Foreign investment, technology transfer<\/p>\n
Foreign investment has been more than just a catalyst for
\neconomic growth and integration in the Asia Pacific region. It
\nhas also become the driving force behind the increasing migration
\nacross national borders of "high-skilled" workers and technology,
\nraising a number of policy issues.<\/p>\n
Malaysia, as one of the fastest growing economies in the
\nregion, is also experiencing this new phenomenon, as shown in a
\nrecent report by the PECC (Pacific Economic Cooperation Council).
\nThe Malaysian Industrial Development Authority (MIDA), a
\ngovernment agency set up by an Act of Parliament, is responsible
\nfor promoting and coordinating industrial development. All
\nmanufacturing firms with shareholder funds of RM2.5 million
\n(about US$975,500) and above or employing 75 or more full-timers
\nneed to apply to MIDA for a license and practically all foreign
\ninvestment proposals are large enough to have to do so.<\/p>\n
Direct foreign investment totaled RM9.3 billion (about US$3.6
\nbillion) or 40 percent of total paid-up capital, foreign and
\nlocal in 1991. The major investors are from Japan, Singapore, the
\nUnited States, Chinese Taipei and the United Kingdom. Total
\nemployment of the larger manufacturing firms was 700,000 workers
\nof whom 1.4 percent were non-Malaysians but it is not easy to
\nestablish employment by multinational companies alone. However,
\ntwo important employment generating sectors, namely electronics
\nand textiles, are heavily dominated by direct foreign investment.<\/p>\n
Current guidelines on employment of expatriates for the
\nmanufacturing sector stand at five expatriate posts for new
\ninvestment where the foreign paid-up capital is US$2 million and
\nabove. Where foreign paid-up capital is RM0.5 million, one key
\npost is approved. For executive posts, which require professional
\nqualifications and experience, expatriates can be employed for a
\nmaximum of ten years, subject to the condition that Malaysians
\nare being trained to take over. For non-executive posts, which
\nrequire technical skills and experience, expatriates can be
\nemployed for up to five years, again with Malaysians being
\ntrained to succeed them.<\/p>\n
All technology transfer agreements of manufacturing firms are
\napproved by MIDA to ensure that local parties are not unfairly
\nrestricted, national interests are protected and fees, where
\napplicable, are commensurate with the level of technology. Over
\n2,000 agreements were signed between 1988 and 1992, most of which
\nwere technical assistance agreements. The electrical and
\nelectronics sector had the largest number of agreements followed
\nby the chemical sector. The largest number of agreements was
\nsigned with Japan, the United Kingdom and the U.S.<\/p>\n
It is difficult to assess the effectiveness of technology
\ntransfer although it appears that there has been minimum cost and
\nmaximum effectiveness with the regulations. A survey on
\ntechnology transfer conducted among 49 Japanese firms established
\nthe following:
\n* Parent firms have considerable control over joint ventures and
\nsubsidiaries and the foreign partner\/parent firms handle most
\ncrucial decisions on product choice, production techniques,
\nmarketing and managerial decisions;
\n* Investments are motivated by the need to expand or control
\nmarket shares, both international and domestic rather than
\ninvestment incentives; and
\n* The electronics industry has not produced any technological
\nspin-offs for local industries and that local subcontractors
\nsupply less than 25 percent of inputs.<\/p>\n
Recent studies are more optimistic. One suggests that the
\nelectronics industry not be footloose and that it take root in
\nthe local economy, despite cheap unskilled labor no longer being
\nan important input. Another suggested that the electronics
\nindustry has a vested interest in the Asia Pacific region, which
\nis a growing market. (rlt)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/foreign-investment-technology-transfer-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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