SAKMONGKOL AK47

THE MALAY ECONOMIC DILEMMA AND THE RISE OF THE MALAY FINANCIAL MAFIA.

But the alternative suggestion and proposal is not uplifting either. First, the spirit of the NEP must be reincarnated. Malays are mistaken if they believe the readiness of the government of the day to rejuvenate the NEP mean easy pickings for them. I can assure them, it will never mean, that the boys at the UMNO branch level, the bigger boys at the division level will all be given concessions, exclusive licenses, quotas, privileges and so forth. They may well remember the old adage which says- fortune favours the brave- only that the word brave is a symbol of many things. It will mean political connectivity, it will and must mean your own merits. Do these boys have what it takes to succeed?

The principal agents for Malay economic advancement, the state owned enterprises must be empowered. To ensure maximum results, the GLCs will be managed by professional managers comprising of accountants, former investment managers, stockbrokers and the like. Professionalism will be maintained as these managers, hired on contractual basis, are measured against some management indicators. Meanwhile, the general population will be inculcated with the right values, skills knowledge to represent the new human capital.

The main thrust for Malay economic advance seems to be the GLCs. Instead of widening liberal economic policies to unleash the potential of the general population, we rest our hopes, preponderantly on the GLCs. Because they will be managed by well intentioned Malay professionals, trained and skilled and highly educated, our future is assured. The targets of the NEP will be achieved. As to the upgrading of human capital, we have no serious disagreement there. There is the unquestionable need to upgrade human capital in the form of better education, skills, internalising positive values, desire for achievement and all that. Our bone of contention and a cause for concern, is the unquestionable trust we place on the GLCs as the panacea for Malay economic inertia. Let us analyse the issues further.

What is it that we have not found in the last 30 years, that we are now re-discovering that could propel the Malay economy? For the first 20 years after the NEP, we have relied on state owned enterprises to steer the Malay economy. The rate of growth in the Malay economy was faster in the 1980’s that the 1970’s. In the 1980’s faster rate of growth rate was achieved by liberal economic policies. Critics find it easy to denigrate the achievements of the 1990s and extolling the results in the first 20 years of the NEP. There is no mystery there, if one cares to analyse carefully. First we started from a very low base- 2.4% ownership of corporate wealth. Any increases add easily to make it appear very fast. During those years too, we invested in the real economy. We actually grew something, produced and manufactured real things and so on. From the 1990’s onwards, believing we have learnt enough, we go into the money economy- speculating in the market, buying over companies without actually increasing productivity. The wealth created was mostly paper money and this, it turned out, can easily burst and did. Therefore, if people start growing panicky about the direction where the Malay economy is going, I would advise them to take it easy. We are just on the learning curve and probably, we are at the bottom of growth cycle. Business as many people know, has it ups and down.

It will signal the rise of a new Malay financial mafia comprising of the much touted but untested, new breed of Malay professionals, accountants a.k.a the bean counters, alumni of the stock and money market, ex investment bankers and men of their persuasion. In their days, all of Tun Daim’s men were hailed as the new breed. Yet many of them failed. Will the same fate befall the new emerging anointed chosen few?.

I have several objections against the new collectivist tendencies. Not so long ago, the principal management idea to expand efficiency was to adopt best practices management style. Professors in many universities synthesised the management practices of successful companies and summarised them as best practices management. The idea was, if these practises could be replicated inside our own organisation, we shall reap the same wonderful results. Management practices of successful companies such as McKinsey, Du Pont, General Motors and whatever were hailed as the new business tools. If we have a readily impressionable mind or we are exposed to the ideas only recently, it will be easy to be mesmerised by such ideas. If we have the opportunity, we would want to translate these ideas as a generic policy. Will the adoption of this set of ideas enshrined in whatever National Economic Policy or New Economic Agenda we adopt later, be able to push the Malays and the country further up the economic scale?

We are not talking about increasing the performance of a group of private companies but the national economy as a whole. Why do we think, in the early 80’s we wanted to adopt the Look East Policy? Because we want to adopt a wide range of institutional and cultural values to move an ENTIRE nation not just a few companies. Why also, did we adopt economic liberalisation? Because we want to move an entire nation not just a few individuals. If these individuals later on failed, their weaknesses were failures of the individual, but we must never falter from the road to liberal democracy.

What we really need is a New Competitive Policy or New Competitive Agenda. Then the bulk of our resources can be channelled to cultivating a team of Malay business persons with the right gumption, tenacity and instilled values who can compete openly, domestically or internationally. We need to practise Value Economics which evaluate the value of the end product we create and not only the production process.

An example of a clear lack of understanding of value economics is in the field of education. Many students are sent to study religion overseas. The reasoning is the cost of sending students to study religion in middle eastern countries is cheap. We must realise that the cost is cheap initially but expensive and costly later. When these students come back armed with degrees in religious studies, they cannot find employment. It may have been cheap to send them in the first place, now we have to tolerate the existence of a new breed of scholared lumpenproletariat. Many are soon absorbed into radical politics which threaten our democratic way of life. These outcome could have been avoided if we understood the concept of Value Economics, i.e. looking not only at the efficiency of the production process, but also at the value to society of our produce.

Malays and Chinese in Malaysia lived under the same system of government. We can assume, that comparing the two races economically, in an almost controlled system would yield similar results. As we know, this is not true. While Chinese are able to expand their economic strength, Malays appear to remain stagnant economically. My answer to this dichotomy is that while the Chinese are more or less allowed to prosper under their own liberal economic system, the Malays lived under a regime of subsidies, regulations, quotas, special privileges and so on. We have left the Chinese basically alone, to develop their own brand of best practices business tools, allowed them to adopt skills, experience and values that have proven to be the best assets expanding their economic dominance. Chinese are not hampered and hindered by theoretical ideas as how to develop economically- they just do it. Whatever the regime we imposed on them, they can prosper because they have developed the right cultural melange of values to prosper. Malays on the other hand lived within a sheltered cocoon preventing them, as a whole from internalising the values so necessary to prosper. Hence, any ideas that we want to adopt as policy, must be of a nature, that can move an entire race. Not a few companies. It is ridiculous to accept that what is good for ECM Libra is good for Malaysia.[1]

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[1] Mr Kalimullah Meesrul Hassan and Mr Khairy Jamaludin are both inside ECM Libra( formerly BBMB Securities).