I love Malaysia. I love the mamak stalls, the idyllic sunsets, the sprawling Klang Valley suburbs and, at times even the Proton. I have only lived intermittently in KL since the early 90s, but home is still where the heart is.

I am also very proud of how the country has done economically. Having lived and worked in various parts of the world, it is obvious that Malaysia has accomplished a lot relative to other developing countries.

But I worry for the future. The biggest challenge facing Malaysia over the course of the next 20-30 years is the rise of China and India.

Every business magazine has trumpeted this for a while now but it's true China is taking over global manufacturing. Walk into any Wal-Mart in suburban US these days, and it is literally a sea of 'Made in China' labels all over the shelves. And it's not just the T-shirts or mugs anymore. The Koreans took only 30 years to move from selling wigs as their number two export to selling the cell phones, consumer electronics, software, cars, heavy machinery, ships that you see today.

How long do you think is it before the mainlanders can make the Proton cheaper than we can?

India is fast climbing up the other ladder services. Bangalore is only the beginning. Today, it does the dirty work of back office outsourcing and commodity software development for the West.

How long is it before the multinationals decide to move their research, design and development over? How long before is it before one of the one hundred million hungry, smart Indian schoolboys of today starts up the Indian Microsoft?

The skeptical reader will naturally ask what's new. After all, what I'm saying is old news. BusinessWeek reporters make a living by writing these type of articles every two weeks.

Today, something between one third to half of our GDP is driven by exports, largely that of electronics and primary commodities going to the West and Japan. But let me ask you to consider a world, 20 years from now, where Malaysia becomes a satellite economy to China and India.

If you take the law of comparative advantage to its logical conclusion, any manufacturing worth doing will be done in China. Any services that is even somewhat tradable (like call centres and programming) will be done in either China or India.

What is left? Probably what Malaysia can do better than any Chinese or Indian province, i.e. specific agricultural products, tourism, and perhaps niche manufacturing.

Can Malaysia respond? Well, where is our Bei Da, our Tsinghua, our IIT? Where is our Infosys, our Legend? Population wise, do we even have enough people to stand next to the best and brightest from Calcutta or Chengdu?

Of course, there will be adjustments. Maybe we will be forced up the value-added ladder and raise productivity gradually. Maybe we will join forces with Singapore and Thailand to achieve more scale in production.

Maybe the renminbi and the rupee will appreciate to reflect relative productivity levels and therefore stave off the inevitable a bit longer. But the day of reckoning will arrive.

To illustrate, take Australia as a case study. What used to be the richest country in the world (per capita) today relies primarily on primary products, education, tourism and other services. And in spite of its ambition to be the 51st state of the US, it is arguably already an economic satellite to Japan, Korea and increasingly, China.

So you say it's not so bad being a satellite to China and India? But consider the social implications. At the worst case, the things we used for a living to do are taken over by these two giants.

Our unity and ethnic harmony for the past 30 years have been underpinned by economic success. People argue for and against the NEP, but the country has become wealthier and more integrated since the NEP was first introduced.

I will not attempt to say whether this was due to or in spite of the NEP, but we have come a long way nevertheless. Will the entire system unravel with a different kind of economy?

If the worst case doesn't happen, then Malaysia is likely to become a satellite specialising in very specific sectors, feeding off the growth of the two countries. The economy will reshape itself to become like Australia's exporting primary products, running ClubMeds or flipping hamburgers (to paraphrase President Gerald Ford). Well, we have to ask ourselves is this what we want to become?

As the American and Japanese examples show us, economic influence carries with it other forms of influence. China and India will exert increasing political and more importantly, media and cultural, power.

Who knows there might come a time when it will be once again culturally hip to read Tang Dynasty poetry/Song Dynasty lyrics and watch movies where boys chase girls round trees. Are we as a country ready for this?

I have neither bold visions nor grand plans for Malaysia. What I offer is only one possibility among many. Was it Yogi Berra who said that it is always dangerous to make forecasts, especially about the future?

All I do ask is if that day does come, would you prefer to be chased by the dragon or eaten by the tiger?