Asian tigers urged to reject polluting foreign investors

South East Asia’s tiger economies should prize the long-term health of their environment above the ongoing short-term gains provided by foreign firms that pollute, economists have claimed.

Academics believe many South East Asian nations have been misled into accepting that increased pollution is a price worth paying for the future well-being of their economies.

But groundbreaking research by the prestigious Globalisation and Economic Policy Centre (GEP) at The University of Nottingham Malaysia Campus shows that the flow of money from overseas cannot sustain a nation's economic growth and that policy-makers should consider tightening the lax environmental regulations that have encouraged much foreign investment.

Mr Chew Ging Lee, an associate professor of quantitative methods, used Malaysian data to carry out what is thought to be the first-ever study into the links between Foreign Direct Investment (FDI), pollution and output.

He said: "FDI has been a major engine for the rapid economic growth of many South East Asian countries, but the success of these economies has been achieved at the expense of the environment.

“Lax environmental policies and lenient regulations have encouraged foreign investment in industries which pollute and damage the environment.

“But this does not have to continue. This research shows that the conventional wisdom that FDI is a key factor in sustained economic growth may provide an incomplete picture.

"It is clear from our analysis that the effects of FDI on the growth of Malaysian productivity may be transitory rather than permanent."

Malaysia attracted 94-million US dollars' worth of FDI in 1970, 934-million in 1980 and 3,788-million in 2000.

But like fellow ASEAN-5 countries Indonesia, the Philippines, Singapore and Thailand, the country has seen rising pollution-levels often as a result of the relentless inflow of FDI.

Lee said his research suggested the ASEAN-5 countries could afford to turn their back on polluting industries and do more to power their own sustained growth.

He said: "Energy conservation and strict environmental regulations may temporarily harm the expansion of the economy.

"But it is now clear that the appropriate response to environmental problems will not prevent long-term expansion if these countries invest in their people, new technology and infrastructure rather than adopting weak environmental regulations and enforcement which may attract polluting FDI that has the potential to actually harm the country in the long-term."

Source: University of Nottingham

Related stories:

Stake tussle erupts on Hutch India network
The two-month-long battle for control at Hutchison-Essar, the Indian cellular venture of the Hong Kong-based Hutchison Whampoa Group, increased its tempo this week with Hutchison Whampoa also jumping into the race for control of its Indian subsidiary by offering to buy out the minority 5.11-percent stake in the Indian company held by the Hinduja family, an Indian business group.
World Bank: Competition key to IT growth
Poorer countries still fall short when it comes to making full use of various available information technologies, according to a World Bank study.
ICT gets a boost in Indian budget 2006
Even as the country's software and biotechnology sectors have expressed "disappointment" over the 2006 budget announced by India's Finance Minister P. Chidambaram Tuesday, many in the IT industry are elated over the attention this budget has showered on the country's IT manufacturing sector.
India delays new telecom investment rules
India reportedly will delay the implementation of new limits on foreign investment in the nation's telecommunications sector.
Briefs: India expects telecom investment surge
India said Wednesday it expected foreign direct investment in the telecom sector to more than double this year.
Briefs: Confusion over review of India telecom FDI
A reported review of India's policy on foreigners running telecom companies was called into question Wednesday by the country's IT minister.
Briefs: India reviews rule on telecom expatriates
India is reviewing provisions in its foreign direct investment rules that currently bar foreigners from top jobs in the telecom sector.
Briefs: India's foreign telecom investment grows
Foreign investment in India's telecom sector will top $2 billion this year, fueled in large part by Vodafone's 10-percent stake in Bharti Tele-Ventures.

News discussion:

General Science news