IDEAS: Lack of technology, skills transfer from China to Malaysia
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While Malaysia has benefited from China’s foreign direct investment (FDI) in terms of financing and capacity, the social and environmental impacts of these investments should be looked into as well.
The Institute for Democracy and Economic Affairs’ (IDEAS) research paper entitled “Impacts of Investment from China in Malaysia on the Local Economy” said there is a lack of technology and skills transfer from China to Malaysia, which the think tank highlighted as being crucial.
IDEAS director of research and development Laurence Todd said there are instances of Chinese companies favouring Chinese labour and subcontractors over local ones.
Having said that, he noted that evidence from other countries suggests FDI is most beneficial when there is a high level of technology and knowledge transfer but this requires the involvement of human capital.
“There are indications that Chinese firms do not always provide opportunities for such transfers, particularly to local SMEs,” he said.
Questions & Answers
Q.What specific benefits has Malaysia seen from China's foreign direct investment?
What specific benefits has Malaysia seen from China's foreign direct investment?
Malaysia has gained from China's foreign direct investment primarily through financing and an increase in capacity. These are the main advantages highlighted in the research paper regarding the impact of these investments on the local economy.
Q.What is the primary concern raised by IDEAS about Chinese investment in Malaysia?
What is the primary concern raised by IDEAS about Chinese investment in Malaysia?
The main concern is a lack of technology and skills transfer from China to Malaysia, which the think tank believes is crucial for the local economy. There are also indications that Chinese firms favour their own labour and subcontractors.
Q.What is required for foreign direct investment to be most beneficial, according to evidence from other countries?
What is required for foreign direct investment to be most beneficial, according to evidence from other countries?
Evidence from other countries suggests that foreign direct investment is most beneficial when there is a high level of technology and knowledge transfer. This crucial process requires the active involvement of human capital within the recipient country.
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