it is further add
that if the Muslim countries determined to minimize, firs they need
to pool their own financial, human and physical resources to
maintain best institutes of technology and Research centers, the
Muslim world undertake for the high technology R&D activities
with the cooperation of Multinational Companies, leading
universities and special technology institution and implement on
sound import policy for technology and products.
9. In the recent years the world has witnessed the development of
foreign direct investment and increasing spread of Multinational
business, there are lot of multinational firms tend to reserve key
management and staff positions, it will be the advantageous in
Malaysia of Multinational firms to employ the qualified and
270
experience hand Muslim Manager, particularly in Islamic culture
and Islamic economic, in policy making, planning, strategy and
implementations of Islamic oriented business projects will be
mutually beneficial.
10. The business growing slowly leading the world to concept of the
global community, in fact these challenges including cross-border
differences in economic, political, social, cultural and religion
conditions, their Managers and the employees need intensive cross
cultural training.
As far as economic development of Pakistan is concern, researcher recommends some suggestion for improvement of economy of Pakistan in the context of Multinational operations.
1. To become a developed country, Pakistan shall have to improve its
social structure Pakistani nation shall have to march forward, taking
simultaneous progressive steps in each and every walk of life. They
will have to bring positive changes in fields like economy, politics,
spiritualism and civilization.
2. To wipe out feudal way of thinking, educational system of the same
nature should be implemented, so that like Malaysia, even an
271
ordinary citizen can easily receive the highest level of education. It
will also help in eradicating such evils like poverty, illiteracy and
quota system.
3. A democratic society should be formed with the base of consultation.
So that religious extremism is eradicated, and society with strong
ethical values can be formed.
4. Small industrial units should be encouraged so that such men are
included in production industries then a network of such industries
could be established all over the country.
5. In Pakistan an institution namely economic equality, with branches
all over the country should be established wherein people speaking
their own language and dialect, relating to all races and sects should
be given work according to their abilities will be able to offer their
services for the betterment of the nation as well as the country.
6. Multinational Companies should be bound to take part in productive
activities. The, however, should be extended all facilities, so that
modern technical know-how could be transferred to Pakistani
industries. Thus Pakistan’s industry could be self-sufficient in
modern research and production.
7. Steps should be taken to establish a prosperous society which should
be strong and stable so that Pakistan could challenge developed
countries at international level.
272
8. Before acting as vanguard against the war on terror, the other
countries of the world should be compelled to waive of all the debts
due along with the interest accrued thereon, so that the heavy burden
on Pakistan economy could be reduced / wiped out.
9. Agricultural tax should be imposed so as eradicates arrogant feudal
thinking and behavior and make the layman powerful so that a
realistically democratic, liberal minded and progressive society
emerges. Such a social system which should be able to share future
progress of country.
10. Pakistan should have such a social system which should not serve
some vested interests or spin around the welfare of the state. It may
be able to assist in large scale social welfare programs and
establishment of a powerful family system.
7.3 Areas of Further Research
All the related areas of research and sampling method need to address properly in future also include to get required data and information of the problem, it is in the interest of the Malaysian Government to create the environment for the foreign investors.
It is further add here that the possibility of bias that the required dada information not be obtained for some units of sample, it is fact no response
273 is very import issue, so one who may attempt to minimize no-response bias by increasing the number of cases surveyed, it is further to say that for the maximize questionnaire return, require the assistance of skilled data gathers.
It is necessary to take the issues of sampling survey design and obtaining maximum questionnaire return, another area of future research is to replicate the cultural aspect, for the comparative basis, apply other
South East Asian countries i.e. Brunei, Indonesia, Philippine, Thailand and
Vietnam or any other Muslim developing countries i.e. Turkey, it will provide help in better understanding of Islam and also to obtain the competitive advantage.
It is also noted that if cover the broad and diverse the value chain of the
Multinational the research will be more meaning full and international business will became more challenging and rewarding.
274
7.4 Conclusion
It has been planned by the researcher to follow-up that Multinational theories and paradigms, as emerged from individual and group researches for more than last three decades, as yet no single theory and so-called miscellaneous paradigm of the international production, at present the
Multinational theories as stated by the scholars are meaning full in explaining the cross border production of the international firms as carrying the business in other developing countries, North America and other countries in the world.
According to the researcher as given in the arrived of cross border Joint
Venture, that some scholars claim that it is not require the development of the new Multinational theory.
It is further stated that there is no any large international firms as wholly owned or independent international production branch in Malaysia, it is very strange to find as single multinational enterprises which have no joint venture across the National boundaries, the dominant form of the international business in Malaysia in Joint Venture.
Researcher would like to distinguish that inspite of Joint Venture or the
Alliance the international trade is other field, not taken by the contemporary theories of international production.
275
It is also necessary to mention here that the Multinational firms has to deal with the external markets as per requirement of the market, its service international trade will continue to grow, according to the report of the
United Nations regarding the multinational firms account for the bulk of international trade volume is the Government in the host country target encourage or to permit the foreign firm for the establishment of the manufacturing branch without any national equity.
Researcher found in this study that Multinational not in position to hold own manufacturing in a foreign country, the foreign government investment conditions may be discourage the multinationals, there are various Multinational Companies have finalized the joint ventures with the partners of Malaysia, it is fact that Joint Venture, international business,
Licensing and Consulting, alternative to the multinational enterprise. The investment option as elected is supposed to add value to the multinational value chain.
According to the findings that the Managers and Customers of the
Multinational Companies without giving the preference of Education and religious background and period of Residence in Malaysia, first the
Multinational Corporations must have the knowledge and importance of
Islamic cultural and ethical values, in order to get cultural aggressive advantage in the world market, so the Multinational Companies having awareness of Islamic culture, possible to get more and more aggressive advantages in the Malaysian Market.
276
It is a great and remarkable result of the study that Managers and the
Customers of Multinational Companies are alert for the cultural needs, values and the Malaysian people sensitiveness it has noted that he Muslims have complete satisfaction with multinational based goods and services or business in Malaysia peacefully, they follow the Islamic Law, the religious
Muslims are expected to resist any dishonesty from their culture.
In this study the Respondent group of Muslims and non-Muslim looking the importance which is for the awareness about the local but also need for the Multinational Companies to consider for planning and decision making, it has also found in the study that in Malaysia the success of the Multinational Companies positively related with the awareness of local culture, so on the basis of Holy Quran and Sunnah the Multinational
Companies must understand Islamic culture.
In this dissertation, researcher tried his level best to collect appropriate
Information on Islamic culture which is based on the Quran and authentic
Ahadith / Sunnah. Literature on theories of Multinational Companies
(MNCs) and secondary data on Southeast Asia particularly in Malaysia and multinational business in the country were gathered from libraries and public institutions in Malaysia, Libraries of Saudi Arabian Universities and
Pakistan.
277
It is also mentioned by the researcher that Malaysia is marvelous heaven for foreign investment having pleasant environment for investment under umbrella of good governance along with long term sustainable policies of the government of Malaysia.
Researcher expressed that Multinational Companies are core tool of international trade, implementation of high-tech research and development, heavy flow of investment, shifting of technology, and massive trade between modern economies. Researcher examined that developed countries are beneficiaries from MNCs while less developed countries still facing poverty, lack of infrastructure, conditional capital flow, none transfer of technology, and political interferences by the
Multinational Companies, Researcher has also discussed history of economic growth in the presence of multinational companies and some social issues of Malaysia as well.
Researcher illustrates that the Malaysian government has launched New
Economic Policy that has positively affected the economy in term of income growth, employment growth and resources allocation, attraction of foreign investment and the result-oriented composition of export and import.
Together with specific policies launched to benefit the lower income groups, poverty reduced significantly and income distributed equally that helped to become Malaysia as Asian Tiger from the economic point of view
278
Researcher distinguished that the Malaysia had suffered economically and politically turmoil at initial stage of the country, as a result this country had to face marvelous financial crisis as badly as some of its neighbours. Its economy contracted but recovered soon after in part because of the steps taken by the government to stabilize the economy, and in major part because of the large role the multinational Companies in Malaysia as export-oriented and value-added activities, especially in the export of electronics, The crisis also had an impact on a very big portion of
Malaysian business, including Malaysian Chinese business. Many big
Malaysian Chinese businessmen survived because they were not fixed in unconsidered over-borrowing from foreign sources and had generally well managed enterprises because of the joint-venture affiliations with
Multinational companies.
As per researcher point of view, Malaysia’s growth in manufacturing and services sector over the last two decades has been facilitating by a considerable entry of foreign capital of Multinational companies, because
Malaysia provides Multinational Companies with a stable, profitable environment but it does not means that this country fully dependent on
Multinational companies, further it is also examined in this chapter that most of linkages between Multinational Companies and local firms need to more stronger in order to meet global economic challenges as well.
279
Appendix 3
Southeast Asia Desires New Attitude to the Multinationals: A Supplementary Analysis
Researcher would like to highlight here that the difference in between the Multinationals of under developed countries’ government, this paper confines to South East Asia, the sources of the foreign investment are diverse than in other region. The French, British, German, American,
Japanese and the Chinese competing with one another, even as South East
Asian countries maintain their independence through holding the ring, it is not expect a change of behavior on the part of the MNCs.
For the assessment of importance of investments climate on the decisions of the companies, the factor as classified according to the order significance
(I) Political and economic stability
(II) Stable and disciplined labour force
(III) Access to local finance
(IV) Ready availability of foreign exchange
(V) Stable currency value
(VI) Existence of a good joint vent partner
(VII) Government incentives, particularly taxation and
280
(VIII) Duty-free imports
In case of resource-tied or local market tied investments the factor that
tax incentives affected his decision.
It is very clear to illustrate that the American Subsidiaries in South
East Asia over all return based on the U.S Department of commerce data, the receipts of profit interest, royalties band technical management at 25%, it is further mentioned that the rate of return most of found as attitude of mind, (Stiglit, E. Joseph. 2005: 96) it is also based upon the assumptions, the setting of prices in between affiliate companies is need, and the determination of royalties and other charges performed by Multinational
Systems for reflect the services.
Motivational Patterns of Investment
The ability of the MNCs to maintain the resources to respond with the flexibility and migration to new conditions to maintain and develop the raw material supplies and process the category of Motivations underlies only 20% of the projects sample, the MNCs in their attempts to maintain the control on the required minerals, (H.Crouch. 1996: 222) fuel and selected agricultural products supply, various countries of the region impose sever restriction in the exploitation of natural resources by foreign investors.
281
It is distinguished by the researcher that most of the investors decided merely to fear of the loss of the local Market, during the year 1950 and 1960 the Markets of the South East Asia were protected by exchange controls and tariff barriers, (Darina, Osman. 2003: 22) it is also cheaper to establish projects due to cheap labour, availability of raw material transportation cost.
As due to develop low, cost bases for export purpose, it is important to note here that the industries as decided to run way from their home base and also establish the production facilities in the South East Asia, there are various factors i.e. the cost of the components tended to reduce with the rapid development of technology, in the year 1960 the cost upto 11 U.S
Dollars when it was down to fifty cents by 1960’s with the development of integrated circuits around 1968, (Fryer, W. Donald.: 297) the cost of the components meant that a gradually higher proportion the final product came from the labour charges, but these firms could not run away without various breakthroughs in telecom and in shipping, permitting centralized control from the headquarters and reduction in the costs of transport.
A: The Motivational Patterns by Host Countries
It is reveal the county wise bias which generally reflects the labour costs, transport cost investment climate in the individual of South East Asia, as the Thailand and Malaysia have received main projects with local market
282 in Mind, recently there has been growth in foreign export, have shifted the emphasis to the export promotion through export incentives, free trade zones, Indonesia is attracting mainly from raw material oriented projects but the number of local Market-Oriented projects established during 1960.
(John-Wong. 1980: 49)
B: The Motivational Patterns by Investing Countries
Researcher claims that It is also attempt to bring the importance attached by the USA, Japan and Europe to the various categories of the
Motivations, as the low cost oriented motivation appears to become more significant for USA, as for Japan, East Asia still remains a favorite site for its run way industries because of geographical proximity and historical ties, South East Asia can compete favorable with East Asia for greater share of these investments, but with success in Singapore, European multinationals, specially Dutch and German, as appear to be more convinced of the advantage of exporting companies and know-how instead of goods, the American and the European multinationals invest in raw material exploitation basically for the profit, the Japanese for the long term strategic reasons of their organization.
It is fact that foreign investment direct effects by employment generated, inflow of capital, it will be in the great interest of the host country through competition in local markets cultivating dynamic and outward, training of
283 labour, create good relationship in between capital, exporting and the host countries, it has pointed out that it is depend upon the reaction of various interest group to the stimulus of foreign investment and on the ability of the country, so it is difficult to generalize overall influence of the foreign investment, therefore review of these effects and the issues will give few interested insight for the formula of strategies of the foreign investments.
Resource-Oriented Investments
These investments prospered during the colonial regime when the raw material i.e. mining and plantation constituted the colonization, and the contribution in national product to foreign exchange earnings and revenue, as well as skills and employment etc. (J. H. Dunning. 1997: 118) There are foreign rubber planters having private research centre in Malaysia, on the research in these crops increase the productivity and this technology given the benefit to the small businessman of the Malaysia but also benefited to the growers of rubber and palm oil in South East Asia, the main source of the conflict in between the host country and the foreign investors i.e. problem of distribution of gains, no doubt that being the owner of resources having the rights to collect the rent to the value of resources, as per present study it has pointed out that South East Asia has not done to capture the rents from the mineral exploitation with the exception of
Petroleum in Indonesia, so it is cleared that the knowledge of resources give the strength to the bargaining condition of the country.
284
Low Cost Base Oriented Investments
It has revealed that the Singapore and Philippines concentrated on these investments, there is no more to gain from the transfer of technology, when the process of the production identified as un-skilled labour intensive, no any linkage to be expected because it is new type of industry and minimum connection with other economic activities of the country, it is fact that these investment fully independent from the location of raw material and local market, (Allen C.G. 1957: 103) the foreign investors are in position to request for concession of tax incentive the benefit of generating employment and foreign exchange carefully weighed against the cost of revenue loss and heavy cost to cover the expenditures.
In order to extend the social benefits of the investments the MNCs and other foreign investors likely to intensify the activities in South East Asia, these countries will decide that how to direct investments of MNCs that is consistent with the National goals, how to reduce technological dependence and build up local capacity and how to make sure that the transfer of new values would not be socially disruptive.
Local Market-Oriented Investments
During the tenure of 1950 and 1960 it was found that local market- oriented investments to be the most important factor which could help in the industrial field of the South East Asia, in this respect various facilities
285 were offered to these countries for foreign investments in manufacturing and protection of market. It is further reveal through this study that due to local market, the effect of technology transfer not found in the South East
Asia, as the large number of foreign companies were involved in production of simple products wherein included food, chemicals and pharmaceutical products, the television, radios cars as the complex type products, the major transfer of technology took place through the transfer of know-how.
As the finally the negative effect of local market-oriented investment are due, not as per the type of origin of investment but also heavy policies of the countries, on the basis of limited markets found absence of economies of scale, lack of competition as well as low production and high costs, so due to high prices of products worked as an instrument of re-distribution, it is also explains the pattern of the products, concentrate for the high income groups, the tensions also created in South East Asia against the foreign investment.
Management of Value Transfer
Regarding the issue of social values, whether local or imported, play vital role in the development, the exemplary value for the local enterprises of the existence of efficient, well managed, science based subsidiary firms will sooner or later be recognized, it is further add that inspite of actual achievement, foreign investment may only help to create a enclave
286 economy with small sophisticated modern sector within a primitive economic system.
Researcher mention in this supplement paper that the technology as imported too affects the existing value patterns but when they can really control their inputs through the water management or using chemical fertilizer, choose their harvest period, there are two problems raised western world to South East Asia, first the western world moving very rapidly from and industrial structure to a post, towards the autonomization of the individual by which nobody will take things on the trust or an authority any more, secondly social change in the western world has increased at an accelerated rated, mean of the communication now available, a diffused consciousness of this total state of affairs is spreading, regulative process which have permitted new values to integrate in the existing structure.
It is also pointed out that the MNCs are spreading their activities all over the world, futurologists already predicted in the year 200 about 300 giant global firms would control around two-third of the world’s industrial production, the most of the unwise and perhaps impossible policy would be a course of complete isolation. (Vasey, R. Lloyd. 1978: 105)
Management of Social, Economic and Political Impact
287
In the previous section given the analysis of the foreign investors impact on different sectors of the economy, as the strategies of South East Asia requires amendment, as the natural resources of South East Asian countries, as the foreign capital and technologic resources are more productive, (Wu, Yuan-li. 1980: 103) because of the potential high return for both, it is further add here that the size of domestic markets of South East
Asian Countries are limited, it was the reason that why foreign investors not interested to come in this type of investment the South East Asian
Countries very much effective in taking the all burden of loss by misdirection of the investable resources.
As per researcher point of view the process of consideration should be changed so that the demand of the South Asian Countries shall be attractive by subsidies particularly by measures of market protection, the economic value of natural resources can be increased if easier through the improvement of social overhead infrastructure, further add that simplification of the administrative procedures and reduction of bureautic controls also increase the administrative efficiency of the government and select the type of such investment of National goals, the type of investment with linkage effect should be encouraged.
In fact that the knowledge of the profit as the driving force of MNCs makes easy to negotiate, as per the practice such estimates need expertise and experience.
288
Researcher further mentioned here that the increasing reliance on the
MNCs as an agency for the promotion of economic development, the ability of country to defend its rights as depends upon the Nature of the leadership and social cohesion, the national cohesion in not a factor, social cleavage take place with the country due to the presence of the MNCs.
Management of Technological Transfer
According to researcher view that there are three main reasons to predominate the management of technological transfer in South East Asia, as lies in the monopolistic advantage conferred to the owner of technology, in some cases the technology buyer in a weak bargaining position and not known that what he is buying, the other reason related with inappropriate nature of imported technology, (Leinbach, T.R. 1975:283) it also leads to inappropriate products, as various products found in the developing countries, the technology imported by the Multinationals also out of the size of most South East Asian domestic markets, the result therefore found additional capacity as well as high cost of the production.
In these circumstances established scientific institution from the productive activities because there is low demand for locally developed technologists from the productive sectors.
289
So on the above stated concerns; it has noted that the Governments of the developing countries have formed the policies for the reduction of technological dependency for the purpose to transfer in the desired sectors.
It has also revealed that some countries of the South East Asia follow the open door policy; in other countries such as Singapore the technology is the important criteria in the selection of the investor, still no any country of
South East Asia follow the example of Japan for screening the foreign technology, (Sadler, David.1994:40) the Ministry of International Trade and
Industry Japan actively sought out local companies.
Researcher thinking is that there is no requirement for permits or registration of licensing or the similar agreements, to attempts to build up local capacities and reduce the external technological dependence, for different degrees of success with three lines of policies insistence on employment of local personnel by foreign enterprises.
No doubt that MNCs negative power of withholding investments from individual countries will clearly become greater force as its instinct of survival tested by long history, there is no reason to believe that South East
Asia will this time fail in the complex and difficult task of co-existing taking the maximum of what they can provide without risking an unpalatable loss of national control.
290
Appendix 4
Muslims Respondents’ Views and Recommendations Related to the Role of Multinational Companies in Malaysia
1. In fact that Psychology of local customer to sum up on complex of
factors, it is the chance to hire the Malaysian people for the Jobs by
the Multinational Companies related to local culture and dealing
with local traders and businessmen.
2. For selecting Multinational Companies to invest in Malaysia basic
priority and long term plan must be given to the Islamic countries. To
modify the product in the host country, the Multinational Companies
must consider the weather condition.
3. The important issue in the world and particularly in Malaysia to
follow and give respect Islamic Shariat, hence the Business
relationship in between the host county and Multinational
Companies will be more improved, in fact that if the Multinational
Companies follow the Islamic Shariat, they enjoy really their lives, lot
of non-Muslims feeling social security by Islamic teaching and fully
satisfied to live in Malaysia.
291
4. It is no doubt that the role of the Multinational Companies take profit
and also give progress, as well as improve the infrastructures and
respect the Islamic way of life, it is not disturb the present system, but
to integrate and improve for the meaningful development.
5. On the basis of tax MNC having good profit, so it is the idea to spend
the same on account of sports events and other efforts of the
Malaysian Government.
6. For technology advancement of MNC and ability persuade the host
country must be moderate usurping and exploit the weakness i.e. for
language communication honesty dealing and compare with low
education.
7. It is necessary to execute the policies and the guidelines for the pross
of profit so that no adverse effect will be made on economic for the
home country of Multinational Companies as well as Malaysia.
8. If for further development in petrochemical industries and profitable
industries with the cooperation of Multinational Companies it will be
in the best interest of the people of Malaysia, for which local people
of Malaysia should be train by polytechnic colleges and the
vocational institutions.
292
9. By investment in Malaysia the Multinational Companies can also
give further improvement and the development of Malaysia and
South East Asia by abiding the Rule and Regulations in the
Businesses and also according to the policies and traditions before
executing the Joint Ventures with the local companies.
10. Give attention on the quality, to organize the seminars and training
the MNC must active in Joint Ventures and participation in charitable
activities in Malaysia. The host country also observes Islamic Socio-
economic legal and financial system for the dealing with the
Multinational Companies.
11. For all the foreign employees the MNC going on to understand
Malaysian custom regarding basic knowledge of the religion of Islam.
For winning the target the basis thing is the sound investment and
for research of market and other MNCs having good knowledge.
12. It is also important that Multinational Companies as well as
qualified companies must be honest and loyal for the transfer of
State-of-Art technology to the host country, so that they will not
depend upon 100% on such companies who come for works in
Malaysia.
13. To provide training to the Malaysian national MNC in struggling
sincerely without any distinction in measuring the performance of
Malaysian and non-Malaysian.
293
14. The people of Multinational Companies must educate themselves on
Islamic way of life so that the relationship in Business with host
country may be balanced.
15. The Multinational Companies very much strict to follow the rule and
regulations of Malaysia and also not trying directly or indirectly
damage the stability of political socio-economic in Malaysia.
16. The trading history with South East Asia the Multinational Countries
making long term close relationship and also interested to promote
the new further solid relationship to the region so that contacts for
assistance market breakthrough.
17. There is MNE owned Production Branch in Malaysia as well as
include 12% import duty limited tariff, as other foreign suppliers also
export the products the Malaysia, as the tax incentives granted to the
such foreign companies having 25% participation.
18. Muslim countries are required for the venture with R&D and the
innovation projects.
19. It is necessary or Multinational Companies to follow cultural values
of host country particularly Do’s and Don’ts in Islam.
294
20. Multinational Companies involve themselves for know-how high
technology need.
21. The Multinational Companies should be awareness in teaching of
Islam and the Muslims culture, by cooperation and understanding
will give the respect to the laws of host country.
22. The Malaysian Government expected for the technology on foreign
companies.
23. The Multinational Companies in any circumstances will not
interfere in the local culture.
24. At present on the import duty of 12% not impose any barrier to
import; hence it IS not attractive for the foreign investors.
25. The bureaucracy interested with the joint ventures, instead of
completely controlled by the MNC production in Malaysia.
26. Tax only collected on account of dividends and the reserve funds of
MNC and other companies in Malaysia can’t be included in the tax.
27. The losses incurred in the period possibly covered in the Tax
emption to the preceding year in case the tax will be imposed.
295
28. The Multinational firms decide for the profit or return on the basis of
investment but not decided on the basis of religious or cultural
differences, so foreign company having good knowledge of the host
country cultural, have advantage on the other companies.
29. The Multinational Companies agreed upon the profit or the return of
investment and not on religious or cultural of investment and not on
religious or cultural basis, so such company having good knowledge
about the culture of the host country, will be best advantage of
competitive.
30. The technology as transfer from the western countries to the Muslim
countries including Malaysia not on the owners of the foreign
technology gives obsolete technology to the Muslim world, when the
license granted the Arab company.
31. The development process as the importance of R&D has been
neglected by the Muslim world; some Muslim countries started the
process of wealth in the middle of 1970, so the role of R&D
continuously increases in the industrial process.
32. Due to negative and internal confliction in between them weakened
the Muslims, if they really sincere and unity in international business
they would be world power.
296
33. Multinational Companies having no manufacturing subsidiaries in
Malaysia, but the industrial policy of Malaysia discourage.
34. It is noted that for sustain the development growth can not met by
the rights supply of indigenous labour, as the importing labourers
from countries with different cultures, the increase of foreign labour
as imported the Malaysia, it is impact on the local culture.
35. The competitive advantage of the nation is and important, as the
Multinational Companies actually choose such countries to enjoy
with the better investment incentives and other on recently the
foreign labour impact as negative on the economic sectors of
constructions and commercial services, which comparatively suitable
indigenous work, it is necessary for Malaysia to trained and educate-
not only to white collar jobs but also blue collar jobs.
36. The foreign investment can be encouraged through floating of
company shares on regular basis, the shares that were floated were
not actually new companies.
37. To processing the entry of incoming foreigners it is necessary to
improve the efficiency and also to improve the immigration
procedures at International Airports of Malaysia.
297
38. To attract the foreign investors for the direct investment in Malaysia
without the required local Malaysian shareholding, when the
products export under certain specified priority industries.
39. It may be make possible for reduce the corporate, profit and other
taxes as payable by the foreign investment project as due after tax
exemption period.
40. Indirect investment very much risky when the stock markets freely
open for the foreign speculators without appropriate measures.
41. Regarding first phase of the project the tax exemption should not be
limited, but extend to cover the future expansion.
42. The Malaysian Government granted the Nationality to the
expatriates who residing in Malaysia since long time and also having
potential for the investment.
43. The Multinational Companies for the business in Malaysia will
obtain favour from the concerned authorities of Malaysia, most of the
Malaysian labour are trained in white collar jobs, and not interested
in manual and other vocational jobs, 50% are at the age of 15 years
and below, hence create more pressure on Malaysian market.
298
44. The procedure for the issuance of enter/exit, visit and temporary
residence visas, as well as travel permit for the foreign company staff
and workers in Malaysia should be simplify so that the foreign
investors take interest with the business in Malaysia.
45. To make possible for planning of the foreign company to invest in
Malaysia to own office building and housing for the employees and
worker of the foreign investors.
46. More opportunities may be given to the Malaysian women for the
development participations, as during the regime of Holy Prophet
(Peace Be upon Him) the women were participated in many social
activities and in wars time.
47. The industrial development projects as well as the Joint Ventures of
Multinational Companies need to spread in Malaysia and lower to
medium scale business required the development in Rural Areas.
48. The lower to medium scale of business having priority to attract
interest and loans from the Malaysian financial institutions i.e. credit
facility without interest, so if possible to remove the bias in favour of
large industrial project.
49. By removal of un-necessary restriction or bureaucratic rigidities the
foreign investment can be attracted, as enforced on the investors of
299
Foreign countries, but it can’t be accepted that it will solve the
development problems of Malaysia.
50. In fact the Malaysian having lot of facilities for the investment and
economic growth, which can even surpass the Growth rates of the
speedy growing Asian economies, the economic growth of Malaysia
still less than 2% on liberal scheme to attract investment, the
country’s real economic growth may reach at 8% per annum high.
Non- Muslims Respondents’ Views and Recommendations Related to the Role of Multinational Companies in Malaysia
1. The business constraints and modern global prevent the governments
and local industries from operating in protected manner, it is typical
of developing nations as the Business Class is often acting as the
agent for the foreign companies, the actual independence on the basis
of development of local technology and research.
2. The Multinational Corporations to hold advantages and maximum
profit on investment on around the world, to ensure the business
success, it is necessary to pay the attention to the requirements of the
local society, it is also better to maximum the profit by local skills.
300
3. It is necessary to simplify import and export rules and regulations by
using the convenient approach. For both the parties’ professional and
honesty two factors as to contribute the development.
4. For human resources services the Multinational Companies must
appoint intelligent skilled people. To attract the foreign investment in
Malaysia the cultural adaptable to the world and flexibility is
required.
5. In Malaysia the success and failure of any Multinational Companies
based on the strength of the local distributor.
6. The products of Multinational Companies for the South East Asia for
inter-nation standard in Malaysia with high temperature speeds and
poor maintenance as built to more specification.
7. On the basis of duty free zone/ port Malaysia will take the benefit as
fully enable Multinational Companies the re-export without custom
duty, so to prevent the unlawful import border controls must be
imposed it will take the Market share, profit and credit from the
official distributor.
8. Generally saying that west is immoral when it is fact that lot of
western employees of Multinational Companies are hard working
and good background, when judging the Malaysia it will compare
301
with the religious and cultural rules as professed with behavior of
people.
9. It is add that every country expect to follow the Rules and Regulation
honestly in all the cultures, the Multinational Companies having
experience of these situations and they are careful not to involved if
having influence and power.
10. In the sense of apply the economic principles the Multinational
Companies try logically in their activities, to select between the
business success using dubious process or failure on truth and
honesty.
302
BIBLIOGRAPHY
Akins, A. Adeoye. The Expropriation of Multinational Property in the
Third World. New York: Praeger Publishers, 1980.
Allen, C.G. Western Enterprises in Indonesia and Malaya. London:
George Allen & UNwin Ltd., 1957.
Alam, Israr. Condition of Religious Values of Muslim World. (Urdu)
Lahore: Fazli Books, 2004.
Andaya, W. Barbara. A History of Malaysia. London: Mac-Millan, 1986.
Asian Development Bank. Anti-Corruption Policies in Asia and the
Pacific: the Legal and Institutional Framework. Manila: 2004.
Aslam, Mohammad. Tariff Reductions and Trade Performance: A Case of
Malaysia. Kuala Lumpur: MEc Dissertation University of Malaysia, 1993.
Azad, Abul Kalam. Concept of Fredom in Islam. (Urdu) Lahore: Maktaba- e-Jamal, 2004.
303
Abbasi, Farhat. Jamal. International Relations. Karachi: Maktaba –e-
Fareedi, 2002.
Azeem, Syed. Multinational Companies. (In Urdu Language) Lahore: Dar us Shaour, 2002.
Backman, Jules. Multinational Corporation, Trade and Dollar in the
Seventies. New York: New York University Press, 1974.
Baqi, Halook Noor. (Dr.) Realities of Science and Qur’an. (Urdu) Karachi:
Indus Publishing Co., 1996.
BEE-JIN, OOI. Land, People and Economy in Malaya. Singapore:
Longmans Publishers, 1962.
Bhardwaj, Arjun. Globalization and Multinational Corporation in South
Asia: Towards Building a Partnership for Sustainable Development.
Colombo: Regional Center for Strategic Studies, 2001.
Bhagwati, Jagdais. In Defense of Globalization. New York: Oxford
University Press, 2004.
Boarman, M. Patrick. Multinational Corporations and Government. New
York: Praeger Publishers, 1975.
304
Buchanan, Keith. The Southeast Asian World. New York: Taplinger
Publishing Company, 1967.
Buckleg, J. Peter. Multinational Enterprises in Less Developed Countries.
London: Mac-Millan Publishers, 1991.
BUDD, Colin. The New Economic Diplomacy. Wiltshire UK: British
Library Cataloguing in Publishing Data, 2004
Butwell, Richard. Southeast Asia Today and Tomorrow: A Political
Analysis. London: Frederick A. Praeger Publishers, 1961.
Buckley, J. Peter. and Casson, Mark. The Future of Multinational
Enterprises. New York: The MacMillan Press Ltd., 1976.
Casson, Mark. Alternative to the Multinational Enterprises. London: the
MacMillan Press, 1979.
Casson, Mark. Multinationals and the World Trade. London: Allen &
UNWIN, 1986.
C. Harrie. and L. B. Chye. The Role of SMEs in National Economies in
East Asia. Edward Elgar: Cheltenham, 2002.
305
Chin, Kok, Fay. Malaysia’s Post-Crisis Bank Restructuring. Singapore:
Singapore University Press, 2004.
Cohen, I. Benjamin. Multinational Firms and Asian Export. London: Yale
University Press, 1975.
Courtnay, P. P. A Geography of Trade and Development in Malaya.
London: G.Bell and Sons, 1972.
Cowan, C. D. The Economic Development of Southeast Asia. London:
George Allen & UNWIN Ltd., 1964.
Crozier, Brain. Southeast Asia in Turmoil. Victoria: Penguin Publishers,
1965.
Craig, J. G. Multinational Co-Operative: An Alternative for World
Development. Saskatoon: Western Producer Prairir Books, 1976.
Curzon, Gerade. The Multinational Enterprises in a Hostile World.
London: The Mac-Millan Press, 1977.
Darina, Osman. How Far is the National Automobile Prepared Itself.
Dewan Ekonomi, 2003.
306
Daruvala, J. C .Professor. Tensions of Economic Development in South-
East Asia. Madras India: Allied Publishers Pvt. Ltd., 1961.
Davidson, J. Paul. Investment in Southeast Asia Policy and Law.
Singapore: Butterworth-Heinemann, 1997.
Dixon, Chris. Southeast Asia in the World-Economy. New York:
Cambridge University Press, 1991.
Dixon, C.J. Multinational Corporations and the Third World. London:
Croom Helm Publishers, 1986.
DOE. Environment Quality Report. Kuala Lumpur: Department of
Environment, 1990-1997.
Donald, C. MacCharies. Trade Among Multinationals, Intra-Industry trade and National Competitiveness. London: Routledge Publishers, 1987.
Donald, W. Fryer. Emerging Southeast Asia. London: Philips & Sons, 1972.
Donner, G. Frederic. The World-Wide Industrial Enterprises. New York:
Mc-Graw-Hill Book Co., 1967.
Dunning, H. John. The Multinational Enterprises. London: Gearge Allen
& UNWIN Ltd., 1971.
307
Dunning, H. John. The World Largest Industrial Enterprises. Gower
Publishing Co. Ltd, UK.
Firdous, H. Abdullah. Redical Malay Politics. Selangor: Pelanduk
Publications, 1985.
Foy, Colm. Investing in Asia. Development Center of the Organization for
Economic Co-Operation and Development, 1996.
Frank, Isjah. Foreign Enterprises in Developing Countries. London: The
Johns Hopkins University Press.
Furnivall, J. S. Colonial Policy and Practice. New York: New York
University Press, 1956.
Gunnemam, P. Jon. The Nation-State and Transnational Corporation in
Conflict, with Special Reference to Latin America. London: Praeger
Publishers, 1975.
Guy, J. Parker. Diversity and the Development of Southeast Asia.
Singapore: McGraw-Hill Books, 1980.
Hahlo, H.R. Nationalism and the Multinational Enterprises. New York:
OCEANA Publications inc., 1973.
308
Hamidi, Khalil, Ahmed. Muslim World. (Urdu) Lahore: Islamic Research
Academy, 1993.
Hans-Dieter, Ever. Modernization of Southeast Asia. London: Oxford
University Press, 1973.
H. Crouch. Government and Society in Malaysia. Ithaca Cornel
University Press, 1996.
Hood, Neil. and Stephen, Young. The Economics of Multinational
Companies. London: Longman Group, 1979.
Hoffmann, L. Industrial Growth, Employment and Foreign Investment in
Peninsular Malaysia. Kuala Lumpur: Oxford University Press, 1980.
Horii, Kenzo. Rice Economy and Land Tenure in West Malaysia. Tokyo:
Institute of Developing Economy, 1981.
H.W. Singer. Technology Transfer By Multinationals. New Delhi: Asish
Publishing House, 1998.
Ippei, Yamazawa. Towards ASEAN-Japan Comprehensive Economic
Partnership. Tokyo: Institute of Developing Economic, 2003.
309
Jacob, Berntein. Trading the International Future Markets. New York:
New York Institute of Finance, 2000.
Jain, C. Subhash. Towards Global Buiness Confederation. West Port USA:
Prager Publishers, 2003.
James, E. William. Asian Development. USA: University of Wisconsin
Press, 1987.
J. H. Dunning. Trade, Location of Economic Activity and the Men: A
Search for an Eclectic Approach. London: in the International Allocation of
Economic Activity, B.Ohlinet al ed, Macmillan, 1997.
J. Johnson. and L. G. Mattson. Internationalization in Industrial System: A
Network Approach. London: Croom Helm, 1988.
John, Kerry, King. Southeast Asia in Perspective. New York: McMillan
Company, 1959.
Jomo, K.G. Malaysia from Miracle to Debacle. London: Zeb Book Limited,
1998.
Jomo, K.S. Development Policy and Income Inequalities in Peninsular
Malaysia. Kuala Lumpur: Institute of Advance Studies, 1986.
310
Jomo, K.S. Were Malaysia’s Capital Controls Effective?. Singapore:
Singapore University, Press 2004.
Jones, Geoffrey. Merchants to Multinationals. New York: Oxford
University Press, 2000.
Joseph, E. Stiglitz. Globalization and its Discontents. London: Allen Lame
Publishers, 2002.
Juzhong, Zhong. Corporate Governance and Finance in East Asia. Manila:
Asian Development Bank, 2000.
Kasper, Wolfgang. Malaysia: A study in Successful Economic
Development. Washington DC: American Enterprises Institute for Public
Policy Research, 1974.
"Kawai, Masahira. The International Role of the US Dollar, the Euro, and the Japanese Yen in East Asia’s Exchange Arrangement. Kuala Lumpur:
National Economic Outlook, 2001.
Kelley, A. C. Economic and Demographic Change: A Synthesis of Model,
Findings and Prospective. Italy: United Nations Population Fund, 1998.
Kenwood. A.G. The Growth of the International Economy 1820-1980.
London: George Allen & UnWin Publishers, 1983.
311
Khoo, Boo. Teik. Elections and Democracy in Malaysia. Bangi Malaysia:
University Kebangsaan Malaysia Press, 2005.
Kojima, K. Japan and a New World Economic Order. Tokyo: Chaeles E.
Tutle & co., 1977.
Kujwa, Duone. International Labor and Multinational Enterprises. New
York: Praeger Publishers, 1975.
Laffont, Jean-Jacques. Regulation and Development. Cambridge
University Press, UK, 2005.
Laviper, G. Farid. Controlling Multinational Enterprises. Westview Press
Colorade, 1976.
Lee, Poh. Ping. China’s Economy Rise and Its Impact on Malaysian
Chinese Business. Singapore: ISEAS, 2006.
Lefeber, Louis. Regional Development Experience and Prospects in South and Southeast Asia. Geneva: United Nations Research Institute for Social
Development, 1971.
Lim, Chong-yah. Economic Development of Modern Malaya. Oxford
University Press, 1967.
312
Lim, David. Economic Growth and Development in West Malaysia.
London: Oxford University Press, 1973.
Lim, David. Reading on Malaysian Economic Development. Kuala
Lumpur: Oxford University, Press.
Lloyd, R. Vasey. ASEAN Positive Strategies for Foreign Investment.
Hawaii USA: The University Press, 1978.
MACPMA Directory 1996-97. Automobile and Components Parts
Industry. Kuala Lumpur: 1996.
Malaysia Current Economic Situation. London: The Bank of Credit and
Commerce International, 1982.
Mababaya, Mamarinta. The Role of Multinational Companies in the
Middle East: Case of Saudi Arabia. London: University of Westninster
(Unpublished Dissertation of Ph. D.), 2002.
Manser, W.A.P. The Financial Role of Multinational Enterprises. UK:
Cassell and Co. Ltd., 1973.
Masood, Mufti. Conspiracy of Multinational Companies Against Islam.
(in Urdu language) Lahore: Ilm wa Irfan Publishers, 2003.
313
Matsumoto, S. Southeast Asia in a Changing World. Tokyo: Institute of
Developing Economies, 1979.
Means, P. Gordon. Malaysian Politics. New York: MacMillan & Co., 1970.
Mee, F. John. International Business and Multinational Enterprises. USA:
Richard D. Irwin, inc., 1983.
Mills, A. Lennox. Southeast Asia: Illusion and Reality in Politics and
Economics. Minnesota: North Central Publishing Co., 1964.
Mirza, Hafiz. Multinationals and Growth of Singapore Economy.
London: Croom Helm, 1986.
Mohammad, Mahathir. Bin. Dr. Globalization and Its New Realities.
Putrajaya Malaysia: Pekndumk Publications, 2002.
Mohammad, Mahathir. Bin. Dr. Multimedia Super Corridor. Negara
Malaysia: Pelanduk Publications, 1998.
Mohammad, Mahathir. Bin. Dr. The Challenges. Kuala Java Malaysia:
Penlanuk Publication, 2002.
314
Mohammad, Mahathir. Bin. Dr. The Way Forwarded. London: Wedenfeld
& Nicolson, 1998.
Mohammad, Mahathir. Bin. Dr. Asia ka Muqaddama. (Urdu translate)
Lahore: Jamhori Publisher, 2003.
Molyneux, John. World Prospects. Ontario: Prentice-Hall, 1987.
Moram, H. Theodore. Multinational Corporations and the Politics of
Dependence. New Jersey: Princeton University Press, 1974.
Mutoh, Hiromichi. The Automobile industry: In Ryutaro Komiya et al
(eds) Industrial Policy of Japan. California: Academic Press inc. 1988.
Osada, Hiroshi. Deeping Industrial Linkages Among East Asian
Countries. Tokyo: Institute of Developing Economic, 1998.
Osborne, Christine. Essential Malaysia. Hampshire: AA Publishing Co,.
1997.
Osman, Chauh. Chinese Muslims in Malaysia. Kuala Lumpur:
International Islamic University, 2001.
315
Parmer, J. N. See. Colonial Labour Policy and Administration: A History of Labour and Rubber Plantation in Malaya 1910-1941. New York: Locust
Valley, 1960.
Pepinsky, Thomas. Institutions, Economic Recovery, and Macro-
Economic Vulnerability in Indonesia and Malaysia. Berkeley: Institute of
Asian Studies, 2006.
P. L. Chee. Small Industries in Malaysia. Kuala Lumpur: Berita Publishing
Sdn. Bhd, 1986.
Qasim, Mehmood. Islamic World. (in Urdu Language) Lahore: Al Faisal,
2001.
Rainer, Hellmann. Transnational Control of Multinational Enterprises.
New York: Praeger Publishers, 1977.
Rajah, Rasiah. Market, Government and Malaysia’s New Economic
Policy. Cambridge: Journal of Economics, vol. 25, 2001.
Rana, B. Pradumna. ASEAN Exchange Rate. Pasir Panjang: Institute of
Southeast Asian Studies, 1981.
Rehman, Afzal. Economic Doctrine of Islam. Lahore: Islamic Publications
Ltd, 1976.
316
Richard, E. Caves. Multinational Enterprises and the Economic Analysis.
Cambridge University Press, 1982.
Riddell, Peter. Islam and the Malay-Indonesian World: Transmission and
Responses. London: Hurst & Co, 2001.
Rosli, Mohd. Entrepreneurship, Economic Development and the
Automobile Industry: A Study of the Asian model and Malaysian
Experience. Kuala Lumpur: Ph.D Thesis University of Malaya, 2004.
Robock, H. Stefan. International Business and Multinational Enterprises.
New York: Richard D. IRWIN, Inc. 1983.
Rugman, Alan. The End of Globalization. USA: Printed by AMACON,
2001.
Rugman, M. Alan. Multinationals and Transfer Pricing. London: Croom
Helm Publishers, 1985.
Rugman, M. Alan. Inside the Multinationals. London: Croom Helm Press,
1981.
317
Saeed, Nazir. An Economic for Foreign Direct Investment and its Impact on Trade and Growth of Pakistan. Bhawalpur: Department of Economics
(Unpublished Dissertation of Ph. D.) Islamia University, 2001.
Safrion, A.E. Multinational Governments and International Technology
Transfer. Croom Helm Publishers.
Salahuddin, Syed. Dr. The Politics of International Economic Relations.
Karachi: Comprehensive Book Services, 1997.
Schlote, Werner. British Overseas Trade: from 1700 to the 1930. Oxford
UK: Basil Blackwell, 1952.
SEIJI, Naya. Towards ASEAN Trade Area. Malaysia: Institute of Strategic and Int’L Studies, 1987.
Shahid, M. Imtiaz. Modern Muslim World. (In Urdu Language) Lahore: Al
Faisal, 2005.
Shahid, M. Imtiaz. International Relations. Lahore: Carvan Enterprises,
2002.
Sham, S. Economic Development and Environment Management in
Malaysia. New Zealand: Geographer, 49 (2), 1993.
318
Shipman, Alan. The Globalization MYTH. London: Icon Books Ltd, 2002.
Silcock, T. H. Readings in Malayan Economics. Singapore: Eastern
Universities Press, 1961.
Silcock, T.H. The Politics Economy of independent Malaya: A Case Study in Development. Canberra: The Australian National University, 1963.
Smith, T. E. Population Growth in Malaya. London: Royal Institute of
International Affairs, 1952.
Smitka, Michael. J. Competitive ties: Sub-Contracting in the Japanese
Automotive Industries. New York: Columbia University Press, 1991.
Sondgrass, D. R. Inequalities and Economic Development in Malaysia.
Kuala Lumpur: Oxford University Press, 1980.
Soon, Zi-Hur. Making of the Detroit of Asia. Asian Chemical News
Malaysia.
Southeast Asia in United States Policy. New York: Affairs on Foreign
Relations, 1963.
Southeast Asia’s Economy in the 70s. London: Asian Development Bank
Butler & Tanner Ltd.
319
Stiglit, E. Joseph. Rethinking the East Asian Miracle. Lahore: Pak Book
Corporation, 2001.
Stiglitz, E. Joseph. Globalization and its Discontents. UK: Penguin Books,
2005.
Taylor, Michael. The Geography of Multinationals. London: Croom Helm
Publishers, 1982.
Tham, Siew. Yean. Malaysia: Managing FDI in a Globalizing Economy
(Asian Experience). Houndmills Palgrave MacMillan, 2004.
The Europa World Year Book 2004. London: Europa Publication, 2004.
The Market of Asia Pacific. Aldeshiot UK: Gower Publishing Co.
The Muslim World and the Future Economic Order. London: The Islamic
Circle of Europe, 1979.
The Role of Trade and Investment Policies in the Implementation of the
Monterrey Consensus: Regional Prospective. Thailand: UNESCAP, 2005.
The Social Implication of the Southeast Asian Financial Crisis. Korea:
Korea Development Institute, 1998.
320
The World Investment Prospects. Survey EDI by the United Nations
Conference on Trade and Development, 2007-2008.
Thoburn, John. Multinationals, Mining and Development: A Case Study of Tin Industry. Hampshire: Gower Publishing Company, 1981.
Thomas, J. Lindblad. Foreign Investment in the Southeast Asia in the
Twenty Century. Australia National University, 1997.
Tindall, Robert. Emmett. Multinational Enterprises. New York: Oceana
Publications, 1975.
Todaro, P. Michael. Economic Development in the Third World. London:
Longman Publishers, 1997.
Toru, Yonagihara. East Asia Development Experience. Singapore: Institute of Development Economic.
Tourres, Marie-Aimee. The Tragedy That Did Not Happen. Malaysia:
Institute of Strategic and International Studies, 2003.
Ueno, Hiroya. The Automotive Industry of Japan in Kazuo Sato (ed)
Industry and Business in Japan. New York: ME Sharpe Inc, 1980.
321
UNIDO. Malaysia: Sustainable the Industrial Investment Momentum.
United Kingdom: Basil Blackwell Ltd, 1991.
Vasil, R. L. Politics in a plural society: A Study of a Non-Communal
Political Party in West Malaysia. Kuala Lumpur: Oxford University Press,
1971.
Vincetcable. Developing with Foreign Investment. New York: Croom
Helm, 1987.
Waheed, Abdul. Encyclopedia of World Nations. Lahore: Nigarishat, 1998.
Wawn, Brian. The Economies of ASEAN Countries. Hong Kong: The
MacMillan Press Ltd, 1982.
Waseemuddin, Syed. Dr. SAARC A Study. Karachi: Farid Publisher, 1990.
Waseemuddin, Syed. Dr. Foreign Policy of Pakistan. Karachi: Farid
Publisher, 1992.
Wells, Peter. and Micheal, Rawlinson. The New European Automobile
Industries. London: St. Martin?s Press, 1994.
Wong, John. ASEAN Economic in Perspective. Singapore: Mac Millan
International College Edition, 1976.
322
World Guide. Victoria Australia: Hardie Grant Books, 2003.
World of Information. ASEAN the Next 30 Years. Bruxelles: 1998.
"Wu, Yuan-li. Economic Development in Southeast Asia. USA: Hoover
Institute Publications, 1980.
Yusuff, Agud. Mohammad. Consociational Politics: The Malaysian
Experiences. Kuala Lumpur: Percetakan Pemuda Enterprises, 1992.
News Papers, Journals and Reports
Ariff, Mohammad. The Malaysian Economic Experience and its
Relevance for the OIC member Countries. Islamic Economic Studies, vol.
6, no. 1.
Athukorala, P. FDI in Crisis and Recovery: Lessons From the 1997-98
Crisis. Hill, H. and Lindblad, T. (eds) Australian Economic History Review
2003.
Athukorala, P. Malaysian Trade Policy and the 2001 WTO Trade Policy
Review. The World Economy 2002.
323
Bank Negara Report, Kuala Lumpur 1998.
Ben-David, D. Trade and Convergence Among Countries. Journal of
International Economics, vol. 40, 1996.
Case, William. Malaysia: New Reforms, old Continuities, Tense
Ambiguities. University of Hong Kong working paper series no. 51
September 2003.
Chonder, R. Social Survey of household. 1968.
Daily Nawa-e- Waqt. Lahore: 22 April 1988.
F. C. Own. Small and Medium Industries in Malaysia: Economic
Efficiency and Entrepreneurship. The Developing Economies, vol. 28,
1990.
F. F. Clairmont. Malaysia: the Unstoppable Tiger?. Economic and Political
Weekly, vol. 29, (37), 1994.
Gomez, T. Why Dr. Mahathir Axed Dam Far Eastern Economic Review 5
July 2001.
Gumit, K.S. Environmental Audit. Alam Sekitar, 18, (1), 1993.
324
Hooker, Virginia, Matheson. Reconfiguraing Malay and Islam in
Contemporary Malaysia. Review of Malaysian and Indonesian Affairs, vol
34 no. (2) 2000.
Human Development Report, UNDP, 2000.
Huston, E. & Kearney, C. The Asian Financial Crisis and the Role of IMF.
JAPE vol. 4 no. 3 2000.
I. Ekeledo. Foreign Market Entry Mode Choice of Services Forms: A
Contingency Perspective. Journal of Academy of Marketing Science, vol.
26, (a), 1998.
Ibrahim, Mansor. H. Co-integration and Granger Causality Tests of Stock
Price and Exchange Rate Interactions in Malaysia. ASEAN Economic
Bulletin vol. 17 no. 1 1998.
J. Johnson. and J. E. Vahlne. The Internationalization Process of the Firm:
A Model of Knowledge Development and Increasing Foreign Market
Commitments. Journal of International Business Studies vol-8 1977.
J. L. Calof. Adapting to Foreign Market: Explaining Internationalization.
International Business Review, vol. 4, 1995.
325
Kazumi, Goto. The Main Issue of the East Asian Miracle: the World Bank
Report as Assessment by UK Critics. OECF Journal of Development
Assistance vol. 1 no 1 July 1995.
Leinbach, T. R. Transportation and Development of Malaya. Annals of the association of American Geographers, vol. 65, 1975.
Malaysia Mid-term Review of the First Malaysia Plan. Kuala Lumpur:
1966-70.
Malaysia, Interim Review of Development in Malaya Under the Second
Five Years Plan. Kuala Lumpur: 1963.
Malaysian Constitution, Part 1.11, (1).
Malaysian Industrial Development Authority. Annual Report Kuala
Lumpur: 1979.
Mathews, J.A. Strategy and the Crystal Crisis. California Management
Review. Vol. 47 No. 2 2005.
Mining Magazine Malaysia’s Tin Case Production. V170 no. 3 March
1994.
MITI (Malaysia) International Trade and Industry Report 1995-96.
326
MITI. Malaysia’s Implementation of WTO Agreement on Trade Related
Investment Measures vol. (2) 1999.
“Monthly Terjuman –ul-Qur’an. Lahore: May 1988.
New Straits Times. 25 July, Kuala Lumpur: 2000.
P. P. McDougall. International Entrepreneurship: The Intersection of Two
Research Paths. Academy of Management Journal, Vol. 43 2000.
Rosli, Mohd. National Car II. Dewan Masyarakat, April, 1994.
Sadler, David. The Geographic of Just-in-Time: Japanese Investment and the Automotive Components Industry in West Europe. Economic
Geography, vol. 70 no. 1, 1994.
Swee, Keng. Goh . Entrepreneurship in a Plural Economy. Malaysia
Economic Review, vol. III April, 1958.
S. Z. Ahmed. and P. J. Kitchen. Transnational Corporation from Asian
Developing Countries. International Journal of Business Science and
Applied Management, vol. 3(2), 2008.
327
S, Z. Ahmend . The Internationalization Process of Third World
Multinational Firms: A Study of Malaysia’s Government-Linked
Corporations. International Journal of Business research, vol-8(5), 2008.
Terai, Maya. Asian Auto Market has dropped 30% from its Peak to 4
Million Units. Asian Automotive Business Review, vol. 10 no. 3, 1999.
The Economist. Dictionary of Economics. London: Profiles Book Ltd, 1998.
Malaysia’s Billionaires Club, The Star. (Malaysia): 10 February, 2007.
Torri, Takashi. Changing the Manufacturing Sector, Re-Organizing
Automobile Assemblers and Developing the Auto Components Industry
Under the New Economic Policy of Malaysia. The Developing Economies, vol. XXIX no. 4, 1991.
Turbull, Peter. Buyer-Supplier Relations in the UK Automotive Industry:
Strategic Implications of the Japanese Manufacturing Models. Strategic
Management Journal, Vol. 13, 1992.
V. Papyrina. When, how, and with what Success? The Joint Effect of
Entry Timing Mode on Survival of Japanese Subsidiaries in China.
Journal of International Marketing, vol. 15 (3), 2007.
328
Waseemuddin, Syed. Dr. & Shahabuddin, Syed. The Services of Dr.
Mahathir for the Development of Malaysia. Karachi: Research Journal of
Social Sciences, 2010.
Wassemuddin, Syed. Dr. & Shahabuddin. The Role of Multinational
Companies in International Relations. Karachi: Research Journal of Social
Science, 2004.
W. J. Burpitt. and D. A. Rondinelli. Small Firm?s Motivations for
Exporting: To Earn and Learn?. Journal of Small Business Management, vol. 38, 2000.
Woo, Wing. Thye. The Unorthodox Origins of the Asian Currency Crisis-
Evidence from Logic Estimation. Asian Economic Bulletin, vol. 17, no. 9,
2000.
World Development Report 2000 / 2001. Table no. 17. (UNDP), 2001.
WTO Trade Policy Review: Malaysia. WT/TPR/S/92, 2001.