Walla on Malaysia's future economic challenges

I present the very considered and thought-laden commentary made by a wonderfully constructive regular commentator who goes by the call-sign, walla. It is a thought-provoking piece that challenges our minds to consider new frontiers of uncharted economic strategies for Malaysia. Read on.
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The blogger has written an important and meaty post. Let's amplify on it:

1)After a whirlwind tour of Southeast Asia, Deng went back to launch China's promarket reforms in 1978 that within thirty years put her right up the world charts in almost all fields. In fact Deng started it all by opening up Shenzhen first. Only a few years later, Mahathir stood with him atop one of the spanking new towers in that city and marveled at the rapid transformation of that city from sleepy fishing village to thriving centre of an industrial metropolis evidential of the region state concept mooted by Ohmae way back in 1993. What happened in Shenzhen was replicated in thousands of other places all over the eastern half of that monumentally huge nation.

If we are to revive our own economic transformation, we need someone right away with the same slapdash courage and pragmatic vision of a Deng. Looking at the present pool of political leaders in our midsts, that'd however be asking too much - a leader who will use any cat to catch rats and who will shake people from their dogmatic slumbers and awaken them in no uncertain terms to the peril at our doorstep.

2)Success tends to bring its own failure. In the past we were successful in attracting FDIs, particularly from the japanese who came because of our look-east policy. We thought it was because we made them welcome that they came, not seeing that they came because of their flying-geeze formation - indeed we were used because our address enabled them to circumvent the quota to restrict japanese goods that had avalanched into the US directly from Japan then.

Because they saw us as just a place for wire-harness making, aircond assembling, metal stamping and the like, the net between value of semifinished goods imported and value of final finished products reexported was often just enough to pay for the wages of the thousands of starry-eyed low-cost labor those factories deployed. Much less if you consider how much tax-free incentives we had also given them and the multinationals from other countries.

You know that Miti knew this from the way it tried to hide the figures - just by using approved projects to equate as landed projects year after year, when the true state of matters is actually less encouraging.

When the japs finally left, their last word of warning was to ask us what we have been doing to build our human capital all those years they were here.

Which might as well be the answer to the MDC for why they have not come in the same droves as envisaged for the MSC, our epitome of value-added high-worth knowledge capital.

In other words, we have been in complete denial regarding the type of human capital that is invariably needed to continue to attract the best-of-breed FDIs needed to add values to our GDP that will make us remarkable amongst emerging nations as a preferred profit centre in a galaxy of other profit centres to which those coldeyed MNCs can park.

If Singapore, Shenzhen, Hong Kong and Mumbai had done it with less, why didn't we?

3) Now we are caught. We are caught in the lacuna of:

3-1 the three trends mentioned in the businessweek article that has weakened the global FDI flow; in a strong position, we could coast through it, but in a weakened position as attractor of those with real manufacturing prowess, we will probably tank; and

3-2 the hollowing out of our position - right now we are neither an Indonesia or Vietnam to be low-cost again, and not yet able to ascend to a Singapore or Korea to be high-value; we are probably sliding to be another Thailand for brown goods if not a Philippines for services, and

3-3 we haven't been sterling in our international reputation in many regards lately.

So while we are having those problems, we have a federal government shaky at best and faced with a humungous financial challenge to try and make its new budget work when its estimated sources of income have all been decimated, and one of them will have to depend on foreign oilfields for revenue when foreign governments would naturally see their assets as too much their own life-savers to want to give highly profitable terms.

And the old man had to come out and talk about the NEP. One wonders whether he really knows what investors think of that term as much as it has been denied the targets of the NEP had already been reached long ago - if one believes those who process the data.

What can be next, it may be asked?

a) find that Deng;

b) adopt the Hong Kong model;

c) work to reamalgamate Singapore;

d) unsentimentally change the entire paradigm of our education policy for best fit to international requirements based on Malaysia as a region state of preferred choice;

e) make this whole country the sassiest, most open and funniest place to be in the world;

f) emphasize cost efficiency in everything we do, even the way we think;

g) educate and rehabilitate those who object just because they want to maintain their comfort zones or fear-borne supremacy;

h) create a new rationalisation:

"if everyone or enterprise is fully supported by the government in accordance with his or its ability to do the best and make the most, then that will ultimately create more opportunities for others to also benefit more in the long-run than any benefit that comes out of playing zerosum games on the races."

And i think the fastest way to fulfill all this is to adopt (b) first. Let it create the new engine to pull everyone up. Or push those to excel. Either way, if we don't, we will perish so one might as well perish while trying rather than sit, wait, hope and pray.

Let's say we don't. The govt will soon be shaving its budget. Which means a lot of development will be jettisoned when they are needed to keep industries afloat. And if Singapore retrenches those 70,0000-100,000 malaysians, we will have an abnormal human resource sector of too many chasing too few viable jobs because all the others have to be filled by those foreign workers whose lower wages are what makes our export products still competitive. So what does the govt expect these retrenched workers to live - on their savings, perhaps on the aid that the govt has to give from its already red budget that has still to work out for those thousands of new graduates who will be coming out of our paper mills by May next year.

There are so many whammies here it feels like being knocked out in a boxing ring, doesn't it?

Did i hear someone in the back say 'we will still survive; somehow we will muddle through as we have done before....'?

Of course we will, but for one, we need to make tourism really efficient - read the complaint about the TDC customer service at one northern airport; understand why travel agents are complaining that Chinese tourists are made to spend too little time here owing to the way their itinerary has been structured to favour one neighbour..and so on.

Of course we will, but for two, remember those free trade zones in another country have been overbuilt to the extent they are ready for fast move-in and each of those industrial hubs are at least ten times in size and more modern and infrastructurally connected than the six we have that can still be called free trade zones for the amount of kinetic energy one must try to imagine they still have.

Of course we will, but for three, we should be discarding buddy-networks to keep some existing assets alive and building better place seaports and airports to take advantage of the fact that the new locus of the world is Asia, to be specific east Asia. That means the eastern seaboard of West Malaysia, and the two states in East Malaysia.