Sunday, October 24, 2010

How To Innovate Like Steve Jobs

All the stuff that we've been reading in the local mainstream media and, all the interviews *blah-blah**yawn* never really tell you how innovative ideas come about.

There's a scene from a great 1980s movie, Working Girl, where the media tycoon, Trask, asked Melanie Griffith's character (who had been accused of stealing Sigourney Weaver's character's idea), "What was your impulse (for the multi-million dollar merger deal)?"


What was your impulse?

Where does the creative spark come from?

Do rote-learning help with creativity?

Does the lack of reading help with creativity?

Don't worry, I am just being rhetorical. Not substantive. Just light fluff. Just like how politicians talk at general assemblies.

Anyway, back to the point.

The lead-in to the extract that I'm setting out below is that we have to understand that Steve Jobs had a restless and inquisitive mind. He has always been a passionate man. I imagine that he reads voraciously.

True, he was a college dropout. But, remember that, just as it was with Bill Gates, Jobs dropped out of college because he had a kind of epiphany - a realisation that he really wanted to get into the nascent computer industry of the time. It was NOT because he felt that he was too dumb to pass his exams.

Some of us are plodders. We follow the syllabus. Others, like Jobs, have minds that are wired differently.

Remember the scene from A Beautiful Mind where Russell Crowe's character, John Nash was standing at the pub bar in Princeton. The girl walks in. All the men turned their heads to look at her. Suddenly it hit Nash. He saw the patterns of probabilities and possibilities in human behaviour that led him to his great Game Theory postulation. It eventually won Nash the Nobel Prize (was it for Economics or Mathematics?).


So, read on...the piece is surced from Forbes:

There’s a chapter in the book called, “Kick-Start Your Brain.” In it, Gallo explains that what scientists have found is that great innovators practice what’s called “association”. They look outside their industry for ideas they can apply within their organization. Steve Jobs has been doing that his whole life.

Here are two examples:

1) Gallo says Jobs’ inspiration for not having a designated cashier in the Apple Store, came from the Four Seasons hotel chain, which has a concierge;

2) When Jobs and Steve Wozniak were creating the Apple 2 computer, which became one of best selling personal computers of its time, Jobs wanted a computer people would have in their homes. But instead of looking at his competitors, he walked through the kitchen appliance isle at Macy’s for inspiration.

In that same chapter, scientists explain to Gallo that another key to kick-starting your brain and get those creative juices flowing is to try new and novel experiences that push you outside your comfort zone and push your interests.

Friday, October 22, 2010

Bloggers For Malaysia

Okay, here's the deal. There are some SoPo bloggers who have a nose for scoops. They are sniffers. Their exposes have helped to democratise and level the field of information dissemination.

Most of the stuff is raw. And, that's why we love it.

There are other SoPo bloggers (like me) who are plodders. We like to scratch our private parts and take our time to stare at scenery. And, when we do write, it is often prolix and painful to read.

But, being bloggers, we are collectively seen as an alternative medium to the conventional media.

I was pretty gobsmacked when I heard from Syed OutSyedTheBox that Rais was on the warpath against Rocky, Big Dog and Taikors & Taikuns for having the temerity to raise questions about his Ministry.

The first thought was, naturally, that I thought these bloggers were UMNO-BN-leaning types. Weren't they on the same side?

Upon reflection, these bloggers do have the "bad habit" of regularly questioning matters of poor governance in UMNO, BN and the Government.

How's that different from my blogging? Not much, actually. It's only a matter of the "hardness" of the bite (I wanted to say "degree of acerbity of vitriol". But, that would have put you to sleep).

So, my blogger buddies are being put through the wringer by Rais.

Rais has said that as a citizen, he has the right to lodge a police report against a perceived wrong against him.

That is true. All citizens have that right.

But, this is where Rais gets it wrong. Unlike us mere mortals Rais is a currently serving Federal Minister. Rais is a significant UMNO leader. Rais is part of the BN government. Rais is a politician. Rais has the power of the government.

That power has been used against Rocky and Big Dog.

Just by having the MCMC require these hapless bloggers to attend at the MCMC offices in Putrajaya already causes great distress. Having Rocky's "tool of trade", his beloved Ferrari, seized is equally distressing.

Over and above that, there is the threat of a charge to be framed against them. This will be costly at a personal and financial level.

Being in possession of a Ph.D in Law, Rais may recall the legal expression nemo judex in re causa sua which roughly translates into "a man may not be the judge of his own cause".

The MCMC being in his Ministry, Rais should have actively instructed the MCMC to refrain from investigating his own complaint.

He should have let the Police conduct the investigation.

But, if I were ever asked for any advice by Rais, his Ministry, the MCMC, UMNO or, BN (not that it will ever happen) on whether or not to lodge a complaint on the impugned blog postings, my reply would be the negative of the Nike tagline.

I would have said, "Just DON'T do it".

And, so, I will record here that I intend to register this blog as a willing participant in Bloggers for Malaysia.

1MDB and IDR in the landscape of GTP, NKRA and ETP

I love History. I love it because there is much wisdom in having a context and perspective of how we arrived at where we are. Without knowing History, we will be forever groping in the dark. Not knowing which direction to take. Let's see how this post pans out.

Economics of development

In terms of the economics of development, the role of government is to decide how resources are to be allocated. There has to be a presumption that the resources must be allocated equally. There must also be a corollary rule that equal allocation be subject to merits.

"Merits" in the economic sense must mean the positive impact that such an allocation has on economic development and growth for the whole country.

This positive catalytic effect is termed the "multiplier effect".

Having put out the boring contextual matters let us dive into the issues at hand.

In the 1960s and 1970s, our economic planners were exemplary in identifying foreign investment to generate economic development. We had limited financial resources. We needed foreign money in the form of direct investment.

This meant getting foreign investors to set up shop here.

The name of the game at the time was industrialisation. We had a literate workforce. Wage levels were affordable to foreign investors.

Our economic planners made sure there was ample and reliable utilities in the form of roads, electricity and water supply.

Geography of development

But, beyond this generalisation, I wish to emphasise that our economic planners had to face up to the reality that the foreign direct investments (FDI) being manufacturing-based, needed access to a good supply of workers.

The logical location was Petaling Jaya first. PJ met the criteria. Next was Shah Alam, the logical extension since the direction of growth was towards Port Klang where the manufactured goods could be cost-effectively exported.

In the 1980s, Penang got into the game. The economics and locational principles remained the same.

From industrialisation to knowledge and services-based activities

Fast forwarding into the millennium, we witness the shift in emphasis from industrialisation to knowledge and services-based activities.

The reasons are obvious. Over time, the wages have risen. Industrial activity needs cost-effective wages since the skills of the work is limited and repetitive. Easy to train freshies. Experience is not a factor. That is why industrial FDIs have relocated elsewhere.

This situation is where our country is at. This is what people call the "middle income trap". We have become too expensive for industrial processing. But, we may not be skilled enough to get into creative work that pays well.

Finally, we get to 1MDB, IDR, GTP, NKRA and ETP

You may now ask what the relevance of such a long preamble on 1Malaysia Development Berhad (1MDB), Iskandar Development Region (IDR), Government Transformation Programme (GTP), National Key Results Area (NKRA) and Economic Transformation Programme (ETP) is?

Well, first, I need to say that this post is my way of expiating reasonably sceptical analyses done previously on these self-same matters.

I have felt strongly since Najib's tenure as Prime Minister began that the government has recognised the urgency of the "middle income trap" situation.

I have also felt very troubled that this urgent economic situation has been clouded by the ripple-effect of over-politicisation and power plays.

The message that the rakyat sent on March 8, 2008 was that change is needed. What the nature of the needed change was is something that we can debate until the cows come home.

Economics trumps politics

The takeaway from March 8, 2008 that I am recommending for your consideration is that the rakyat sensed the urgency of dwindling economic opportunities.

I am aware that many of you will not agree with this narrow interpretation. But, if you adopt the Abraham Maslow heirarchy of priorities, I will resoundingly say that economic welfare trumps any other issue in terms of priority. If you are not convinced, I suggest that you read about Mikhail Gorbachev and the perestroika saga.

So, what we have here today, is a set of nebulous principles in the form of GTP, NKRA and ETP.

If we were to take a helicopter to rise above the thicket of nebulous words in the GTP, NKRA and ETP, we may be able to get a better idea of the socio-economic landscape that confronts Malaysia.

Crossroads

We are at a crucial economic crossroad.

Yes, the GTP, NKRA and ETP are imperfect roadmaps. But, I don't have a better roadmap than this. So, yes, I have been prepared all along to buy-in. Of course, my buy-in is done with eyes wide open. That's the whole point of the exercise of buying-in, anyway. As citizens, taxpayers and stakeholders we must not be indolent. We have to be a part of the thought process.

And, what of IDR?

IDR makes geographic sense, I suppose. It's proximity to Singapore means that the chances of its key investment criteria succeeding is that much higher. The key areas of the IDR are:

6 categories of service-based sectors:
  • Creative
  • Education
  • Financial advisory and consulting
  • Healthcare
  • Logistics
  • Tourism
And, of course, the attractive features are:

  • Exemption from the Foreign Investment Committee (FIC) rules
  • Flexibilities under the foreign exchange administration rules as follows:
    • Make and receive payments in foreign currency with residents;
    • Borrow any amount of foreign currency from licensed onshore and non-residents;
    • Invest any amount in foreign currency assets onshore and offshore; and
    • Retain export proceeds offshore.
  • Unrestricted employment of foreign knowledge workers
  • Eligibility for tax incentives
The tax incentives are:
  • Exemption from corporate income tax for a period of 10 years in respect of statutory income derived from qualifying activity carried out within the approved node for customers situated within the approved node and outside Malaysia or wholly for customers outside Malaysia. Such activities must commence on or before 31 December 2015; and
  • Exemption from compliance with the withholding tax provisions on payment of royalty and services fee to non-residents for a period of 10 years from commencement of operations.
And, what of 1MDB?

Well, from my previous postings you will, no doubt, have gotten an idea of my concern about the debt edifice of 1MDB.

Be that as it may, I do wish for the Sungei Besi Airport redevelopment and KL Financial District projects to be successful.

Here comes the reason for my long preamble.

In a sense, the 1MDB projects can be seen as the present day equivalent of the industrial parks of past decades. Where industrial parks were meant to house and cluster manufacturing concerns, the 1MDB projects are intended to house services-based concerns. This is consistent with the ETP goals, I suppose.

And, I am making a strong assumption that to ensure the financial viability of the 1MDB projects, there will be IDR-like incentives in the pipeline. And, like IDR, the incentives will be legislated by Parliament and decreed by MIDA.

Calling the Klang Valley "Greater KL" is, I suppose, a branding exercise to the global customer base. I have no problems with that just as most of us have no problems with the KLIA being called KLIA even though it is in Sepang. It's about global branding.

Two key takeaways for you

All the foregoing is intended to lead to 2 points that I wish to make:
  • First, how about extending the IDR-type incentives to the whole country?
  • Second, how about (here I go again) reducing the corporate and personal income tax rate to 18%?
What a stimulus and seriously positive economic multiplier these will have on the whole country.

Wednesday, October 20, 2010

Pee Pee Pee Budget Issues

I found Budget 2011 to be a strange document. It is strange at many levels.

For one, there was really only one big expenditure item. That was the allocation for Operating Expenditure. No austerity measures there. There was, in fact, a marginal increase in allocation.

Another, is the great store put on the so-called Public-Private Partnership (PPP) formula. At a cursory level, PPP seems to mean that the private sector will foot most of the developmental bill. At another level, PPP seems to mean projects for private sector parties with access to the political masters.

The third feature is that this is a largely a budget for large scale (some say "mega", others say "grandiose") construction and property development.

The fourth matter that struck me, going back to the concept of PPP, is that the Government recognises that it is cash-strapped. The "innovative idea" is to take developmental matters to, what I will term, "off-balance sheet" transactions.

What do I mean by "off-balance sheet"? Well, I have deliberately put the expression in inverted commas (just like the way Dr. Evil did with his fingers in Austin Powers) because I don't mean it in the way that accounting standards mean it.

The "off-balance sheet" that I allude to is that PPP arrangements has less transparency than a basic, garden variety budgetary allocation that is open to Parliamentary and public scrutiny.

Take the case of the 100-storey Warisan Merdeka Tower. I was puzzled that the matter was even included in a Budget speech. Essentially, the RM5 billion outlay will be borne by Permodalan Nasional Berhad (PNB), not the Government. I imagine that the only involvement of the Government would be at the Economic Planning Unit level - to approve the project for its perceived salutary economic "high-impact".

In a sense, the Warisan Merdeka Tower project is more akin to the proposed Sungei Besi Airport project the land ownership of which is in the process of being transferred from the Government to 1MDB. That is "off-balance sheet". Not open to direct Parliamentary and public scrutiny.

In this sense also, there is a precedent in the KLCC Project. It was also "off-balance sheet". It was not open to Parliamentary and public scrutiny.

But, this is where the similarity starts and ends.

The KLCC Project was destined never to fail. It could never have failed because it had the financial clout of Petronas behind it. That the KLCC District has become the success that it has is due, in my humble opinion, to the benefit of a central location in the heart of Kuala Lumpur. It also had the benefit of Petronas, which is a Fortune International 500 company, occupying one whole tower block effortlessly. By the way, Petronas was also instrumental in keeping Dayabumi alive in terns of occupancy during Dayabumi's first decade of existence.

In contrast, new-fangled PPP projects such as Warisan Merdeka Tower will rely on PNB's finite resources. What is PNB? Unlike Petronas, which is a commercial going concern in the substantial oil and gas industry that generates significant revenue streams, PNB is at best a fund management entity and a passive asset owner.

How will PNB be able to acquire the skill sets and the commercial gravitas to fill up the floor spaces in the 100-storey Warisan Merdeka Tower? RM5 billion is a substantial outlay. And, lest we forget, PNB is the trustee of Malaysia's institutional wealth - especially for Bumiputras. Failure is not an option.

As for the Sungei Besi Airport project, I have touched on it previously. But, the analysis is substantially similar with one worse addendum - 1MDB is based on an RM5 billion bond issue. 1MDB is in the process of raising yet another RM5 billion bond issue.

A bond is a debenture instrument. It is a hypothecation. A debenture is a debt. A debt must be repaid.

Therefore, it is obvious even to the untrained mind that 1MDB's financial feasibility relies in large measure in its hoped-for ability to parlay the Sungei Besi Airport land into a valuable piece of real estate. This is something real estate developers do. Any member of REHDA could have done the job. Why is there a need for 1MDB? I'm just asking....

Finally, I just want to make an observation that, in recent decades, we have placed great store on Corporate Governance.

The International Financial Reporting Standards (IFRS) on mark-to-market valuations, property development sales revenue accounting treatment and, recently, leasing arrangements demonstrate a great concern for off-balance sheet transactions.

The IFRS Exposure Drafts on these and many other business practises are intended to ensure transparency so that investors and stakeholders that have dealings with corporations have a clear idea of the financial health of corporations as going concerns.

In this context, PPPs may not be a march forwards. History may see it as a troglodytic concept.

So, I leave you with this question: Should governments have a different accounting standard from corporations?

Saturday, October 16, 2010

Maghrib prayer at my house

My son told us that his friend Ishak (not his real name) was dropping by to hang out at the house. He was just informing us. No permission really needed. Just notification. These 15-year olds had just completed their PMR exams. It is time to hit the PS3 games with a vengeance.

Since Ishak was at the house we decided to "bungkus" some Otai burgers from the franchise burger stall nearby for the kids.

Got home. Dropped the burgers off in the lounge. Ishak greeted me with "Hi, Uncle". I responded with my usual, "Hi, Ishak." The dinner arrangements taken care of I headed upstairs for a much-needed TGIF snooze.

I just came downstairs. It is almost midnight.

I saw a folded blanket in the middle of the lounge floor. Ishak is long gone by now. My son having retired with his laptop to his room, I asked my daughter why the blanket was on the floor.

She told me, "Oh, Ishak needed to pray just now." I realised that it must have been the Maghrib prayer time.

I asked her how Ishak could have identified the kiblat direction.

She said, "I think he agak-agak."

I just want to say that I think Ishak is a way cool Muslim Malay Malaysian boy.

I also want to say that he wears his faith so easily, which shows that he has received very wise instructions on his faith.

Finally, I want to say that his parents are very cool Malaysians.

Friday, October 15, 2010

Facing the human capital challenge

This is Part 2 of the interview that RB Bhattacharjee conducted with the Universiti Malaya Professor Rajah Rasiah as reported in the Edge Daily:

In part 1 yesterday on Malaysia’s economic direction and the constraints that are holding it back, Universiti Malaya Professor of Technology and Innovation Policy Rajah Rasiah talked of the strategic initiatives needed to raise its economic prospects. In the second and final part, he tells R B Bhattacharjee about fixing the public delivery system and how Malaysia can draw on its diaspora for help


TEFD: What are the priority reforms needed to make the public delivery system a selling point for the country?
Rasiah:
The best is probably in Penang. For some reason, there is much more involvement. But even there, things have flattened. During Tun Dr Lim Chong Eu’s time as chief minister, at least during the tail end of his career, they had evolved a system where it was the Penang Development Corporation’s (PDC) responsibility to keep firms happy.

Penang was one of the success stories, because in 1970 the incidence of poverty was something like 50% and it went down to 0.3% or thereabouts by 2005. How was that possible? The state recognised that it may not enjoy much support from the federal government, because it is dominated by the Chinese, even though the ruling party was with Barisan Nasional.

They often did things that included providing the requisite service that is necessary to see that firms continued to upgrade or involve firms in the network, promote linkages so that greater progression of synergies.

Some of their methods come from Singapore and Ireland. They knock on doors to identify species of firms. At one time they realised that consumer electronics is too labour intensive, then they mistakenly went to disk drives, then they realised that too was labour-intensive, then they scaled down.

Later, they went to different species of industries, knocking doors and requesting them to relocate.

Penang was among the first to face the problem of a lack of skills. The Penang Skills Development Centre evolved in response to that. PDC was the facilitator. The old PDC building was rented out at RM1 a year as their contribution. The firms came in because they knew the group of stakeholders there were interested in helping each other. Firms put in the equipment and a whole range of other things.

While providing this state-of-the-art training, it also made sure that Penangites were being trained. Some of the training went to people who were not working in those firms.

That sort of initiatives also led to linkages. PDC tried to match multinationals with local firms, and facilitated the birth of local firms from employees of multinationals. That is well recorded.

But that did not evolve into the scale of upgrading necessary to match Taiwan, Korea and Singapore because of a number of institutions governed by the federal government.

The rules of the game were established by the federal government. Say, whether Penang can have enough professionals from abroad in a particular area. That’s a decision the federal government has to make.
Rasiah uses Penang to illustrate the example of a successful public delivery system.

Rasiah uses Penang to illustrate the example of a successful public delivery system.


Whether the government will provide the requisite educational infrastructure to create the human capital they require, those instruments are governed by the federal government, and whether the federal government would put up these labs.

I have brokered this myself, with the federal government’s backing. I assisted Khazanah on it. The Indian Institute of Technology Kanpur had a MoU with Universiti Sains Malaysia, for the federal government. The idea was to undertake research, using Masters and PhD students who were some of the supervisors from there. For the moment, they are targeting what firms want, which is the research focus.

We need to get into things the firms may not want, namely some elements of those technologies that will go to the poor. That means they won’t make money, so the government will have to buy the research products and pass the benefits to the poor.

Or you can have situations where firms have not recognised the potential in their sector. There you need incubators.

At one level, you serve the firms, and at another, you provide technology for incubators. At another level, you produce the graduates that firms and others can hire.

We should give green cards to these guys. Target the whole world for employees. At the same time, take in local participants. You need this networking between the best around for them to capture the best practices, and for the improvements to stick.

I also recommended a leading Taiwanese university for that. But the reason why the university is not in the equation now is because of some political considerations then.

Can Malaysia wean itself from its dependency on cheap foreign labour without going into economic shock?
We have broad statistics to show that in a number of industries we are relying on foreign labour. There have been attempts many a time to stop taking new foreign workers, but we have not thrown back those who are already here.

From time to time, there have been raids to check that the foreign workers have not been here for more than five years.

I don’t think the government should take any steps that contravene the joint governmental agreements with Bangladesh and Indonesia to repatriate the workers. Nor with the Filipinos, who even have minimum wage legislation that requires that maids here are paid probably a premium compared to the rest.

What they should do is through policy governance, by introducing levies that make it more expensive to hire foreign workers. Not immediately, because then the immediate retracting factor could be deleterious to the country, but gradually, they should defer recruitment. This would be like in Taiwan, where they imposed a levy if you take in unskilled labour.

You have to start somewhere, but you should not do it abruptly. If you do that, you are actually going back on your word. Firms should be given the assurance that you will stick to the word you gave earlier, otherwise they will lose confidence in whatever you do.

What is the positive news about Malaysia’s economic situation?
The minister mentioned that in the first quarter they had more than RM5 billion already. If they can maintain that they will be able to achieve more or less the annual figure to reach the RM115 billion in five years.

The positive news is the promise that the NEM provides. Of course, there are things that are unclear. Among them, you need to achieve 12.8% annual growth in investment over the next 10 years. Does it make sense? People are reluctant to believe that when it has slackened substantially from 1995 to 2010.

I remain convinced that NEM has provided the motivation that policy should focus on inclusive growth. In other words, embrace corporate social responsibility (CSR) practices as an inherent part of growth itself, not as a detached one, that you take care of afterwards.

NEM has taken head on the need to generate the human capital necessary to reinvigorate economic growth in the country.

Thirdly, the focus on the 40% of families with income levels less than RM1,500 per month. When you enable their thinking faculties, it gives them the opportunity to improve their situation, although the NEM does not explain that much. I would prefer that they look at the Scandinavian countries, so that they will create a welfare state without free riders.

There should be no misallocation of subsidies. There needs to be different instruments to address the problems of targeting subsidies. The focus should not be the distortion they think they are creating. Even if there is distortion, the welfare state will correct that better because you don’t have misallocation of resources.

You now identify the poor, which you know from the Statistics Department’s household income and expenditure survey. Of course, real income varies between locations, and you need to adjust for that. Then, if they divert the current system of providing additional income or coupons or whatever form they give aid in, then I don’t enjoy the subsidy, I don’t become a free rider, and neither does a foreigner.

It also reduces smuggling. That figure will be very small.

Although there are some sceptics, I think the NEM’s good points are that it provides the conceptual and epistemological rationale behind why these 12 economic activities should be done. That to me is exciting. What is not clear to me is that it is not very explicit about how they will go about doing it.

That same thinking is found in the 10th Malaysia Plan. Perhaps more foreigners were involved and they did not understand the workings of the macro organisations. Perhaps they weren’t able to outline the responsibilities to different ministries that the previous Malaysia Plans had done.

Those things need to be made clear, but we at least have the motivation.

You can also see universities now getting into this bandwagon of competition. In the past few years, Malaysian universities have been investing and working towards raising their performance, especially in the science faculties.

That means positioning themselves to hire anyone from any part of the world, provided they meet the standards required to perform. So, we can hire anyone from India, UK or elsewhere, provided they can provide the publications required, because we believe universities should be led by research to drive teaching.

These things weren’t done before. These are things that are happening, but the results may not be immediate, but the long-term effect will be there. Local staff strength is going up, as well as foreign staff standards, and this will have some kind of effect on the economy, including towards supplying the labour force in all fields, including science and engineering.

Is the Talent Corp idea workable and what are the lessons from previous exercises to attract the Malaysian diaspora?
I am a participant because I came back under the brain gain programme. I also coordinated the brain gain report of 2009 for MOSTI. We recommended that a Talent Advisory Council be set up. We called for an R&D investment of GDP of 1%. We wanted the ratio of R&D personnel and scientists per million persons to be raised from 367 to 1,500, if I recall correctly. I think they are looking at 1,000.

The Talent Corp, from the R&D side, again is not very explicit to me. It is hoped that we adapt from the experiences of successful countries. In a country like India, there is no incentive scheme for talent to come back, and yet there are all sorts of talent going back.

Taiwan and Korea are our real models, compared to Singapore, which targets the world, like the US. Taiwan and Korea have talent advisory councils which play an important role because they connected to the diaspora very well, and they gave them recognition to participate in the initiative.

You must look at the whole ecosystem that has been evolved. You must see all the parts, and the way they are organised. This is critical.

In the case of Taiwan, they continue to spin off incubators that are potential world class firms. Then they bring people from similar industries to head them, like Morris Chang, who was senior vice president at Texas Instruments taking over Taiwan Semiconductor Manufacturing Corp or Dr Wang from IBM. There are so many of them in many different things. You have all these hi tech firms like Vanguard, Asus, etc.

The advisory committee is very well linked to them. And they don’t discriminate, at least from 1985, because they recognise the role that they play. Before that, the local people thought they were the most loyal.

In the case of Malaysia, they must see a transition. We have a problem, again, of political economy. Most of these people abroad are not Malays. Of course, there are Malays too. Are they willing, say, to bring a Chinese, who may be the best suited to run Mimos? Or Silterra? This is an area we have to solve, because you are now competing. You cannot suddenly have a sub-optimal performer running a big corporation or a meso organisation without the standards that you put there in order to achieve running those things. Is Talent Corp going to do that?

We have a problem because more often than not the person who comes back plays a secondary role. He is not the boss and has no autonomy to do anything.

Let me give you examples of people who left. They came back, they didn’t mind being second in command, but the first in command often left critical meetings when the minister called. These people were trying to establish MoUs with critical suppliers, even buyers, from abroad.

But when they come, the main person is not there because the minister has called. And his position, if he doesn’t take care of the minister’s interests, he won’t be here. And the real talents are the people who came from abroad.

I thought this would be a rare case, but when I speak to them, I find that it is a common case.

Reinventing Malaysia’s economy

I must warn you that I have reproduced a very long piece from the Edge Daily. It is a first-part distillation of an interview that RB Bhattacharjee conducted with the Universiti Malaya Professor Rajah Rasiah:

Malaysia’s diminishing appeal to both foreign and local investors has been in the news of late. Energising the country’s economy will need some strategic policy shifts, Universiti Malaya Professor of Technology and Innovation Policy Rajah Rasiah, who has been appointed the Holder of the Khazanah Nasional Chair of Regulatory Studies, tells R B Bhattacharjee in a frank and free ranging interview. Here are some excerpts in the first of two parts:

TEFD: To what extent is Malaysia’s poor investment performance in recent years, as reported in the UN’s World Investment Report 2010, due to internal and external structural factors?
Rasiah: Investments have gone up this year, so the outlook isn’t bad. The government has made some changes that have had a positive impact. If the investment flow sustains, it is good.

Obviously the global recession has had an effect. Among members of a good neighbourhood that has done relatively well in relation to the global economy, foreign direct investment (FDI) having contracted only by 17% for Asean, you have us as really a bad example, showing a drop of 81%. That has sent a wrong message that things are not okay here, especially that Malaysia is probably the worst place to go and invest, because they have had the largest contraction.

But it could also be seen differently, that this is a country that does not really need massive FDI because it has the capacity to invest abroad, not only domestically.

There must be a holistic approach to investment dynamics, with government policy identifying FDI as an integral part of development policy.

The New Economic Model (NEM), as well as the 10th Malaysia Plan (10MP), addresses the need to focus on economic activities that provide the value-add required to bring Malaysia’s growth path back to the trajectory required to achieve Vision 2020.

We need to see how FDI can contribute. So far, a whole lot of FDI goes into manufacturing, and that’s one of the reasons why there has been a trend fall from the golden years of 1988-1993. It is because they are no longer competitive in low-end, labour-intensive manufacturing. We have delayed that by importing foreign unskilled labour.

It is recognised by the NEM, and 10MP, that we are facing a severe human capital deficiency problem. There have been attempts since the 1990s to overcome this, through the Private Investing Bill and a whole range of other instruments that were created. But they haven’t solved it; The deficit has been growing.

Malaysia is facing the problem of matured industrialisation. It is deindustrialising, meaning the share of manufacturing in GDP has started to fall since 2000, although the sector has not reached maturity status. The target is to achieve 20% value-add in Malaysia’s output, against 32% in Korea. In some sectors like steel, it is about 13%, it’s that low.

What that means is we are not migrating or upgrading our manufacturing sector sufficiently fast to keep up or at least stay in touch with Korea and Taiwan, as well as Singapore.
Prof Rasiah says there must be a holistic approach to investment dynamics, with government policy identifying FDI as an integral part of development policy.

Prof Rasiah says there must be a holistic approach to investment dynamics, with government policy identifying FDI as an integral part of development policy.


Meanwhile, other countries that are growing rapidly — China, India and Vietnam — are closing the gap. Even more scary is their sheer size. Imagine, as India and China get closer, then surpass us, the consequences will be more difficult to deal with.

If you plan properly and address the shortcomings raised in the NEM and 10MP, at least you give yourself a fighting chance to make yourself attractive to those sectors where FDI is likely to come.

We must have the requisite human capital and macro-organisations that deal with R&D labs. This can be through specific sector specialisations, for example, R&D labs on electronics, like the Electronics Research and Service Organisation (ERSO) in Taiwan, and incubators then that are co-located.

That produces knowledge, which is critical. You have this systemic effect of knowledge that spills over into firms, which will find it attractive.

What advantage have we got in relation to India and China? We have much better basic infrastructure, comfort and choice of residence. These are things I’m picking up from interactions with CEOs of firms.

Once you have those serious deficiencies addressed, we will be better placed than our competitors, including Taiwan and Korea in many ways.

In these countries, there were clear government initiatives to develop indigenous capital. They saw that development meant the development of domestic capabilities.

They also recognised it is pointless reinventing the wheel. There are different paths to reach the frontier. They sought technologies that they thought the country should focus on.

Korea went into steel, electronics, shipbuilding and industries of that sort. They looked at the flagship firms in these industries in an attempt to catch up. Initially, because the gap was so wide, they went into licensing. Secondly, they hired Korean personnel working in those big firms because they carried passive knowledge, which includes experiential knowledge.

This allowed them to acquire a labour force that can really perform. They also remained networked to markets and R&D labs in all these places. They had a strategy of ensuring that all these flows of knowledge, either by licensing, using their own human capital or bringing back their diaspora, generated results.

They developed vetting, monitoring and appraisal instruments by evolving these capabilities. The equivalent of the Economic Planning Unit of Malaysia led the drive in Korea, Singapore, Taiwan and Japan. They improved by continuing to appraise and remove their mistakes, identifying new thrust areas and so on. They evolved planning and execution capabilities.

They relied on their diaspora for advice as well as foreigners whom they thought could contribute to them. If you have a mechanism with that sort of standards, then you can subject any performance to that measurement. They have that. We don’t. If you have that, then you can plan against the countries and firms you are catching up with, and close the gap. These are very critical.

FDI should not just be seen as capital flowing in, but includes multinationals which may not relocate here. One channel for developing our own skills is by either establishing an outsourcing link, and growing from there, or accessing technology through licensing.

What short- and medium-term measures are needed to restore business confidence in Malaysia?
In the next five years, the 10MP is seeking inward investment growth of RM115 billion, which translates to RM23 billion a year. This is not really impossible because we got more than that in 2007 and 2008. Only in 2009 it crashed.

If we say that we need FDI reviving, rebounding to the amounts that we recorded in 2007 and 2008, then we need to find out why those figures have gone down.

The dominant players that are coming in are industries that typically did not come here previously. In the 70s and 80s, it was electronics, garments. All that were big, and they went into manufacturing.

Now, it is Kuwaiti oil, even Indian firms into infrastructure and properties that are bringing in FDI. We need to go back to the drawing board and see if that is the sort of capital we still want. In those areas, we’ll have competition for our own producers.

Because we are also investing abroad a lot, and if you want them to allow us to build infrastructure in India, then you have to allow them to come here. Otherwise, bilateral arrangements don’t work.

But if you want to pursue the new growth policy, then we need to address and convince the firms that are here. Firstly, firms like Intel, for example, have been asking government leaders whether its plan to fast track applications for permanent residence (PR) has been executed.

Some, however, are concerned that this policy might lead to a dualistic economy where the set of foreigners who come may not have a long-term responsibility to the country.

It is still a fact that the government needs to tell investors that it means action. The officials must take the steps and put it out that we are already doing this, that foreigners working in firms here can now apply for PR.

We now have a one-stop agency that deals with the entire range of issues on this. So, those things must immediately take effect.

You are dealing with the FDI crowd here. These are flagship firms: Motorola, AMD and others. You are really dealing with the big guys in an industry I think is still important — electronics.

Secondly, Malaysia is known for its universal spread of MIDA offices, that were known to promote FDI, at least in the past, quite effectively, so that potential investors knew the investment opportunities here.

I feel the focus has shifted somewhat to tourism and related sectors. They must bring real information to potential investors. Don’t go back and promote the same thing because nobody believes it now.

In the 1990s, CEOs of Taiwanese companies told me they felt cheated coming to Malaysia. They were clearly told there was an abundant supply of cheap labour and they were literate in English. When they came, they had to go very far to get their workers. Once they got them, they brought them by the busloads to their factories. The next day, they had been poached by neighbouring firms.

Clearly, they didn’t have the labour force. The building was already up, so what could the investor do? One CEO was quite upset about this. It is unfortunate that they had to adopt practices such as holding back workers in the previous shift because they didn’t know how many would turn up in the next shift.

The officials have to recognise the transition that has taken place and they must have the requisite labour force. These need to go hand in hand. You can’t make statements about things you can’t deliver.

The longer you do that, the more people won’t believe you, like the boy who cried wolf.

The prime minister seems sincere in trying to see these things happen. But there must be execution by the officers who are made responsible. The line of responsibility should mean that the range of people involved must be made to recognise that they will be rewarded only if they continue to execute the things required of them.

Otherwise, if loyalty is the only thing that the leaders look for, then their officers won’t deliver.

Another measure would be to connect with the officials of the Ministry of International Trade and Industry and the Economic Planning Unit, who are looking at new species of industries to promote. The idea is not to create for the universe here, but to observe trends elsewhere, identify the right players and attract them here. For example, the planners are looking at solar energy and medical devices, which is already in the field, but now they want to go much broader into these areas.

This goes back to the same old strategy: you connect with a multinational value chain and attract them. The species are not new to the universe, but they are new to the country. Then it grows. It has happened before. The semiconductors moved to consumer electronics, then to disk drives. Suddenly, they went labour intensive, and on to other industries, computers and so on, and Dell came in.

But that strategy, I am reluctant to believe, connects with structural change. The structural change that is expected is not just about moving to different industries.

The most important thing is to move to higher value-add industries. They can be in the same industry category as such. If you’re looking at electronics, then it’s designing and wafer fabrication, where it gives you the higher value add which is necessary.

I’m not clear if they are going to reintroduce the policies which were seen before. You attract one industry, then you see a range of firms growing there, then suddenly they get up and go. That does not make for an economy that wants to progress from one level of income to another.

Taking up medical devices, there must be follow-up panels, comprising industries they want to promote. Previously, there was even avionics. In that case, you need to see that they will have at least design capabilities, if they don’t do basic research.

To do that, you need a different set of policies, which require a link with universities and R&D labs. All of them must be seen as an ecosystem that we need to have in order to have the sort of industries you think the country needs. Not simply industries by name, but industries that can support the value-add required to establish the growth rate so that we bring back the growth path to Vision 2020.

I wouldn’t like simply to do the promotion then, in economic terms, create a bubble; things that grow on the basis of perception. The prime minister is planning for a transformation, but when firms realise it’s not happening, then you see a huge fall because the requisite infrastructure, promotional instruments, macro organisations all have not been created.

You mentioned some concerns that industry representatives have raised about the business environment. What are the main hurdles in the way of attracting investments, from the political economy point of view?

We haven’t been successful at producing a responsible and capable labour force that can evolve with the expectations to become more productive. The kind of workers required can not only earn higher salaries but are able to support the upgrading of firms.

Political economy is one of the reasons why we have not been able to deal with the issue of targeting labour transformation. When the NEP was created in 1971, there were some shortcomings. The government had to introduce quotas for the Malays and non-Malays, for example, for places in education.

That was already flawed. Affirmative action should target providing equal opportunities. It should never be targeted at some because they have the colour or they think they were underprivileged before.

It gets worse because the community that you favour could have been financially much better endowed compared to the others who are competing for it.

We’ve got many things wrong, I think. The utility of money to the rich is low or zero. RM1 means nothing to the rich, but means a lot to the poor.

The dynamic argument is about moving the poor out of their situation by enabling their thinking faculties. Then they participate productively because they now have equal opportunities, and can perform better than the others. That’s the logic of affirmative action, not going along ethnic lines. If you do that, you may end up misallocating resources such that you may not establish equal opportunity. The beneficiaries could be the rich themselves.

Secondly, you no longer have the same standards for all. It becomes the right of one group to enjoy privileges.

In the initial stage, some good things happened. The restructuring targeted where the Malay communities were. They built canals, drains and roads. That integrated them into markets. That was enabling.

What was not enabling was the provision of 30% equity for bumiputeras. What do you establish from that, by simply fixing an artificial figure? That may even backfire because the poor Malays may not even enjoy it.

Because you have a framework of that sort, then a whole network of macro-organisations are created targeting bumiputeras. You have elements of collusion setting in.

I happened to have the opportunity to study Pusat Giat Mara and Institut Kemahiran Malaysia, both Malay-based.

I was visiting places in Johor, Perak, Selangor, I did not find the kind of skills they were teaching state-of-the-art.

When I spoke to the person in charge, I was told these students couldn’t grasp precision engineering and tool and die-making. I was surprised because this is the age at which you catch people’s attention. You never know how much they can learn. That’s the state-of-the-art skills the industry wanted, as reported in a 1994 World Bank study.

When I asked the Mara and polytechnic administrators, they said they were doing very well, because all their graduates get hired.

But when I went to the firms (this was at the peak of the labour shortage), they said they had no choice but to take them in and train them because they were already here and the misinformation was that skilled labour was in abundance here.

The training institutions claim they are market-oriented, but the firms say we pay lower salaries and we give them training. There’s no premium in that. They should bring the best to train the students. I would have preferred that they go to the poor irrespective of race, then you build nationhood, a society.

Even if you started with the Malays, the trainers shouldn’t have been those whose skills are mediocre. Get quality instructors even if you have to source them from abroad.

I criticised the political hierarchy in Johor on this point, and they said whatever you have said, we recognise and we’ll change, but I don’t think they have.

A World Bank official said, ‘Malaysia is an interesting country. Whatever FDI instrument there is in the world, it has, legislatively. But whether they enforce it and execute the policy properly, the answer is ‘no’.

When they say they don’t have the labour force etc, firms will say, they told us we can get tool and die makers and precision engineers from abroad, but approval is not easy. There is a lag period, sometimes they allow a few, sometimes they don’t. They talk about bureaucracy.

It’s also a tremendous waste of resources, isn’t it?

When I was doing the Iskandar Development Region strategic chapter, I spoke to many managing directors. Five of them told me they were keen on relocating their designing facilities from Singapore. Whatever Singapore has, Johor has. There are things Johor has that Singapore doesn’t have. Big land mass, more options for tourism, and they can have more people to work there, but unfortunately, after looking at a number of details they decided not to work there. Some CEOs decided they would drive to Johor daily from Singapore because Singapore is a better option. For example, education facilities are better.

I brought the matter to the state officials, who said, ‘This is the problem with Malaysians. Most of them run away to Singapore. Just 10% more wages, and they go there.’ One figure is that 50% of Singapore’s engineers are Malaysians.

We found some of these employees and talked to them. They said, ‘You think we’re fools? For 10%, we can’t get to see our children. They are asleep when we leave for work and again when we return. The real reason for choosing Singapore is that their problems with the local authorities are not solved because of bureaucracy. But they say we are a one-stop agency, we solve everything immediately.

Thursday, October 14, 2010

Science & Maths - It's the level of English that's falling

The NGO for education matters, PAGE, has reminded the Malaysian policy makers and the general public about the importance of the English language in Malaysian education. In a letter to the NST (which, I have taken the liberty to reproduce below) PAGE has also highlighted the continued erosion of the English language in Malaysian education.

Once again, I wish to record my deep appreciation for the valiant efforts of PAGE (which I am an inert member of).

THE Parent Action Group for Education Malaysia (Page) believes that to achieve the goal of a high-income nation as outlined in the Economic Transformation Programme (ETP), the policy of teaching and learning Science and Maths in English (PPSMI) in national schools is far more sensible than the policy that is replacing it, that is: upholding the Malay language and strengthening the command of English (MBMMBI).

We would like to address the argument for MBMMBI by Mohd Solihan Badri from the Corporate Communications Unit of the Education Ministry ("Plan will boost BM, English" -- NST, Oct 11).

The problem is the deterioration of English language and not Bahasa Malaysia (BM).


The language to propel us forward in terms of science and technology is English. The main medium of instruction in national schools will still be BM.

At present, the syllabus provides that 60 per cent of subject hours in primary schools and 53 per cent in secondary schools (science stream) retain BM as the medium of instruction.

BM is also the official language for assembly and correspondence.


The option to uphold PPSMI is protected under Article 152 of the Federal Constitution, which ensures the freedom to teach and learn in other languages, including English.

In addition, the Education Act 1996 supports that "pupils are to be educated in accordance with the wishes of their parents".

The Education Act 1996 also states that "and whereas the purpose of education is to enable the Malaysian society to have a command of knowledge, skills and values necessary in a world that is highly competitive and globalised, arising from the impact of rapid development in science, technology and information".


If we want to achieve a skilled workforce to fill 3.3 million jobs that will be created as the government restructures the economy under the ETP, then we need to be serious about the prescription for the education system.

As it stands, the system is not fulfilling the needs of the nation as the knowledge, abilities and language skills of most graduates leave much to be desired.

There has yet to be any effort to address the inadequacies of the education system.

The assertion that students can understand their teachers better in their own language in this context is rather warped.

If this is true, then Chinese and Indian students in national schools would be underperformers. This is obviously not the case.

We have yet to see the outline and be convinced that the MBMMBI policy will improve and increase students' mastery of and competence in English.

The letter from Solihan does not prove that MBMMBI is superior than PPSMI in improving the competency of learning and using English language in line with achieving a competitive and globalised workforce.

Therefore, we urge the government to seriously consider PPSMI as an option for the schools that want it.

(the letter to NST was signed off as) DATIN NOOR AZIMAH ABDUL RAHIM, Page, Kuala Lumpur

Wednesday, October 13, 2010

Rocky, Rais and Gum Infection

Last weekend I did what I do on weekends. I turn into the garden variety Malaysian. I become a foodie.

It was a scorching Malaysian Saturday afternoon. The sun was in full glory. Roads were melting. Even the flies were having their unplanned siesta. My car rolled into one of the ex-New Villages that was created by one of Gerald Templar's boys. New villages created by the Briggs Plan to combat the communist insurgency in the old days have turned into a great success story. Almost every one of them. This one was no different.

By the main road of this new village there was an array of metal-roofed stalls. The sight, smell and sound was pitched at maximum. The heat of the day did not deter any of the patrons. Fried food, kueh, popiah, kuay teow - you name it, they had it. And, the thirst-busting sugarcane machine was an inviting sight.

So, I ordered an assortment of delicacies. When the food was served I tucked in with gusto.

To perform my usual after-meal oral ablution, being a typical Malaysian, I searched in vain for a toothpick. Not a single stick was to be found. I was undeterred because I knew I had a pack of Jordan toothpicks in the car.

As I drove off, I reached for the Jordan pack and extracted a toothpick. The toothpick has an promising triangular design that is as pointy as a needle at one end and stubby at the other. I happily picked at my teeth. At one particular gap there was a stubborn bit of fibre. I stabbed at it. Nothing budged. I stabbed further. Still, nothing. I stabbed harder. The toothpick broke. Now I had a splinter lodged in my upper pre-molars.

A part of it is still lodged there. The salivary enzymes have worked hard to break it down. It has taken some days now. It's a lousy way to find out how complex the cellulose of tree trunks are.

So, I have a localised gum infection. It will go away. Gargling with Listerine has helped reduce the terrible throbbing that occurs from time to time. But, it is not a comfortable feeling. In fact, it hurts. It hurts when I chew. It is annoying.

What has this business of gum infection got to do with Rocky and Rais? I'm not quite sure.

Rocky is the doyen of Malaysian bloggers. He's got a sly glint in his eye whenever the journo in him sniffs something. Sometimes its nothing. At other times there's something.

It appears to me that in a recent post on the Ministry of Information, Communication and Culture's plans to disburse an RM1 billion allocation in relation to the Wimax and 3G (or, 4G) spectrums, Rocky's post appears to have become the aforementioned splintered Jordan toothpick in the Minister's gums. And, like my oral travails, that posting has had a similar effect on the Minister as the annoying splintered toothpick has had on my gums. For some reason, it has hurt.

Now, I think I know enough basics of writing to know not to stretch a metaphor too far. But, I am tempted to say that instead of rushing to the dentist (an incredibly stupid metaphor for the Police or multimedia enforcers), perhaps going into the privacy of one's bathroom to do a bit of gargling or popping some Ponstans may be a better alternative to lessen the hurt. And, it will be less costly.

For some unfathomable reason, this episode has reminded me of the Wilde vs Queensberry defamation case. In a fit of anger over a perceived defamatory note left by the Marquis of Queensberry that suggested that Oscar Wilde was a "sodomite", Wilde sued the Marquis for defamation with disastrous consequences.

To mix up a bit of canine metaphor, it may be said that sometimes it is better to let sleeping dogs lie since some people's bark can be worse than their bite.

That said, some barking bloggers travel with rabid blogger friends. And, in spite of modern medicine, a series of rabid bites may hurt even more than a splintered toothpick lodged in the gums - if you get my meaning. If not, then, c'est la vie.

Friday, October 8, 2010

Smart leveraging: What we can learn from Ryan Seacrest and America

Any mention of Ryan Seacrest may evoke reactions of fluffiness and superficiality by anyone who drops by this blog. This blog is supposed to be laden with gravitas, right?

Well, to the better informed amongst us - better informed from the point of view of E! Channel, that is (I seem to be betraying my viewing proclivities *ahem*)- Ryan Seacrest is a wunderkind. The thing that has impressed me tremendously is how Seacrest has been able to leverage the public profile that he has as a "talking head" or master of ceremonies of a hit reality television series into a monetisable business model.

This, if I may be allowed to be exuberant on a Friday, is sheer American entrepreneurial genius. It's about transforming being part of a public spectacle to becoming a necessary part of the public spectacle. That is not happenstance. It is by design.

That said, let's not ignore the sheer hardwork that Secarest has put in to make the whole endeavour viable. Guess, what he's embarking into now? Cable television.

In Malaysia, we would have to leave it to the likes of Media Prima, Ananda Krishnan or TM. In the United States, "talking heads" like Seacrest can get into the action. With a little help from some friends, of course. But, he's the brand. The fact that I'm even writing about him already confirms his international cachet.

Anyway, enough muttering. Read this piece by Lacey Rose to get a glimpse of how to leverage on a likeable personable and telegenic appeal and turn it into a bankable business...
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Savvy Seacrest To Add A Cable Channel To His Empire

Ryan Seacrest at the Seattle auditions of Amer...

Image via Wikipedia

Ryan Seacrest’s resume already includes TV host, radio personality, series producer and brand ambassador. Next, he’ll add cable channel owner.

Seacest is in the initial talks to launch a new channel, tentatively named AXS, in collaboration with talent agency CAA and entertainment company AEG. The business venture, which was first reported by the Hollywood Reporter, will pull content from AEG’s concert and live venue assets. Our sources tell us the network won’t position Seacrest in the way that the Oprah Winfrey Network (OWN) will Winfrey, but rather will leverage both his experience and connections. Though a Seacrest spokesperson declined to comment, my colleague Chris Helman has many of the exclusive details straight from AEG Chief Executive Tim Leiweke’s mouth.

Though there are obvious challenges to launching a cable network, the most significant of which is distribution (see Epix’s struggles), news of Seacrest’s involvement shouldn’t come as much of a surprise to anyone who has charted the 35-year-old’s meteoric rise. Sure, he lacks the traditional Hollywood skill set that catapults a Johnny Depp to no. 1 at the box office or a Lady Gaga to the top of the music charts. But as we wrote in our June profile, “The Man Without A Shtick, Seacrest is more than just the hardest working man in Hollywood; he is also one of the savviest.

And for that matter, one of the more ambitious. “The plan,” he told me during a visit to his office this spring, “is to build something that doesn’t require me to stand there and do it.” (In typical Seacrest fashion, a cable venture is one of many projects he has in the works — and a reason both his $51 million fortune and his spot at No. 44 on the Forbes Celebrity 100 list are expected to rise next year. )

But what will the man best known for his American Idol duties really bring to the table?

Massive Marketing Muscle

When Idol is in season, Seacrest has a staggering 35 hours of weekly airtime to connect –and shill– to his audience. Factor in other mediums like Twitter (3.6 followers) and Facebook (242k fans), and the Seacrest brand reaches some 84 million people a week. What’s more, he knows how to leverage his many projects, be them series (E!’s Keeping Up With The Kardashians franchise, ABC’s Jamie Oliver’s Food Revolution), endorsement deals or a potential cable network, across each of those platforms. Take Microsoft, among the latest blue-chip companies to get into the Ryan Seacrest business. For an estimated $2 million a year, Seacrest makes sure the company’s year-old search engine, Bing, is everywhere he is: on his radio show (logos on the microphones); website (displayed on every video); and twitter feed (mentioned in tweets). He’s done much the same with the Kardashian shows, promoting their latest episodes on his Twitter feed, interviewing their stars on his radio show and discussing their various plot points on his E! News show.

A Finger on the Pulse

He lives and breathes pop culture — and he’s as much a curator as he is a lover of it. It’s how his E! show became a go-to destination to debut music videos and his radio show a must-stop on the movie star circuit. It’s also the reason he recognized –and heavily promoted– Justin Bieber’s star quality early on and deserves much of the credit for the phenomenon that is the Kardashian family. (Earlier this week, E! announced another installment of the top-rated Seacrest-produced franchise, Kourtney and Kim Take New York.)

But it is more than knowing what his audience wants; it is also about knowing how to reach them – on the radio, the TV and the Internet. Recognizing that ability, Microsoft invited Seacrest to sit on a closed-door panel at a three-day conference in late May with Yahoo Chief Executive Carol Bartz and Facebook’s second-in-command, Sheryl Sandberg to discuss the latter. He talked about using outlets like Twitter to chart trends, stay connected and gauge stars’ appeal for casting purposes. (Among leaders that included Jamie Dimon, Warren Buffett and Bill Gates, Seacrest was the only rep from Tinseltown.)

A Rolodex the Envy of TMZ

Thanks to his various hosting gigs –E! News, On Air with Ryan Seacrestand American Idol– it’s hard to imagine there’s a Hollywood personality that Seacrest hasn’t cozied up to (and then befriended) over the years. In fact, it’s that status that earned him a scene-stealing cameo in the 2007 flick Knocked Up. Playing a fed up version of himself, he unleashes an expletive-laced tirade on the E! News set: “I’m more famous than half the people we talk to anyway,” he fumes. The irony is it’s largely true, and a part of what makes Seacrest the king of the carpet. In addition to his charm, pop cultural fluency and comfort on camera, he is calling on people he rubs elbows with in other settings. He counts stars like on-air nemesis Simon Cowell as close friends, and as a frequent nominee himself, if he weren’t asking the questions he’d be answering them.

A Knack for Luring Talent

As his boss Ted Harbert, president of the Comcast Entertainment Group, told me at the time, if you put Seacrest in a room with somebody, he can sign them. He did it with Denise Richards; and then again with the Kardashian clan. “If you need him to get on the phone with someone and try to get something done, he’s indefatigable. He wont give up and he’s not very good at taking no for an answer,” says Harbert of a skill he likes to call good-natured perseverance. “He can give you 10 reasons why you should work with him, but he’ll do it in a way that you know you’re going to have a good partner.” It’s a good quality in a producer; but an even more valuable one for someone looking to line a network schedule. It was also one of many qualities that lead Harbert to add, “He’s got an empire now, but I think it’s only a matter of time before Ryan has most of the hemisphere.”