By Dr Teck-Yong Eng
5. What measures have the government put in place to explore and exploit Malaysia’s strategic and cultural position of two major growing economies in Asia, India and China?
Malaysia’s foreign economic policy with regards to India and China remains relatively under tapped from a strategic viewpoint. Despite our geographical proximity, advantage of language and cultural similarity, and established networks with commonwealth countries (serve as potential economic and business conduits), there is no evidence of systematic economic initiatives in helping Malaysian businesses to see the bigger picture of economic rewards and how Malaysia could leverage its economic position.
In particular, what did the government do to promote Proton in China and India? This would not be restricted to selling our national cars but extend to the exchange of technology and knowledge development, e.g., in parts and components manufacturing, joint ventures and strategic alliances. In effect, we could create and add value to related local manufacturers and suppliers, and spur domestic economy. As both India and China are experiencing tremendous growth in the motor vehicle industry the government need to be proactive and implement market-driven strategy (Day, 1994) to form business partnerships and attract potential investors. There are also ample business opportunities in other industries such as construction and real estate. What did the government do to help our construction companies to compete with overseas rivals? For example, the Korean construction industry is benefiting from the growth in China with knowledge of relationship development and marketing strategy (Eng and Wong, 2006; Eng and Spickett-Jones, 2007; Eng et al., 2008) despite not having the language advantage. The tourism industry would also benefit from the increasing wealth of these countries. But various government agencies in the tourism sector are lackadaisical, overlooking obvious provision of basic leisure services for these markets, e.g., language assistance at airports and major tourist attractions.
Government policy could help small and medium-sized business entrepreneurs explore and develop their business in China and India. The representatives from the MCA and MIC could support local business entrepreneurs and build economic ties using the advantage of language and culture such as through specific foreign business missions and conventions. There are also benefits for the halal food industry in targeting Muslim population in China. As a nation of multicultural society, this advantage is readily accessible to ordinary Malaysians and can be leveraged through informed business and marketing strategy. Despite our experience from the success of organising the Commonwealth games (albeit in a smaller scale), the government could have been bold and competitive in helping local businesses to bid for potential projects of the Beijing Olympic Games. The rapid pace of growth in China and India also creates opportunities for our petroleum and chemical business in terms of energy consumption of consumers and industrial markets. The focus of government foreign economic policy on these emerging economic powers would generate a far more pronounced economic effect with longer term economic growth compared to investment in other markets.
Clearly, scarce human and economic resources of our country need to be allocated to the most effective use in maximising return-on-investment. The government need to be selective in developing its portfolio of foreign economic ties and strategic in creating economic benefits especially in addressing wealth inequalities. While the Ninth Malaysia Plan noted the importance of moving the economy up the value chain, it is hard to find any specific action plans at local levels, and metrics for performance and control of strategy in the published document. In brief, value creation on the global commodity chain is progressive and highly influenced by marketing skills such as branding (Gereffi, 1999; Humphrey, 2004; Cheng et al., 2005; Eng et al., 2007, 2008). Information technology application alone would not result in higher value-added services but the stock and combination of intellectual and human capital assets as well as knowledge of resource development are essential for successful upgrading on the value creation chain (Helfat and Peteraf, 2003). Furthermore, economic conditions would moderate this economic aspiration, e.g., the scope and intensity of competition could stimulate innovation (Porter, 1980). This depends on the functioning of an efficient market (e.g., transparent and competitive rather than based on quotas) with appropriate mechanisms to deregulate and privatise major industries. A highly bureaucratic business environment would only serve to jeopardise efforts of eradicating economic equalities in the long-term. This is simply because markets are dynamic (Teece et al., 1997) and at a minimum, protective measures would limit exposure to competitive knowledge.
6. Is the current economic development parallel with human capital investment and/or education policy? In other words, is the country over relying on both spectrum of the labour market (skilled and unskilled) as well as experiencing high levels of brain drain?
As discussed above (no. 1), the pace of human capital development is lagging behind industrialisation (re: first-class infrastructure third-class mentality quoted in the Ninth Malaysia Plan). The economy is also over-relying on cheap labour and suffering from high levels of brain drain. The implications are not only resulting in the increased of socio-economic inequalities but also negative consequences for knowledge transfer and acquisition at both ends of the labour-market spectrum, i.e., government policy would not be motivated to upgrade foreign-labour skills and knowledge development is transient without continuity at the higher level. Unskilled and poor people would be left in doldrums to fend for themselves whereas the rich entrepreneurs would hit stagnation in terms of business development opportunity (e.g., a typical family business/ownership aspiration).
The government education policy is non-competitive in terms of awarding scholarships and university places. At the very least, this cultivates complacency at all levels of the national education system and at worst, this produces incompetent graduates affecting wellbeing of future generations. Although more Malaysians have obtained tertiary and higher education degrees, foreign multinationals seemed prefer to recruit non-government sponsored graduates or foreign personnel. In a u-turn strategy of sponsoring students abroad, the government encourage Malaysians to study at local universities by setting up many new universities and/or granting university status to many former local colleges. But many Malaysians questioned the standard of our universities against other international institutions (e.g., against Singapore’s universities) especially after our recent poor performance in the world university rankings. Some universities attempted to fix this problem by rotating senior management rather than instigating a systematic investigation to enhance higher education standards. Unsurprisingly, the government admitted to the widening inequality of income in the Ninth Malaysia Plan despite the increased levels of education across the board. If the country’s education standard had not been on par with overseas institutions, the majority of students that graduate from local institutions would be at a disadvantage in competitive job markets. Put simply, for future generations (managers, engineers, doctors etc.) to survive successfully in the changing environment the government should not compromise or cut corners when it comes to investment in education. The people who are most vulnerable or to lose are those in low income groups. It is time for the government to take actions – not be hesitant or intimidated by certain self-interest individuals. Furthermore, academic resources are not strictly immobile and they are tradeable in competitive markets (Black and Boal, 1994).
The above questions are not exhaustive and merely scratching the surface of basic economic issues in the functioning of markets and distribution of economic wealth. The government’s past economic records and current economic policies are in tatters. I urge stronger and more informed opposition from the Pakatan Rakyat, and the current government to listen to the people. One has to examine methodically across industry sectors using relevant indicators and analytical tools for the context of our country. The interrelated nature of policy formulation and decision-making in public sectors means that economic performance is not bound to standard economic measures but include cultural and behavioural phenomenon. To fellow Malaysians, I hope that the extent to which we assess changes and judge the government and the coalition (opposition) would be on tangible outputs rather than policy per se. And to the Malaysian media, I extend my support for greater information and press freedom where reporting would be independent, timely and accurate, so that, the people are informed and empowered to drive democratic changes from the elected and relevant government representatives.
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[Dr. Teck-Yong Eng is Senior Lecturer, King’s College London, University of London, School of Social Science & Public Policy.
Email: teck.eng@kcl.ac.uk. Blog : http://strategisingmalaysia.blogspot.com/)