We can’t compete with the Malaysians

Malaysia outperforms Canada in macroeconomic environment, goods to market efficiency, and business sophistication and innovation.

I was as surprised as anyone that it took three federal cabinet ministers flying in from Ottawa to Vancouver late in the afternoon of Sept. 20 to make the announcement the federal government was approving the Pacific NorthWest LNG project.

Perhaps that’s how politics works but I would have thought this announcement could have easily been made in Ottawa.

But what aroused my curiosity beyond the ministers’ photo-opportunity/selfie visit was the identity of the developer: who is Petronas, the lead company for the project?

Petronas is an oil and gas giant, a Malaysian state-owned corporation created one year before we created Petro-Canada. Its annual revenues exceed $130 billion, nearly half the annual revenues our federal government collects.

The Wall Street Journal reported (January 18, 2016) that “Petronas is the Malaysian government’s biggest source of revenue, covering as much as one third of the annual budget – even after cuts in subsidies and the introduction of new taxes to diversify sources of income.” Canadians do not have to worry about such problems since our government privatized Petro-Canada, our energy crown corporation.

Malaysia, population of 31 million, is a federation whose governance is based, as is Canada’s, on the British parliamentary system. It has a House of Representatives and a Senate, its cabinet is headed by the prime minister, the ceremonial head of state is their king, and its legal  system, just as ours, is based on English common law. Malaysia’s 19th and early 20th century history is more troubled and violent than ours, and it achieved full independence in 1957 as Canada was nearing its first  centennial.

How did Malaysia come to own a corporate giant such as Petronas? While the country is still classified as an emerging economy, the World Economic Forum’s (WEF) 2015-16 Global Competitiveness Report Index shows that Malaysia outperforms Canada in the areas of macroeconomic environment, of  goods to market efficiency, and of business sophistication and innovation.

The WEF’s data shows that today Malaysia outperforms Canada in its capacity for innovation and in company spending on research and development. Adding insult to injury, Malaysia also records better gross national savings and lower general government debt as a percentage of GDP than Canada does!

Instead of flying across the country for a few photo-ops and making billion dollar promises, these three ministers should have taken a flight to Malaysia.

They should have gone there to learn how a country of similar size than ours, governed by the same parliamentary and common law systems as ours, has managed, after only 60 years of independence, to outperform  us in national savings and general debt while at the same time developing a corporation producing revenues to cover one third of its national government budget.

We cannot dominate the global natural gas market. We are not a natural gas superpower. Twenty countries exceed Canada’s proven natural gas reserves.

Russia’s proven natural gas reserves are 20 times what ours are! We cannot compete by improving the quality of our natural gas to make it a superior product. We can only compete by lowering the price. Malaysia’s state corporation has the advantage. It can search the global market to get the lowest energy price to give its manufacturing industry a competitive advantage.

This LNG project, if it goes ahead, will mean added costs for Canadian citizens and their industries if we are to honour our carbon emission commitments. It will mean higher carbon taxes and other costs.

We must end our focus on peddling non-renewable resources on the promise of short-term jobs and billion dollar dreams. We should learn from Malaysia how to develop and implement a national plan to benefit society for the long term.

We must subject economic development to the realities of the environment and balance economic progress with social well-being, education, and political stability.

Retired public sector administrator Andre Carrel lives in Terrace, B.C.