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Sakmongkol ak 47

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.


Anonymous,  25 March 2010 at 11:54  

Go to Silicon Valley instead of Hong Kong where companies like HP, Apple, Amazon, Google originated.

The MSC initiative was a good start but Malaysia must persist in grooming potential start-ups.

It will be fatal to ignore the new opportunities created by ICT and the Net.

Anonymous,  25 March 2010 at 12:24  

Dat SAK47

The road to a high income economy is quite simple. the roles to be played by the govt and the privae enterprise is laid down in all economic treatises. the govt ensures that it creates the necessary insfrastructure that will encourage private enterprise to thrive and grow. Our infrastructure is stunted and stultified, especially the legal, security and political ones. Even the economic ones like the regulatory authorities in this country are given such enormous powers under the legislation, the regulators are trying to micrmanage their areas of authority. How can private enterprise thrive under such adverse conditions.

You are right in demanding that the Najib Administration free up the nation, politically and economically or we are doomed to remain in the middle income trap for a long time. Najib will then consolidate his place in the history of Malaysian nation building.

La-di-la,  25 March 2010 at 12:44  

Yesterday Najib said there will be a shocker besides the NEM on March 30.
My guess is he will offer Ku Li to be in charge of the NEM, possibly a ministerial post.
Or is it (don't laugh) Tun M as the supremo.
Since there will be a new MCA boss by then, there will be a cabinet reshuffle.
I think our fave guy KJ will be rewarded a cabinet post.
My hunch only.
What say you?
Let's wait and see, TUNGGU!

Anonymous,  25 March 2010 at 13:12  

If Steve Jobs' Apple is a model of Shumpeter's innovative entrepreneur, then I think equity investors have a real role to play in the making of real solid companies.

Imagine if Apple or Google was not listed.

Anyway, I think Najob's job as economist is a no brainer (just remove the NEP's racist bias) and get the country to look forward to a new future with forgiveness and aspirations beyond their expectations. His obtacle is of course the warlords in UMNO and Pesaka who insist we remain in the 19th century.

Richard Cranium 25 March 2010 at 13:54  

Those highly motivated and qualified people now serving in the Penang state government are there to prove a point.

Their point being "we are better than BN in running this state".

But let's be honest. Eventually, these same selfless servants will ask for their selfish deserved pot of gold once power is entrenched.

It's just human nature. And then, we go back to same old-same old.

Anonymous,  25 March 2010 at 13:56  

Pada dasarnya, DEB or MEB or what ever B the goverment already set, is to distribute the economy cake equally among the race in malaysia.

Masalahnya, how to do it? Time, attitude and world economic environment change. Kita harus berdepan dan mengakui perkara ini. Sebab itu saya selalu katakan "please, mahathir era already gone. Full stop.Dia dah pave the way to transite younger generation mind for next level. He did it. But the way to develope now, totally different from his day before. He's right bila dia advise TAR not to interrupt during his tenure as PM. But now, he got to accept the same advise.

Najib got to go thru new level of developing this country, the challenging from new develope country surround us, like vietnam, myanmar, indonesia etc..etc. Lower labour cost, shorter and easier transportation system on another year ahead not on our side. Agro base and self driven technology need to improve, mana nak cari duit? Kena cekau dari fund manager juga. Beside, other develope country macam Jepun, they are now joint venture with US to penetrate their industrial regime to lower labour cost country in a way that not familiar to us. Kena jaga juga bro.. not that easy.. anyway good luck to Najib.. hmmm berat tanggung jawab dia...


Anonymous,  25 March 2010 at 14:26  

I wonder if those goons in BN ever bother to read or even try to understand the strategies we need to undertake to propel our economy.
The DAP proposed a 2010 budget. BN don't want to study the proposals. All they can say is that there is no allocation for Islam and Malay.
The merits of the proposals are irrelevant to them.
Now hw can this nation progress?

kuldeep 25 March 2010 at 16:36  

To really appreciate the difficulties our PM have in trying to introduce a NEM...just have a look at last nite's launching of HSBB.

HSBB is deemed to be a very important and major catalyst towards the mind set change required in the NEM.

However,we are treated to long winded meaningless speeches by #yorais and crew.Not a single practical example of how HSBB can change our "mindscape"..

Myb PM tried with his reference to a FB party..

Don't u wish for a launch Steve Jobs style and dimension..running demos on the key attributes and opening up visions for third party developers to create Apps..

And today..TM continues their High Income Model of doing business by incredulous rates and useage caps.Hey..plsss...this is big big hiway..allow people to travel anywhere and for how long they please.Thus High Income Model is only for CEOs and senior mgmt of GLCs..

Lets create the allow the creative guys with technical knowhow and biz savvy to develop the APPS that can create value through the HSBB enabling mechanism.TM should be driving that instead of capping useage and high charges.Russians pays only half what TM charges..and they're supposedly inefficient,lots of cronyism and not too highly regarded in the corruption index.

I am looking forward to have a one to one online,video and voice enabled tutoring by a Quran teacher from Bachok as much as a live video preview of a hotel room in langkawi.

I promise #yorais not to download anwar ibrahim and RPK Youtube speeches

walla 25 March 2010 at 19:38  


A: 'Come to think of it, the situation is actually worse, Tun. We have to factor the return of the 4R's.'

B: (eyebrows rise) '4R's?'

A: 'Race, religion, rights and rulers, Sir.'

B: 'It's all about the clinging to some past for lack of confidence about the challenges of the future, Sofea. But let me ask you and them. If we are having severe economic and political concussions now, doesn't that confirm the ways of the past have been their cause which must thus give way to the ways of the future? After all, we won't be here when our young are bequeathed the shit we are leaving them so shouldn't we all draw out the last dregs of our responsibility to do the right things for them, once? They didn't choose to come into this world. We chose it for them. That, and a faulty duralex.'

A: 'Hmmm. Does that explain the size of your brood, Sir?'

B: 'Quiet, woman. You want the whole world to know, kah?

Look, so as not to make our felicitous eavesdroppers restless with this overly long conversation, let me cut the chase to what our PM, Najib Tun Razak, needs to do.

He needs to schumpeterize the whole economy. Creatively destroy all the bullshit and start sowing all the real productive bulls. There are malingerers of progress in our mindset. Remove them decisively. There are leeches and sycophants. Despatch them to places they cannot harm. Then do whatever it takes to create a new innovative and confident society, a progressive and modern-minded economy, and the most pro-business of all nations. Make this a great and fun place to be for everyone in the world. Especially those with money to throw. Remember, the world is liquid with cash but spoiling for ideas. Might as well throw in fun as well.

Is this definitive enough for you?'

A: 'Does this mean you will ask me out for a date tonight, Sir?'

B: 'You want me to die kah? There are four of them, and i am too old to remember how i had escaped the last time.

Anyway, to make up for your inevitable disappointment in not having the privilege of my exclusively charming company tonight, i have saved up for you something. Here, let me roll them out from my handkerchief...

walla 25 March 2010 at 19:38  


A: 'But we built an infrastructure.'

B: 'And deliberately neglected what it was for. We built an overpriced and super-leaked infrastructure and proceeded to do everything in our powers to shoo away the very people needed to use them in order to recover the costs. So we end up with big things not used with big bills for future generations to foot. And we locked all that in with a deranged political system for all posterity. Smart, aren't we?'

A: 'But we have big oil deposits, Tun.'

B: 'Nope. Petronas just quashed that rumor. We are a small-time oil cowboy with deposits to finish in about ten to fifteen years, and our economy will be a net oil importer in two. Don't people realize the implication of being a net oil importer in two years time? It means there's going to be an additional big bill every year on the treasury which has to be paid off somewhere. If not paid off, the national deficit will skyrocket. Why the initial rush for GST? Why do you think Najib and the PM went to HK?'

A: 'You're terrible, Tun. I shall pretend you didn't say that. Our PM went to interest the regional funds investors to pump hot money into our market, Sir.'

B: 'I thought after the Asian crisis we vowed off hot-money, Sofea? Let me guess, it's for ValueCap reloaded?

(sighs) Do you know how i would describe our economic situation? It's zugzwang. That's chess for self-checkmate by any move. A big deficit jitters investors. And it's growing like a tumor. Also, inflation looms. Why? Because that net oil bill will hit TNB first since people were so smart to buy oil-run generators the last time we had a national brownout. And even smarter to blindly sign IPPs for personal political gain for some local pharaohs.

Then that bill will of course hit the petrol pumps because the gomen tiada wang lagi to subsidize.

Those two items will be enough to push prices up. Starting with animal feed. Moving on to wet market produce. Then going into plastic bags, tyres, lubricants, and so on. A massive cascade rolling across this beautiful land, dampening all economic activity.

Remember what Jetro had recently said - that its manufacturers here feared additional overheads from higher power tariffs. Everything is at the moment on a knife's edge. One tilt, and kaput.

And if i remember correctly, we had discarded the IMF but here we are now considering their type of draconian measures.

But take heed, the moment we do, that family up there that is floating on credit will go under. More will be forced to go to our other financial servicing industry. Because at this moment we are low-income low-skill low-market economy.

Now that's still alright. With patience and perseverance, we might still pull through. But this time we are out of time. Because to get to high-income, you need high-value activity, that idea-design-make-sell chain. It doesn't have to be things. Can be business models, services, branding. These can also be innovations.

But the crux is all these things take time and brains if we are to start on our own with what we have today.

Macam mana when we haven't exactly been an inventive society, when our thought processes are still one frame at a time, when we are ignorant of best practices and market potentials, when we don't read journals which report discoveries, when our people can't even string a decent sentence at international forums, when our minds and bodies are still in some soporific state of torpor since the last orgy of malaysia boleh?'

walla 25 March 2010 at 19:38  

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.'

Donplaypuks® 25 March 2010 at 19:47  

Shumpeter was famous for his "small is beautiful" hypothesis. But ever since Firaun, no one in M'sia thinks like that!

It's all about mega billion $ projects (whether economical or needed or viable or not)and money now, morals later!

I have for some time been saying this and doubt UMNO/BN will take note. Just as Location! Location! Location! is the byword in real estate and retail biz, so too for a high income economy, it is Education! Education! Education!

Add meritocracy to it and I'll be surprised if we don't catch up with S'pore within 10 years

We are all of 1 race, the Human Race

Ariff Sabri 25 March 2010 at 20:20  


schumpeter is famous for his creative destruction.

e.f schumacher is the one famous for small is beautiful.
but yr proposition is taken note of.

Anonymous,  25 March 2010 at 23:45  

Cost of FTTH is now not more then RM 2000 per household in USA..

And for UK based on certain configs with VDSL on copper wire frm kerbside to internal modem,the cost is only RM 1000 per hse hold.

As a result they can charge much lower then wat TM expects us to least 30% lower (ringgit to ringgit)..u factor their cost of living..probably they are charging 7 BigMacs whilst we have to for go 35 Big Macs if we wanna HSBB

Anyway using UK Capex per household numbers,with the 12 bil Capex our TM is spending..they need to create about 5 million new hseholds from our current population base?If they can't find the 5 mil new hse holds then they can make 100% profit on the CAPEX?

We fall into traps after traps...and 10 years down the line someone will finally have the guts to say it wat they are saying about over priced Tolled Hiways,IPPs and such.But the quick buck mentality never2 end.

Simply..the construction of the HSBB network shld have been let out on a competitive tender and then leased out to operators in an open bid.

Someone help us please.

Anonymous,  26 March 2010 at 00:25  

people entrusted to promote the nation is only interested what for their pocket. you can see these at many of the GLCs.
not so uch of the growth n high economies

Anonymous,  26 March 2010 at 07:11  

Dear Dato,
The PC(Personal Computer) market is worth US$200b.
Come up with a PC 10 time faster and cost US$150 and the PC market is yours to take.

PC is made up of silicon chips, which are baked from fine sand. Malaysia has fine sand. Why sell sand to Singapore instead make the chips yourself.

Surely the graduate of UMIT should be able to do it after all Dr M repeatedly classed them as ketuanan.
Now is the time to prove to the world your supremacy!


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