RECENT discussions, notably an article from Free Malaysia Today, have attributed the waning foreign investor confidence in Malaysia to Prime Minister Anwar Ibrahim's alleged U-turn on race-based policies.

This perspective, while compelling, overlooks a more nuanced and significant factor: Anwar's approach to foreign policy, characterized by excessive posturing, pandering, and a precarious balancing act between East and West. This article aims to redirect the focus towards these critical aspects, arguing that they are the true culprits behind the current economic apprehensions.

Foreign investor confidence is a cornerstone of Malaysia's economic stability and growth. Investors seek predictable and stable environments, where policies and diplomatic relations are consistent and transparent. In this context, a nation's foreign policy is not just a tool for international relations but also a signal to the global investment community. The confidence of these investors is heavily influenced by how a country positions itself on the global stage, the consistency of its foreign policy, and its diplomatic relations.

To understand the impact of foreign policy on investor confidence, one can look at several global examples. The United Kingdom's Brexit saga is a prime example. The uncertainty surrounding Brexit negotiations led to a 29% drop in FDI between 2016 and 2018, as reported by the Financial Times. Similarly, the U.S.-China trade war under President Trump saw a decline in investment flows, with the UN Conference on Trade and Development noting a 13% fall in global FDI in 2018. These cases illustrate the direct impact of foreign policy decisions on economic indicators.

Considering these global trends, Anwar Ibrahim's foreign policy approach can be seen in a similar context. His attempt to perform a balancing act between Eastern and Western powers, as reported by the media last year, has not been conducive to fostering FDI in Malaysia. This indecisive stance, coupled with the inconsistency in Malaysia's stance towards key international issues and economic partners, mirrors the unpredictability seen in other countries that have experienced declines in foreign investment.

Anwar's decision to overlook the issues of the South China Sea, where China is allegedly trespassing into Malaysian waters, in favour of securing more investment from China, is a glaring example of this detrimental approach. Such actions not only compromise Malaysia's territorial integrity but also send worrying signals to the international community about the country's foreign policy priorities and its commitment to international law and norms.

Since assuming office, Anwar Ibrahim's foreign policy has been a mosaic of contradictions and uncertainties. His administration's approach to international diplomacy has often appeared reactive rather than strategic. These policy flip-flops are not just diplomatic missteps but also red flags for investors who seek stability and predictability in governance.

Just as Anwar's posturing and pandering have raised concerns, similar actions have had repercussions in other nations. For example, Brazil under President Bolsonaro's leadership faced international criticism and investor scepticism due to its environmental policies and diplomatic stances. This global perspective underscores the importance of a balanced and consistent foreign policy, not only for domestic stability but also for maintaining international investor confidence.

The decline in foreign investor confidence in Malaysia is a complex issue that cannot be simplistically attributed to domestic policy changes, particularly affirmative action policies. A more accurate diagnosis points towards the inconsistencies and unpredictability in Anwar's foreign policy approach. For Malaysia to regain its footing in the eyes of the global investment community, a recalibration of its foreign policy, characterized by stability and consistency, is imperative. Only then can Malaysia hope to restore the confidence of foreign investors and pave the way for sustainable economic growth


Ahmad Zaim Ahmad Tawfek was an assistant to Federal ministers in formulating economic, youth and foreign policies for Malaysia.

** The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of Astro AWANI.