allAfrica.com: South Africa [analysis]: Mbeki Seeks to Capitalise On Thaw in Malaysian Politics
[A fine article. Check, in particular, the section on affirmative action.] "Mbeki Seeks to Capitalise On Thaw in Malaysian Politics" Business Day (Johannesburg) ANALYSIS September 5, 2003 Posted to the web September 5, 2003 Martyn J Davies Johannesburg UNTIL the onset of the Asian financial crisis in 1997, Malaysia was among the largest foreign investors in SA. But financial fallout and political differences resulted in Malaysia disappearing off SA's investor radar screen. Investment fatigue set in and relations went on to the backburner. Given pending political change in Malaysia, President Thabo Mbeki's trip to the country this week aims to re-energise the bilateral relationship. Between 1994 and 1997, Malaysia was SA's second-largest investor state, with incoming investment calculated at R6,8bn. This figure accounted for 17% of all foreign direct investment coming to SA since 1994. Showcase investment projects included Telecom Malaysia's 30% acquisition of Telkom , valued at R2,2bn, and oil heavyweight Petronas's almost total takeover (97%) of Engen, which is valued at R1,9bn. Malaysia's investment in SA was largely politically driven and was cemented by the good standing between SA and Malaysian Prime Minister Mahathir Mohamad. Umno, Malaysia's ruling party, had been a long-time supporter of SA's liberation struggle and was a financial contributor to the African National Congress (ANC). With both SA and Malaysia, being proponents of south-south co-operation, the political fit was expected to develop into a commercial bond. Under former president Nelson Mandela, Malaysia had two advisers in the presidency advising on the formulation of SA's affirmative action policies, propagating Malaysia's pro-Bumiputra model. Malaysia's Bumiputra policy was introduced in the 1970s to redistribute economic power from the Chinese to the indigenous Malay. Mahathir regards himself as a champion of the developing world an exporter of capital. Under Mahathir, Malaysia's international investment forays have often been decided at cabinet level. Strong political influence has been exercised over international corporate expansion. Malaysia's support for the ANC was reciprocated by the South African government's backing of Petronas and Telecom Malaysia acquiring South African state assets in 1996. Initial Malaysian investments in the South African banking sector were intended to build the financial foundation for investments. There are now 32 firms with Malaysian interests in SA, with a combined total investment of about 400m. Investment interest has, however, cooled off dramatically. This is for commercial and political reasons. * * * * Malaysia's investment foray extends beyond SA into other African states. In light of dwindling Malaysian oil reserves, Petronas has expanded into Sudan and Algeria. The company has partnered with China National Oil and Sudapet, Sudan's national oil company. Telekom Malaysia has acquired a stake in Ghana Telecom, a deal that has gone sour. It is in danger of losing nearly $100m after disagreements after Ghana's political change in 2000. Political forces have largely determined Malaysian investment in Africa. This model is likely to change under incoming prime minister Badawi. And this presents both new learning challenges in Malaysia's changing political structure and commercial opportunities for South African firms. Davies is research and strategy director at Emerging Market Focus, a business research and strategy firm. http://allafrica.com/stories/200309050133.html
