LETTER: Internatiional studies have shown that massive China, Japan and Western foreign direct investments (FDI) into Vietnam did not bring much benefit to Vietnamese companies or to the country.
One of the main reasons for foreign companies to invest in Vietnam is the cheap labour and incentives like a 10-year tax exemption offered by the Vietnamese government.
This kind of FDI is used to set up manufacturing plants with the cheapest labour cost to produce products that will be marketed globally to maximise profit margin, which is tax free.
This has been the same in Malaysia since the 1970s.
The country has been a major exporter of electronic and household goods like air-conditioning to the world market, but these products belong to international companies that manufactured them here due to cheap labour cost.
In other words, this type of FDI, even as joint ventures, will not bring much transfer of technology in creation of local products or the utilisation of robots in manufacturing lines.
The clearest example of this can be seen in our automotive industry. The designing and engineering of automation and robotic production lines are done by Mitsubishi, Geely, Daihatsu and Toyota in their home countries.
Therefore, the latest move by the Science, Technology and Innovation Ministry (MOSTI) under the stewardship of its minister Khairy Jamaluddin to create the Malaysia Grand Challenge is a good start to encourage the country to make its own products for the global market.
Unlike China, India or Indonesia, which have a large population that creates a large domestic market, Malaysia's population is small and its products must be targeted for the global market.
Once the country has many "Product of Malaysia" goods successfully exported to the world market, only then can we achieve industrial nation status.
And, once this has become a reality, it will bring big benefits to our country as it would create wealth for the nation and its citizens.
DR AMALINA AMIR
Head of Innovative Electromobility Research Lab,
Faculty of Mechanical Engineering, UiTM, Shah Alam
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times