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.
