Rafidah Aziz in the US, faces a spot of bother

The Malaysian international trade and industry minister, Datin Seri Rafidah Aziz, is in the United States to drum up investment.  Malaysia wants foreign investment, but on her own terms.  Foreigners should not question -- "had no right", in her own words, to question -- how the Malaysian judiciary works:  it is impartial and independent.

Never mind that few concerned parties outside the government and unfortunate litigants do not think so.  But the independence and impartiality of the judiciary, whatever the spin put on it, is why most foreign investment and contracts with Malaysians insist upon arbitration in foreign countries in a dispute.

Singapore is the preferred choice.  No foreign investor would invest hundreds of millions of ringgit in Malaysia and lose it in a dispute if his Malaysian partner is a prominent businessman or if his lawyer goes on holidays with the chief justice.

That is not all.  Contrary to the spin Malaysian officials put on ministerial foreign investment visits, foreign investors hold Malaysia to ransom, demanding better facilities than the law allows.  Motorola, for instance, threatened to relocate its investments in Malaysia in Vietnam.  It got what it wanted, and better than those who come in under tax holidays or investment incentives.  The Prime Minister had to plead with them in the United States to stay, giving them the investment guarantees they asked for. 

Somehow Malaysian ministers believe they can arrive cold in a foreign country, talk to a few potential investors arranged in a hurry by an indifferent Malaysian embassy or high commission, and, hey presto, these companies have found an investment Valhalla.  That is what we are told.  That is not how it happens.  These days, the investment message wears thin.

Other countries have more to offer, do their groundwork carefully, and go for the jugular with officials laying the groundwork and ministers coming in only for the signing.  Vietnam was where Motorola wanted to site its factories from Malaysia.

Malaysian ministers come in cold, and hope all is well.  Datin Seri Rafidah herself took great pains to have a meeting with potential American investors in Manhattan free of placard carrying Malaysian and American protestors demanding the release of the former deputy prime minister. And she signed a relief when none married the event. 

There would be more of this.  When those with investments in Malaysia come forth to talk about inanities and home truths the host government would like to hear, the issue is lost.  Union Carbide, in telling potential investors about conditions in Malaysia, went to basics, not on the reality, of investment in Malaysia.  When investors expected insights, they got public relations irrelevance.

Malaysia must assume that any wanting to invest in this country do their own sums, and expect a rational discussion on what bothers them.  The minister cannot do that. The Taiwan village in Port Klang was delayed when the Taiwan investors pulled out after the Lord President, Tun Salleh Abas, was drummed out of his own court in 1988.

The judiciary's independence and impartiality took a dive, when businessmen and lawyers got the judgment they wanted.  This is not helped by the blatant bending of the rules to convict the former deputy prime minister.  Malaysia should expect that other countries in the region, to push their case for foreign investment, decry the parlous state of the Malaysian judiciary

It does not matter whether it is so or not.  If enough foreign investors believe in it, truth is no defence -- as in contempt of court or sedition trials.  If anything, the judiciary has not recovered from that shock, especially in regard to foreign investment.  Foreign investors have to be courted and weaned to invest, but no groundwork exists for that.

The investment promotion officers overseas, attached to embassies, high commissions or operate independently, seem to exist for the rare occasions when ministers come to do their work for them.  It is complicated now by the Anwar Ibrahim affair and the body blow it gave the Prime Minister and his administration.

Malaysia has all the advantages that almost any other country in the Third World has, but that is flawed by the breakdown of institutions, the most important of which being the judiciary. To make trite remarks as Datin Seri Rafidah makes in the United States and elsewhere around the world to drum up investment only ensures that none would invest until the underlying fear of their investments protected by reference to an impartial and independent court would bring in not new "foreign direct investment" but disinvestments.

But then Malaysia aims for form over substance every time. 

FAC Canada