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Tuesday, 17 November 2009

Economic Corridors- Our own Fatal Conceit? -1

This piece of news caught my attention.

Harun Johari has resigned as CEO of Iskandar Malaysia. Iskandar is the much heralded corridor for economic explosions in Johor that was meant to showcase what planners can do. To be more specific, what central planners can do.

Harun is the second CEO that has resigned after one Ikmal Hijaz. Harun's departure will certainly raise suspicions as to why the CEO turnover is alarming. This position is not your average run off the mill CEO of the typical loss making GLCs. This is the South Economic Corridor that is supposed to admit heavy duty traffic onto the investment highway of Malaysia. After that, the economy of Johor in particular and the whole country will be on the speed by which cars travel on the Autobahn.

Allow me to tell you about Harun Johari, the manger that we have lost. Before he joined Iskandar he was plucked out from Shell Malaysia to head the Port of Tanjung Pelepas. People are right to regard Harun as an introvert except to those close to him. Those close to him include his schoolmates from MC-gay-gay and those in Shell. He went to study in Australia and obtained a first class honors degree. When he was in Shell he was highly regarded and went up the ranks pretty quickly earning several cross postings. In Shell, cross postings are generally rewarded to those talents whom Shell see as likely to become leadership material. The current MD of Shell, Dato Mokhzani Wahab for example has been on several cross postings.

It is fair to say that Harun Johari was chosen purely on merits. He has the management pedigree (being trained at Shell) and has the mental prowess to stand on his own. He would have managed Iskandar to great heights if mentally-challenged and envy- filled government servants accustomed to doing things the officious civil servant ways don't meddle with the running of Iskandar. Hardnosed management is what we need to run a business entity as huge as Iskandar and a talented team. Charisma is for herding cattle- a much overrated virtue when it comes to managing a business.

Now that the matter of Harun Johari is put aside, let's talk about economic corridors in general.

The origins of these economic corridors were humbler. It was said that a retired SS in Johor offered some ideas to Johor MB on how to soak up the overhang of properties in Johor. The SS said why not open up the southern region by allowing investors from Singapore to take up excess capacity. In the first meeting attended by among others Dr Vincent Lim who was later wrongly credited with coming up with the corridor idea, the idea of creating an investment hub in Johor was mooted. The former Prime Minister, who was looking out for one great idea to claim as legacy, quickly adopted the idea and extended it generally. If we have a southern corridor why not have it also in the north, east, west and East Malaysia. That's how the idea of economic corridors came into being. It wasn't any idea conceived by Dr Vincent Lim.

Why on earth do we need them in the first place? Is the concept of economic corridor somebody's idea of dividing the economic turf n Malaysia among several economic mafias? What do they do actually? The corridors will in the end become vehicles through which to secure large amounts of money and then get them distributed to your own network.

What can economic corridors do that cannot also be done through the state? Take ECER for example of which I am a bit familiar. We in Pahang certainly don't need PETRONAS to tell us to plant pineapples or to rear Boer and Jamnapari goats. These ideas could have been more effectively carried out an empowered MB incorporated staffed by talented people.

You have a bunch of fresh faced graduates entrusted with sudden powers and they suddenly felt that they could centrally plan prosperity. This bunch of paper tigers are enamored with the great attraction of centralization. This is the fatal conceit spoken about by Friedrich Hayek. People think centralized planning will enable them more effectively legislate programs which they think are in the interest of the people at large. These include ideas such as transfer of income from the rich to the poor and from private to governmental hands. They are yet to realize what has long been appreciated by economic thinkers such as Milton Friedman that the great tragedy of the drive to centralization , as in the drive to extend the scope of government in general, is that it is mostly led by men of goodwill who will be the first to rue its consequences.





9 comments:

Pak Zawi 17 November 2009 at 19:42  

Dato'
Now that you have told us, it is confirmed what we have suspected all along. So was Islam Hadhari. Nothing but hot air.

walla 17 November 2009 at 21:16  

The planners should rightsize expectations.

Like the MSC, the market for special real estate depends on the global situation.

And the situation today is people everywhere are out of jobs. There is therefore a social factor inside each investment plan from any country. Investors may start to think of their own countries first.

Whether big or small, investments will thus depend on comparative attractors. We are not brain-capital rich for immediate upscale root-sowing. So it'll again be mass production of hardware with soft production of services like twinning and tourism. Given this scenario no ceo should be expected to perform herculean miracles.

A couple of other issues. If the original thrust was to attract the singaporeans, the public relations should have been upgraded and managed more carefully from the very outset. Bridge, water, airspace, sand, pebble islands, security, cosmopolitan lifestyle, even who is in a committee. All these must have made them shake their heads as to what the Johor heartland was thinking. Would anyone want to run in then? Central planning shouldn't just mean drawing nice plans. It should also polish stakeholders perceptions. In a global world, local and global are meshed. The Philippines ignored that. The heartlands in other states should bear this in mind.

Now we have Mustapa trying to do something with the singaporeans through the asean council. That's horse after cart. It's harder to push than to pull. Nevertheless, it is hoped something positive for Johor can turn up. The people need jobs.

The other factor in mind is the 15 percent corporate tax attractor for the corridor. One day it should come to that for the whole country. Maybe not immediately otherwise the corridors lose one attractor. But progressively so if the govt is thinking how to achieve high-income because in reality it is hard to see how to earn high-income from hardly high inputs. The flip side is that it will deplete govt funds whose deficit will raise the cost of external financing or debt servicing ratio.

It is hard to think about the next Malaysia Plan. That's due anytime. Maybe the govt should open for debate to get fresh inputs from the rakyat. Some may have good ideas. Better to have the rakyat say something than for them to get another dose of the usuals which in living memory always sounded so pad and, divorced from reality, in fact.

You know we are in trouble as a country when the citizens cannot figure out how corruption affects them individually. One it will tempt those who are doing it to continue doing it. Two it will slow the reform rate. Three all will collectively get hit when services can't be maintained. Four investors won't come but we won't know how many won't come because of that factor.

This is just one issue which shows that standards have dropped. Not just physical, planning and governance standards. But standards of awareness of what is important and what is not important for improvement for the future.

It is dangerous to see a few bright lights and tall buildings and then assume progress has been made and all's well. Individual capability, enterprise capacity and global relevance are what matter.

This post, for Othman Yeop, first CEO of MSC. May he rest in peace knowing he hasn't been forgotten for falling in service of Malaysia.

Hansac 17 November 2009 at 21:45  

20 years back, when I was 17+ years old or so, somewhere in the backwater of Sarawak in the town of Sri Aman, someone commented that Malaysia is more like a communist country with its emphasis on central planning. I was then a follower of the Arqam movement. What was more surprising was that person also commented that Arqam itself is also a centrally-planned organization.

anakbukitgantang 17 November 2009 at 22:21  

Salam Dato'

You mentioned hard nose corporate head honcho vs jealous civil servant err little nepoleon?

Having worked in Putrajaya, having performed and been a hard nose head corporate manager is not he key to success....and yes, I know what you meant, for being efficient is nothing in ringgit as compared to being able to polish apples...... and that factor alone, if continued undetered, will bring down the civil service for promoting incompetent superiors.

kuldeep 18 November 2009 at 09:37  

Are the corridors new AREAS for development i.e the New Frontiers?The new Feldas?DARA?

Or are the corridors just circles drawn on existing developed areas?So Kuantan overnight becomes part of ECER?Thus is my proposed investment in building a chicken coop in my backyard be included as one of the many ECER investments?And if my chicken coop is to be funded by my uncle from S'pore..does that mean its Foreign investment for ECER?

Corridors are good if they actually maximise synergies and logistics.Its meant to be a congregation of skill sets to the base resources to move it to a higher level.Its not about setting up a chicken rice stall next to one that is already successful.

Anonymous,  18 November 2009 at 09:42  

I know Harun as well as Ikmal.Both do not have the entrepreneur zest nor the personality to be able to drive real value creation.

One is a big picture guy and the other is obsessed in imagery.Both lacked passion to drive a project of this scale and the strength of character to navigate the stormy bureaucracies.

The right person is KJ.

Cynic,  22 November 2009 at 19:13  

dismantle la all these economic corridors.

Anonymous,  6 January 2010 at 01:21  

This Harun fella is an arrogant prick with bad leadership skills. In malay, this harun is SS, syok sendiri.

On the other hand, his other MC gay gay fren, Ikmal Hijjaz, was too busy bonking his own staff in IRDA, one janda ex CIMB, and the other one ex KPMG.

Just close IRDA for life.`

Anonymous,  17 January 2010 at 01:41  

u asked local players in jb, the rmk9 projects that are put under the purview of IRDA are behind schedule. Now we are already in 2010, and the rmk9 projects for 2006-2010 are still in the initial stage of construction.

what is this?

u go and ask with the local contractors, the main reason for the delay are too many KUIH LAPIS in one project. I'm sure those MCKK and ex-SHELL bastards are making money for themselves like nobody's business.

The MACC should investigate this. Otherwise, im sure umno johor will throw their towels against this stupid con-job Iskandar Msia.

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