Malaysia's (Ad Hoc) Economy
November 15th 2006 12:44
A true story that was consistently denied and nothing new. The piece piercing Malaysia's bumbling economic development and polices in The Age today by Michael Backman is yet another reminder to Malaysia, again, a country with great economic potential in terms natural and human resources, being managed by a class with a mindset seeking face value recognition and satisfaction. It's absolutely not new news but certainly denied in the country.
It does not take an external news media to recognise the shortcomings, as the following is a piece that runs parallel with the theme of Malaysia's reactionary economic policy, written by me two years ago. The title is simply "Ad Hoc"
The freeway was blocked by the 97/98 Asian financial crisis which wiped off the values of the region’s currencies and stock markets save for China and Japan. Malaysia was fortunate with the strong leadership of the former Prime Minister Dr. Mahathir Mohamad who imposed capital controls and pegged the ringgit to the dollar at RM 3.8.
The capital controls and the peg saved Malaysia’s economy heading further south. Fast forward to present, the past six years, economic growth was stead yet relatively stagnant that has yet to recover back to its pre-crisis level and perhaps this idea has to be abandoned. The economic landscape had changed.
The national obsession of turning the country into a premier ICT hub, initiated by the former PM, was relevant back then but the Multimedia Super Corridor (MSC), the local silicon valley developed by the government is all but a handful of foreign and local ICT companies doing research and development that has yet to contribute significantly to the economy as the original idea had envisioned. India and China are the place for ICT software and hardware research, development and production respectively. What has left for MSC or Malaysia in particular to compete with the two giants in terms of costs, infrastructure and human resources? These three factors in the two third world developing countries are superior to that of Malaysia.
ICT is increasingly becoming a necessity of life that doesn’t require “rocket science” anymore. It is undeniable a computer enthusiast without a degree but with the necessary technical books from the bookstores could, over time, become a software expert. But is not all loss, it seems, for MSC, the national tool for modernizing the country by the year 2020, as there is a “Bio-Valley” nearby.
The in-thing now is the development of bio-technology and Malaysia being a tropical country with the most diverse ecosystem in the world took advantage of the trend to project the nation into the freeway again. The Bio-Valley is the bio-technology equivalent of the MSC. The bio-tech experts and companies came near; to Singapore’s Biopolis instead, with the foundation laid by the cloned sheep Dolly’s father who migrated there from Scotland. So near yet so far. Again, what has left for Malaysia?
Singapore is the financial and services centre of south-east Asia, South Korea and Taiwan the powerhouse of ICT and heavy industries, Hong Kong in the ranks of New York and London, China the emerging superpower on all fronts and India the new economic giant of software and outsourcing. There are only two words for Malaysia’s quest of a catalyst to its economy; lost direction. All those aura of enthusiasm and confidence of the last decade of the 20th century have been lost.
Without any new catalyst to the economy, Malaysia’s economic policy has been reactionary and ad hoc. The primary economic engine is still manufacturing and foreign direct investments which are losing fast to China. Increasing number of jobless graduates are giving chills to the government and recently it clumsily organized a job fair for jobless graduates to fill up the vacancies such as working in farm or plantation estates!
The economy is not growing fast enough to grow relevant jobs for graduates is an accepted fact but what it is most important is that the structure of the economy is in total disarray. There is an over supply of graduates than the demand as the equilibrium has been reached and jobs are going to China or simply the “need” has not arrive yet. The ad hoc job fair and the extra skill training workshops created by the government is an extremely short term solution, at best. What the economy needs is a totally new “freeway” blueprint that must be implemented strictly and not with just three minutes of euphoria and then forgotten or chilled like most government projects and policies initiated. Ring the White Elephants.
Where to go from here
However there are three generic catalysts to the economy which may seem bland, ordinary and unassuming; upgrade urbanization of regional towns and cities, education reforms and wiring up of the country. When one talks of the Malaysian economy, the picture of it comes to mind is Kuala Lumpur, Penang and Johor Bahru, the three major urban centers of Malaysia. Other states or towns are usually associated with at best, hometowns and holiday destinations and certainly not the places for seeking jobs, career development or large scale long term investments.
Instead of pouring money into any more white elephants, the money should instead be invested in developing other towns or cities to upgrade their status as local economic centers similar to that of Seattle, Detroit or Houston in the United States. For instance, Kuala Trengganu, typically associated as a sleepy timeless town could be developed into Houston of Malaysia due to its proximity to major offshore oil fields.
Creation of economic centers naturally creates the demand for workers of all profession to generate economic growth that needs to sustain the centre. For one, at least the number of jobless graduates generally could be reduced in the long term.
There is an urgent and immediate need to revamp the education system in Malaysia from primary school all the way to the tertiary level. The current system is producing graduates from knowledge spoon-feeding instead of knowledge criticism, creative-thinking and discussion. One the current factors of graduates unable to find jobs are the lack of creative thinking and proficient English language skills. Basically, the graduates churned out by the various public universities in Malaysia are just knowledge banks ready to be withdrawn by employers. What employers today want are critical thinking graduates who might one day shout eureka for the good of the company and the graduate him or herself.
Lack of English language skills is an obstacle in today’s job market as English is the international language of business and science that no country could ignore. Already there are reforms in the basic education system with science and mathematics being taught in English. However it would be good for the country if English language is used as the medium of instruction at the university level considering Malaysia being one of the world’s major trading nation that would ultimately enhance the economy in the future as trading as the bastion of economic survival for Malaysia.
A well rounded education could boost the service sector as well, as this sector does not comprise of only serious services such as finance or consultancy but also in the arts and entertainment as well. This is proven in the western economies as well rounded education inject a significant portion of soft skills such as creative thinking and writing, music, debating and drama. The fact is that high schooling in Malaysia is strictly divided into arts or science stream with no compromise and the education received remains purely technical. For instance, both New York and London are not just symbols of finance but also arts as well such as Broadway and techno clubs.
Boosting the service sector is one of the antidotes to manufacturing jobs and FDIs taken away by China and India.
Lastly, the wiring of the nation or internet penetration process is on the right track with the initiatives taken up by the government and the main ISP, TM Net. Internet is the key for any future economic development to be sustained as more businesses are migrating to e-commerce as the world is the trading ground at one’s fingertips.
The introduction of broadband was relatively late hence the adoption rate of broadband is still low however the cost of access is on a reducing trend to attract more users. The internet penetration is still low standing at 35% of the population. What should be done is a strict and rapid process of wiring up the nation to face the challenge the globalization and new economic development.
Instead of relying market forces, there should be a joint effort between the government and the private sector to divide the country into grids and each grid has to achieve an internet penetration of at least 40% to 50% of the local population before proceeding to the next grid. The grid development could start simultaneously from north downwards and south upwards and end the development at Kuala Lumpur. Same could be applied for West Malaysia.
The result could end with Malaysia having over 50% internet penetration. E-commerce is a crucial field the government has to put economic emphasis on with consistent review and amendments if necessary to make it a success in today’s fluid economic condition dictated by globalization and technology. E-commerce is the next frontier for local private sector to grow out from the local market base.
Although the three points are relatively basic but are nevertheless crucial to position Malaysia again on the right path of the freeway with a clear vision and lay a firm economic framework and policies instead of being ad hoc and reactionary. Perhaps instead of dreaming of becoming a technological powerhouse like Japan or the United States, Malaysia should lower its benchmark and modeled itself like Sweden, a country with one of the highest standards of living, sustainable economic development and a technologically advanced and yet doesn’t command the limelight which Malaysia aspires to be with MSC and Bio-Valley. It is time for a serious re-evaluation.
It does not take an external news media to recognise the shortcomings, as the following is a piece that runs parallel with the theme of Malaysia's reactionary economic policy, written by me two years ago. The title is simply "Ad Hoc"
Ad Hoc
A third of the 1990s was a period that Malaysia experienced phenomenal economic growth hallmarked by the towers dotting the city by the dozen with the crown held by the KLCC Twin Towers, one of the tallest buildings in the world. Growth in car ownerships was displayed by the roads fast degradation by the wheels as fast as the stock market unstoppable bull market. A period of prosperity with a sense of euphoria that the country was on the freeway to join the ranks of South Korea, Taiwan, Singapore, and perhaps Japan.The freeway was blocked by the 97/98 Asian financial crisis which wiped off the values of the region’s currencies and stock markets save for China and Japan. Malaysia was fortunate with the strong leadership of the former Prime Minister Dr. Mahathir Mohamad who imposed capital controls and pegged the ringgit to the dollar at RM 3.8.
The capital controls and the peg saved Malaysia’s economy heading further south. Fast forward to present, the past six years, economic growth was stead yet relatively stagnant that has yet to recover back to its pre-crisis level and perhaps this idea has to be abandoned. The economic landscape had changed.
The national obsession of turning the country into a premier ICT hub, initiated by the former PM, was relevant back then but the Multimedia Super Corridor (MSC), the local silicon valley developed by the government is all but a handful of foreign and local ICT companies doing research and development that has yet to contribute significantly to the economy as the original idea had envisioned. India and China are the place for ICT software and hardware research, development and production respectively. What has left for MSC or Malaysia in particular to compete with the two giants in terms of costs, infrastructure and human resources? These three factors in the two third world developing countries are superior to that of Malaysia.
ICT is increasingly becoming a necessity of life that doesn’t require “rocket science” anymore. It is undeniable a computer enthusiast without a degree but with the necessary technical books from the bookstores could, over time, become a software expert. But is not all loss, it seems, for MSC, the national tool for modernizing the country by the year 2020, as there is a “Bio-Valley” nearby.
The in-thing now is the development of bio-technology and Malaysia being a tropical country with the most diverse ecosystem in the world took advantage of the trend to project the nation into the freeway again. The Bio-Valley is the bio-technology equivalent of the MSC. The bio-tech experts and companies came near; to Singapore’s Biopolis instead, with the foundation laid by the cloned sheep Dolly’s father who migrated there from Scotland. So near yet so far. Again, what has left for Malaysia?
Singapore is the financial and services centre of south-east Asia, South Korea and Taiwan the powerhouse of ICT and heavy industries, Hong Kong in the ranks of New York and London, China the emerging superpower on all fronts and India the new economic giant of software and outsourcing. There are only two words for Malaysia’s quest of a catalyst to its economy; lost direction. All those aura of enthusiasm and confidence of the last decade of the 20th century have been lost.
Without any new catalyst to the economy, Malaysia’s economic policy has been reactionary and ad hoc. The primary economic engine is still manufacturing and foreign direct investments which are losing fast to China. Increasing number of jobless graduates are giving chills to the government and recently it clumsily organized a job fair for jobless graduates to fill up the vacancies such as working in farm or plantation estates!
The economy is not growing fast enough to grow relevant jobs for graduates is an accepted fact but what it is most important is that the structure of the economy is in total disarray. There is an over supply of graduates than the demand as the equilibrium has been reached and jobs are going to China or simply the “need” has not arrive yet. The ad hoc job fair and the extra skill training workshops created by the government is an extremely short term solution, at best. What the economy needs is a totally new “freeway” blueprint that must be implemented strictly and not with just three minutes of euphoria and then forgotten or chilled like most government projects and policies initiated. Ring the White Elephants.
Where to go from here
However there are three generic catalysts to the economy which may seem bland, ordinary and unassuming; upgrade urbanization of regional towns and cities, education reforms and wiring up of the country. When one talks of the Malaysian economy, the picture of it comes to mind is Kuala Lumpur, Penang and Johor Bahru, the three major urban centers of Malaysia. Other states or towns are usually associated with at best, hometowns and holiday destinations and certainly not the places for seeking jobs, career development or large scale long term investments.
Instead of pouring money into any more white elephants, the money should instead be invested in developing other towns or cities to upgrade their status as local economic centers similar to that of Seattle, Detroit or Houston in the United States. For instance, Kuala Trengganu, typically associated as a sleepy timeless town could be developed into Houston of Malaysia due to its proximity to major offshore oil fields.
Creation of economic centers naturally creates the demand for workers of all profession to generate economic growth that needs to sustain the centre. For one, at least the number of jobless graduates generally could be reduced in the long term.
There is an urgent and immediate need to revamp the education system in Malaysia from primary school all the way to the tertiary level. The current system is producing graduates from knowledge spoon-feeding instead of knowledge criticism, creative-thinking and discussion. One the current factors of graduates unable to find jobs are the lack of creative thinking and proficient English language skills. Basically, the graduates churned out by the various public universities in Malaysia are just knowledge banks ready to be withdrawn by employers. What employers today want are critical thinking graduates who might one day shout eureka for the good of the company and the graduate him or herself.
Lack of English language skills is an obstacle in today’s job market as English is the international language of business and science that no country could ignore. Already there are reforms in the basic education system with science and mathematics being taught in English. However it would be good for the country if English language is used as the medium of instruction at the university level considering Malaysia being one of the world’s major trading nation that would ultimately enhance the economy in the future as trading as the bastion of economic survival for Malaysia.
A well rounded education could boost the service sector as well, as this sector does not comprise of only serious services such as finance or consultancy but also in the arts and entertainment as well. This is proven in the western economies as well rounded education inject a significant portion of soft skills such as creative thinking and writing, music, debating and drama. The fact is that high schooling in Malaysia is strictly divided into arts or science stream with no compromise and the education received remains purely technical. For instance, both New York and London are not just symbols of finance but also arts as well such as Broadway and techno clubs.
Boosting the service sector is one of the antidotes to manufacturing jobs and FDIs taken away by China and India.
Lastly, the wiring of the nation or internet penetration process is on the right track with the initiatives taken up by the government and the main ISP, TM Net. Internet is the key for any future economic development to be sustained as more businesses are migrating to e-commerce as the world is the trading ground at one’s fingertips.
The introduction of broadband was relatively late hence the adoption rate of broadband is still low however the cost of access is on a reducing trend to attract more users. The internet penetration is still low standing at 35% of the population. What should be done is a strict and rapid process of wiring up the nation to face the challenge the globalization and new economic development.
Instead of relying market forces, there should be a joint effort between the government and the private sector to divide the country into grids and each grid has to achieve an internet penetration of at least 40% to 50% of the local population before proceeding to the next grid. The grid development could start simultaneously from north downwards and south upwards and end the development at Kuala Lumpur. Same could be applied for West Malaysia.
The result could end with Malaysia having over 50% internet penetration. E-commerce is a crucial field the government has to put economic emphasis on with consistent review and amendments if necessary to make it a success in today’s fluid economic condition dictated by globalization and technology. E-commerce is the next frontier for local private sector to grow out from the local market base.
Although the three points are relatively basic but are nevertheless crucial to position Malaysia again on the right path of the freeway with a clear vision and lay a firm economic framework and policies instead of being ad hoc and reactionary. Perhaps instead of dreaming of becoming a technological powerhouse like Japan or the United States, Malaysia should lower its benchmark and modeled itself like Sweden, a country with one of the highest standards of living, sustainable economic development and a technologically advanced and yet doesn’t command the limelight which Malaysia aspires to be with MSC and Bio-Valley. It is time for a serious re-evaluation.
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