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Diplomatic a Triannual Publication of the Institute of Diplomacy and Foreign Relations, Ministry of Foreign Affairs, Malaysia Voice Issn 2289-1277

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Diplomatic a Triannual Publication of the Institute of Diplomacy and Foreign Relations, Ministry of Foreign Affairs, Malaysia Voice Issn 2289-1277 Volume 1 2020 DIPLOMATIC A TRIANNUAL PUBLICATION OF THE INSTITUTE OF DIPLOMACY AND FOREIGN RELATIONS, MINISTRY OF FOREIGN AFFAIRS, MALAYSIA VOICE ISSN 2289-1277 The Knowledge Management Launching Ceremony and Exchange of MOUs The Knowledge Management there were also exchanges of copies tacit knowledge for the benefits of Launching Ceremony was held at the of the Memorandum of Understanding future decision-makings by officials of Multipurpose Hall, Wisma Putra, Ministry (MOU) between IDFR and Universiti the Ministry on matters pertaining to of Foreign Affairs, Malaysia on 14 Malaya (UM), Universiti Malaysia diplomacy and international relations. February 2020. The event was graced Sarawak (UNIMAS), and Universiti The Minister applauded the co-operation by the Honourable Dato’ Saifuddin Malaysia Sabah (UMS). The event and collaboration between IDFR and Abdullah, the then Minister of Foreign was attended by 150 attendees the Higher Learning Institutions in Affairs of Malaysia. Also present were comprising of Wisma Putra officers, Malaysia in ensuring the knowledge on Datuk Wira Marzuki Yahya, the then representatives from public universities, diplomacy and international relations Deputy Minister of Foreign Affairs, Dato’ government agencies, and the media. is shared, circulated, and utilised by Amran Mohd Zin, the Ministry’s Deputy officials of the Ministry, academicians, Secretary General I, Vice Chancellors, In his speech, Dato’ Saifuddin Abdullah and KM practitioners. He also touched and representatives from Universiti stressed the importance of knowledge on his aspirations pertaining to the KM Malaya, Universiti Malaysia Sarawak, and the need to manage it systematically initiative of the Ministry, as a platform and Universiti Malaysia Sabah. Apart for future reference. He also touched for knowledge-sharing activities, which from the launching of the Ministry’s on the importance of the process of in future will benefit the officers of the Knowledge Management (KM) initiative, capturing, storing, and reproducing Ministry and the public. Continued on page 14 CONTENTS Follow us on 1 The Knowledge Management Launching Ceremony Facebook and Twitter 2-9 Forum @IDFRMalaysia 10-14 News 15-16 In and Around IDFR FORUM Navigating the Samurai Bond and ‘Look East Policy 2.0’: A Deeper Malaysia-Japan Economic Partnership? Norraihan Zakaria Imran Hakim Mohamedsha Upon his return to the premiership in First introduced by Tun Mahathir on 8 attempt to replicate the export-oriented May 2018, Tun Mahathir Mohamad February 1982 at the 5th Joint Annual manufacturing model can be deemed has made six official visits to Japan to Conference of the Malaysia-Japan successful. In addition, the Japanese further strengthen bilateral relations. In Economic Association in Kuala Lumpur, government also allocated USD400 one of the visits, the Japanese Prime the Look East Policy reflected Malaysia’s million in loans and grants in 1998 and Minister, Shinzo Abe, has reciprocated shifting development model, away from 1999 for educational scholarships, with Malaysia’s wishes to reinforce the laissez-fare capitalism propagated almost 2,000 Malaysian students of economic partnership, particularly on by the West to the developmental state science and engineering backgrounds exchanges in technical education, policy adopted by Japan and South in Japanese universities benefitting from human resource competency, and Korea. That is, the complementary the scheme.5 However, further analysis technology transfers.1 Consequently, state-business relationship in Japan of the Look East Policy has highlighted the Japanese Government had offered had inspired him to replicate such an policy inefficiencies that should serve financial assistance to Malaysia in the idea in Malaysia, in which the state as key lessons for future bilateral form of a low-interest, Tokyo-based, can direct and facilitate private sector cooperation: yen-denominated bond, or the Samurai investments to promote socioeconomic bond, in November 2018. The bond, growth, especially given his belief that i. Creating Conducive Economic eventually issued in March 2019, was the unrestrained Western capitalism Incentives offered at an ultra-low interest rate would fail to alleviate the economic of 0.65%, in which cheap access to gap between the Malays and non- Given the borderless nature of capital capital market can finance infrastructure Malays.3 Essentially, this form of state movements, attracting constant flows projects and alleviate Malaysia’s public intervention relies on the establishment of FDI relies on a conducive and debt concerns.2 The renewed ties have of state-owned enterprises to invest in competitive economic environment arguably drawn a parallel with the Look strategic sectors with the profits being that provides comparable returns to East Policy, first introduced by Tun reinvested into public domain. However, investment. While Japan has always Mahathir during his first stint as the pursuing the Asian development model been the largest source of manufacturing Prime Minister, given the similarities in posed a challenge to Malaysia as it FDI in Malaysia since 1980 – totalling at motivation (to replicate the Japanese lacked intensive physical, capital, and RM88.5 billion as of 20166 – this flow economic model), scope (education, human resources to promote an export- only accelerated after the 1985 Plaza technology, and investments), and oriented, heavy-industry manufacturing. Accord, in which the depreciation leadership. Although this replication of Thus, the Look East Policy was of USD against the yen incentivised the special bilateral relationship of the introduced with these two main pillars at Japanese firms to scour for investment yesteryears has already shown swift its core: 1) replicating Oriental virtues and opportunities abroad due to currency policy outcomes, lessons learnt from the values, work ethics, and management advantages. In fact, there exists a Look East Policy imply that more must style through educational and training significant disparity in Japanese FDI be done within the context of Malaysia- exchanges and 2) attracting Japanese pre- and post-1985 – the values ranged Japan relations. More specifically, investments and technology transfers to from RM32.6 million to RM308.7 million considering how Tun Mahathir aspires to cover such constraints.4 between 1970 and 1984 and RM116.3 make Malaysia a high-income country by million to RM4.2 billion between 1985 2025, the ‘Look East Policy 2.0’ should Lessons from Look East Policy and 1991.7 Thus, Malaysia must realise then reflect the complex challenges that bilateral economic cooperation is faced by the global economic structure After over three decades of its not based solely on altruism or political in the 21st century and beyond. In other implementation, the Look East Policy goodwill, but also encompasses sound words, Putrajaya should ensure that the can be evaluated with varying degrees and valid domestic macroeconomic ‘Look East Policy 2.0’ is not limited to of success. With an uninterrupted principles. investment promotions and educational period of rapid economic growth exchanges, but rather sophisticated averaging almost 8% annually between ii. Balancing Idiosyncratic and permanent technology transfers. mid-1980s and prior to the Asian Motivations and Tangible Outcomes Financial Crisis in 1997, which was Look East Policy as the mostly aided by extensive foreign direct However, the Look East Policy was cornerstone of Malaysia-Japan investments (FDI) from East Asia, the not limited to Tun Mahathir’s economic 2 | [email protected] FORUM vision of Malaysia. His deep admiration on the Japanese interest rates – from encouraging, especially in the scope of the Japanese culture, work ethics, the overnight Central Bank Rates to the of supporting Malaysia’s aspirations of and successes in a Western-dominated 10-year long-term Government bond being a high-income nation by 2025. world – amplified by his Global South yield – have remained below 0.5%, or However, given the rapid disruption of activism and nationalist stances – has even negative, since the economic conventional economic structures that illustrated the extent of idiosyncrasy in crash in 2008.11 That is, low interest is upon us – with the breakthrough Malaysian foreign relations. For instance, rates can encourage public and private emergence of Industry 4.0, big data, the Look East Policy was considered an investments as the cost of borrowing artificial intelligence, Internet-of-Things, integral part of the two-pillared Malaysian is essentially at its lowest today and and similar technological-driven foreign policy in the 1980s, with the other would only increase in future (barring changes – the Government should being the ‘Buy British Last’. Introduced the unlikely mainstreaming of negative further elevate and expand its idea of by Tun Mahathir in 1981 merely months rates). Therefore, issuing a Samurai bilateral economic relations to ensure after entering office, the ‘Buy British bond offers an avenue for Malaysia to not that it is not left behind in the digital Last’ signified the deteriorating relations only finance its domestic development epoch. Since Japan is listed as the between the UK and Malaysia that were at a lower cost, but also free up funds ninth most innovative economy in the mostly attributed to the exorbitant tuition to dispose higher-rated loans issued world while South Korea retained its first hike for Malaysian students at British by the previous administration,
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