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Sakmongkol ak 47

Wednesday, 29 July 2009

Adam Smith’s Chinamen

Adam's Smith's Chinamen?

If competitive capitalism thrives under a specific political climate where the role of government is limited, then it follows, that more of government hinders capitalism. Let us be clear at the outset, that less government does not mean government withdraws from providing services normally associated with being a government- security at home and protection against threats from abroad, upholding the rule of law through the relevant institutions etc, presiding over monopolies that only government should do.

What less government means is that government refrains from getting involved in business affairs which are better run by private individuals and enterprise. Like spending our own money. Like Milton Friedman says, nobody spends our money better than we ourselves do. If our money is spent by the government, the circumspect behaviour isn't just there. Our money means tax payers money.

If capitalism has been proven as the better way to create wealth, it follows therefore any fetters on the growth of capitalism also fetters wealth. Government's bossy involvement for instance can hinder the growth of capitalism which is necessary for wealth creation.

If one then looks at the different economic positions between Malays and Chinese, perhaps the chief reason why Malays lag behind is because of excessive government interference into the affairs at which the Malays would be better off in doing as private citizens.

In an earlier article, I got this comment (thank you anonymous) which I think is quite pertinent to my point:-

What is necessary is to develop genuine Bumis with the prerequisite skills/attitude within a competitive environment and incubated through a 5 year program i.e. no instant wealth thru APs, monopolies, brokerage etc..No issue about depriving the non Bumis but complementing existing capacities and competencies...

What strikes me in the above statement apart from the technical feasibility of such proposition is an acceptance that good business skills are teachable and are not genetically encoded.

My point is this. Let us dispel this myth about the Chinese having thousand of years cultural experience in dong business and hence their innate eminence in commercial abilities. That would suggest that business skills (now, business is a skill and not a cultural trait) are easily encoded in the genetic makeup of a particular race. Further, once encoded these are passed on from one generation to the next and so forth. In our present case, it is the Chinese whom we assigned this capability.

That statement crumbles when facts are brought up to refute it. The truth of such a statement would depend on whether it was a fact that those immigrants who immigrated into Malaya in those days, came from the merchant class. Now, as pointed out by many bloggers writing or commenting on this subject, the majority or indeed all those immigrants descended from the lower strata of Chinese society. Those better off on the social hierarchy stayed behind where life for them was better. Those who had nothing to lose except their miserable existence in China came over to the Nanyang and Malaya in those days. They met up with the challenges by an appropriate response- cultivating teachable habits and skills. those Chinese planters featured in the book Land to Till or Stepping Out- The Making of Chinese entrepreneurs, pardon my word, were the dregs of society or whom the Malays once referred to as sengkek.

Those early Chinese were able to thrive because our own rulers at that time regarded them more as a curiosity usable because they were industrious workers. I am not sure and certainly refuse to accept that industriousness is a cultural habit/trait unique only to the Chinese. Because of this trait, and not because of any other innate abilities, they were given initial start to engage in commercial activities. The opportunity was only at the beginning- once the Chinese applied themselves on economic endeavours, they were basically left alone to do their stuff. Again, it was the limited 'governmental' involvement in the handling of Chinese business affairs best run by themselves, pursuing their own interests, which allowed the Chinese to prosper.

This is classic Adam Smithian behaviour. Malays must take note of this.


etheorist 29 July 2009 at 10:29  


Profound insights and courage in this post and the previous, which I hope you will keep at until the causes are clear...or clearer.

It will then be like the parting of dark clouds in the Malaysian skies.

Anonymous,  29 July 2009 at 15:06  

These people after diapora into the Sounth East Asia region (nanyang) became practical pragmatic and formed closed and unpenetrable dialect based associations.
Close and intimate relationships with local ruling cliques and stratified elites guaranteed entrenchment in economic and commodity structures.
The hard word work was only the initial state.
Palm oil and corrupted elites ensured present dominance.
Mah Ngah Tong.

Tommy Yewfigure 29 July 2009 at 15:14  


Kawan punya pasal, I’ll let u in on their secret strategic training; it is Mahjong, supplemented by Black Jack, pai kow & poker training at a very early age! Tak percaya sama I, u pergi tanya those taukehs u know.

Look at the Jews in USA, they played & mastered mah-jong since the roaring 20’s, now look where they are at controlling most of USA economy too.


Anonymous,  29 July 2009 at 17:20  

It is the Malay elite, the likes of Mahathir and his cronies who will always blame the Chinese , always say the Malays are backwards, Why ?.

In my mind I can only see that people like him have an agenda, which is to hoodwink the Malay masses so that they can find an excuse to extent the "hijacked" NEP so as to continue to enrich themselves, but at the expense of the Malay masses.


Anonymous,  29 July 2009 at 20:41  

Do you wish to know the traits of good young n upcoming "next echelon" businessmen i.e those likely to be given opportunities and are in demand by the business community?

For Bumis>>those with good political/govt contacts n able to swing deals or foster good relationships

For Non Bumis>>those with operating skills,good sense of business and strong HR network

Well..this is no new phenomena..its been going on for years.Thus would one be surprised of the type of biz ppl spawned from the different ethnic group.

I know of a few Bumi..who are great operating guys,very entrepreneurial and hands on>>but due to their focus on operations are poor networkers and hv limited po;itical skills..have remained stagnant or out of jobs with the downturn.

Just look will notice that as well,

Pak Idrus 29 July 2009 at 23:04  

When the Chinese first came to our shore they were all very poor. They came with the only cloth that they wore. I live through that period and saw how hard they work and they kept learning to acquire knowledge. At that time they spend only on the basic and save most of their earning.

The most important thing they did is the setting up of the clan club and the Chinese School. The Club became their network for exchanging of know how and getting information and ideas. And to be in the group at the club they all had to play majong or other form of gambling. I live below one of the club and hear them playing majong day and night every day. Gambling is very important because they learn to take risk.

It is also through the association that they could get to borrow money because at that time there was no banking system.

It seem that most of your commenter are of the same opine as mine.

Take care.

walla 30 July 2009 at 10:20  

A: 'I think the malay dilemma is actually a malaysian dilemma. It's not about malays trying to catch up with the chinese in the country. It's about malays, chinese, indians and so on trying to catch up with the japanese, koreans, americans, europeans and so on elsewhere.'

B: 'You mean it's about pragmatism. The success of the chinese in commerce and industry wherever you can find them is due to a number of attributes. The overriding thrust is pragmatism. They don't waste time and energy trying to do things which they know will not help to alleviate their situation. If a situation is bad, they look above and beyond it to look for another path to reach their focused objectives. Their biggest focused objective is financial independence because it enables them to do more, and achieve higher. Even those without much education want to achieve because they say if they don't try, they won't know. They are natural risk takers. The gamblers are one end of that, mostly with bad results. The calculators are at the other end, knowing the limits they can take with each risk. And their rationale is pristine. If something turns bad, i can still make it fashion my own destiny. That's the rationale.

Take Kuok, as example. From grocery shop in Johor to sugar trader in London. One leap and he was next in Beijing. Deng asked him what should be the leasehold for the land. He said 99 years. Deng gave him 50. A jv was formed, it became China's first world trade center. He made it all back in 7.
You see, Kuok had the foresight ahead of everyone that China would reemerge as the biggest in-thing of this century. Looking at the hunger of the masses for progress, it was inevitable. So he planted the first shoots there. But it was not about buildings of stone and glass. The value was in the management know-how that was captured in his company in HongKong that manages his Shangrila chain of hotels. You can have the best hardware but if the brain power is not in place, the hardware is just cold steel standing still. And in this fast-paced world, anything that stands still is moving backwards compared to others moving forward.'

A: 'So you're saying the malay ergo malaysian dilemma was about the malays not recognizing that they had in their chinese brotherhood a nucleus of pragmatism they should have also emulated?'

B: 'Exactly that. Instead of turning to positive, they took the first road to negative. Instead of seeing the chinese as national assets, they saw them as nettlesome threats and competitors. Once you have that frame of mind, then it is easy to go down the road to nowhere. Is it a comma or a fullstop in the agreement, for instance. You know, we have ten fingers. One of them represents zealousness. It is a negative emotion that destroys. Find me a successful man who has let any negative emotion control his actions. The enemy that you make today may well be the best friend you need tomorrow when both are assailed by a common external threat. And that threat which has arrived is relevance. How relevant is Malaysia today to the external world which determines our prosperity and progress? Try to answer that question candidly. If people can't pay taxes, how will government services run when oil spigots turn dry?'

A: 'From that angle, it thus seems that all this local comparing of who is richer or poorer has no value, doesn't it?'

walla 30 July 2009 at 10:21  

B: 'Exactly, again. You say that the chinese are richer because they hold more wealth. My friend, what about the malay government holding the national pursestrings. The bailouts of BMF, MISC and MAS didn't happen with malay money. They happened with malaysian money. And if that's from Petronas and other national wealth, then it means there is control of those wealth which means there is equity over those dispensers of wealth which means those equities should have been added to the stock to compute the actual proportion. Why the convenient omission? Please answer me. So if we put everything together, who owns what percentage, if we want to be gross about things?

The malays at the grassroot levels who are griping about chinese wealth should instead gripe about malay control of national wealth. It is a perpetuation scheme so long as people continue to think the competition is at home. How can that be when the competitors are struggling against the tide of external forces?'

A: 'That's why the proposal to incubate malay potential in five-year programs to groom successful businesses deserves consideration.'

B: 'I can agree to that provided you have ready answers to some questions. One, how different is that from what has been done so far? Since day one, special exclusive schemes have been given to malay entrepreneurs and scholars. Grants, subsidies, contracts, permits, scholarships. You name it, they have done it. If by incubate you mean cluster them, you can find plenty of those clusters around. A, the factors of success are not there. That's the problem. Two, now that there is some heart-warming to one another around the country, how are you going to hide a scheme which favours one race when there are other races which also depict the same needs and potential? Three, who is to decide and by what means the worthiness and feasibility of an incubatable project? Four, if there are inherent knowhow and skills weakness in the proposed project to be supported, who will decide and in what way will it be decided that will reduce the risk of another failure by pulling in other support resources that will however end up making it look less malay and more malaysian?'

A: 'Are you indirectly saying that any new deal should be inclusive of 1Malaysia concepts?'

B: 'Let me give you an example. Take cosmetics. The malays have developed a budding local cosmetics industry. But they don't brand it properly for a wider market. It becomes something made just for makciks who come out of hypermarts. Where's the wider spread of prospects? Look at the brand names used and the way they are packed. The minds were already fixed on one market. So how can it grow?

Likewise, every other thing you can think of. And you know why? It's because the entire notion of malayness has become associated with negative memories. You start with political arrogance, then move to riots and tantrums and it picks up momentum with kerises bathed in blood, ending in selective offers made salami-style, layer within layer within layer of grudging concession. In the first place, why should there be racial profiling in decision-making about conceding to things which should never have been held back in the first place?'

A: 'So where are we, looking forward?'

walla 30 July 2009 at 10:21  

B: 'It's all about the 3C's, A. Culture, character and conscience. The more i think about it, the more i conclude that only if there is constant cooperation and mutual harmony between all the races will it be possible, late as we are, for a successful and progressive Malaysia for everyone. The chinese have some bad traits. So too the malays and indians and who else you can think of. It's only human. But when you put together all the good and bad traits of all the races, the good of one race may just end up nullifying the bad of another race. So what comes out is the ultimate autobot.

And since i know cabinet members are listening in, let me fire a question at them. If this minute you don't have party membership and your genes are scrambled to make it impossible for you to determine your race, what will be your response to all that has been said here?'

A: 'I think they will say it's too politically incorrect for them to say anything, even if they are depoliticized.'

B: 'We can feel for one another, A. To see a hardworking malay not be able to get up is sheer shit. Likewise the chinese and indian who try hard to make honest livings. But emotions aside, there must be proper methods and clear vision. There must be clarity of mind on where to draw the line between support and welfarism. There must not be any zealousness if someone succeeds. There must be integrity and hard-working, inspired leadership and supervisory efficiency.

Otherwise what will happen is that we will all end up doing the same things again. And getting the same ghastly results.'

A: 'I was thinking the malays should have life-long learning, too. That should include things like how to design their own webpage, how to do a really good business plan, what pitfalls to look out for when striking out to do business, and so on...'

B: 'And simple things like inventory control, negotiating for goods and services, accounting and financial prudence, business communication and marketing techniques. Yes, A, they need these things. Why it's not done more pervasively beats even me.'

A: 'Do you think both of us are making sense to anyone?'

B: 'No, we are just old men whiling time until lunch. By the way what's for lunch today?'

A: 'I have some left-over Whiskers cat food.'

B: 'Delicious; let's warm it up, A.'

Tommy Yewfigure 30 July 2009 at 11:21  

Glad to see that Pak Idrus noted that my comments weren’t exactly all a big joke.

Agreed with his statement that “Gambling is very important because they learn to take risk”.

Mah-jong is not just an intelligent gambling pastime, beside the risk/fun factor, it’s teaches the ‘art of War’ skill, business sense, social life skill, team play even though the other 3 players are supposedly your competitors. One must really understand the intrinsic nature of the game to truly appreciate its value. The Kwong Huays or Wei Koons (Clan association) plays a vital part too in looking after their own & in community developments as well. Note for example during Chinese weddings or funerals, members will never be burdened by financial difficulties in their moment of joy or grieve. Everyone make monetary contributions (Ang pow for weddings or ‘white gold for funerals’ sure beat the like of giving a glass set or a toaster :)).

However, having said the above, there will always be those that fall to the wayside with these skills they developed, turning to undesirable activities. Imagine the Star Wars ‘Jedi knights’ code, most will follow the good side while a few will turn to the dark side.

Anyway, may the 'good'force be with all of you.


Tommy (me the ever lovable ‘Yoda’ lah of course, do I need to say more?..heheh)

P/S – I don’t condone or encourage gambling in any form to those that lack self control & discipline.

ahoo,  30 July 2009 at 12:24  

Dato, Let me share a little on my life as anak Malaysia and also some background news that was passed down to me about my grand parents ( Chinaman )from China.

I am a third generation, Malaysian and my late grand father came to Malaya in the early 1900's and settled in Perak. Was told that he was very entreprising and at the age of mid-twenties, he was into construction and building roads, rails and bridges for the British. It was solely because he could speak a little English that he was closed to the British. No engineering training but got lots of hard working manpowers.

At that stage he was consider rich as he went back to China to bring my grandma, his eldest son and many close relatives. Most of the relatives were sought to work for him then in clearing of jungle, building warehouses, roads, rails and bridges etc.

Well, all was going well until the Japanese came. Everything was restricted and he was marked for being close to the British. Most of his assets was taken away and he ended up running a provision shop. Even for that he was not spared as the Japs would come and truck away rice, oil and whatever that their battalion need in Teluk Intan, Perak.

At times payment will be given and at times nothing was offered. Such was his life then and it was after the Japanese occupation that he succumbed by illness and died at a young age of late thirties.

Grandma was left with a burden of five kids with the eldest only at age 12 and the youngest at only 6 months old. Contractor licence and bus licence awarded by the British were given to close relatives that were working for him. These relatives today are all multi millionaires.

Since most of his assets was taken away early, grandma had to release 3 kids into the orphanage and work to bring up the other 2 kids. Life was certainly tough and I never knew how she had struggled through it all BUT her courage, strong will and determination was exemplary.

Life was really tough for all of us as when I was young, I remembered our daily provision of porridge with sugar or sauce. Sometimes only one meal or two in avarage. Any veggies or meat would be a grand occassion of birthday or festive celebration of some sort. The adults income were mainly from tapping rubber to cashcrops like tobacco, tapioca, banana etc. The lands were lease from Malays chegu or govt servants etc.

Grandma would make dumpling or pao to sell to the villagers as most people on a second job would need to pack such item as their meals working from noon till late evening. All was hardworks and no shortcut by any mean. She managed to buy 2 rubber estates in the mid sixties and moved to a village lot given by the govt in view of cutting off communist's supply chains. Income was a little better but that depends entirely on the daily weather. Rains and no rubber tapping meant no income. Most of my uncles ( her sons ) were not educated and my dad ends up as a truck driver.

In view of such tough life, I made a pledge that I would not want to be in the shoes of my uncles nor dad. With a strong will to succeed no matter how tough the going is to be for me, I venture into business in my mid-thirties with a saving of one hundred thousand in early 90's and struggled through it all. Life is much more pleasing now with business, some savings and yearly holidays for family.

In conclusion, I can only say that there is no short cut to success. It requires true determination, persistency and lots of sacrifices. It has often being said that " Success is 10% inspiration and 90% perspiration."

And I like what Bob Proctor's said : We come this way but once. We can either tiptoe through life and hope that we get to death without being too badly bruised or we can live a full, complete life achieving our goals and realizing our wildest dreams.

Anonymous,  30 July 2009 at 14:29  

But, if there is no government intervention and no government "protection", then what is the role of UMNO in protecting Malay rights and privileges. UMNO will not be a special political party.

This govt intervention is to get the Malay beholden to UMNO. Period.

Anonymous,  30 July 2009 at 15:52  

Anon 30 July 2009 12:24>>a most relevant statement?
"Contractor licence and bus licence awarded by the British were given to close relatives that were working for him. These relatives today are all multi millionaires."


market>supply chains/niche with good prospective demand
candidates>Aptitude/experience and hands on.
Market share target>less than 50%

Any program as such??..never.Always catching the wave after the apex..hitting saturated markets on the downtrends.

And who to identify..who to run the programs?EVERYONE including Mr Walla,Mr Sak..everyone.U can't rely on govt to seed n catalyse>>the age of govt knows best is over...

You and all interested intelligent Malays (or non Malays) shld be given the platform to propose/lead and develop incubator their own sphere of expertise.
The role of the govt is to catalyse the new DEAL.

mekyam 1 August 2009 at 12:35  

salam tok sak, walla and fellow visitors!

i'd like to share something that has been tagged to me by a facebook friend. it should serve to corroborate the point on pragmatism that walla raised in his usual entertaining and astute dialog, esp in answer to the question -- "How relevant is Malaysia today to the external world which determines our prosperity and progress?".

going by the details brought up in the candid observations of an expatriate living in msia that i'm appending below, i dare say not much any longer.


mekyam 1 August 2009 at 12:43  


"Dear all,

As a foreign investor in this country, it puzzles me to no end that Malaysians would fight all-day-long about their ethnicity, religion or the colour of their belly-button.

Foreign investors are not coming here for cheap labour anymore, Vietnam, and further ashore China, are far cheaper and better (little labour department there). The local market is a laugh, small in number and means, Indonesia or even Thailand are way more enticing if you look at quantity. Don't try to bluff me about common law and judiciary, unwritten rules and unpredictable judiciary rule Malaysia far out compared to Singapore. Don't even speak about infrastructure, try taking a Malaysian taxi from KLCC to Bukit Bintang wearing a tie and sporting a laptop and you'll understand why foreign investors do not need a second trip to Malaysia. Nope, none of these count favourably.

The very reason Malaysia (still) ends up with large semi-conductor factories, regional shared services and other multinational service centres is, precisely, the ethnic diversity. I recently had a tax issue in Indonesia. Some obscure rules I could not even start to fathom blocked the conclusion of the yearly audit. Who sorted it out? Our Malaysian accountant who speaks fluent bahasa flew down and got rid of the fuss in a couple of days. Had it been me, I might be in a Jakarta jail or even dead by now. I am now sourcing materials from China, needless to say I speak and write no Chinese, like most mat salleh, guess who helps me here? A Malaysian. I increasingly require Indian expertise in IT, law and finance. Needless to say, I can never hope to get through the thick accent and neither can my suppliers decipher anything I have to say. Guess who's doing the legwork? A Malaysian. Again. Surprised?

It does not stop there. I can consider myself lucky if my visiting clients from continental Europe can mutter 2 or 3 comprehensible sentences of English. Guess what they tell me once they get back home? They love the way Malaysians speak English. It being a second language here, Malaysians go the extra mile to make themselves understood to Italian or French speakers who would have come back from the UK or the US not having understood a thing!


mekyam 1 August 2009 at 12:44  


Now rather than capitalise on this, Malaysians prefer to rant about ethnicity day in day out. Good for foreign devils, Malaysians seem bent on keeping us in business. Expensive (and sometimes useless) expats are still needed in this country because Malaysians would rather have a costly foreigner on top than a plain co-national, due to wrong skin colour, religion or whatever. Thanks to the absurd (and it pains me to stay polite) local university selection and incredible limitations, expats will be needed forever here. Contrast this with India or China. With their efficient if tough university systems. Chinese and Indian (current or former) nationals are actually taking over many Western companies' executive positions. Meanwhile Malaysian foreign graduates are happy taking up the jobs Westerners won't do at any price (e.g. dreary auditing jobs, low-pay F&B, etc.).

Proposals like DN knights' Satu Sekolah are a gunshot in Malaysia's foot. The day Malaysians shun their diversity under the guise of assimilation, Malaysia will have made sure it become Singapore's official dumping site. For Pete's sake, even the French, who used to champion assimilation all the way, are now teaching Arabic to second-generation French kids, because even they realise the potential loss.

What will make Malaysians feel like a common bangsa again? Shall we petition the British to come back so that Malaysians return to the united days of Hartal and AMCJA-PUTERA's people constitution? Perhaps the Japanese would want to have a second shot? Or maybe the Dutch or the Portuguese?

If I were to be cynical, and I can tell you a number of my foreign clients are, I should tell you all to go on fighting one another for the crumbs. Please do tell each other "this ethnic community is lazy, that one is a bunch of avid crooks, that other one is just a bunch of miscreants", while foreigners can go on happily signing juicy deals with BN's cronies, hire the best talent for dirt cheap, rape nature (logging, gold mining anyone?), etc. but I won't. Why? I may be a silly idealist, but I still love this country, because I believe you guys can finally overcome your divisions and make this country a model for all to admire. Now, will you prove me right?


so do we realistically think that we are ever going to sober up?

with the kind of attitude msians [esp the malays] have, i sure as heck am not holding my breath...

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