Taking new roads to stay competitive

WHEN turmoil erupted in the financial markets of East and Southeast Asia in 1997 due to the regional crisis, the economies of many nations - including Malaysia's - were affected in many ways.

Although large amounts of short-term capital left countries like ours and those of our regional neighbours like Indonesia, South Korea, Philippines and Thailand, foreign direct investments (FDIs) into some of these economies were quite positive.

Along with the flow of investments into these countries, there also came technological, managerial and intellectual capital.

Thailand stands out as one country which benefited from this kind of FDI, as seen from the example of Japanese carmaker Toyota Motor Corp, one of the first multinational corpo-rations to establish operations in the kingdom's automotive indus-try.

The company had established a manufacturing presence in Thailand then, to serve the domestic market of that country, and also export to other countries in and out of the region.

When the crisis hit, Toyota, like many other foreign investors in Thailand, was forced to reduce its headcount by offering early retirement to some workers, while sending some of its Thai staff to Japan for training, and also doing many jobs previously done by sub-contractors, in-house.

This move to take advantage of the redundant capacity due to the crisis and providing training at its headquarters in Japan to employees of its Thai affiliate to better improve quality and competitiveness of its production in Thailand, did not adversely affect its Thai parts suppliers.

Instead, the company accepted price increases for components ranging from 6 per cent to 20 per cent, and also provided pre-shipment payments.

We do not need to wait for another financial crisis to hit us before devising novel ways of luring investors to do business here.

As home to some 11 automotive firms in the northern states of Penang, Kedah, Perlis and Perak, we can already make inroads at becoming a regional automotive hub, as we better ourselves in becoming global players.

One positive step in this direction is the setting up of the country's first digital engineering design centre.

The RM51.8 million Digital En-gineering Design Centre at Ta-man Tasik Taiping in Perak which was recently opened, has the capacity to produce 500 engineers in that field over the next five years.

The joint-venture project between the Northern Corridor Implementation Authority and DreamEDGE Sdn Bhd is meant not only to support the domestic need for digital engineering, but also for the Asian regional market.

Malaysia's northern states, especially Penang, which has for some four decades, been tagged as the "Silicon Island of the East" boasts of the right eco-system for the automotive industry, owing to its excellence in supporting the global electronics indus-try.

The opportunity to diversify from just serving sectors such as semiconductor and medical devices, is now available and companies should step up to new opportunities by investing in the right equipment and resour-ces.

The provision of a platform to grow as a result of new business opportunities via the setting up of the design centre in Taiping, for example, also serves as a plus to those wishing to make a success of their businesses like carmakers found in China and Thailand.

These two economies which opened up their automotive sec-tor to FDIs should be emulated for encouraging the best global automobile makers to collabo-rate with local partners and as a result, emerged as leaders in the market.