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Sakmongkol ak 47

Thursday, 19 November 2009

Economic Corridors and our Fatal Conceit.

The luster of the economic corridors is fading as the hard evidence about their success is very sparse. The Singaporeans are not coming in droves into Iskandar region. In the other corridors, the economy hasn't taken off beyond the pyrotechnics and dry ice smokes.

In Pahang for example, there was much spectacle about planting 8000 acres with a new species of pineapples. Also in the show, was the rearing of Boer and Jamnapari goats. These two ventures could easily be handled by the state's own agencies. We don't need ECER to tell us that. The goats too were brought in from goat farms so that the PM, the MBs of Pahang and Kelantan can enjoy stroking the kids.

Other than that, what is the public's perception of ECER? It's just another extraneous institution coming into existence to supersede and duplicate what can be done by the state. They have money all right, which will in due time degenerate into avenues for streaming money into a few selected beneficiaries. The ECER for example is headed by PETRONAS people. They may be ok in oil and gas industry, but that ok is not transferable into general business ventures such as rearing goats and planting pineapples.

There are now doubts as to whether the economic drive assumed to be inherent in the creation of the various corridors is there or not. The problem is, the boys advising on the economy think, everything can be micromanaged. In some ways I blamed our senior civil servants for not arguing the case against setting up these behemoths with more substantive reasoning and even probably pointing out to the unsoundness of such projects. Now almost 70% of the country is enveloped by these corridors thereby making the various economic development agencies in each state, seem superfluous.

If what I hear about MOF officers spending time yik-yaking eating potato chips while serious meetings about the economy are in session is true, then no wonder the text-book young guns occupying the 4th Floor can bulldoze through with their plans.

But I want to talk about the philosophical underpinnings of such esoteric ideas as these economic corridors. To me they are essentially extensions of the mind of central planner. Someone out there think they can micromanage our economic lives.

Last week I wrote several articles about the parallel economy and the lessons we can learn from it. The parallel economy is a live lab for studying the principles behind economic vibrancy to distinguish them from the formal economy so loved by our central economic planners. You have people still wetting their underpants impressed you with some economic models that they think are answers to break beyond the thresholds.

Look at the driving principles behind the parallel economy and our own formal economy. I am not asking you to look at the declaration that the parallel economy is the answer to the BN's NEP or something along those lines. That's a stupid way of engaging in a fruitful discourse. What's more meaningful is to realize that the vibrancy in the parallel economy is the result of relative de-regulation and economic freedom. The less vibrancy in the formal economy is probably the result of excessive government intervention and meddling by officious napoleons.

People are still besotted with the idea of centralization and concentration of power. They think they can substitute the spontaneous order of human economic cooperation with a detailed input output tables and plan every single minutiae of economic urges. The facts are they can't. We don't have to produce those elegant rebuttals against the attractions of centralized economic planning. It is sufficient for our practical purposes to see the principles behind the parallel economy.

The underlying principle driving the parallel economy is this:

The great advances of civilization, in the industry or agriculture, have never come from centralized government. Columbus did not set out to seek a new route to China is response to a majority directive of a parliament, though he was [partly financed by an absolute monarch. Newton and Leibnitz, Einstein and Bohr, Shakespeare, Milton and Pasternak….; no one of these opened new frontiers in human knowledge and understanding, in literature, in technical possibilities, or in the relief of human misery in response to governmental directives. Their achievements were the product of individual genius, of strongly held minority views, of a social climate permitting variety and diversity.( Friedman in Capitalism and Freedom]

I doubt whether those people behind Saville, Wisma Shun Li, Pearl Point and Elken Convention centre did what they did in response to directives from government officers. Harun Johari or Ikmal or whoever could have accomplished more if a social climate permitting variety and diversity is provided.


kuldeep 19 November 2009 at 13:02  

The corridors was a badly conceived idea..and enhanced with very poor execution ;its turning into nothing more than a PR machine.The sad story is that this PR machine needs lots of fuel and it will be a major disaster when the final accounting is revealed.

Someone needs to hv the courage to sit down and unravel the corridors.There's too much duplication between the various existing agencies and the newly formed Corridor team.A simple road now becomes a confusion of ECER,JKR,State,Federal initiative AND you have 4 teams looking at the same rest and recreation area.

Please someone unravel the mess created by Pak Lah and his bunch of misfits.
And Khazanah needs to go as well>>never seen such a bunch of gobbledygooks before..spewing words of wisdom to hide their failures.

Peter,  19 November 2009 at 23:17  

Trying to open up the Corridors in this late period after China had grabbed all the good ones, is just too late.

One day you chased investors away by stupid rheotorics about being conquered by Singaporeans and other day urging them to come is just not good. The stupid big mouths have already driven away potential investors who now unlike yesteryears have many other better countries to invest.

So by just announce super here and super there is just plain stupid and will not lure the few investors in this period of economic crisis.

It is about time someone keep those stupid bad mouths to shut up as this has affected the livelihoods of Malaysians.

I still remembered what DR M said about Singapore Chinese and Malaysian Chinese taking over the Iskandar corridor. It was one hell of a stupid and racist statement. Remember these Chinese investors can easily invest somewhere else.

walla 19 November 2009 at 23:30  

The fatal conceit actually extends further.

The comments are as interesting as the article in:

For the report, especially part three table 3.5, go to:

As with most of such institutional reports, there is no allowance for the cascading of negative effects which will coalesce and create bigger unseen problems whose solution will expend part of the resources put in a plan so that what will be achieved will ultimately fall short of the planned targets.

The bottom-line then is this: even if we have a family of new corridors, it will not matter one iota because, basically, we don't have the endogenous factors to innovate ourselves out of the middle-income trap and into a high-income economy. Which means at best we will continue to coast along with incremental changes to what we are seeing today, now, here.

In other words, status quo.

But since other economies will have got their act together without the sort of pull-back factors we seem to belabor every year, status quo will relatively speaking be actually retrogressing.

In other words, we will lose more competitiveness.

Which will draw away investments. And for the same reason that foreign investments will taper off, domestic investments will follow the trend and move away.

We may reach a cusp followed by economic twilight.

It's serious if we think like that. Maybe ten percent of the population are aware of this possibility. Not that many amongst them will be able to do much to ameliorate their situation in the first place. The other ninety percent will get hit without knowing how it could possibly be happening.

So it remains to pose that one question: are we game to risk initial destability by throwing out the window all present comfort zones and limitations in order to target one and one objective only - higher and faster growth regardless of the reasons behind existing policies? That may cosmopolitanize the society completely and inject all manners of external influences. The hope is that we will still have enough within us after that absolute level of intra-globalization to make amends and adjust later. A tough question. Even to frame it.

The end.

Pak Zawi 20 November 2009 at 05:31  

Dato' Sak,
Well said. The comment by Kuldeep is most relevant. Now I don't know if the good old Jabatan Pertanian has a function at all in even our ordinary farmers life with so many other agencies duplicating it's function. The Economic Corridors which may have meant to develop Johor added to this quagmire.
The launching ceremonies all over the nation definitely benefited some parties. That is all that there is to show for all this hype of hot air.

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