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Sakmongkol ak 47

Wednesday 31 March 2010

Some initial thoughts on the NEM

Ladies and gentlemen, Now the NEM.
The PM has outlined the main aspects of the NEM. I was waiting to read strategies to unleash the entrepreneurial energies of economic agents besides the same old players. Private sector means what? Does it mean the same old companies, friendly parties or the faceless multitude of ordinary business people? Since 2004 for example, Khazanah has been divesting its holdings in many companies- may we know who and on what criteria? People can say all sorts of things on paper- using highly technical financial jargon which actually means they were hiding something.
What I take as entrepreneurial agents to turn this country into a nation of high-incomers are the large number of businessmen- the SME people, research of which has shown are more productive and generate more income that the big guns. These are the people who have been excluded from participation simply because they only have technical skills but no patronage and no intimate relationship with powerful decision makers. So why do we pander to the wishes of the super leaguers?
I was reading some comments given by ex banker Amir Sham who is head of the NEAC. He was telling that maybe some contracts should be given to a certain group of contractors not including the big leaguers. I would support the idea by pushing it a bit further. Why don't for the next 5 years, we declare that all listed companies engaged in construction are not to participate in government mega contracts? Or the big suppliers are excluded in the next 5 years to participate in big government supply contracts. You have made large profits previously and you can hold on for the next 5 years. This would allow the middle and even top bottom leaguers enough room to prove themselves to become big leaguers. Such an interim policy of 5 years would also re-distribute contract opportunities from the current big leaguers to others.
Amir sham shouldn't say- we leave it to the government to do that. As head of the NEAC- say it and say it loud what needs to be done lah taukay!
Then we wouldn't hear the stomach turning spectacle- Yeoh Teo Lay this and that, GAMUDA this and that, Syed Moktar this and that, Berjaya this and that.
Let's see whether the big leaguers, without the traditional patronage can be creative and venture elsewhere? Can they do that? They must- after all smaller contractors have been excluded from participating in big contracts.
Remove all the classes in contractors. In 5 years time allow every contractor, on a Classless basis to compete on equal footing. I am sure the up and coming and qualified contractors can also do strategic partnership. Many of the smaller bumi contractors for example are highly trained people- engineers and technicians.
I have written a number of articles on what I wanted the NEM to be. At that time, we had no inkling how the NEM will be. I started from some key phrases the PM used. These included competitivess and creativity. I had to re-read what Porter said about competition and competitive advantage. The key word of creativity pushes me to re read Joseph Schumpeter- creative destruction.
As I look into the NEM, I will have to say it's not actually a new construct at all. It's just a grandiloquent way of saying, we will do it differently. The PM said it himself:-
"I pledge this: we will work tirelessly to develop and implement the economic reforms that our nation needs to grow, our businesses need to succeed and, above all, for our people to prosper," he said. "Some people are questioning the need for urgency to break the habits of the past. Do not be fooled. We need a new way of doing things. We must act now to position Malaysia for the future. We need to have a sustained and consistent big push if the reforms set out today are to gain momentum and help us achieve our goals."
I do not doubt the sincerity of this PM to carry out what he has said- a new way of doing things. This would certainly demolish the hopes of those hankering for a return of the inglorious past- where patronage and who you know rule the day. Since 1981, the driving force behind almost all businesses has been the dubious factor- hey do you know this pengarah, this ketua pengarah, this minister and the PM?
It is precisely that weakness that has created and sustained a select group of rent seekers and patronage hunters. Their success depended less on meritorious skills and expertise and more on harnessing the right political networking relationships. Success depends on sharing privileged information which excluded the real entrepreneurs out there.
The new model must strive to be closer to a market driven economy in the sense that it must introduce system that many free marketers believe- placing wealth creating assets closest to actual economic agents. Hence I welcome an assurance that our GLCs right from Khazanah to state owned companies will be divesting their holdings. Allow private sector, entrepreneurs to develop the assets and apply better work ethics and different motivations.
Khazanah for instance will sell 32 percent of its stake in Pos Malaysia but let's do it on open tender basis. But not before Pos Malaysia account for its humongous loss of over RM 500 million. Then not only must it be privatized, we must also make those responsible for the losses accountable. Do not allow those responsible for the losses to come back with a MBO plan or any business plans for that matter.
If it's not tenable to have one Pos Malaysia let's do a Mama Bell and Papa Bell on them- break it down to regional Pos Laju. Let them compete among themselves and see who can offer better services.
Why don't we allow online tendering so that people in Khazanah or decision makers don't come face to face with bidders until they are called in the final round? Hands off and on line tendering will allow the government avoid being accused of cronyism or patronage.
I have long advocated the freeing of the market from the clutches of state owned companies. In the absence of competition for example how do we know whether the SOE's operate on operating efficiencies or are just passive beneficiaries of the nature of the product? For example, in Pahang there are a few SOEs which are given monopolies in developing land for palm oil. I suspect, they enjoy good earnings simply because of the natural price of the product. Palm oil has a good price. All you need to do is to ensure you produce a certain quantity and sell at the good prices.
We really don't know whether this is due to productivity, efficiency, best practices or what? Because as soon as you compare productivity with private companies, then you will realize that SOEs have not been efficiently run. Their comparative productivity is lower than many private owned companies.
As long as you allow SOEs monopolies, you impose the crowding out effect. Genuine investors are sidelined from participating in certain economic segments. SOES get priority in many areas- land allocation and application, financing, guaranteed credit etc.
On these points, I have advocated when I was a state assemblyman, the closure of several GLCs and their subsidiaries. If they are not able to compete with even some upstart companies, while they have been receiving a variety of privileges, they might as well close down. Naturally, those suggestions were not well received by the CEOs of the various SOEs.


Monday 29 March 2010

The age of HSBB- the return of the Jedi Knights

I have written articles on our recent HSBB. As you will remember on the 24th of March 2010, Telekoms Malaysia launched its HSBB. On hand to deliver the birth of HSBB were the Prime Minister, the Minister Rais Yatim of course and the bosses of TM.
TM will offer its triple play services, combining telephone, TV and internet services. It will charge consumers anything from RM 149 to RM 240 per month. That's a lot of money and can only be justified when a number of things go along with the price. Such things like service, content and quality of the programs. I mentioned some of these services which TM will offer- on paper.
I am looking at this whole business as a turf war between the government and ASTRO. I have termed this move as the empire strikes back. But the empire may not be looking out for the welfare of its people. It may in fact be looking out for the interests of a select group of stakeholders. We can also expect ASTRO to do its own creative re-engineering.
Imagine this. Suddenly ASTRO is taken private. What happens next? Well, behind closed doors, stakeholders may change. Equity changes hands. Then, in 5 years time ASTRO is taken public again but this time with new stakeholders. UMNO's interests, interests of wealthy UMNO puteras and the likes. MIC Puteras. MCA mandarins and so on. A new ASTRO will be born, having the required tools to mount a new challenge to new players. Maybe assume new character and identity. It's owned by Mohd Ananda. It will be hailed as a new smart partnership under the aegis of 1 Malaysia. Maybe its all just a move to secure a contract for exclusivity.
But I am also thinking, the whole exercise of offering HSBB is just another excuse, solemnised by the PM for certain people and groups to make tons of money. So what do we do? We write and we question the powers that be.
For example, we want to know why this penchant for contracts of exclusivity. TM offers us HSBB for how long? Will it be the exclusive provider for HSBB for the next 20 years? Will the government agree in excluding any other telcos from offering triple play services? 
I have only recently become aware that ASTRO has an exclusive license for Satellite Broadcasting here in this country until 2017. They have been awarded this license in 1996 and till 2017 there should not be any new Satellite Broadcaster in Malaysia. MiTV came up sometime in 2005 and died almost a year later. Vincent Tan is still holding the spectrum license and also the 3G license (U Mobile) and is hunting for prospective buyer so he can make quick bucks. Now TM is out here with hope to beat ASTRO.
This trend towards increasing concentration of economic powers, otherwise known as monopolies are in contrast to the PM's economic vision of competition and creativity and innovation. It's actually a consolidation of the old economic practices hatched since 1970 that have not succeeded in addressing the main economic issues of wealth distribution and economic growth.
We now know that out of the RM 54 billion in equities allocated to selected BUMiputeras only RM 2 billion remain. That means, the majority of the Melayus who received shares and equities were not interested in owning permanent assets. They were after windfall money so that can own brabuses, Lamborghini and Ferraris and made it to Malaysia Tattler's List of social luminaries. 
Thus the act of placing wealth creating asset under the control of a monopolistic behemoth, which is similar to the economic practices  of NEP era, isn't going to improve the distributive agenda of our economic policies. We are only going to see an economy promoting meritocracy, creativity and productivity if we consciously work towards promoting competition. Hence the first step is to distance ourselves from this practice of creating monopolies and giving economic exclusiveness.
Then there were also the standard menu of privatisation which actually turned out to be piratisation. I call it authorised looting. So while the empire may strike back, Sakmongkol AK47 is joined by a battalion of Jedi knights...who will write to inform the public.
Consider the following. When the govt privatized some of its functions, it privatized two fundamental growth drivers: electricity and telecommunications. Let's look at the sore points on these piratisation projects.
In the case of electricity, we are stuck because apparently the Perkasa patron didn't bother to ask about the key terms of the IPP agreements that had cornered TNB. No one in his right mind would on the one hand wax eloquent about national patriotism but on the other hand uncharacteristically overlook a ruinous term that requires the state to buy electricity even when it doesn't need the surplus ...which is why every household, school, office and factory today is paying for power which it didn't use. In some enterprises, the excess electricity bill equals additional incomes for staff. In one case, an entire family toasted from using candles because it couldn't afford to pay the electricity bill.
What for privatization of power (sic) you can see parallels in APs for the automotive industry and concessions for road tolls.
Likewise, in the case of telecommunications, the social and strategic objectives of privatization seem to have been conveniently overlooked. Social because we are still a low-income and small population economy compared to those we aspire to. Strategic because, like electricity, telecommunications is a key high-income growth driver, what more an investment attractor, what more the only tool for the future of this 21st century which, in a word, is - convergence. In fact, high-speed broadband of telecoms has become the focus of all the major economies.
So if we are to compete to climb another rung in global rankings, at the least we must have cheap, easy and wide access to high-speed broadband. And by wide, one can envision rural folks being able to enjoy channel entertainment from the world, not the versions that have been sanitised until their IQ drops to the official level.
The rakyat ask, if you want us to change our mindset, give us an affordable tool as a first step. As we on the screen and get an avalanche of sights and insights, we will then be motivated to proceed to the next step - to learn the languages used in the content of the web - and that will expand our mental horizons so that we can do more real money-earning things - and that will contribute to reducing your treasury deficit while helping us become higher income earners and so, free us from the pathetic zealots who are constantly trying to send us back to their stone age. Now, how?

Now, how are we going to do all that if such broadband access is officially bundled under one provider which is a public-listed company which thus means its first loyalty is to its shareholders who are unlikely to be concerned about national strategic and social objectives because they only want their ROIs multiplied? Especially at this critical juncture when 1Malaysia is trying to soar with high-income 1Enterprises? Or soon face economic extinction in a middle-income 1Trap?


The Age of HSBB -2 the empire strikes back!

A few months back, ASTRO was upgrading its services- offering high definition TV programs and all that. We were asked to upgrade with some hardware or something. It was called beyond pay TV or something like that. I wasn't paying attention, happy, with the current slew of watchable programs. I am not particularly discerning as long as my favourite programs are there- high definition or not. Who cares? But there are many more discerning watchers who have more refined tastes than I and who are willing to pay. One less undiscerning customer is all right.
I am sure many ASTRO watchers were then asking why? Probably people at ASTRO got wind of TM's plan to offer high definition programs and video on demand (VOD services). I hope TM will indeed offer these- otherwise the RM 149 –RM249 by which they empty our wallets is for nothing other than giving high earnings to TM.
In Fairfax County, Northern Virginia, these services are provided by a cable TV operator, Cox Communications. It has offered customers a wised range of products including broadband internet services. A cable TV operator can also do what TM is offering now. Can such an operator offer what TM can at lower prices? We shall never know probably assessment on TM's proposal wasn't done rigorously.
What do triple play networks offer? Perhaps we can learn more about them from countries where Triple-play networks are popular such as in the United States.
For telephone, Triple-play network telephone service offers standard options such as call waiting, call forwarding, caller ID (identification), call screening, selective call blocking and conference calling.
The TV portion of the service includes legacy network reception, a wide choice of cable channels and a diverse selection of music channels. Other TV-related services may include messaging, interactive viewing and gaming. Gaming? Hmm...this may interest Vincent Tan who is likely to lobby the government for rights to run gaming over TV. It's an open secret that he has done many favours to UMNO politics and could always call upon the Number One fighter for NEP kind of economics- Tun Dr Mahathir for help.
TM's HSBB named Unifi is offering up to 22 channels of TV programs. The TV arm is named IPTV I think- I Pay TV. I hope this will give stiff competition to ASTRO TV programs and comfort many of us who are fed up with ASTRO's arrogance towards customers. If TM's foray into the media world with HSBB, besides offering high speed internet services also include a conscious attempt to challenge ASTRO over the latter's pay TV programs, this step must be lauded.
I am betting, on hindsight, given ASTROS offensive, fiber optic based service (FIOS) will challenge ASTRO's current dominance. So, fiber optic suppliers and manufacturers are set to enjoy monopolistic business as vendors to TM. Why shouldn't TM create new business opportunities by appointing a group of fiber optic suppliers? Perhaps open up the import market allowing importers to bring in fibre optics at competitive prices?
Cables need to be installed. Who's the contractor? Not one of the companies belonging to some directors in TM? Why doesn't TM appoint a number of independent contractors on region basis? Split the country into 4 -6 regions and appoint one cable laying contractor for each region. Doing so, instead of monopolising the entire business, some contractors enjoy business spill-over.
As an internet user, as a blogger I am more interested in its internet speed. In the UK, broad band has been welcomed widely because it has empowered internet users via its speed and consistency and the volume of data broadband can handle. The key consideration in the Internet connection is adequate bandwidth, even during peak local usage hours.
Nominal Internet connection speeds are 3 megabits per second (Mbps) downstream and 512 kilobits per second (Kbps) upstream. Other important features of the Internet connection include screening of e-mail for viruses, content filtering options for connections to be used by children and reasonable guarantees of communications privacy and security.
No matter how advanced the technology may become, customer relationship management (CRM) remains an important factor in the success of any triple-play network. Home users who subscribe to triple-play networks enjoy the fact that they have to pay only one bill each month and can deal with a single entity to resolve problems with their telephone, TV or Internet connections. The ideal triple-play system functions 24/7 (24 hours a day, 7 days a week). The best triple-play services provide customer support on a 24/7 basis as well; when a customer calls for service, hold times are rarely long. Non-technical features such as these are crucial to maintaining customer loyalty.
Now tell me, how many of you get damn frustrated over the services provided by TM when your internet service breaks down? Your calls are answered much later, and you are given all sorts of excuses explaining why services are bad. Will the RM 149 per month chargeable by TM for this HSBB address these real shortcomings?
Allow me to get back to potential issues regarding broad band service. What's the pricing plan for its FIOS high-speed broadband service? In America for instance (don't convert the currency please) the entry-level service offers customers 5 Mbps downstream / 2 Mbps upstream (a "5/2 plan) for $34.95 to $39.95. That's below USD 100 folks. If you're a heavier user, you can get 15 Mbps / 2 Mbps service for $44.95 – $49.95. Still below USD 100. And if you're a serious broadband junkie and need even more bandwidth for home business purposes, or if you frequently have multiple family members online, Verizon also offers a whopping 30 Mbps / 5 Mbps plan for the much higher rate of $179.95 – $199.95. I can't figure out why anyone would need service above even 15 Mbps, and I doubt their computer's processors could even handle broadband speeds higher than that). That means in US of A, internet users get broadband services for less than100 Dollars their currency.
TM is charging between RM149-RM249 for its HSBB. But for how many Mbps?
The PM should challenge TM's business plan and ask them to offer Malaysians below RM 100 for its broadband services. As one perceptive commentator (Kuldeep) suggested:-
Sometimes I wonder if they (powers that be..TM) does a proper market study before deciding on pricing/offers? I have a suspicion that they are doing desk top pricing..i.e. equate all costs, add "risk" margins..then put in "price " that will yield their minimum hurdle rate? Then, if PM ask why price is all the cost plus inflated risks etc...And substantiate with lots of acronyms such as LoD,DemApp,BAU,ROTF Index etc..PM won't dare to ask too much cos it maybe a stupid question.
I remember Mr Sony wanted the smallest transistor radio...after months his tech guys came back with a very small radio. Mr Sony promptly requested for a bucket of water and deftly allowed the radio to be submerged. And he told the long as there are air bubbles..means there is still means to miniaturize..PM shld do same..THROW THE CEO INTO A POOL WITH A TON OF BRICKS TIED TO HIS ANKLES..AND LEAVE HIM DOWN THERE UNTIL HE GETS THE PRICES DOWN TO BE AS LOW OR AT PAR WITH OUR NEIGHBOURS JUST TO TEACH HIM THE LESSON THAT NO ONE CAN LIVE IN A VACUUM.


Sunday 28 March 2010

The Age of HSBB- part 1

It is the age of broadband

What is the medium of transmission? Fiber optics? Then TM will work closely with the fiber optic manufacturers and suppliers. One deputy minister who has a monopoly status in supplying fiber optics will become a zillionaire high incomer. People in TM will have a network of friendly suppliers whom they have registered earlier. When you have inside knowledge, ALL the future businesses can be anticipated.
This is the secret of becoming a high incomer. Hence when TM announces on 24th March, it will start offering triple play services- THAT sets tongue wagging.
It's worrying. The PM wants to start this country on a path to high income by conferring near monopoly status to TM. Telekom Malaysia announces its providing HSBB by charging rates that are unreasonably high. We have the right to ask- can the same facilities and service with the same capacity be provided at cheaper rates? If we can, then, something is not right with the charges TM is making.
Then we want to ask, what is actually being offered to us at that price? We don't want this HSBB project to be another excuse for some people to underwrite their retirement plans. Yes, we have heard senior government officers maneuvering the timing of projects worth hundreds of millions to coincide with their retirement. Even ministers overseeing particular ministries are reticent in corralling such senior government officers. Let's ask Rais Yatim for instance.
Who's not to say, the same shadowy agenda doesn't exist inside TM?
Who do we compare to? We compare the same services provided for by Singapore whose people have higher per capita cash incomes than our people. The logic is this. If higher income people can enjoy cheaper rates, it is reasonable to expect much more sensibility from a poorer country- it should be charging much less because our per capita income is lower.
TM is a behemoth. It surprises us that TM's offer to wire up the whole county with superfast internet service is the only offer. Sometime ago, when the Pahang government wanted to join in the fray to provide the country with the same service, it is said TM hired someone to extol its virtues while casting aspersions to the abilities of others. If that is true, TM wasn't playing fair. It wanted this business to be wholly theirs.
If the PM is serious in talking about innovation and creativity and all that, he must be mindful of any attempts to monopolize any market segment. Begin by dismantling any vestiges of monopoly. For instance, let there be more players offering the same service as TM and see how they compete. Let there be more than one ASTRO. Because satellite TV providers can also muster the market for triple play services.
Let there be more electricity provider direct to the people instead of selling power to TNB and reselling it. Let's see whether TNB can compete and those wanting IPPs can compete by offering better and cheaper services. Let there be more than one water supplier.
Let's have more broadband competitors. Why TM only? Please issue more cable TV operator licenses. So they can offer competition. We are not just going to sit around and accept what the CEO of TM says- this and that. Right now, he is sitting on cash piling machine.
More broadband competitors. That's the idea behind creative disruption expounded by Schumpeter. Create as many entrepreneurs as possible because they are the pivots on which everything turns as Schumpeter says. Now, the emergence of TM as the sole entrepreneur can hardly be said to be symbolic of disruptive creation.
But we shall discuss these philosophical issues at another time. There is an interesting book on Schumpeter- Prophet of Innovation by Thomas McGraw in the market to whet the appetite of the serious researcher.
For the moment let's ask what exactly does TM offer us now? Triple play? A triple-play network is one in which voice; video and data are all provided in a single access subscription. The most common applications are Telephony, community antenna television (CATV) and high-speed Internet service. The transmission medium may be fiber optic , conventional cable ("copper") or satellite.
Issue more licenses to downstream businesses. Fiber optics?- not Mukhriz alone please. Satellite? Not Ananda alone. Is TM going to use conventional cable? Issue licenses for suppliers then or appoint a dealer supplier network.


Friday 26 March 2010

The road to high income economy-2


I will let Walla tell us about the road to a high income economy. Walla tackles the question that I have asked in my latest article; how to increase the cash income of individuals. The typical individual in Malaysia is likely be one who takes home on average RM 3,000 per month. How do you increase his cash income?
By asking him to be entrepreneurial. In Malaysia this translates at the most simple level as asking him to work hard, not to accept handouts, not to depend on others and not to have this mindset that others owe it to us to help us out. We must also get out of this mental rut that the good life is a matter of right to us. Rights are acquired. They are something you fought and struggled for and qualify for. You acquire ownership and title to a TOL land by working it and 'having worked' it qualifies you to acquire a right. Hence a right is something you qualify for and not acquire by being someone, some race etc.
A: 'I read that 74 percent of Malaysians draw no more than rm3,000 per month. You reckon we must be somewhere inside a low-end quartile of per capita incomes relative to cost of living compared to many other upcoming economies?'

B: 'You mean net zero at beginning of the month so that each household is actually floating on credit to get to the next payday? Probably so. Especially when each has to commit so much to essential high-ticket items like homes and cars. And the tightness is not going to soften as they grow older because they will have children and old folks to take care with education and medical costs rising. Not unless and until they can earn more to save up now. That's save up to survive, not save up to spend to spur the economy, mind you.'

A: 'But how? The ecosystem is not pro-innovation. Hard to get loans and grants for ideas. Hard to find good designers. Hard to find professional fabricators, people who can take your plan and micro-machine what you want, or integrate applications to deliver a seamless service. And probably a whole layer of sly bureaucracy along each step. It's quite demotivating, especially when all of one's waking hours are already spent slogging for sleepy companies in moribund industries.'

B: 'We need to spark idea-labs, Sofea. With communications technology, it gets easier to tap the new social computing wavefront and get diverse and borderless resources to collaborate. That's one way to spark innovation. Maybe the MSC people can run with it and the Mida etc people can set up a single welcoming mat to attract some of the brains in the US and Europe who have been untethered by their financial crisis to e-venture here. That's a shift from luring capital and equipment to luring talent and brains. In any case, they don't have to be physically here. But they will be essential not just for their know-how but also for their know-where. They know where the markets are that we need to target. Ours is too small for any big-wave high-income activity. We can sell that we are lower cost and presumably still smart people.'

A: 'But they can get more from India, China, Russia, the East Europeans, Philippines, even Vietnam. Why us?'

B: 'Ah, for that you must ask the Ibrahims and Nordins of this country. They talk big, loud and fast so they must have brains and answers for everything. And I mean everything, all the way from bumi to langit.'

A: 'Sir, I don't think they have done a single productive thing in their entire lives.'

B: 'Except make investors shake their heads and walk away? Hmm. Who outside UMNO still doesn't know that?'

A: 'Your way of posing two statements as one twisted question makes me dizzy, Tun.'

B: 'Only to make you pliable to what I am going to say now, Sofea, which is this - our road to a high income economy is paved with the corpses of shattered excesses.'


Thursday 25 March 2010

The Road to High Income Economy.

What needs to be done by PM Najib? He needs to create the atmosphere of industrial revolutions, the climate in which capitalism can survive. He is right on innovation – because without innovations, no entrepreneurs, without entrepreneurial achievement, no capitalist propulsion. That was the main thrust behind Joseph Schumpeter's ideas of capitalism. But he also needs to be on top of these ideas. Otherwise, he can't piece it whole.
I am thinking- we are on the road to become a high income economy, or at least we want to become one. I would expect that in order to do so, we must focus on the real economy. Instead the PM goes to Hong Kong and talks to fund managers. These fund managers invest in what- the stock market? The problem is this- there is excess liquidity in the world looking out for domicile in the real economy. So the problem then really is in the real economy. What and where are the new products, new ideas that funds are searching for?
The NEAC better come out with plans to restructure the economy and to unleash bankable ideas and products. In order to do that, a wide variety of measures freeing initiatives and entrepreneurship must be carried out.
How about for instance, restoring Penang's free port status? Will Malays be marginalized? How can they when there will be new opportunities unless of course they are free loaders. But then free loaders are not confined to Malays only- there are Chinese and Indian freeloaders. If they are marginalized its because they are the products of stupid polices in the past. The services provided for by the Boom Boom Chambre in Penang will most likely benefit from opening up of Penang. Because the lady owner is leveraging on a bankable and financeable service.
We don't want to- because that ogre Lim Guan Eng is there? Even when the saintly looking Koh was there, the Malays were also marginalized and they were lulled dull because UMNO compradors told them different dreams. So go play with yourself if you now come back to say Malays are marginalized under Lim Guan Eng. How about giving recognition that Penang last year raked in operating revenue of more than RM 1 billion? That has never been achieved under Koh Tsu Koon and those Malay deputy chief ministers. I say, FO to you and your sanctimoniousity.
We are all hoping that the proposed new economic model (NEM) or Model Eknomi Baru(MEB) is not just an adoption of the letter M- from NEP to NEM and from DEB to MEB. Our mission is to become a high income country by 2020. This is the same year the previous PM Dr Mahathir set for Malaysia to become a developed country. A developed country is one that has a high per capita income.
Thus to me it seems the same thing being said differently. But it also suggests that much of the policies laid down by DR Mahathir have to be re-structured or disbanded totally. One of them is the realization that Malaysia needs to get into the mainstream. Getting there means being on the same page with foreign investors. To do that, PM Najib has to carve out policies amenable to free market practices.
This policy stance is at one at odds with what were pushed for by Perkasa which has Dr Mahathir behind it. In a sense, the new approach to becoming a high income country which is also a developed country places PM Najib on a thought collision course with Dr Mahathir. He must be resolute and his advisors and political backers mustn't wilt later. The constitution of UMNO people is not the same like before.
PM Najib is banking his hopes on productivity and creativity. The first is dependent on free market. You compete to be productive. You are always looking for the best way to overcome your competitors. Creativity is the prerequisite of innovation- doing old things in new ways; new ways of doing things that are unique.
How do you raise the cash income of the people? By making them into entrepreneurs. The PM goes to Hong Kong and he talks to fund managers- he is asking these people to invest in Malaysia. What to invest on? On new ideas, new products, unique products. Not just to relocate. It's the real economy that needs looking into as the basis to raise cash income. Fund managers invest in the stock market- that's not really real economy isn't it. Business hype not backed by real economy can also induce fund managers to place large amounts of fund inside this country.But that would still leave the productive capacity of the country lacking.
Then you have a strange situation where the vibrancy of the stock market isn't supported by the real economy. Real economy- you actually produce goods and services.
It's a simple proposition really. We want everyone to become a capitalist. Not capitalist in the sense of an antonym to Marx's Socialism but capitalist in the mold of a Schumpeter. Much of the idea of creativity, innovation and entrepreneurship is attributable to Joseph Schumpeter.
Let the NEAC people study him.


Wednesday 24 March 2010

If it Yips, You don't quit!


It's a skullduggery tactic by Yip Sun Onn. If it yips, you don't quit. Is the direct opposite of if it doesn't fit, you acquit.

A few days ago, the ADUN for Titi Tinggi, Yip Sun Onn resigned his seat. To execute his resignation he sent his letter of resignation to the Perlis MB and Speaker of the Perlis DUN.

But the speaker and the MB who are both from UMNO do not relish a by election in the state. Perlis can only have a specific number of EXCOs. It's a state the size of a monkey's spread-eagled legs. The MB is a besieged individual being attacked by people from his own party and presumably supporters of Shahidan Kassim. The speaker whose tenure depends on the whispering discretion of the MB said he will not pass Yip's letter to SPR. He said, YIP wasn't planning to resign his seat the state government will try to persuade Yip to remain as ADUN.

Today the Chairman of the SPR said the Titi TInggi seat is still not vacant. Only SPR can declare and pronounce a seat as vacant and since the wise Speaker has held back the letter, the SPR could not make any decision at all. he could very well say- what letter? Indeed the Speaker can also now say- what Letter?

Yip resigned on a simple reason. He was a former EXCO and he wasn't chosen to continue as EXCO. His decision to quit was purely because of personal greed. He wanted to be EXCO at all costs.

There's the chink in his self righteous armor. Being EXCO carries with it many financial perks- board members of state GLCs or businesses. Extra allowances, government cars, front seat at Istana functions, bragging rights to the wife (wives think they are also elected reps) and so on.

And so, we come to the million dollar question? What kinds of inducements were offered to Yip to not quit? Come on Yip- don't be bashful. Out with it. One Malaysia wants to know what you got my friend.

This Chinaman who resigns because of greed would not retract his resignation letter if the benefits of this final and enlightened decision do not outweigh the sense of anguish and humiliation which formed the basis of the cost of his quit decision. Suddenly his value has leaped by quantum heights. How much per inch Yip?


Tuesday 23 March 2010

Jadilah Anak Jantan, wahai UMNO.

This is the time for UMNO to prove that it's a party of anak jantans. Otherwise the last remaining anak jantan in UMNO is Nazri Aziz.
The MCA ADUN of Titi Tinggi in Perlis has resigned. He has sent his letter to the Speaker. The speaker does not have discretion to judge otherwise, his intention other than what was written explicitly. He has said he does not want to be ADUN any longer and as the letter was written in black and white, the speaker is not at liberty to be a clairvoyant and interpret that to be not the true intention of the YB. Dia mau berenti tau- BERHENTI! Ada faham kah YB Yang di Pertua?
This is becoming like a cartoon story. You have ONE frustrated ADUN who wasn't selected as EXCO resigning and the speaker refuses to accept his resignation. Since when does a speaker be invested with extraordinary powers such as reading differently the true intention as was explicitly said?
UMNO will show that it's really in a depraved state if it now induces the YB to retract his letter. It will not be spared from accusations that it's paying this MCA useless idiot millions of Ringgit to retract. Probably, the blank sounding MB of Perlis will create a special EXCO Post for the MCA. Perlis is a state as big as a monkey's straddled legs and yet it wants to have an EXCO as big as Sarawak?
UMNO must show moral resolve by accepting the resignation of this fool of an ADUN. Don't do another PKR coup as in Perak and allow Vincent Tan or the owners of Malaysian Formula One make another special lottery draw.
Apa lagi mau pujuk matlaon macam ini?


The Dark Side Beckons.

Dato Seri Nazri Aziz says Anwar's September Putsch can be seditious in nature. This is because Anwar has used the name of the King and the army to induce defection from the BN Side.
When will the usage of the King's name be seditious? This will be an opportunity for the courts to set a precedence and to make a new law.
You know, in the 1970's the late Pak Sako used to end his articles with his trademark, 'wow'. The only other journalist using the same punch line was Mama Juwie also from Utusan Malaysia. When I hear Nazri Aziz says that Anwar's September-to- Remember posturing is potentially seditious, I want to say- wow,wow and wow.
Imagine this. In order to verify legally Nazri's assertions, we need to have a trial. The King has to be called to establish whether Anwar had approached him because the truth or falsity of what Fat Zahrain says can only be verified from the Royal Horse's mouth.
Next the former chief or army has to be put on the stand. Did he offer support to Anwar and was this the reason he was unceremoniously booted out? Wow again.
Next- and this will the best part- all the names mentioned by Zahrain as potential candidates to defect to the Dark Side will be put on the stand. Lipsy Fuad Zarkashi, blissfully married Bung Mokhtar, Tengku Azlan of Pahang, the current Foreign Minister, even Tengku Razaleigh Hamzah. That would make it a trial of the century eclipsing the current one faced by Anwar.
Wow- the Dark Side beckons. Come- let us invoke divine intervention.


Perjuangan untuk Melayu.

Apabila DYMM Sultan Selangor membuat keputusan untuk tidak mahu merasmikan perhimpunan Perkasa hujung March ini, sebab2 yang tersirat nya mudah sahaja.
DYMM Sultan tidak mahu di kaitkan dengan suatu pertubuhan yang di anggap memperkudakan kebimbangan orang Melayu. Kita maju dengan optimism, bukan dengan kebimbangan. Keputusan tersebut sepatutnya di puji oleh pengarang Utusan Melayu kerana ini menunjukkan kewarasan fikiran mengatasi darah yang panas. Timbang rasa dan toleransi di pilih keatas extrimisme.
Atau sebab yang munasabah juga ialah- apabila DYMM Sultan membelek belek , di dapati bahawa orang disebalik Perkasa ini ialah Tun Mahathir. Sultan tidak mahu ada apa apa kaitan dengan apa yang Dr Mahathir buat. Zaman Dr Mahathir sudah berlalu. Jika zaman tersebut di puji dan di ingati, itu pun sudah memadai. Biar ia kekal demikian dengan ingatan yang manis.
Ini tafsiran yang munasabah. Suka atau tidak, terpulang kepada pembaca.
Namun bahaya yang lebih besar ialah kepada UMNO. Dengan hanya berdiam diri, pimpinan UMNO seolah olah nya menunjukkan mereka tidak pernah berfikir mengenai perkara perkara yang di perjuangkan oleh Perkasa dan MPM. Kedudukan raja raja Melayu dan Institusi nya di lindungi oleh perlembagaan. Kedudukan orang Melayu di lindung oleh kekuatan demografi. Kepetingan Melayu sudah di jaga oleh UMNO dan oleh parti parti politik Melayu yang lain. 
Sama ada ianya di jaga secara memuaskan ialah persoalan nya.
Kedudukan ekonomi orang Melayu menjadi lemah bukan kerana ianya tidak terlindung. atau kurang terlindung Ia jadi teruk kerana dasar ekonomi yang salah. 40 tahun dasar dasar ala NEP di laksnaakan dan telah mengakibatkan keadaan yang di bisingkan oleh Perkasa. Penyelesaian nya tentulah bukan nya dengan di tambahkan dasar yang salah. Kita memerlukan dasar yang baru. Perlaksanaan yang cekap dan jujur.
Persaingan memerlukan pemusnahan tembok tembok yang mengurung orang Melayu. Kreativiti mememerlukan persekitaran yang memerdekakan. Menghadiri perhimpunan Perkasa tidak memberi jawapan apa apa kepada orang Melayu. Membuat bising bukan gantian kepada kemestian berusaha. Buat bising tidak melindungi kelemahan pentadbiran dan pengurusan negara.
Jadi apakah yang sebenarnya di perjuangkan orang orang seperti Ibrahim Ali? Jawapan nya mudah. Memperjuangkan suatu cara hidup di mana kepentingan kumpulan PUTERA2 dalam istilah BumiPUTERA itu boleh bergalak dan berseronok. Kepetingan golongan macam inilah yang selama ini di lindungi yang di perjuangkan.
Orang Melayu biasa tidak pun merasa tergugat kerana mereka selama ini hidup pun dengan menggunakan kudrat usaha didalam persekitaran yang di ujudkan oleh kerajaan. Mereka telah hidup dengan mengambil kesempatan dengan apa yang di ujudkan oleh persekitaran. Hanya mereka yang bergantung kepada konsesi istimewa, malas berkerja, yang hanya boleh maju dengan pertalian istimewa dengan penaung kronisme sahaja yang melanggani idea idea yang di perjuangkan oleh orang2 seperti Ibrahim Ali.
Perkasa bukan nya UMNO. Maka jika orang Melayu tidak semua menyokong Perkasa, tidak bermakna mereka tidak ambil berat mengenai masa depan bangsa mereka. Mereka hanya enggan membenarkan hal hal Melayu di juribicarai oleh Ibrahim Ali. Itu sahaja. Ibrahim Ali bukan lah personafikasi bangsa Melayu.
Kita sebenar2nya tidak mermerlukan perkasa atau MPM untuk memperjuangkan kepentingan orang Melayu. Jumlah orang Melayu sebanyak 65% penduduk Malaysia tidak memungkinkan orang Melayu di gerhanai. Kemudian kita ada peruntukan dalam perlembagaan Negara. Artikel 153 umpamanya memperuntukkan kuasa kepada Yang Di Pertuan Agung untuk menentukan kedudukan orang Melayu dari segi pemberian scholarship, perjawatan dan perlantikan dan sebagainya. Peruntukan perlembagaan tidak semudah dapat di tukar sewenang wenang nya.
Yang lebih penting ialah membetulkan UMNO itu supaya menjadi jurubicacara dan juara rakyat Malaysia.


Monday 22 March 2010

Still on NEM.

I am sure those people at NEAC when drawing up our NEM read Porter over and over again. It's impossible to talk about competition, being competitive and all that without reading Porter. Unless those bean counters assisting Amir Sham are not conversant with Porter's work.
Many people can talk about Porter's 5 forces analytical tools when assessing competitiveness. They can write elegant treatises about it and present it to the PM. Maybe some of the more able of the PM advisers will read on behalf of the PM and present him a précis or summary. I say the more able bearing in mind, as I said before, the general perception of the public is that many of the PM's advisers are more adroit at their golf games. Plus, many of them are not up to the mark- making it reasonable to assume that Porter's work is heavy on them. But I hope there aren't too many of them near him.
I therefore do not propose to talk about Porter's 5 forces analysis. I want to talk instead of the 6th force- government and public. We are in the government. We are the public. We must read the work of Adam Brandenburger and Barry Nalebuff who wrote a seminal book in the mid-1990s. They added the concept of  complementors (also called "the 6th force"), helping to explain the reasoning behind being competitive.
Now, surely this must be something even cerebrally deficient advisers must understand. Government and the public means politics. This is the game everyone from the peon who has made good to become Hishamudin Hussein's polsec to the Cambridge trained young cikkus in PM 's office can understand. It's the common language of those wanting and being in power.
Even though Porter indirectly rebutted the assertions of other forces, by referring to innovation, government, and complementary products and services as "factors" that affect the five forces, we know how the quality of government, governance affects economic outcomes. Let's talk about government, governance as important aspects of the NEM.
The common way to approach the subject of economic wellbeing has always been- insist this, demand that, legislate this, decree that going public with combative calls instead of rigorous and reasoned arguments expounding an idea. This is the Perkasa way of doing this which is at once childish and very primitive. It's childish in the sense of duplicating the way of a child who throws tantrums and is normally rewarded with the milk he wants. But if he is an obnoxious adolescent, he can also get whacked!
The best way to push for Malay economic agenda is to stress its importance to Malay survival. That in making Malay survival dependent on their economic mastery galvanizes them to action. There must be a Toynbeean challenge to them, not insurmountable but sufficient for them to spring to positive action. Declaration of a new economic model premising itself on the ideas of competitiveness and creativity as the PM has done, is one of them.
The stupid thing the government has done, or hasn't done actually is to get ready with a respond group sounding out the preferred reactions. Instead by its own inactivism, (that is expected from lethargic and indolent UMNO anyway), its territorial ground has been usurped and overtaken by people like Perkasa, MPM and all that. The speed by which Perkasa has taken leadership on the issue of Malay economics over sleepy UMNO, can only suggest that UMNO people have not been thinking about economics. Instead they are easily sidetracked into nonsensical things such as making police reports about Anwar using the name of Agong and all that. That's not going to save UMNO if Malay economy is kaput. Forget Anwar. Ibrahim Ali is mowing down your legitimacy.
You should be attacking the erroneous ideas of the Ibrahim Alis of the world. You know the effects of the previous NEP, yet you play dumb and appear to accept that the way to progress is to have more of the NEP doses? How stupid can we be? We want to go back supporting an economic blueprint that has achieved more success in inducting selected puteras into the Malaysian Tattler List instead of general progress of Malays.
The ideas of progress by groups like Perkasa are erroneous. This goes against the idea of progressivism- that we move on from something good to something better. That makes the march of humanity forward. Compare that to Perkasa and others asking us to go back to policies started and probably needed and justifiable in the 1970's. We are invited to move backwards!
The other important thing to think about is our proclivity to take things for granted. The danger of holding this thought is it breeds passivity. Asking others to lookout for our wellbeing and upkeep reinforces the habit of taking things for granted. Hence for example, Malays assumed that just because society as a whole has progressed, that same progress should also go to them automatically. As I have said, there is no such thing as a free lunch. It is profitable for Malays to have a sense of pessimism a bit. Just to be aware that if we don't do anything about it, we can have nothing in the midst of aplenty.
Hopefully that realization would demand that Malays not take their economic progress for granted; that if they don't pull themselves by their own bootstraps, they can't put on their shoes. Leave nothing to assumption. It is not safe to assume that Malay progress will be part of the progress of the whole society. Malays can be left behind even though our society as a whole has progressed. So far, the effects of economic policies implemented since 1970 have supported this observation- we can still be behind while society in general has improved. Assuming progress comes automatically is fatal.
Hence from the beginning we must assume nothing and leave nothing to chances. We mustn't assume that because we have a Malay government, economic progress flows naturally. It hasn't and part of our disappointment is attributable to the fact that we have assumed having a Malay government alone is sufficient, without reading into it, RIGOROUS QUALIFICATIONS OF HOW A GOOD GOVERNMENT MUST BE. So we think, when we have Ketuanan Melayu, the future will be bright. It has been bright for some.
We shall discuss good government and good governance next.


Sunday 21 March 2010

Looking out for the New Economic Model.

Like the lady in the burger commercial, I am also asking 'where's the beef?' Thus far, I have seen nothing analytical about the NEM to be announced in 2 stages. No leader from this administration has given an extended account beyond reassuring that Malays will not be marginalized.
Ibrahim Ali said that as much when he stated that the Malays have been marginalized. These plans in the end become nothing more than grandiose and elaborate sting operations to enrich a small group of Malaysians. Or perhaps it's better to call them comprador Malaysians comprising of Malays, Chinese and Indian Malaysians working together to fleece the country.
What are the mechanisms to place Malaysia on a fast track to a high income economy? One that will see a per capita GDP of USD15, 000? Will the flag bearers for the new economic battle-cry be the GLCs- most of which failed to deliver the results? Will  they be some other complex economic outfits? The previous administration had these various economic corridors which were supposed to open doors for economic boom. We haven't seen the boom yet other than hearing some people made tons of money because now they had reasons and excuses to justify allotting public money into some ventures.
Look at the Corridors? They are starting to appear as nothing much other than just another excuse of skimming the milk. Money that could have gone direct to economic actors is forced to filter through some organisations, allowing in the end, a smaller amount to pass through. You know- the same effect a few years back when UMNO backed construction conglomerates announcing they made 250 million in year X. Well, they should have made 350 million had what was actually direct government transfer money  did not have to go through filtration and therefore pinching by a layer of dubious construction companies. The 'profit' was actually just transfer money the government wanted to hand over the Bumiputera construction conglomerate to allow it to proclaim a Bumiputera economic success.
One recent tender exercise by ECER to build a RM250 million water supply facility in Panching Kuantan virtually excluded the Malay contractors from Pahang. The ECER tender outfit demanded a list of criteria and prequalification that actually reserved the tender participation to public listed companies which are already controlled by the Chinese Hongs with Malay window-dressers as chairmen or something. Economic Corridors? Just another grand name for a con job fleecing the country by proponents of neoNEP.


Wednesday 17 March 2010

NEM=NEP plus other things?

So when our leaders say, we move from now and here to a high income economy, what do they mean? Was it just a term of art without reading into it, the real technical meaning? That is, you want to move from an average income economy to a high income economy involves a sea change in a lot of things.
Such as: Debunking old age myths, detaching from old school ways, acknowledging that its very difficult to change things from inside( which means PM Najib must institute radical reforms if whatever he said loudly were to move from beyond theatrics. If he wants action he must have a new team.
Would PM Najib be able to shed his play safe and I have never had to challenge anybody to get I am image? He now has to challenge every settled ideas and habits of the past.
He has to contend with human nature. More precisely he has to contend with Malay nature. Malays don't need an overdose of affirmative action anymore. What they need most of all is a hard knock on their senses that in life there is no such thing as free lunch. Why should we believe Ibrahim Ali who promises to have more free lunches? We have free lunches so that he can have grand feasts?
Just as an aside, I like Mat Sabu. I was listening to one of his speeches of  longtime ago. He was warming up to the crowd, working up their appetite and one of the menu items was Ibrahim Ali. He declared- I know I am ugly, but I am little bit handsomer than Ibrahim Ali. Ibrahim Ali he says has the face wonderfully useful to scare birds away! That threw the crowd into fits of giggles and primal laughs.
I am moving ahead of myself first. He is even reluctant to change his team of advisers and retinue of officers who are seen by the public and conveyed to the Oracle, as being more adroit at playing golf and not up to the mark. If he is reluctant in these basic things, then it would be safe to assume like Nazri said, the NEM is just another re-packaged NEP plus more. That his procrastination in announcing the NEM is just a stalling tactic to accommodate the Malay hawks in his party and out there.
By an indirect way, it proves that what Ibrahim Ali and his Perkasa and MPM were doing was just a rearguard maneuver supplying PM Najib's economic planners with the justification of heeding public opinion. Which public opinion? That convulsed by MPM and Perkasa in a moment's fit of temporary insanity?
They're probably using the term high-income in a non-technical way, otherwise how can we get from per capita GNI of USD3,300 at present to USD12,000, almost fourfold, in order to qualify as a high-income economy?' They must have felt the nation needs to be galvanized into confidence and activity, hope and aspirations. New generations are coming on-board and they will be the ones to push ahead. That's why a general target is put up consistent with the past 2020 vision but re-draped.' The only way is to avoid the inanities and insanities of the past. To continue using the same half-baked methods will be disastrous. We have to unmask all the mistakes made in the past three decades. We have lost not only time but our high ground and first-mover advantage of the past. Other countries have sprinted from behind and are now ahead. No assumptions must be held sacred. We have to bite the bullet, admit our miscalculations, understand where we have become irrelevant, and brave the future now.
PM Najib must now be aware that our compulsion to keep doing what we have always done is very strong. Would the economic planners used to planning life for rent seekers come up with radical plan which will see life as they have always known it, will be killed off? We are driven to remain consistent with our past decisions and actions even when they are obviously wrong.
By stalling with the announcement and looking irresolute, PM Najib and his administration will show that they are influenced by the factor known as social proof. That term means that being collectively wrong is better than individually wrong.
Is PM Najib and his team looking for safety in numbers?


Towards a high income economy.

You can't avoid this. The high income economy is predicated upon a knowledge-based economy. India has emerged from the status of a basket case because it producers engineers, technicians by the thousand per year. It has so many engineers per given population. So many doctors per given population.

The question then is: Has the government thought about that enabling infrastructure that will propel this country into a high income country? Define at what level of GDP? What level of manpower achievements? How many doctors per given population; how many engineers/population. Etc.

Think of how many people we want to train at PhD levels in the sciences and engineering. That's the cutting edge. Not too long ago, the then minister of higher education I think- Khalid Nordin was saying we are going to produce many at doctorate levels? Would be interesting to see in what fields. It's the quality that counts.

India produces some 500,000 technical graduates a year. Even if 30% of them are of quality material, that's still a sizeable number. Malay students must be encouraged to excel in the hard sciences.

With our current GDP, at which level are we at? We are hardly above the low income level. Between the slightly above low income level to that utopian undefined high income, exists a large void? What do you fill hat up with? You need a middle income level.

Now, that's a tricky part. You have a middle income trap; we have a corresponding middle class trap. The middle class trap with a rent seeking mentality that isn't about to give up its pleasurable position when the PM wants to open up the economy.

Why should they? You have created an environment where this middle class rent seekers are comfortable, get pink forms (most wantonly during Anwar Ibrahim's tenure as finance minister) ,Nob-hilling and hobnobbing with fat aristocrats,- would they want to give up these perks? They want the good life- but it is the good life given to them on the backs of others is that lifestyle they want to keep.

The inception a middle class for the Malays was fine but it becomes a new problem- the emergence of a rent seeking class then created by policies that must be self perpetuating. It is the rent seeking class that will sprint into action when it sees its interests being threatened.

This rent seeking class at present has as its chief spokesman and justifier, people like Ibrahim Ali and the officiously and artificially minted professors and academicians paraded by the rent seekers as their intellectual paratroopers. Hence the people of MPM and Perkasa proudly lists down their academic sharpshooters who, it is claimed can dismantle much of what have been recommended by PM Najib's much touted foreign advisers.

So what happens when we create this middle class rent seekers? It first of all widens the income gap between the middle class rent seekers with the rest within that particular community.
The rate of wealth accumulation of the elites is faster and more compounding than that for the masses whose earnings will be eroded by inflation and other factors which naturally arise from an economy artificially propped by such policies.

I wasted no time and asked the Oracle his thoughts on the PM saying he will announce the NEM in 2 stages. I asked the Oracle, what he thinks of this portioning of the announcement.

The government is testing the waters. Allowing it some escape exit to make adjustments. They called it taking time off to get feedback from the people. They should have gotten feed back before, not after the reports are completed. Having spend a large amount of money on acquiring an economic blueprint, the government isn't about to allow the report to collect dust. But that is not good. You are sending wrong smoke signals. Your plan has some inherent defects.

The main problem we are facing now is a crisis of confidence. Our people have low confidence in the government managing the state.

Was the PM spooked by Ibrahim Ali and his people?

Not really, but it did force the PM to rethink.

Maybe the PM is a victim of faulty and half baked advice. We don't know who is advisors are. Who recommended the economic advisers?

Here is a general perception. PM is handicapped by his advisors. There are reports which get louder everyday- that PM's office with people who are more adroit at their golf games than giving proper advice to the PM. Second, these people are not just up to the mark. When you are insecure, beholden- you hold back. You become compliant, submissive by nature and serve to merely nod in agreement at whatever the PM says. You are just sycophantic cheerleaders.

The PM must have a good leadership team. This requires good people. Not necessarily agreeable but uncompromising in their assessments until proven wrong. This is the leadership culture that is needed. These qualities don't necessarily go hand in hand with personal loyalty. Good leadership material is loyal to ideas, defend and expound then. This is what the PM needs at the moment. Personal loyalties can be rewarded by other means. In ancient times, the King will confer titles and give lands to his loyal supporters and then 'release' them to be on their own only to come to the aid of the king when he is in trouble.


Tuesday 16 March 2010

Second guessing the High Income Economy.

Until it's outlined clearly, nobody knows about what we mean by a high income country. It's similar but troubling like the concept of 1 Malaysia. 
Everyone seems to have their own version of 1 Malaysia. Is 1 Malaysia for the taking by the economic elites? Is it 1 Malaysia that is to be divided between 'the players' whose sons and daughters made it to The List issue of last year Malaysian Tattler?
Just how do you become a high income earner? You need education first of all. The right education. We are producing so many Malay graduates who are unemployed. We created them without thinking of the absorptive capacity of the market. The market will absorb those talents which will help them become more competitive. It absorbs those who can add value.
You need an Ali to represent you which qualifies you to get those special share allocations? You pick the best of the crop. There are 100 bumis out there. You need how many? 10? Then you pick the best out of the uniformly standard issue. 
My point is this. Even in the Malay playing field, you have so many Malays to choose from- you dont confine yourself to a limited horizon. There's always the better Malayman- if you allow free competition, the best will emerge. The best will be those who have some advantage over the rest.
To earn high income, you have to specialize in a field which you have competitive advantage- that's the edge you have over your competitors. Some Malays excel in the arts, entertainment etc. They strive to be the best in that filed- a Latif Mohidin for example can sell 1 painting at RM 300,000 apiece. He needs to sell just 4 paintings a year to become a millionaire- that's high income. That's achievable BECAUSE he became the best in his chosen field and he cultivates himself to have an edge over his competitors.
Siti Norhaliza for example sings while commanding high fees. She specializes in her chosen field.
The principle of high income- be the best in a field where you have an edge over your competitors. Malaysia can become a high income by defining what it has advantage over its competitors and being the best in that filed. E.g. In producing/manufacturing of certain unique products perhaps permissible only by a uniquely Malaysian climate that is not found in other countries. Maybe?
This should be the guiding principle- find out what we are best at. Then excel in that field. We become a high income country.
The underlying principle is not a new just- thought- out idea by the Oracle. Listen:- the increase in dexterity; to the saving of time which is commonly lost in passing from one species of work to another; and to the invention of a great number of machines which facilitate one man to do the work of many.
Who in the hell said that? Why, Adam Smith of course. In plain English? its specialization. Be the best in that field. Perfecting that task. Leading to dexterity and output. Leading in turn to improved performance. This is the performance we should be going after. So, when PM mentions performance first- apa itu? Why is specialization and being the best in that a field vitally important?
Men are much more likely to discover easier methods when the whole attention of their mind is directed towards that single object than when it is dissipated among a great variety of things.
The Scotsman again.


Monday 15 March 2010

Second guessing the New Economic Model

Once again, I had the singular honor of meeting up with the Oracle of Syed Putera. Until he chooses to reveal himself, let's just say that he was an important person to have ever walked the corridors of power. Friend to PM's, kings, counsel to anyone who cares to solicit his wisdom. Above all a man of practical wisdom in a world sometimes made complicated by elegant theories. I suspect he is not inhibited nor constrained by esoteric and elegant theories. He is moved more by practical considerations- does this method work? If it works, then theory has to be treated as secondary Theories are just necessary evils.
Case in point: how can we define capitalism in practical terms? Answer: capitalism- application of capital to any economic endeavors by man. You lack capital; the solution is to capitalize the economic agent.
You lack financial capital; the solution is to make finance available. You lack human capital- education is the answer. You have physical constraints- the solution is technology. Economic advancement then becomes the art or science of applying capital to economic endeavors. That's capitalism. No need for Friedman. No Adam Smith. Just apply capital to the economic agent.
We talked over a number of issues. This time around, I am not going to narrate our conversation ala dialogue style. What I propose is to expand on the number of pointers raised. In that way, the expansion is not attributable to the Oracle. He gave the germ of an idea. He is in no way responsible over the accuracy or even the version of my interpretation of what were discussed about. They are entirely my understanding and any deficiencies therein are not at all referable to the Oracle.
The oracle is doing an important research. He will soon submit the research to a university for the benefit of posterity. He has promised to give me chapters in the research. Again, another singular honor. He is also a widely read person and I have benefited too in the sense of being able to share his reading material from time to time.
Let's not talk about NEP anymore. It was finished in 1990. It has been replaced by the NDP. It's long dead and gone.
Plans to help out the unfortunates will always remain. The marginalized, the fringe groups, the economic- left behinds will always need help. Governments help them, whether they have plans or not. Whether they have actions called affirmative or not affirmative.
The qualification for getting help isn't because they are Malays. They must be assisted because they are the unfortunates. Whether they are Malays or not isn't material anymore. Even other Malaysians (not Malays) who are economically disadvantaged must be helped.
Let's be clear about one thing. The NEM is not an economic agenda for Malays. It's an economic blueprint for the whole country. How to get Malaysia to a high income economy?
Within that blueprint, Malay economics should be an important subset. If this isn't taken into account, that would be problematical for Najib administration. I am saying this because our objection to the NEM shouldn't be because the blueprint was advised upon by a team of foreign experts. We will object if the recommendations have excluded distributive mechanism of an expanding economy. We shall object, if the NEM doesn't address the issue of inclusiveness. Will Malays participate meaningfully and if so how will do so?
Through agencies? Through a selection process based on rapport with the leadership? Through a method of picking winners decided upon by personal knowledge of awarding parties? Is this method effective? That is, we replace the invisible hand of laissez faire (let the market decide) with a politically visible hand? Ibrahim Ali is talking about a clenched fist intervention.
In Malaysia, the reality is the majority of the less fortunate are Malays. So, we helped them. But it's very important for us to frame the reality correctly. Maintain our sober perspective. Don't allow loony bins like Ibrahim Ali derail us. If we do allow ourselves to be off-balanced, that lowers our confidence in the quality of this government. Its response to what Ibrahim Ali represents will determine whether it slides further down the confidence scale.
This government can't be spooked into altering its battle plans just because someone named Ibrahim Ali stirred up some rearguard commotion as an excuse to cave in. if that happens, then what we have done is to have the reality that's confronting us now be Ibrahimized.
The reality is we have article 153 and other clauses in the Constitution that make the position of Malays, religion, language, employment and all that virtually unassailable. On top of that, Malays have the demographic advantage. It's unlikely the other Malaysians can procreate by quantum leaps and suddenly eclipse Malay Malaysians.
Ibrahim Ali and his gang are mounting a rear guard action that supports rent seeking culture that is commonly associated with old school UMNO. Zaid Ibrahim wrote a very terse essay on this.
I have said earlier, that it's unlikely that those in power will abandon the needy Malays. The NEM will never do that because that would be suicidal. If they do, then our economists and policy makers reviewing the recommendations by the team that is culling up the NEM are, sorry to say, dullards. We are better off if we assign [perceptive people like Wenger Khairi to assist the planners.
As regards the NEM- let me quote the beautiful Walla( I hear many are falling heads over heels at the representation of Walla in Walla's calling card):-
Lastly, no one is naive to think the new model will not remain accommodative to Malay privileges intractably sold as 'rights'. Nomenclature and intent aside, what is portrayed and what the world cares about are not synonymous. Investors in the present global economic situation don't have time or patience to play our game of political niceties. They answer only to their shareholders who will only ask the Malays and others in the same honey jar to grow up and realize the real world is about modernization and progressive mindsets, not the ibrahimization of reality.
As to the reality that the majority of the economically marginalized are Malays, Walla presented this reasoning:-
But as concerned citizens, we must all nevertheless not just be satisfied that such a realization has come about. We must do whatever we can to help all races overcome their internal dilemmas. If the community that is suffering the most from a modernization crisis are the Malays, then let's put our heads and hearts together to see what positive measures can be taken to lift them up. They cannot do it on their own. Their leaders have only messed up everything for them and taken this whole nation down the same road with it. They need brotherly support in an open and frank environment that thrives on a new level of trust and understanding free from caginess and past shadows.

Because all will have to realize that never again must affirmative measures be a zero-sum game of trying to come up by making sure others go slower or be labelled as cattle to be milked of their labour in order to support free-rides and unearned goodies that only open the Pandora box to ill-gotten gains for a bunch of unethical and hypocritical elite who will then without the slightest shred of conscience use the other Malaysians as bogeymen to be blamed so that the Malaysians who happened to be Malays can be cowered into some unsupportable fear to continue supporting such divisive affirmative policies. That is not Malay supremacy. That is national suppression, swindling and siphonage.

I couldn't have said it more directly and in as piercing a manner as Walla did.


Sunday 14 March 2010

MCA’s Royal Rumble- 2

I was planning to post my second part of the MCA Royal Rumble. Patience has its virtues. The ever incisive and sharp Walla has written in some comments on the current state of MCA turmoil. I can only do justice to his excellent observations by sharing his comments in the form of a main article.
walla said...

A: 'What a mess!'

B: 'Goes to show one thing though...'

A: 'And what's that, Tun?'

B: 'That it wasn't due to the pair of marble lions at the entrance of their Wisma MCA which is the cause of the internal squabbles of that party.'

A: 'Why so?'

B: 'Those lions were removed long ago. Maybe they should put up a giant pakua instead to reflect away bad vibes..(wink)'

A: 'My dear Sir, i never thought you would think of such things..'

B: 'Desperation is the mother of invention, Sofea.

Look, there are three things here notwithstanding the interposition of LAL and OKT into the fray which is expected considering their known characters.

First is the surprise. Second is the rationale and third is the test. Surprise, rationale, test.'

A: 'Intriguing. What surprise was that, Tun?'

B: 'Observe that OTK was visibly surprised during the last voting when some of the central delegates took a position against him. Now, only someone who had thought he was doing the right things would be surprised the delegates didn't support him completely. That look of surprise only reinforces the conclusion that he was driven by his ideals, no?'

A: 'Your mind is still sharp, Tun.'

B: 'I recommend tonik cap gajah, Sofea.'

A: 'But Tun, that's an old herb for women pain!'

B: 'Alamak! no wonder my fours have been chuckling behind my back.

Now where was i? Then there's the other surprise. You have CSL seemingly coming together with OTK and distancing from Liow, Wee, Chew and the others. Suddenly he throws in his towel, and i don't mean that towel, and he withdraws a group to pressure reelection. What could have caused that sudden volte face?

With that to ponder, let's move on. The second thing is the rationale.

The overriding rationale is this: the MCA leadership must never be perceived to be under the influence of any external party, political or criminal.

And this perception is going to stick the moment the leaders elected to its office are the ones having unsavory pasts or present baggage.

Whether it is a grainy blue film or a shiny MPV or ties to the alternative financial industry doesn't matter. Why? Because the people will think these things can be used against their leaders later in such a way as to influence the decisions and actions of their party.

Right now, political leadership needs independence and integrity. The rakyat have had enough and want a clean slate.

Why is this important? It is the only way to create a benchmark of integrity. It sets a level for politicians to follow. If the next batch falls below that level, hasta la vista, baby.

Without that level, each new batch will again play the same game. It will be a never-ending story. Except when the country's economy turns turtle.

Now, wouldn't it be preposterous if the leaders of the party you depend on for the future of your family are themselves beholden to invisible external forces whose intentions may be expected to be nefarious to the interest of the community in some unforeseen future?'

A: 'But, Tun, the squabble here is about the democratic principle of reflecting the wishes of the rakyat, the key point against OTK, isn't it?'

B: 'So we have to weigh between the importance of that democratic principle on the one side, and the independence/integrity thing on the other side in this present peculiar situation formed by individuals scrambling to align one side one day and then another side another day, no? Remember to draw the distinction between wishes of the rakyat and wishes of the central delegates.

Let me ask you, Sofea, what is democracy? I only remember someone saying it's "of, by and for the people", yes?


If you say the matter here is about democratic principle which is what some of the central delegates are demanding, let me ask you to qualify what they have shown that are "of, by and for" the people?

Has each of them taken a full survey of the people in their area to confirm that their stand is what those people want so as to mean they are really of and by their people?

And what have they done for their people?

And take their previous admin who are now trying to influence the matter. What have they really done for their people?

Note that although the MCA is a founding member of the coalition from day one, its leaders have not come out to say anything substantial on anything that is nationally important. I mean substantial stuff, not the usual homilies. Stuff like how to make businesses more competitive, what to do about human capital, how to crank up the civil service, what really happens during consensual dialogues with Umno, what's happening in other faster-moving places, even the community's vision for its integral role in V2020. Nuthin'.

In fact if the MCA doesn't lay bare what happens in a nego with say Umno, then the rakyat will conclude there was no nego the MCA was happy to lay out about.

And if that's the case, shouldn't the rakyat know since it is obviously unhealthy to the future of race-based politics in this country?

A: 'Sir, you are taking a jibe at both democracy and Barisan!'

B: 'It's hot and there's nothing on tv.

In any case, don't you think the opponents to OTK are also idealistic too if they are talking about the democratic principle of their honey-ed votes?

Thirdly, the test. Say OTK wins and he arrays his own group. The test is whether the rest will come together with him to revive the party, combining individual strengths to create a whole which is bigger than the sum of its parts. That is the test.

If they don't, the party will fall apart again. And in either direction - because they helming the party will still have to work with his group.

All that will be the end of the Barisan coalition because with Gerakan and MIC down and the old guards leaving the stage across the sea, Umno needs a strong and confident MCA to face GE13. Time is the deciding factor. And time is not what Barisan has.

But if they do, there is a fifty percent chance the center will hold - however, barely.

Why do i say barely? Because Umno has its own agenda. People in the know are saying it wants back that two-third majority in parliament so that it can legislate to gerrymander the GE13 constituencies.

Let's take it hypothetically. Say it keeps the Kelantan oil royalty until the general elections. That's a hefty sum to buy votes, no? And it's easier to buy votes from a constituency delineated down to 10,000 than one which at present is 100,000, yes? After all, the only aim is to get that one more MP. Don't expect the rakyat not to know this. This realization will only strengthen and increase the rakyats' resolve to resist Umno even more.


Let's get back to the argument. Now, if on the other hand OTK is out, the opposition that is Pakatan will have ammo to say that the opposite group at the helm of the MCA are puppets to external influence.

Then no matter what the MCA will be doing, each and every action or decision will be seen with deep suspicion.

So you may get your democratic principle but it cannot operate at the masses level at all since suspicion has entrenched.'

A: 'So what is the strategic thrust for Barisan, Tun?'

B: 'You know, one's strength is also one's weakness. Barisan's strengths are its infrastructure and its financial muscle.

But a heavy infrastructure is also slow and lumbering to make changes, and changes are needed immediately. Not tomorrow, or next month, but now because the clock is ticking.

And having financial muscle can also be bad. People are rankling that their hard-earned money is being used to win votes against their interests.

So Barisan's strategy has to show convincingly and finally that it can overcome its own strengths. Neat, eh? Overcoming one's own strength in order to show one has reformed from the arrogance which was caused by those strengths in the first place.

As an example, let's say tomorrow Perkasa or the Utusan group or some NGO says something idiotic and contrary to 1Malaysia.

Immediately, and i mean immediately, Umno must come out and berate them in no uncertain terms.

Not only that, Umno must immediately institute measures to show it takes a line that will prevent such things from taking root again. Not just words but real action backed by independently provable facts and data.

If they don't, then the rakyat will conclude both are playing a mind game on the rakyat and that's a fatal mistake.

Because the rakyat already know that food piled on the table for them are bought with their money in the hope of getting their favours to continue the same privileges for the loaded elites.'

A: 'sigh.. so many intractable challenges. Is there anything else?'

B: 'I used to have a friend who has since left. One day he got a parking summon. He had read about the C-Index and being curious he wanted to test it. He wrapped his cash payment in a piece of newspaper and walked up to the first floor to pay. He said he saw the sergeants sitting there at the counter. He put the summons slip on the table and said the payment was wrapped in the newspaper. One of them took the parcel, took out the cash, crunched up the newspaper, threw it away behind his shoulder. And pocketed the cash. Then with a wave he said can go back now.

And they all recently got a raise. So, Sofea, let me ask you whether Hisham knows what he's talking when he says he knows what's going and i also ask what's the big deal about people not resigning.

So as not to belabor the messages, there are three key and core statements about this country which any government, pro or against, should be constantly mindful of.'

A: 'And they are?'

B: 'One, substance, not form. Two, enough is enough. Three, do the right thing.'

A: 'Aren't there two more??'

B: 'Oh, you mean "wake up, Malaysia!" and "more brains, please." ?

But if they wake up, they will find it's a nightmare. That explains the denials. Pin the word 'PKFZ' on the wall and see how it will end. In this country, even elephants can disappear.

And as for the other, it's impossible. They have no brains in the first place.'

A: 'Now, now, Tun, that's an exaggeration, no?'

B: 'Nyet.'
14 March 2010 16:19


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