Tuesday, March 16, 2010

New Economic Model? Let's go Dutch

While our policymakers are mulling the New Economic Model, which is supposed to be services-based, I hope they've had a good review of what's going on in the Netherlands.

How has a country with just 16 million inhabitants become the 15th-largest economy in the world? Answer: through a combination of resourcefulness, hard work, and acute foresight for what might make the nation rich. Since the 14th century, the Netherlands has played a major role in shaping the world economy. Now the country that brought us such major innovations as the stock exchange and the insurance industry has identified another big opportunity: the services sector.

Read more about the Netherland's drive to build a service economy here.

Further, the key features of the 50 most innovative companies of 2009 are not necessarily technological innovations per se. The list of key features include:
  • Customer experience
  • Process
  • Business model
  • Product
To be sure, to get a services-based New Economic Model going there needs to be a serious mindshift. For Malaysian businesses and corporations to buy into the proposition, the New Economic Model needs more than oratory, gesticulations and exhortation.

As blogger hishamh has pointed out in his recent post on innovation and, as I have blogged about some time back, there is a need for an enlightened array of meaningful tax incentives to get the New Economic Model going.

I still maintain that a triple tax deduction is the way to go to get corporations to invest in R&D.

And, given the broad meaning given to the scoring and ranking of the top 50 most innovative companies above, a more ambulatory definition of R&D is needed within such a tax framework. Work done to develop training modules and the resources applied to train staff to improve customer exerience or, to refine business processes must form part of the definition of R&D costs. It shouldn't just be about technological innovation.

That's how the Dutch are approaching it. Since the innovated the modern stock exchange and modern insurance, maybe Malaysia should pay some attention to how the Dutch are going about to create a services-based economy.


walla said...

Some high-impact things to consider:

- very cheap high-quality broadband; government subsidizes it as a national competitive strategic resource;

- public school system at international-school standards with international-level offerings; students are taught by modules to take international exams as well; learning other languages and subjects are promoted;

- formalizing e-clubs of expertise; they become virtual pools of expertise in diverse areas to forum-share issues and solutions; they add to the national identification of an experts roll;

- using technology to cut red tape; applications filed online; results listed online; don't wait for the letter; just shoot ahead once name appears online, or even consider approved unless later proven otherwise;

- coordinated funds disbursement; too many grants and incentive schemes; tie them to some bidding process for private sector scholarship schemes; good for positioning best brains into industry and commerce;

- educate and motivate the masses; roadshow workshops on key skills-enhancement in specific trades; learning kits; motivational tv series with key messages;

- cut income tax to max fifteen percent and import excise and stamp duties and excises down to five percent max for all items; cancel service tax; bring down cost of five-year sixty-four page international passport to fifty ringgit max;

- cut processing time of foreign permits, immigration, staffing and others, to three days max;

- jackpot scheme for special innovations, especially new business models;

- best-of-breed hiring of key executives; think Nissan and Kia as examples;

- regulate education, health and motor repair businesses with regards to consumer rights protection;

- make short-term to high-end financing more creatively optioned and lower barrier to entry;

- and, loosen all restrictions pertaining to entertainment activities; (dutch was mentioned?)

Make this country come alive. Remove taboos. Modernize it to hilt.

There's enough oil money to pay the civil service for next twenty years; by then, strong changes must be in place. Because before then oil runs out.

That's the new economic model.

semuanya OK kot said...

That country is also supremely concerned about sustainability; they are well motivated by all that North Sea water lapping at their dykes. Unlike many other "advanced" economies, their tangible public and private plans cover contingency and radically altered prospects for energy. They are well-attuned to reaping the benefits of efficiency. Scandinavia is generally even furter ahead. The touchstone for all this progress is of course genuine democracy.

Back in Bolehland, it's a firesale. Every natural resource and public facility must go - to the highest or friendliest bidder.