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.
The most humorous part of your post
ReplyDeleteThey 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.
Porters 5 forces - ha ha ha. Well I do have to study it up in my level II so perhaps I can give my 2 cents (its only 2 cents cos I aint no mumbo jumbo consultant). Michael E. Porter came up with a frame work to determine the level of intra industry competition facing a firm. I think people forget that point, and basically what he said was the competition and hence the GROSS PROFIT MARGIN facing an firm was based on
-The threat of substitute products or services
-The threat of the entry of new competitors
-The intensity of competitive rivalry (cause/effect of the competitive rivalry)
-The bargaining power of customers (buyers)
-The bargaining power of suppliers
All well and good. CFA wannabes use this to model how a companys ROE growth trajectory is going to be. In a single sentence :Can it maintain margins?
The answer to that is how well the firm responds to the forces it faces; some being by virtue of the industry it is in (for example, there is no differentiation between Palm Oil Cap IOI and Palm Oil Cap Sime Darby), others firm specific decisions (for example who has more power - Proton or its suppliers. Depends of course whether or not the suppliers control the Government who control the CEO of Proton...).
Interesting that the PM is reading it. Unless of course the PM is intending to use fundamental analysis in analyzing the stock returns I see no point. Look at our large caps - Maybank, TNB, Telecom, Maxis, PLUS,Genting and the Palm Oil boys. Really what new insight can the PM get by being educate on P5?? Most of the firms have a strong power over consumers due to monopolist business practises, different degree of control over suppliers (TNB's IPP vs. Maxis), have virtually little or no intra industry competition (execption the telco boys), strong profit margins due to protectionism. Case in point.
What the PM should be more worried about is how is the non domestic economy faring. Those that export to the world market, which can be summarized into the 4 following segments
a) Palm Oil boys
b) Petronas
c) Electronics
d)Tourism
(a) & (b) are price takers. Market sets the price of the commodity, and people take it. Thats why, for the hoopla surrounding the so called modernization and industrialization of the country, we are still very much a primary industry player.
(d) - Tourism..well.... I don't see how strategically we can do well by making this a so called thrust. What benefit is it to the country as a whole if we have a sizable proportion of our population employeed in the hotel, f&b and other "entertainment" sectors to grow this sector.
(c) is interesting. Electronics exports is the single largest export of the country. In theory it should employ highly skilled engineers, some even to PhD level, but its surprising when LGE supposedly turned down an investment opportunity becos we can't guarantee engineers.
Some food for thought. Buzzwords are only as good as the knowledge of said buzzwords. If not its just rubbish
Dear Dato',
ReplyDeleteI think you had hit so many nails in the head, you may want to replace the AK47 with a nail gun :-)
The key take away point
. 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.
Self explanatory and spot on. Sometimes it is so "common sensical" that it gets ignored, but a good thing you did not make an ass-u-mption but stated it clearly. Unless there is this qualification, we will have the case where nobody knows what a Good government should be and it is up to the spin doctors to sell stories as new pet projects are placed on the table, claiming that this is the "good government" everybody was on about.
The only way for the Malay to be competitive is the cold turkey approach.
ReplyDeleteDato,
ReplyDeleteThe problem is not with Amirsham or lack of understanding of Porter's 5 forces.
We all know what needs to be done, look at all PM's policy initiatives. All has the right thinking behind it (except RPGT). But every single one kena U-Turn.
The real problem is one of leadership. We have a govt that has one too many skeleton in the closet. They have lost all moral high ground to rule and best part is they know it and they know we know it. So they have no balls to upset the apple cart even if its the right thing to do.
Malaysia is now akin to a home where the kids calls the shots and not the parents.
Leadership is held ransom by the need to be popular. These are career politicians, they have no other means to a living, no popularity, no job, no chance to curi makan.
How to make courageous decisions? They don't care what's good for the country and malay's. They are only interested in how to keep their job, not what's good and the right thing to do.
So stop talking non sense with Chinaman. Problem is not wt policy, problem is wt leader who can't lead.
Today i listen to the IRDA CEO interview on BFM on the way to work. After 40 years this is what u hv to show for it? No more talent meh Malaysia? Legoland and Hello Kitty!! This one tax payers money hor.
Hari hari gomen kata tadak GST deficit sudah mau bocor, ahh ini lah. Sudah deficit lagi mau makan fro free, ini free itu free siapa mau kasi bayar?
So stop ur silly arguments of what NEM/NEP/NDP should have and not have. We just need a government who not only knows what to do but has the courage to follow through with it. Period!
Chinaman
chinaman
ReplyDeleteyou may think thse are silly arguments. i thought at the end of the essay, i stated we will discuss good government and governance next. ada butot?
Sak
ReplyDeleteHow do you expect much when the same people who worked for Dollah are now with Najib.
You mean you dont know this?
If the former UMNO had noble aims, the current one has gone rogue. To the extend of denying their own people (the Melayus) in Kelantan and Terengganu (previously) their rightful share of the oil money.
ReplyDeleteIt is always easier to blame others and find bogeymen than to admit 'pagar makan padi.' Like it is not shameless enough, now they are asking for more.
We can be sure that the likes of Perkasa and MPM would be doing the same song and dance routine in 3030 while the rest of the world is moving ahead in warp speed.
If ever Malaysia need God's help, now is the time.
To be competitive you need industry/market knowledge,drive and capital.
ReplyDeletesome classic examples ;
1> Tenaga is in a protected market which is heavily subsidised.Because of the subsidy,they have not seriously looked at other fuel sources even tho it is cheaper then gas.As a result,we are losing billions AS A NATION in order for TNB CEO to meet KPIs
2> UEM is involved in Penang Second Bridge.The project have been delayed for 4 years.Nobody have lost their jobs over the delay.Meanwhile,a huge casting yard is idle.An intelligent and reasonably proactive mgmt would be able to generate 50 mil/annum producing other precast products whilst waiting for the Bridge to start.But,there is no incentive cos its easier to put up CLAIMS to the govt.And,to preserve UEM's CEO KPIs..govt will pay hundreds of millions in compensation ON TOP of a grossly overpriced contract.The system rewards poor performance and under achievers.
3>Felda and Sime Darby are the big oil palm companies.However the first company to generate electricity for sale to the grid ;from palm oil mill waste is a smallish Chinaman company.Similarly,another small Chinaman company is capping methane to produce electricity for Tenaga.Thus,never the leadership and never enough thots to develop technology.
4> Telekom/Celcom shld be the biggest fish in the small pond of M'sia.It has the infra,ready database of subscribers,wide range of services etc etc.It can provide multi service packages..giving data,static n mobile voice ..and all under one umbrella.It can outbid anyone..BUT instead it is struggling.There is no integration etc...a private owner would hv sacked the CEO years ago..
5 MAS >> no words can explain the pain..and if u dose in PMB/WAU/BTP Version XXX...somebody very BIG shld hv done a harakiri to absolve his sins.
Its accepted that GLCs will never be the leaders and best performers.The FEAR is that our leaders thinks the management of the GLCs are the best AND is trying to replicate it in the GOVT.
Then ,we will fail and perish in the corridors whilst listening to the echoes of our leader's preachings of their glories and their successes;from the empty rooms.
2
ReplyDeleteOn the other hand, some of the smaller companies which were awarded proportionately sized contracts subcontracted out until the last holder had to cut corners to deliver, resulting in many projects failing completely which cost even more to remediate. Again a problem.
The NEM has to avoid the two shortfalls of the growth of monopolistic forces and their becoming the nuclei of cronyism, as well as the nonperformance of smaller companies which were given contracts by affirmative policies criteria to the exclusion of capability to deliver.
Both demerits can be solved in one stroke but it will require enormous political will to the extent of cutting out corporate financial support for political ambitions.
It will require for the government to insist that the bigger corporations only manage projects with execution to be completely devolved to smaller companies so that they can earn more while picking up special skills from the corporations. Meanwhile the corporations will have to seek their larger revenues from overseas contracts, leaving the domestic market.
One may expect this proposal will be difficult to realize because currently there are few big jobs overseas.
Which brings one to Nalebuff and Brandenburger. They invented the notion of coopetition whereby firms cooperate and compete with other like firms in a market played out by game theory applied to Porter's model. Such a stance of strategic collaboration has also been named the Jericho principle.
Perhaps the NEM can be different from the NEP to the extent of deploying coopetition between firms operating in a 1Malaysia setting, sans the ali-baba arrangements of old, with big firms acting like mother ships serving themselves primarily in export markets while lending a CSR-type of mentoring to smaller firms specializing in specific and differentiable capabilities in the local market, groomed by access to the many institutional training centres otherwise underutilized at present.
It must however be stressed that selection of jobbers by the corporate sector must be no less transparent than expected of the public sector. So far, neither has been achieved. And that is another prerequisite for the NEM: transparency.
Because such policies are already denuding the benefit of free market efficiencies by adding the load factor of social engineering. Which in our case is long past sustainability.
ref:
(patience and perseverance win the day)
http://is.gd/aSHGO
http://is.gd/aSHIy
http://is.gd/aSHK4
http://is.gd/aSHLs
http://is.gd/aSHNo
http://is.gd/aSHVd
The NEP sought to distribute wealth in a growing economic pie but the distribution was deviated and the growth sputtered.
ReplyDeleteSome concluded that it was because the distribution was deviated that the growth sputtered.
They cited reasons like: productive assets relocated and investments retreated while the siphonage increased owing to the need to pay patronage to the policy implementers who in turn needed wealth to maintain their power.
In short, the NEP created a syndicate which hampered the deployment of right resources to pave a stronger foundation for overall economic growth which underpins wealth distribution. It cannibalized the achievement of its own objectives.
Therefore the NEM, if it is not to be the NEP plus other things, must recognize those factors intrinsic in a policy which will sooner or later eat into its own implementation.
Human greed was not factored in the NEP. Neither was the fact that the NEP created elitism which led to cronyism which ended in corruption which fueled the negative factors which created the polarization and marginalization that prevent the country from rising to the challenges of globalization.
The rakyat have already concluded the elitism came from Umno. Take the troubling revelation of third party involvement in the PDRM. If it is the PDRM revealing this, then it cannot be the underworld as that party; it would be strange for cops to admit they are influenced by criminals. Neither can it be the Opposition because they are not the paymasters. Therefore it must be the government. Ergo, Umno.
It therefore follows that the first and foremost thing to have in place before rolling out the NEM to replace the NEP is integrity of the government. Otherwise how does the government expect people to believe that it won't be the NEP replayed?
The question is thus posed to Umno:
how are you going to get credible support for the NEM if you are seen to practise double standards and non-integrity?
Another matter is how not to neglect the economically challenged. The affirmative policies of past sought to insert a social engineering element into the works so that wealth could be spread out more. But that ran contrary to best-of-breed market selection which has resulted in some companies rising to be big which were then preferred to the rest for big ticket contracts thereby elbowing out many small players from growing. Thus wealth could not be distributed and the policies failed.
Tuan,
ReplyDeleteThe new story. Astro is going private. All these years Astro was protected by the government. Even RTM took a back seat. TV Pendidikan was produced by Astro. All schools have to subscribe pay-tv. There was no competitor.
In 2003 the issue price was 4.20 and now going private at 4.30. The reason some Bumi Foundations want to cash-out. I beleive Mahathir is the Bumi Foundation.
Soon Najib will ask Astro to get back in BSKL so that EPF, Tabung Haji , ASB and sundry will be milked of their cash. Hence CIMB will make multiple advisory fees.
What an economic model of monopoly, going private and public as the hidden hand wishes !
kuldeep... bro,
ReplyDeletedont talk about GLC lorrr... GLC kaputtt... On the surface only UMNO... dalam perot dia macam2 ada.. PAS, DAP, MCA, MIC semua ada.. dont ask GLC to provide any good answer, they'll only give excuse leerr.. if you are 1 of the political guy, regardless of your party... u'll safe in GLC.. kalau you didnt belong to any political party.. you go kaputt like me... 'm 1 of GLC contract staff being kick b4 the project finish, reason "i'm not their orang kampong" ... not belong to any political party lorr...
walla ... baby,
'm only a peon, pls...pls... jangan panjang sangat wording tu... al fenin2 lalat lorrr...
tq
...adioss....
Dato,
ReplyDeleteYou memang butot! Ini apek, sikalang sudah cepat naik barah. U cakap saja NEM saya pun mau amok.
Kesian saya tengok budak budak melayu baik punya olang kena tipu kau kau. Dia ingat ini apek dia punya musuh. U tengok lah itu Tabung haji punya pasal patut ini apek jangan mau campur tangan. Tapi saya tengok itu Gomen punya jawap kasi lolo ah saya pun stim.
Dia itu budak kasi tau ah, brader in TH talak kasi free trip pegi umrah bagi itu olang punya. Saja kita kasi bagi TH punya chairman dan board member sama satu minister tumpang kasi free, itu isteri pun kita kasi pau for free. Ini sudah apa jadi punya dunia? Chairman, director sama minister olang putih kata ada itu duty of stewardship dan fiduciary.
Kalau itu bos ambik free u ingat siapa kena bayar ah? Butot! Itu nenak sama itu atok susah susah dia kerja mau simpan wang pegi buat haji, ini orang patut jaga sama pilgrim punya interest dia sendiri pegi free oh!! Lagi berani dia kata VVIP treatment dia dapat. Ini saya butot butot kasi kesian, macam mana dia boleh jawap sama dia punya tuhan saya pun tak tahu.
Chinaman
Ha,ha ,ha, vely gud one Dato and I just want to comment on your 2 statements which I think is rather erroneous.
ReplyDelete1. “Unless those bean counters assisting Amir Sham are not conversant with Porter's work. “
2. “Forget Anwar. Ibrahim Ali is mowing down your legitimacy.”
In statement 1, you tend to blame the followers while statement 2, you seems to blame the leader. I find it rather amusing and in contradiction since Amir Sham has the position and authority to change things whereas Ibrahim Ali who is not holding any position in any Authority is being blamed for all the miseries we are facing. Is it not a paradox?
Forget economics, what we have is a breakdown in organization structure.
To keep it sweet and simple (KISS), we are facing all these problems because our current leaders are
a. Guilty
b. Stupid ….. and worst still
c. Guilty and stupid.
no hope of NEM making any difference in our lifetimes....given your view of the people in power.....
ReplyDeleteDato,
ReplyDeleteI wish you were one of Najib's advisers. You would be able to help stimulate the economic growth of the country.
Those surrounding Najib now are nothing but walking excrement.
I rest my case.
Idris.
Ever wonder about the success factor of the 'immigrant mentality' ?
ReplyDeleteIn PM's home town Pekan, the Kampucheans work 24 hours shifts to harvest fish and prawn in the Pahang river. Just walk about in the town, you'll find flourishing businesses owned by Kampucheans.
Perhaps in the near future, we'll find successful Kampucheans, Indonesians and Vietnamese in Malaysia.