Thriving Norway Provides an Economics Lesson

The matter of Norway's approach to managing its oil wealth is worth re-visiting. I have made 3 previous posts on this matter here. In it's 13th May article by Landon Thomas Jr., The New York Times featured Norway's economic management.

My continuing fascination with Norway stems from their having been able to manage their oil wealth in a meaningful and socio-economically fair and egalitarian manner. They have managed to avert the temptation of abusing this wealth for short-term gain such as instituting consumption subsidies. Instead, Norway has socio-economic programmes such as free education up to tertiary levels. Public amenities are properly run. It's oil wealth is placed into a sovereign wealth fund. Okay, enough editorialising. Read on.

Espen Rasmussen for The New York Times

The promenade for the new opera house in Oslo, which is transforming a seaside area into a business and residential community.

When capitalism seemed on the verge of collapse last fall, Kristin Halvorsen, Norway’s Socialist finance minister and a longtime free market skeptic, did more than crow.

As investors the world over sold in a panic, she bucked the tide, authorizing Norway’s $300 billion sovereign wealth fund to ramp up its stock buying program by $60 billion — or about 23 percent of Norway ’s economic output.

“The timing was not that bad,” Ms. Halvorsen said, smiling with satisfaction over the broad worldwide market rally that began in early March.

Graphic

Sea of Plenty

The global financial crisis has brought low the economies of just about every country on earth. But not Norway.

With a quirky contrariness as deeply etched in the national character as the fjords carved into its rugged landscape, Norway has thrived by going its own way. When others splurged, it saved. When others sought to limit the role of government, Norway strengthened its cradle-to-grave welfare state.

And in the midst of the worst global downturn since the Depression, Norway’s economy grew last year by just under 3 percent. The government enjoys a budget surplus of 11 percent.

By comparison, the United States is expected to chalk up a fiscal deficit this year equal to 12.9 percent of its gross domestic product and push its total debt to $11 trillion, or 65 percent of the size of its economy.

Norway is a relatively small country with a largely homogeneous population of 4.6 million and the advantages of being a major oil exporter. It counted $68 billion in oil revenue last year as prices soared to record levels. Even though prices have sharply declined, the government is not particularly worried. That is because Norway avoided the usual trap that plagues many energy-rich countries.

Instead of spending its riches lavishly, it passed legislation ensuring that oil revenue went straight into its sovereign wealth fund, state money that is used to make investments around the world. Now its sovereign wealth fund is close to being the largest in the world, despite losing 23 percent last year because of investments that declined.

Norway’s relative frugality stands in stark contrast to Britain, which spent most of its North Sea oil revenue — and more — during the boom years. Government spending rose to 47 percent of G.D.P., from 42 percent in 2003. By comparison, public spending in Norway fell to 40 percent from 48 percent of G.D.P.

“The U.S. and the U.K. have no sense of guilt,” said Anders Aslund, an expert on Scandinavia at the Peterson Institute for International Economics in Washington. “But in Norway, there is instead a sense of virtue. If you are given a lot, you have a responsibility.”

Eirik Wekre, an economist who writes thrillers in his spare time, describes Norwegians’ feelings about debt this way: “We cannot spend this money now; it would be stealing from future generations.”

Mr. Wekre, who paid for his house and car with cash, attributes this broad consensus to as the country’s iconoclasm. “The strongest man is he who stands alone in the world,” he said, quoting Norwegian playwright Henrik Ibsen.

Still, even Ibsen might concede that it is easier to stand alone when your nation has benefited from oil reserves that make it the third-largest exporter in the world. The money flowing from that black gold since the early 1970s has prompted even the flintiest of Norwegians to relax and enjoy their good fortune. The country’s G.D.P. per person is $52,000, behind only Luxembourg among industrial democracies.

As in much of the rest of the world home prices have soared here, tripling this decade. But there has been no real estate crash in Norway because there were few mortgage lending excesses. After a 15 percent correction, prices are again on the rise.

Unlike Dublin or Riyadh, Saudi Arabia, where work has stopped on half-built skyscrapers and stilled cranes dot the skylines, Oslo retains a feeling of modesty reminiscent of a fishing village rather than a Western capital, with the recently opened $800 million Opera House one of the few signs of opulence.

Norwegian banks, said Arne J. Isachsen, an economist at the Norwegian School of Management, remain largely healthy and prudent in their lending. Banks represent just 2 percent of the economy and tight public oversight over their lending practices have kept Norwegian banks from taking on the risk that brought down their Icelandic counterparts. But they certainly have not closed their doors to borrowers. Mr. Isachsen, like many in Norway, has a second home and an open credit line from his bank, which he recently used to buy a new boat.

Some here worry that while a cabin in the woods and a boat may not approach the excesses seen in New York or London, oil wealth and the state largesse have corrupted Norway’s once-sturdy work ethic.

“This is an oil-for-leisure program,” said Knut Anton Mork, an economist at Handelsbanken in Oslo. A recent study, he pointed out, found that Norwegians work the fewest hours of the citizens of any industrial democracy.

“We have become complacent,” Mr. Mork added. “More and more vacation houses are being built. We have more holidays than most countries and extremely generous benefits and sick leave policies. Some day the dream will end.”

But that day is far off. For now, the air is clear, work is plentiful and the government’s helping hand is omnipresent — even for those on the margins.

Just around the corner from Norway’s central bank, for instance, Paul Bruum takes a needle full of amphetamines and jabs it into his muscular arm. His scabs and sores betray many years as a heroin addict. He says that the $1,500 he gets from the government each month is enough to keep him well-fed and supplied with drugs.

Mr. Bruum, 32, says he has never had a job, and he admits he is no position to find one. “I don’t blame anyone,” he said. “The Norwegian government has provided for me the best they can.”

To Ms. Halvorsen, the finance minister, even the underside of the Norwegian dream looks pretty good compared to the economic nightmares elsewhere.

“As a socialist, I have always said that the market can’t regulate itself,” she said. “But even I was surprised how strong the failure was.”

Solar Stocks Eclipsed: Any impact on SunPower's BILLION RINGGIT M'sian project?

Forbes has reported that:

The solar power industry may be about to deliver investors some bad news. Analysts at two big banks say leading solar companies may miss expectations when they announce profits and could lower their forecasts for the rest of the year. Leading to the disappointment are rapidly falling prices for photovoltaic systems amid fierce competition for customers during the recession as well as scarce financing for new projects.

The Forbes report goes on to state:

SunPower ( SPWR - news - people ) illustrates the industry's woes. The San Jose, Calif. firm can afford to charge more than competitors because its solar cells produce more electricity from the same amount of sunlight than rivals'. Nevertheless, SunPower's prices fell 10% in the first three months of the year and sales dropped 50%. Both declines are smaller than the industry's as a whole, notes O'Rourke, who rates the company a "Hold." He thinks the firm could lower its 2009 forecast.

Analyst Timothy Arcuri of Citigroup isn't as optimistic. He rates SunPower a "Sell" in a recent report, explaining that falling prices will likely whittle away the premium prices the firm currently charges customers. If this bearish thesis is correct, it could spell bad news and downward revisions for First Solar ( FSLR - news - people ), Evergreen Solar ( ESLR - news - people ) and Suntech Power Holdings ( STP - news - people ) as well.

On 26th December 2008, I made a post on a report by Bloomberg that SunPower Corp. had announced that it could borrow as much as USD288 million (ONE BILLION RINGGIT) from the Malaysian government to fund a solar-panel project in the southeast Asian country. The San Jose, California-based company is said to have plans to use the funds to build a factory in Malaysia to produce more than 1,000 megawatts a year of the panel components, the company said in a statement. The unit, the company’s third in Malaysia, may start output in 2010:

To be clear, SunPower's solar products are regarded as top-notch compared to its competitors because its solar cells produce more electricity from the same amount of sunlight than rivals'.

Nevertheless, SunPower's prices fell 10% in the first three months of the year and sales dropped 50%. Both declines are smaller than the industry's as a whole, notes Steve O'Rourke, of Deutsche Bank who rates the company a "Hold." He thinks the firm could lower its 2009 forecast.

Forbes concludes thus:

One possible bright spot for the industry is the American Recovery and Reinvestment Act, signed into law in February. The bill includes grants for renewable energy projects, including solar, and reimburses buyers for 30% of their total cost. Last week the government announced guidelines for applications and reimbursements could go out later this year. The Energy Department estimates it will disburse perhaps $3 billion of such grants, boosting investment by $10 billion to $14 billion, notes O'Rourke. Citigroup ( C - news - people )'s Timothy Arcuri, however, cites "widespread skepticism" that the program will bring new investors.

This brings me to the question of how Malaysia's economic managers and planners conduct their feasibility studies when evaluating which FDIs are deserving of "soft" loans to the tune of RM1,000,000,000-00 and, which ones do not.

I also wonder how much of the "soft" loan has been disbursed to date.

And, I wonder how the SunPower project in Malaysia will pan out in the coming years.

Can anyone enlighten me and the rest of the taxpaying Malaysians?

Pax Sinica

Martin Jacques had the worst experience anyone could have had. He had to undergo the terrible experience of the death of his Indian-Malaysian wife, Harinder Veriah, in a Hong Kong hospital. He claimed that the tragedy arose from a deep Chinese prejudice against anyone with a dark skin.

The Harinder Veriah Trust that was created after her untimely passing has also benefitted young Malaysian lawyers who successfully apply for a short work experience stint in a law firm in the City of London.

In spite of personal tragedy and the bitterness of the perceived racism, Jacques has just published a seminal book that contains real gems of insight into the matter of Pax Sinica. The book is aptly titled, When China Rules the World: The Rise of the Middle Kingdom and the End of the Western World.

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I will let Michael Rank's review in the Guardian take you on an excursus of Jacques's book. As ever, I have emphasised in bold what I believe to be pertinent tracts of the review:

Jacques claims that "In an important sense, China does not aspire to run the world because it already believes itself to be the centre of the world, this being its natural role and position", and discusses sensitively and in depth what it means to be the "middle kingdom". He also argues that China is essentially a "civilisation state" rather than a western-style nation state. "The term civilisation normally suggests a rather distant and indirect influence and an inert and passive presence," he notes. "In China's case, however, it is not only history that lives but civilisation itself: the notion of a living civilisation provides the primary identity and context by which the Chinese think of their country and define themselves."

One of the fundamental features of Chinese politics is the overriding emphasis placed on the country's unity, Jacques claims. This occasionally leads to contradictions which he does not entirely resolve, for he also stresses China's diversity, going so far as to claim that "China's provinces are far more differentiated than Europe's nation-states, even when eastern Europe and the Balkans are included". The question of unity and diversity leads to a stimulating comparison of China and India, a far more pluralistic - and democratic - nation, and Jacques notes how the enormous cultural differences between the world's two most populous countries have resulted in "an underlying lack of understanding and empathy".

The book is based on a well-informed and subtle analysis of Chinese history and culture, and as the title implies, Jacques is convinced that it is not a matter of whether China will dominate the world over the next few decades, but how. He is careful to avoid over-confidence in his predictions, however, and notes that "China's present behaviour can only be regarded as a partial indicator, simply because its power and influence remain limited compared with what they are likely to be in the future". But he is surely right to say that American confidence that "the Chinese are inevitably becoming more like us" is misplaced and is based on a view of globalisation that is seriously flawed.

Jacques is likely to raise eyebrows in some quarters by playing down China's military potential; he sees China's arms buildup as being aimed largely at blocking any possible Taiwanese moves towards independence rather than at achieving world domination, and he claims that its own technological level remains relatively low. In the face of US and EU bans on selling weapons to Beijing, its only potential foreign supplier is Russia, Jacques says, and Moscow is hardly eager to see a militarily powerful China.

But it is China's fast-growing economic power which has the world transfixed right now, and Jacques is confident that this will grow further. In the long term he expects China "to operate both within and outside the existing international system, seeking to transform that system while at the same time, in effect, sponsoring a new China-centric international system which will exist alongside the present system and probably slowly begin to usurp it".

In perhaps his most provocative remarks, Jacques praises China's communist leaders for their "remarkable perspicacity ... never allowing themselves to be distracted by short-term considerations". He appears to defend the party's failure to move towards democracy, stating that China has devoted itself to economic growth, having concluded that it cannot afford to be diverted by what it "rightly deemed to be non-essential ends".

Jacques observes, as commentators such as Jonathan Fenby have also noted, how the party has confounded western assumptions that the consumer boom over the last 20 years, the internet and the flood of Chinese travelling abroad on business or for pleasure would inevitably result in moves towards western-style democracy. He is not perturbed by this and is indeed sympathetic to the "not misplaced view that any move towards democracy is likely to embroil the country in considerable chaos and turmoil".

It is on race, not unexpectedly, that Jacques is most critical of China. He says "racialised ways of thought ... have been on the rise in both popular culture and official circles", and he expects this to continue, with China's "sense of superiority resting on a combination of cultural and racial hubris".

Some flaws are inevitable in such a lengthy and wide-ranging book. Jacques's discussion of Japanese culture is cliché-laden (the Japanese are "exquisitely polite", "You will never seen any litter anywhere" and the country is virtually crime-free) and it is surprising that his discussion of China's historical scientific and technological achievements makes no mention of Joseph Needham's towering contributions to the field. There are also occasional factual mistakes: Japan annexed north-east, not north-west China in 1931, and Shanghainese is not a dialect of Mandarin. In addition, the author occasionally cites dubious statistics: for example, I find it impossible to believe that 100 million Chinese tourists will visit Africa annually in the near future.

Despite such foibles, this is an extremely impressive book, full of bold but credible predictions. Only time will tell how Jacques's prophecies pan out, but I suspect his book will long be remembered for its foresight and insight.

Ku Li says New Deal needed

When Tengku Razaleigh speaks, he does so with such clarity and candour that our self-imposed blinkered psyche may find it difficult to process his words. But we must persist so that we can imbibe the wisdom and insight of Tun Abdul Razak's "chosen one". We need to do so in order that we understand what it means to be a proud and forward-looking Malaysian. By so doing we may yet avert the downward spiralling decline of our beloved country.

Here is an extract of a report on Tengku Razaleigh's speech in a private function tonight:

Tengku Razaleigh said that Malaysians should start trusting “less in personalities and more in policies.”

“Look less to politics and more to principles, less to rhetoric and more to tangible outcomes, less to the government of the day and more to enduring institutions,” he said.

In his speech, the former finance minister also spoke at length about the country’s affirmative action policies, the NEP and how he felt embarrassed that after 50 years of independence, “we are still talking about bringing Malaysians together.”

“Curiously, although the policy was formulated … for a finite period, in our political consciousness it has grown into an all encompassing and permanent framework that defines who we are.

“The NEP ended in 1991 when it was terminated and replaced by the New Development Policy, but eighteen years on, we are still in its hangover and speak confusingly about liberalising it.”

He said that it was a crushing indictment of the mediocrity of leadership that the NEP is considered sacrosanct and that departures from it are big strides.

“The NEP is over and we have not had the courage to tell people this.”

In a veiled attack against his own party, Tengku Razaleigh pointed out that the NEP had been systematically appropriated by a small political and business class to enrich itself and perpetuate power.

“We must break the stranglehold of communal politics and racial policy if we want to be a place where an economy driven by ideas and skills can flourish.

“We can do much better than cling to the bright ideas of 40 years ago as if they were dogma, and forget our duty to come up with the bright ideas for our own time.

“We need a Malaysian New Deal based on the same universal concerns on which the NEP was originally formulated, but designed for a new era.”

The Umno veteran also called for a fair and equitable political and economic order, founded on equal citizenship which he said was the only possible basis for a united Malaysia and a talent-driven economy.

You can read his entire speech here.

Read also The Edge Daily's op-ed piece, First, the straight talk, here.

Happy 84th Birthday, Tun

Happy 84th Birthday, Tun!

Pix from here

Nine "experts" join economic advisory council

It is reported that nine "experts" have been appointed to the Economic Advisory Council which is chaired by Tan Sri Amirsham Abdul Aziz.

They are:

• Universiti Sains Malaysia vice-chancellor Prof Tan Sri Dzulkifli Abdul Razak,

• Economic council member and former Bank Negara chief economist Datuk Andrew Sheng,

• Economic council member and former World Bank consultant Datuk Dr Zainal Aznam Mohd Yusof,

• National Implementation Task Force adviser Datuk Dr Hamzah Kassim,

• Corporate adviser Datuk Nicholas S. Zefferys,
  

• Institute of Strategic and International Studies director-general Dr Mahani Zainal Abidin,
  

• World Bank and Asian Development Bank senior adviser Dr Yukon Huang,
  

• World Bank east asian regional chief economist Dr Homi J. Kharas, and
  

• London School of Economics economics department head Prof Dr Danny Quah.

Universiti Malaya economics dean Prof Dr Norma Mansor has also been appointed as the council’s secretary-general.

I'm certain that these people would not have the gumption or gall to call themselves "experts". given the strange and uncharted territory that economies all over have descended into involving scenarios that have sorely tested conventional Keynesian-type wisdom. and, is likely to force major re-drafting of economics textbooks in years to come. No, that moniker was given by the Press.

Were it otherwise, I would have been compelled to recall the definition of "expert" that was given by an academic in Australia some years ago to the effect that "ex" meant something past while "spurt" had a phonetical connotation of liquefied matter, organic or otherwise, ejaculating from a spout or like cavity.

Well, it's a Friday and I must be forgiven for being a trite digressive and mildly naughty.

After all, the leader of the land has just been graded by a former leader of the land with the remark that "So far, the negatives are more than the positives".

SRJK (I) and SMJK (I)

I understand that there may be quite a lot of parents who would be deliriously overjoyed if the Government will convert designated primary schools into Sekolah Rendah Jenis Kebangsaan (Inggeris) ("SRJK (I)")and, designated secondary schools into Sekolah Menengah Jenis Kebangsaan (Inggeris) ("SMJK (I)").

This is only fair.

After all, the Mandarin-speaking fellows have their SRJK (C) and SMJK (C) and the Tamil-speaking fellows have their SRJK (T).

And, the Bahasa Malaysia-speaking fellows will soon have their SK and SMK in the appropriate language of instruction.

Some of us may not want to send our children to SK, SRJK (C), SRJK (T), SMK or, SMJK (C). But, we may wish to send our children to SRJK (I) and SMJK (I).

Can or not?
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If you are against the decision to revert from the PPSMI please register your vote at Dr M's Blog. I've registered my vote.
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Read also the op-ed of Malaysia's foremost business paper on the negative impact of the reversion policy.

"Somnambulists walking backwards"

I wrote this piece in 2002 for Asia Inc magazine. The original title was Avoiding the Babel trap in Malaysia Inc. This piece was written at the cusp of a major policy shift by Dr M, who was Prime Minister of Malaysia at the time. The policy shift involved the introduction of the English language as a medium of instruction for Maths and Science.

It was posted earlier here. This is an appropriate time to dust it off and re-post.
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It was late afternoon as I sat opposite my friend in his comfortable office in Tower 2 of the Petronas Twin Towers in Kuala Lumpur. I faced the glass window panels behind him and took in the incongruity of the few surviving old colonial bungalows resting in the shade of the tall office buildings that typified Malaysia’s corporate ambition. I listened pensively to his lament about the state of the English language in Malaysia. This 50-year old Malay Muslim CEO of a statutory body should know. “When I started my career in the 1970s, the secretaries still took dictation from their bosses. They were even able to correct the grammatical errors that crop up in dictation”, he said. “Nowadays, I’m better off whacking words into a PC and have the secretary confined to formatting and printing the finished product. I don’t need the stress of correcting letters”, he added.

My CEO friend’s predicament is not unique. Corporate law firms that make a living from putting together strings of words designed to capture the true intent of business partners are also under threat from poor English. “The wit who coined the silly expression ‘Manglish’ cannot have meant ‘Malaysian English’. It should mean ‘mangled English’”, says a senior corporate lawyer. “The worst part of this is that the work load does not decrease with new recruits. It increases because you just can’t rely on drafts from the juniors. More often than not I end up having to draft the whole thing from scratch again”, he moaned.

Increasingly, accounting and law firms create at least two, if not four, levels of vetting of documents. To be fair, this procedure is part of the risk management strategies deployed in the wake of the 1997 economic crisis and, more recently, the pall drawn by the Enron and Worldcom affairs. But poor English has also begat this truncated and annoying procedure. To project a good professional and corporate image with letters, documents and, even websites Manglish is a definite negative.

As Malaysia ups the ante on the logistics front with KLIA pitted against Changi Airport and Chek Lap Kok Airport, and the Tanjong Pelepas Port and West Port against the world-class harbours of Singapore, the real battle may well be on the language front where projects designed to enhance Malaysia’s international competitiveness such as the Multimedia Super Corridor in Kuala Lumpur is being stymied by a supply local knowledge workers weak in English. In contrast, the boon to knowledge workers in the Indian city of Bangalore to augment the Silicon Valley’s global IT reach is largely due to their English proficiency.

The experience of using English in Europe is instructive. Airbus Industrie, an amalgamation of several European countries in civil aviation, had recognized English as a vital medium some thirty years ago when it made English its official corporate language. At its base in Toulouse, south of Anglophobic France, one is struck by the anomalous appearance of a Belgian engineer exchanging technical ideas with a French electrician in English. Meetings at increasingly multi-national and transnational corporations such as Deutsche Bank and Credit Suisse are conducted in English. It is also not unusual to find a largely domestic establishment such as Deutsche Post World Net, the German national post service, using English as its working language. The main reason offered by the Europeans is simple; the United States is the leading global economic powerhouse in commerce, industry and finance. Since Americans use English, so should the Europeans, to maintain competitiveness.

Detractors in Asia usually point to Japan and South Korea as examples of societies that were able to attain economic modernization and corporate competitiveness without sacrificing their vernacular. They also point to the poor economic record of English-speaking countries in Africa that were former British colonies. But, that is simplistic rhetoric. The reality is that Japan began its economic modernization at the turn of the 20th century. They have had a 100-year head start over the rest of Asia. South Korea embraced industrialization in the 1950s with American capital being poured in ideological support for it’s being a frontline state against communism. They have a 50-year head start. In any event, to globalize homegrown brands such as Sony, Panasonic and, more recently, Samsung, the Japanese and South Korean corporations are recruiting graduates proficient in English. Global marketing may require a clear understanding of cultural differences. But amidst this diversity in global markets is the recognition of many countries that English is the dominant business language.

Malaysia rightly fears being put in the ignominous position of having had a strong English-speaking population that has significantly declined. And, with this trend, may go its regional competitive advantage. This concern is the most likely explanation for the recent government policy reversal to convert the teaching medium for the technical subjects of mathematics and science from Malay to English. Another reason may be the recognition that the Malay community is increasingly hamstrung by its restricted proficiency in the Malay language, with Arabic being their second language. In contrast, Chinese and Indian communities are generally multi-lingual. Furthermore, given the insularity of Muslim societies since the beginning of the decline of the Ottoman Empire at the turn of the twentieth century, proficiency in Malay and Arabic may not offer the Malay community the proper paradigm of values to acquire the technical and commercial skills necessary for international economic competitiveness.

Statistically, Malaysia’s superlative economic and international trade record stands proudly above other countries with dominant Muslim populations. But this is irrelevant to Malaysia since it has to compete for international investment within the Asean and East Asian region. “There is no point in being the jaguh kampung [village champion] when we have to compete for foreign direct investment against the likes of Singapore and Thailand, not to mention China”, says an investment analyst in a KL-based broking house.

The issue is not so much that the Malay language or other vernaculars are inadequate. Certainly Japan and South Korea has debunked that myth. The more pertinent concern may be that business cycles have shortened tremendously over the past two decades. The experience of the U.S. automakers in the 1980s illuminates this phenomenon very well. They were jarred awake to the strong competition offered by the Japanese automakers. While their studies revealed that productivity lag and fuel efficiency were important factors, an adjunct to that was the car model changes that the Japanese automakers made. The Japanese were implementing car model changes in two-year cycles when the U.S. norm at the time was four-year cycles.

Such a moral may not be lost on Malaysian policy makers who must have realized that if Malaysia is to offer an efficient manufacturing base for multi-national manufacturing industries English as the medium of communication is necessary. The shorter product life cycles require manufacturing concerns to re-tool and change production lines rapidly. This, in turn, requires retraining of the workforce. It is in this respect that English language proficiency may become a key factor in reducing wastage and turnaround time. In the critical path that manufacturers take to change products, longer training time due to language translation and, the real threat of miscommunication, may make or break finely tuned financial and production plans.

For Malaysia, the re-introduction of English as a teaching medium is not a whim as detractors have sought to portray this policy shift. It is, instead, seen as a key competitive factor in an era of globalization. In the 70s and the 80s, many old colonial buildings in Kuala Lumpur were demolished to make way for the tall corporate spires. In the new millennium, the surviving colonial buildings are being preserved as heritage sites. In a similar vein, the political will that relegated English in a fit of nationalistic hubris has been transformed into the corporate will of Malaysia Inc to restore English proficiency to avert the decline of competitive advantage. Given these realities, opponents of the policy on English instruction in Malaysian schools may, in the colourful words of Franklin Roosevelt, be “somnambulists walking backwards”.

Reversal of policy on teaching Maths and Science in English

The policy reversal on the teaching of Maths and Science in the English language is now confirmed. This decision of the Cabinet is troubling.

It's not so much about my having one child that will be affected (She thanked me for the offer of going to a private school but said that she should be able to cope. I told her it's an open offer that she can accept at any time).

Rather, it's about the continued decline of Malaysia's economic competitiveness. The defense of saying that the Japanese and South Koreans were at all times okay with their indigent languages rings hollow. Malaysia is NOT Japan or South Korea. It never will be. I'm too tired to categorically explain why we aren't and, shall never be.

And, whatever the attempted spins, it IS a politically-motivated decision that panders to language chauvinists within the Malay and Chinese communities in Malaysia. The aphorism that politics makes strange bedfellows rings very true in this matter. And, now that they have won their war, let us watch them resume their ugly communal battle.

Will this policy reversal benefit UMNO? Will it win votes in the 13th General Elections?

If by allowing the Malay community, especially in the rural areas, to crawl back under the tempurung is a plus point, then there will be sympathy votes. But, if it is to raise the skills of the Malay community to the point where it meets the new economy of higher income jobs, then, the answer will be moot for at least another decade.

Will this policy reversal benefit the MCA? Will it propel Wee Ka Siong to party leadership? Will it win the MCA more seats?

The Chinese educationists can now rest easy in the thought that their student community will not have the heavy load of studying Maths and Science twice - once in English and once in Mandarin. They can also harbour the delusion that their student community will now be assured of riding the Chinese and Taiwanese gravy train of economic progress. This is delusional because given the exponential growth in skills within China and, given the taut competitive environment within Taiwan, it will take a highly exceptional Chinese Malaysian to succeed there.

The jury will be out on these political questions until the 13th General Elections. And, even then, will the policy reversal be a plus point for the MCA? Or, will issues such as PKFZ impair the MCA even more than the salutary effect of the policy reversal?

This is not a happy day.

The Key to Innovation in India: Co-Location

I thought this piece was interesting for the factors highlighted on the elements needed in the crucible for innovation in India. Are such elements applicable to Malaysia in the context of our aspiration to create condtions for innovation? The emboldened emphasis added are mine.
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Of all the scientific challenges facing the world today, none are as critical to humanity's future as energy, water, and agriculture. While area-specific research is underway worldwide to find cost-efficient solutions, most of the R&D is conducted within silos that, according to the initial research design, do not allow for interdisciplinary interaction.

Viewing these three critical areas as independent, however, overlooks their inherent interdependence.

• First, as the search for efficient and sustainable energy resources grows, hydroelectric power will reign supreme.


• Second, more countries will need to invest in seawater desalination, an extremely power-hungry process, in order to provide water to growing populations.


• Third, the resultant energy and clean water will be deployed largely to agricultural processes to provide basic sustenance.

Given the connection between these forces, it is critical that tomorrow's innovation projects be designed in ways that allow for co-location. Innovation strategies built around the principle of co-location — where interdisciplinary research programs are conducted in physical proximity to one another, in order to leverage this closeness — provide firms with a chance to mitigate escalating R&D costs, but also require more detailed planning. In today's world, perhaps no other country offers global firms and governments the best chance at this interdependent and co-located research design than India.

India offers global firms, academics, and governments the ideal laboratory within which to conduct R&D in energy, water, and agriculture, boasting the following characteristics:

1. Natural Resources: With 4,600 miles of peninsular coastline, plus a variety of other renewable energy sources, India presents researchers with an unmatched wealth of resources.


2. Human capital: India's science and engineering schools and universities are rated among the best in the world, an education system whose outputs provide firms and researchers with a technically-skilled, entrepreneurially-driven, English-speaking talent pool.


3. Vibrant civil society: As a relatively transparent democracy, India has a free media and a large cadre of activists who more often than not surface problems instead of burying them. The tensions which accompany human development do not tend to go unnoticed in India. This transparency provides researchers with a rich ecosystem within which to design inquiries that encourage more human-centric, solutions-based innovations.


4. Democratic capitalism: While far from perfect, India's democratic, business-friendly government and transparent debt and capital markets safely absorb, protect, and leverage foreign investment, providing global firms with reasonably strong protections and the freedom to allocate money and resources toward scientific discovery and commercialization.


5. Existing R&D infrastructure: The majority of global research firms today already boast large R&D laboratories in India, either for the development of software, information technology, energy, life sciences, and agriculture. With the R&D infrastructure in place, global firms can ramp up projects with greater speed and not have to carry the start-up costs that traditionally hamper or cripple large-scale scientific inquiries.

India's growing population, geographical footprint, regional diversity, and economic growth amplify the sustainability challenges the nation will face. This blend of factors makes India one of, if not the, ideal place in the world to investigate the myriad problems associated with technical advancement in energy, water, and agriculture. India provides global firms' research divisions, in partnership with Indian universities, with a "one-stop lab space" where cutting-edge experiments can be tested in a climate filled with formidable constraints; if discoveries are unearthed and tested in India, the chances are quite good that these discoveries can be commercialized to the outer world because of their cost structures.

Finally, India possesses an immense, inherent need for solutions itself. If necessity is the mother of invention, paucity is often the impetus for surfacing human necessities. For many years rich countries have had few shortages — with the exception of oil. Poor countries have meanwhile have been too destitute to place serious demands on capacities. Globalization and growth have changed all this — poor countries like India are becoming richer, and rich countries in the West are approaching certain boundaries of sustainability. In these circumstances, many of the problems associated with energy efficiency, water purification, and improved agricultural techniques — all which deserve attention, funding, and innovation — are reaching critical mass in poor countries, and often presage issues that will be faced by richer countries only a short while later. Global firms, therefore, can capitalize on this historical trend, discover the most cost-efficient innovations in India that leapfrog existing models, and then export them to the rest of the world.

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Semil Shah is a Principal at India Strategy Consulting, a boutique services firm that advises small and medium enterprises and global universities on how to approach India strategically. Semil is also a Principal at de Novo Labs, which takes equity positions in clients' start up ventures relating to India. Prior to founding these firms, Semil spent four years as a director of business development and project management for the National Center for Employee Ownership in the San Francisco Bay Area, where he consulted to employee-owned businesses, completed research for the National Bureau of Economic Research, and co-authored a book on nontraditional applications of employee ownership.

Are You an Inventor or an Entrepreneur?

Being an entrepreneur has more to do with a state of mind than a state of employment. And when you think of being an entrepreneur, it doesn't just mean starting a company — I've started over half a dozen successful companies but have also brought my experience to established companies. Right now, I am the President of a public company I did not start — so I may in fact be an "entrepreneur gone bad."

One of the most consistent things I hear entrepreneurs say is, "I have this great idea." And the advice they often get is to write a business plan and make it their bible. Most entrepreneurs firmly believe there is nothing better than a solid plan couples with a great idea.

But don't confuse being an entrepreneur with being an inventor. Great ideas are a dime a dozen. Action is what differentiates an entrepreneur from an inventor. If you want to focus on ideas, become an inventor — not an entrepreneur.

And as for plans, entrepreneurs probably spend more time on our business plans than just about anything else we do. But business plans are often useless, even counterproductive; the old adage that "planning is everything; plans are nothing" (credited to Eisenhower) couldn't be more true in entrepreneurship.

The important thing is the process of planning — but you also have to be willing to throw out that plan. The single biggest advantage you have as a start-up versus an established business is your ability to be nimble, to act, to change. If you're beholden to your ideas or to your business plan, you will fail.

Thomas Edison is a great example of someone who most people think of as an inventor because of the thousands of ideas he came up with. But when someone asked Edison about his ideas he replied that he didn't care about his ideas. The only ideas that were interesting to him were the ones that he could commercialize. "I am quite correctly described as more of a sponge than an inventor," he said. Yet most people in fact don't realize that the light bulb was not Edison's idea; he just commercialized it. Edison thought of himself as an entrepreneur.

History is littered with great ideas — they're irrelevant to entrepreneurs. You need to be nimble and you need to act. Sony is a classic example. Few people know that Sony was founded on the idea of offering rice cookers to the masses. They failed at that idea, but Sony is what it is today because the founders were willing to give up on their original ideas and plans.

Gillette is another classic example of a company that constantly reinvents itself. Every year they come up with new products that transform their own industry. We may end up with razors that take two hands to hold, but Gillette proves that innovation is about change and progress, not great ideas.

So don't be afraid to throw out your business plan, adapt and give up on your original idea...and let your company succeed.

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Jeffrey M. Stibel is an entrepreneur and brain scientist. He studied business and brain science at MIT Sloan and Brown University, where he was a brain and behavior fellow. Stibel has authored numerous academic and business articles on a variety of subjects and is the named inventor on the US patent for search engine interfaces. He is currently President of Web.com (NASDAQ: WWWW) and serves on academic Boards for Tufts and Brown University, as well as the Board of Directors for a number of public and private companies.

Dr M on high income: What about the hard work needed?

Dr M is regarded as a "populist" politician. The Tun is a master communicator. Thus, when he speaks of Malaysian needing to become a a high-income economy that is built on domestic demand and wealth, we need to listen and, listen well, lest we swallow everything and suffer from the mental equivalent of indigestion.

That phrase, "a high-income economy that is built on domestic demand and wealth" needs to be examined.

That phrase speaks of the effect. That is the end-result that is sought. That is the veritable Utopia and Nirvana that we all seek as Malaysians.

Dr M has on other occasions elucidated on the process needed to get there. That is the cause that we need to remind ourselves about.

Cause and effect.

It is easy to imagine the effect. But, it is very, very, very tough to apply our minds to the causes needed to get to that effect. Get it?

Why am I belabouring this point?

Let me tell you why.

Malaysians, and I mean all ethnic groups, are delusional when it comes to their economic worth.

Even when there is an objective measure of productivity such as output, many Malaysian employees choose to be ignorant or, choose to be in denial about the limitations of their abilities. Malaysians want more income but don't want to put in more hours of work.

Many Malaysians are too lazy to read or, enrol in courses and programmes to improve themselves...unless it is for free...and, even then...

Others are indolent. They just want to be told what to do...and, then, they get angry with being ordered about...

So, the process of transforming from a low-cost, export-oriented economy into a high-income, domestic consumption-led economy is going to be a long and difficult process.

The first step is to change our mindset.

But, how do you tell a cow in a field full of verdant grass that it needs to sacrifice eating grass and pull the plough more? Pull out the whip?

pix from here.

FIC no longer exists

The Prime Minister has said that, “You can say that the FIC no longer exists and a new unit created by (minister in the prime minister’s department) Tan Sri Nor Yackop will be created to replace it in the EPU".

This is another step in the liberalisation process.

The barriers are coming down.

The key word in the PM's speech is competitiveness. Of that, Malaysia needs to work very hard to reach anywhere near the level that is required.

Redux: A future without oil money

As a change of guard takes place in Petronas, we need to take a holistic view of the prospect of Malaysia's future without oil money. Tengku Razaleigh Hamzah has written something about the key principles and values of and, some transitional issues involving Petronas here. Anyway, this is what I wrote on October 29, 2008:

A future without oil money

Today, oil money, courtesy of Petronas, constitutes 44 per cent of Federal government revenue. Oil revenues is the single largest contributor to the GDP of Malaysia.

We are all aware that world oil prices have declined to less than half of its high-point of USD145 per barrel. We are also aware that the Malaysian government used US$125 per barrel of oil as its benchmark price for the 2009 Budget to estimate the revenue it assumed it would earn.

Clearly, Malaysia's economic managers are now forced to recalculate the 2009 Budget assumptions. The deferment of the Eurocopter deal is the most high-profile response to the expected decline in Federal government revenue. We can expect more of such measures come November 4, when Najib as MOF1, takes to the floor of the Parliament.

But, this is the immediate future. We should be even more concerned about the near-distant future.

In the not-too-distant future of, say, 2012 or 2014, Malaysia's oil spigots are expected to run dry. What does this mean for a Malaysian nation that has enjoyed the oil largesse since 1974? If oil revenues constitute 44% of the Federal government revenues in 2008, wouldn't that mean that Federal government revenues will decline significantly, even if Petronas has oil revenues from non-Malaysian sources?

This is a real spectre that all Malaysians need to accept in the next four to six years.
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Strategies to deal with an oil-less future
I believe that when Najib spoke of liberalising elements of the NEP, he has been adequately briefed to be fully aware of an oil-less future for Malaysia. In a sense, looking at ways to liberalise elements of the NEP is the pragmatic and, highly necessary, strategic and tactical view.

I believe that the effect of the mooted NEP liberalisation is directed at foreign direct investment (FDIs). The Malaysian government needs to highlight the highly liberal and decentralised FDI strategies of competitor countries like China. The autonomous economic zones stretching from the Pearl River delta to Shanghai did not become the factory of the world by accident. In the 1990s, Beijing empowered provincial governments with very wide discretion even on equity structures and land ownership for FDIs. This strategy was highlighted by Kenichi Ohmae to be one of the key success factors for coastal China's economic leap. Our economic managers may have this in mind.

Key elements of the Malaysian economy
In a future where oil revenues as a contributor to the Federal government has declined, Malaysia's economic growth drivers will, more so than ever, have to come from:

1. Industrial-manufacturing base.

2. Primary industries such as palm oil and rubber.

3. Tourism.

4. Services sector, encompassing banking and finance, especially Islamic finance will become even more prominent since Kuala Lumpur is already recognised as a centre for Islamic banking. But, do not, for one moment, forget that Singapore is already equally recognised as a center for Islamic banking. That's competition for you.

One of the key routes that all nations take to foster economic growth, Malaysia being no exception, is the search for good quality FDIs. That was the idea that drove the numerous Economic Corridors under the Badawi Administration. But, as I have previously stated in earlier blog posts, at Malaysia's present stage of development, such Corridors are no more than mere venue-providing and construction opportunities for a select few. Underlining such an approach is the ready supply of cheap labour for low-skill assembly, soldering and packaging.

Industrial-manufacturing activity
Let's face it. Most of Malaysia's E&E (electrical and electronics) exports are generated by FDIs. While the Ministry of International Trade and Industry has crowed about this sector for years and years, the truth is that Malaysia is only a venue provider and a supplier of cheap labour. The FDIs can uproot themselves at any time. I saw with my own eyes how, despite having spent ten years in Malaysia, the giant US toy manufacturer, Mattel, uprooted itself from the North Port, Port Klang area within months to relocate in Indonesia. It paid all severance and retrenchment benefits and left. We are a mere budgetary item for the multinational companies (MNCs).
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That leaves us with surgical gloves and furniture. In the case of furniture, Malaysia suffers from poor industrial design or, even the lack of it. As I said in a previous post, industrial design is a key value chain element. But, we are short of it. It is a skill that can be learnt. But is our education system churning out the correct type of skill sets?

Primary industries
Let's look at rubber. Natural rubber, as far as I'm aware, has certain unique properties that makes it the only shock absorption material for heavy loads such as bridge spans. Natural rubber has properties that maintain its quality in high-performance tyres that are put in punishing conditions such as Formula One racing cars, aircraft and, even the Moon Rover. Synthetic rubber falls apart under extreme conditions.
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But, what happened to Dunlop tyres owned by Sime Darby once upon a time? Non-rubber producing countries have global brands like Michelin, Goodyear, Silverstone and, even the Korean Kookmin. What happened? Dunno. We only tap rubber, smoke them into SMRs and sell them semi-processed.
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Let's look at palm oil. Extract the palm oil and it becomes crude palm oil (CPO). Add additional processes and it becomes oleochemicals. Then it can be processed into margarine, soap and cooking oil. Wonderful.

The only problem is, all the world wants is palm oil in CPO form. The oleochemical part is usually done in the importer countries. It is a prime candidate for import substitution industries in the importer countries.

By the way, most of Malaysia's palm oil based soap brands are non-Malaysian. Owned by the Japanese-owned Kao or, the US-owned Procter & Gamble or, the European-owned Unilever.

Tourism
This is one possible bright, shining star. But we need to clean the public toilets and, get the taxi drivers not to overcharge.

Education is a key factor
Seriously, Malaysia needs to move up the value chain. Dr M mystically describes this as making Malaysia a high cost centre. By high cost, Dr M means moving up the value chain.

There seems to be a disconnect in the minds of the Minister of Education(MOE), the Minister of International Trade and Industry(MITI) and the Minister of Finance(MOF). Let me help to connect the dots.

To move up the value chain, we must start with Primary and Secondary education. Two key elements are needed:

1. English language proficiency is crucial. Teaching Mathematics and Science in the English language is crucial. This will allow Malaysians to be assimilated into the modern world of knowledge and, into the modern economy.

2. More resources must be put into training teachers to become more proficient in English. The current crop of teachers come from a 100% Bahasa Malaysia medium. Forget about investing in ICT, computer labs and all that nonsense. We need software NOT hardware.

After the Secondary education level, Malaysians must have the option of going to vocational schools to learn mid-level technical skills or, pursue tertiary or high-level skills at the universities. Here, a sound command of the English language will be a significant advantage.

Why is it so difficult for MOE, MITI and MOF to take this holistic view and jointly tell the Malay, Chinese and Indian tribes that teaching English in Mathematics and Science secures the future of their children and, advances the economy of Malaysia by ensuring that their children will get higher pay due to higher skills?

Employment and entrepreneuring
With higher skills, Malaysia will move up the value chain to become the high cost centre that Dr M spoke of. This means higher incomes and more high-level jobs for Malaysians.

It can be jobs from the FDIs. It can be jobs from Malaysian SMEs that produce components such as solar cells and, possibly, nanobots.

In a future without oil money, money can only come from our brains. And, if Malaysian brains are not properly prepared, the shock of becoming poor or, less rich can be a dangerous threat to social stability and national security.

The sultan's role in Perak

This item is from the Edge Daily. It is written by an eminent constitutional scholar. His analysis is very sound and instructive. It is worth reading several times.

Dr Kevin YL Tan has taught constitutional law for over 20 years. He currently holds Adjunct Professorships at the Faculty of Law, National University of Singapore and the S Rajaratnam School of International Studies at the Nanyang Technological University. He holds a doctorate in law from Yale University. He is the author of Constitutional Law in Malaysia & Singapore (with Thio Li-ann); Introduction to Singapore’s Constitution and numerous articles on constitutional law in Singapore, Malaysia and the region.
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Sultan Azlan Shah's appointment of Datuk Dr Zambry bin Abdul Kadir as Perak’s Menteri Besar on 17 March precipitated a constitutional crisis that culminated in the case now before the courts. The facts of the case are by now, fairly well-known and merit only a brief recount.

Following nation-wide general elections in March 2008, the Pakatan Rakyat (PR) won 31 seats in the 59-member Legislative Assembly and Datuk Seri Mohammad Nizar bin Jamaludin was appointed Menteri Besar of Perak. The Barisan Nasional (BN) held the remaining 28 seats. In February 2009, three PR members -- DAP’s Hee Yit Foong, and PKR’s Jamaluddin Mohd Radzi and Mohd Osman Mohd Jailu -- announced their resignations from the legislative assembly, leaving each party in control of 28 seats each.

On 4 February, Nizar approached Sultan Azlan Shah to dissolve the assembly to "resolve the deadlock". The next day, the sultan met with 31 members of the assembly, and was satisfied that they supported Zambry as MB, and then informed Nizar that his request for dissolution of the state legislative assembly had been rejected. Among the 31 members present at this meeting were the three PR members who had earlier resigned. They had apparently withdrawn their resignations and transferred their support to Zambry. The sultan then informed Nizar that he no longer commanded the confidence of the state assembly and asked him to resign as MB. Zambry did not comply, and the sultan’s office issued a press statement declaring the office of MB vacant and that Zambry had been appointed the new MB since he commanded the confidence of the majority of state assembly members.

On 11 May 2009, the Kuala Lumpur High Court ruled that as there had been no vote of confidence on the floor of the state legislative assembly, Nizar remained the rightful MB of Perak. Zambry appealed against this decision and on 22 May, the Court of Appeal overturned the High Court decision and declared that Zambry had been rightfully appointed as MB.

At the time of writing, the Court of Appeal has yet to deliver the grounds for that decision. Even so, Nizar’s lawyers filed an application for leave to appeal against the Court of Appeal decision on 19 June 2009. This application is scheduled for hearing on 9 to 10 July.

Issues raised by the High Court's decision

As the High Court’s decision is the only one available, this commentary relates to this judgment. The key issues in this case are whether Sultan Azlan Shah:

a. could dismiss the Executive Council when Nizar refused to tender the Council’s resignation after the Sultan refused to his request to dissolve the Legislative Assembly;

b. was constitutionally empowered to appoint Zambry the new MB when Nizar refused to tender the resignation of the Executive Council; and

c. had a discretion to determine if Nizar had lost the confidence of the majority of members of the Legislative Assembly in any other way than by a vote on the floor of the Assembly.

Ambit of Article XXVI(6)

The key to answering these questions is Article XXVI(6) of the Perak Constitution which provides:

If the Menteri Besar ceases to command the confidence of the majority of the members of the Legislative Assembly, then, unless at his request His Royal Highness dissolves the Legislative Assembly, he shall tender the resignation of the Executive Council.

The High Court Judge, Datuk Abdul Aziz J, adopted the "golden rule of interpretation" requiring a court to give the words of the Constitution a plain and ordinary reading if the words are unambiguous. Finding that Article XVI(6) of the Perak Constitution ‘contains no ambiguity whatsoever’, Abdul Aziz J held that the sultan had no power to dismiss Nizar; neither was he allowed to deem the office of Menteri Besar vacant when Nizar refused to resign. To do so, he added, would be to do ‘violence to the language’ of Article XVI(6).

The judge held that when Nizar requested the sultan to dissolve the state legislative assembly, he had not done so with "any reference to any provision in the Perak’s State Constitution" and in the absence of reference to any specific provision in the Constitution, Nizar was thus requesting the sultan to exercise his royal prerogative under Article XXXVI(2), which gave the sultan a general power to "prorogue or dissolve the Legislative Assembly."

The textual argument

A textual reading of Article XVI(6) supports the High Court’s interpretation of this key provision. Article XVI comes under the heading "The Executive Council" and the relevant provision is the sixth of its eight sub-clauses. Though headings, sub-headings and marginal notes do not technically form part of the constitutional text, they help us understand the structure and organisation of the Constitution. On the face of it, Article XVI is clearly intended to deal specifically with matters relating to the Executive Council and not generalities.

A general request for the dissolution of the state legislative assembly and the sultan’s discretion thereof is governed by Article XXXVI(2) read with Article XVIII(2)(b). That means that the sultan has a general power to dissolve the state legislative assembly and may act in his discretion in withholding a request for dissolution. It is clear that such a general request for dissolution does not fall under Article XVI(6), which is to be deployed in a very specific instance.

This is immediately discernible when we read it sequentially: A MB who has already ceased to command the confidence of the majority of the members of the Legislative Assembly must tender the resignation of the Executive Council, but only if the sultan exercises his discretion to refuse to dissolve the Legislative Assembly upon that MB’s request for dissolution.

Following from this reading, it is clear that the determination as to whether and when the MB has lost the confidence of the majority of the members of the state legislative assembly – as opposed to whether the MB was likely to command the confidence of the majority of LA members under Article XVI(2 – is a matter for the state legislative assembly itself. It is not an executive decision.

The argument from history

Does history support the High Court’s reading of Article XVI(6)? Back in 1956, various representations were made to the Reid Commission on the status and powers of the sultan and on his power to act. Back then, debates still raged over what necessary constitutional amendments needed to be made to make the Sultans "constitutional rulers" and whether the MB should hold office at the sultan’s pleasure.

What is clear from the resulting deliberations is that the Commission was determined to ensure that (a) the organisation of government in the states mirrored that of the Federation; and (b) the Malay Rulers should no longer preside over their state executive councils and involve themselves in executive decision-making save in very limited instances. These concerns led the Commission to set out the meaning of ‘constitutional ruler’ in paragraph 177 of their Report:

… a constitu­tional Ruler is a Ruler with limited powers, and the essential limitations are that the Ruler should be bound to accept and act on the advice of the Menteri Besar or Executive Council, and that the Menteri Besar or Executive Council should not hold office at the pleasure of the Ruler or be ulti­mately responsible to him but should be responsi­ble to a parliamentary assembly and should cease to hold office on ceasing to have the confidence of that assembly. (emphasis added)

By the Commission’s reckoning, there was no intention to give the constitutional ruler a power to dismiss the MB or the Executive Council at will. Further support can be gleaned from a memorandum on ‘The State Constitutions’ prepared by Sir Ivor Jennings (CO 889/2 p. 156 dated 31 Aug 1956) – certainly the most important and influential member of the Commission – when he noted:

The Rulers will become constitutional monarchs and executive government must be placed under the control, direct or indirect, of the State Councils. It is assumed that the Ruler … would appoint a Menteri Besar … who would have, or hope to obtain, a majority in the State Council. … It is assumed that the Ruler would have power, on the advice of the Menteri Besar, to dissolve the State Council, but that, like the Queen, he need not accept the advice. The Ruler would not be empowered to dissolve without advice, though, of course, he could always appoint a new Menteri Besar who was likely so to advise because he had no majority.

Historical precedent is consonant with the High Court’s reading of Article XVI(6). The sultan was entitled to refuse a request to dissolve the state legislative assembly, be it a general request – for example when early elections are to be called or where the state legislative assembly is sharply divided over a key policy or the budget – or a specific request under Article XVI(6) after the MB has already lost the confidence of the majority of the state legislative assembly.

Dismissal of the Executive Council

Both the textual and historical arguments support the High Court’s reading of Article XVI(6). However, this does not resolve the question as to whether the sultan was empowered to (a) declare the office of the MB and Executive Council vacant; and (b) following from that declaration, proceed to appoint a new MB.

The Perak Constitution is not explicit on this point. What is clear is that the Executive Council is appointed by the sultan on the advice of the MB. Although Article XVI(7) states that members of the Executive Council hold their office at the sultan's pleasure, Article XVIII makes it clear that the sultan may not dismiss them at a whim, but only upon the advice of the MB. This reading is borne out by the Reid Commission Report that stated (at paragraph 181):

As the Executive Council is to be collectively responsible to the Legislative Assembly the appointment of its members must lie in the hands of the Mentri Besar and a new Mentri Besar must be free to appoint a new Exec­utive Council in the same way as the Prime Min­ister appoints his Ministers. This result follows from our recommendation that members of the Executive Council should hold office at the plea­sure of the Ruler because in appointing or termi­nating the appointment of a member of the Exec­utive Council the Ruler must act on the advice of the Mentri Besar.

What happens if an MB, who has lost the confidence of the majority of the state legislative assembly, refuses to resign his position and that of the Executive Council after the sultan rejects that MB’s request for a dissolution of the state legislative assembly? This happened in Kelantan in 1977 when its MB, Datuk Mohamed Nasir refused to resign even though he had lost a vote of confidence motion in the Kelantan state legislative assembly, been sacked by his own party, and had his request for dissolution of the assembly refused by the Sultan of Kelantan. The impasse led to the declaration of a state of emergency by the Federal Government that lasted three months, after which the state legislative assembly was dissolved for fresh elections.

Alas, this single precedent is not particularly instructive. No legal solution was possible and the situation was resolved politically by the sultan dissolving the assembly and allowing fresh elections to be called. Perhaps, all rulers and governors should, as a matter of course, accede to requests by their respective MBs to dissolve the legislative assembly for fresh elections to be called unless the ruler has a premonition that a calamity might befall the state if he so acceded.

That way, new mandates are quickly determined and the business of government can proceed once a new leadership is established. Indeed, the Sultan of Perak supported this view of a ruler’s powers when he was Lord President. In his 1982 essay, ‘The Role of Constitutional Rulers’, he opined:

… under normal circumstances, it is taken for granted that the Yang di-Pertuan Agong would not withhold his consent to a request for dissolution of Parliament. His role under such a situation is purely formal.

This point was picked up by counsel for Nizar and cited with approval by the High Court.

The sultan has no explicit power to dismiss an MB under the Perak Constitution. Indeed, neither is the Yang di-Pertuan Agong empowered to dismiss a Prime Minister under the Federal Constitution. Originally, the Reid Commission had prepared a draft Article 36(2) which, among other things, gave the Yang di-Pertuan Besar power to remove the Prime Minister from office. However, as the High Court duly noted, the words were changed when the present Article 43(4) was promulgated. This provision is almost word-for-word the same as Article XVI(6) of the Perak Constitution save for the nomenclature used.


Conclusion

We return to the three questions posed at the start of this article. If, as the High Court rightly held, Nizar’s request for to dissolve the state legislative assembly was made under general provisions rather than under Article XVI(6), then the sultan had no power either to declare the office of MB vacant nor to dismiss the members of the Executive Council. And since the sultan had no power to declare the office of MB vacant, he was correspondingly prevented from exercising his discretion under Article XVI(2) to appoint Zambry as MB and to act on Zambry’s advice to appoint members to the Executive Council.

The third question posed – whether the sultan had a discretion to determine if Nizar had lost the confidence of the majority of state legislative assembly members – does not arise for consideration on the facts of this case. The question as to whether or not a show of confidence or support can be demonstrated in any way other than by a formal vote on the floor of the House is moot since the sultan is not being asked to exercise his discretion under Article XVI(2) to determine support or confidence for the purposes of appointing a new MB.

Even if the sultan was called upon to exercise his discretion on this matter, I would argue that the best way to determine confidence (or otherwise) in any individual as MB is to have a formal vote on the floor of the state legislative assembly. This is especially crucial in a political system that is not constrained by anti-hopping laws, and which allows assemblymen and assemblywomen to transfer loyalties at a drop of a hat. A formal vote will require formalities to be met, membership of political parties to be ascertained, and resignations or change of affiliations registered. Most importantly, it will provide for certainty.

One possible way to avoid future confusion over the sultan’s discretionary powers with respect to requests for a dissolution, might be to require the MB to state clearly in his request for dissolution, whether his doing so under the general provisions to which Article XXXVI(2) applied or because he has lost the confidence of the majority of the state assembly members under Article XVI(6). That way, there can be no issue of how the sultan is to deploy his discretion. This can be done as a matter of constitutional practice and will not require a constitutional amendment.

In the meantime, the problem remains. Two men claim to be the rightful MB of Perak and two groups claim to be members of the Executive Council. As scholars of constitutional law and keen observers of Malaysian politics, we anxiously await the Court of Appeal’s written judgment as we eagerly await the wisdom of the Federal Court to find a legal solution to an essentially political issue.

Maids vs Work-life balance

There is another aspect to the maids issue that we tend to overlook. It may be ignored because at the micro-level there is nothing any individual can do about it. But a collective will may bring about a gradual shift.

Most families need dual-income or even quadruple income to finance their aspirations. Both parents need to go out to earn a living.

It is no longer appropriate to expect parents or in-laws to look after our children. Besides, they are ageing and, it is not fair on them. The extended family system of care that many older Malaysians used to witness and enjoy when we were children ourselves is a bygone thing. Another victim of "modernisation".

So, here we are. Housing loans to pay. Car loans to pay. Dining out. Inflation. Lifestyle. Tuition for the children. Saving for the university fees that our children will need.

The causes are manifold, of course.

So, domestic chores such as basic housekeeping, gardening, laundry, ironing and, cooking needs to be outsourced.

But, on a shoe-string budget most Malaysian families are prepared only to pay, say, RM600-00 for domestic help. And, the agents who intermediate on this, are more than happy make arrangements with their overseas counterparts, particularly in Indonesia, to liberally recruit all and sundry in the most remote villages of Java. There is hardly any quality control because screening and training is costly.

In the competitive stakes for domestic help Malaysians cannot afford to pay what the people in Dubai, Hong Kong or Singapore can pay. So, Malaysians are scraping the bottom of the barrel.

So, Malaysians have a problem. We cannot afford to have only one spouse work. We cannot afford good quality domestic help.

Is this due to a cheap and weak Ringgit?

Is this due to low wages and salaries relative to other countries?

Is this due to poor quality primary and secondary education that requires us to pay tuition for almost every subject to augment what teachers don't teach in class?

These are social and economic issues that requires a seriously holistic appraisal. The process has started albeit hesitantly. But, it will be a long and arduous path.

Where does that leave any aspiration for work-life balance?

Pua's mighty 'Pen'

No this not about Tony Pua. This is a story filed by S. Indramalar of The Star on Pua Khein Seng whose originated from Malaysia and, who found his way to Taiwan and developed the world's first USB flash removable disk, more popularly known as the Pen Drive.

Pua Khein Seng is another inspirational story. One should not read any sort of political, educational or any angle into his story. It's about a Malaysian who made good. His is another story that should inspire all Malaysians to do better and to be the best that we each can be.

I must thank profusely regular commentator flyer168 for forwarding this story to me.
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Name: Pua Khein Seng
Age: 31
Hometown: Sekinchan, Selangor
Education: SJKC Yeok Kuan, Sekinchan; Pin Hwa Independent school, Klang; Chiao Tung University, Taiwan
Occupation: Engineer/ president of Phison Electonics Corp
Current base: Taipei, Taiwan
Years abroad: 12


WHEN he set off for Taiwan in 1993, Pua Khein Seng's only aim was to complete his degree in Electrical Control Engineering at the renowned Chiao Tung University and return home to work in Malaysia.

Never did he envision himself heading a multi-million dollar Taiwanese company that developed the world's first USB flash removable disk, which they called Pen Drive.

Pua Khein Seng went to Taiwan to get his engineering degree but ended up staying on, starting his own company and inventing the pen drive.

"I went to Taiwan to pursue my undergraduate degree. I chose Taiwan only because it was too expensive to study either in the United States or Singapore.

"However, I did well in my undergraduate programme and was offered a place to do my masters," explained Pua, who was back in Kuala Lumpur recently for a holiday.

After completing his Masters in July 1999, Pua worked for about six months in a local company before deciding to set up his own venture company with four fellow engineers who had studied with him at Chiao Tung.

"We were confident that we had the know-how and ability to start our own business, which is focused on USB technology. The company is called Phison because there are five of us - two Malaysians and three Taiwanese engineers," said Pua, 31, who hails from Sekinchan, Selangor.

Phison Electronics Corporation was set up in November 2000 and within six months the young entrepreneurs came up with their first invention - a USB storage device called Pen Drive.

"We were the first company in the world to develop the USB Drive SoC (System On Chip) and we were very confident that the market for USB will be huge. At the time, no one believed in us so we had to do everything ourselves - from developing the technology, the chips to the product itself.

"We were only 27 at the time and inexperienced. But we were confident that we could design good systems and chips but we didn't know anything about selling. So, we sought partners or traders who could help sell our products for us," Pua added.

Through smart partnerships and shrewd strategies, Phison soon made its way into European, American and Japanese markets. One quick move was securing Japanese tech giant Toshiba as Phison's largest shareholder and customer.

"We launched Pen Drive in June 2001 and by August the same year, we broke even! From September 2001, we were reaping monthly profits from our invention and there has been no turning back since."

Having established himself in Taiwan, Pua is in the midst of setting up Phison's branch in Malaysia, due to begin operations this
February.

"I am starting a branch in Malaysia because this is my country. I would like to do contribute to its development.

"We have about 100 engineers at Phison in Taiwan, 20 of whom are Malaysians. Though they studied in Taiwan, I had to re-train all the engineers I hire because, like most fresh graduates (in this field), they are not industry-ready upon graduation.

"Unfortunately, some of the Malaysian engineers want to return home after a couple of years because they are homesick, about to start a family and so on. Some prefer to work in Singapore, as it is closer to home. Instead of losing them to competitors, I decided to set up an office in Malaysia where they can still work for me," said Pua.

Another problem faced by returning computer engineers from Taiwan, Pua added, was the lack of job opportunities for hardware engineers in Malaysia.

"There is no environment or support for design engineers here in Malaysia. One of my Malaysian engineers from Phison returned home and ended up as a teacher in a Chinese school! I was shocked and thought, 'After all that training and re-training, he is going to just teach?' I told him to hold on till I open up the Phison branch in Malaysia."

Though he has been in Taiwan for the past 12 years and married to a Taiwanese, Pua is not sure how much longer he will remain there.

"I have really no idea where I will be in 20 years. Maybe Taiwan, maybe Malaysia, maybe somewhere else ... it all depends on my business. The industry is moving so fast that I cannot predict what or where I will be," he said.

For the moment though, Taiwan is home for Pua, his wife and two children even though he misses the Malaysian way of life.

"I come home once a year for Chinese New Year and will usually stay for about two weeks. There are several things I really miss about Malaysia. One is the food! For the past 12 years I have been craving for Malaysian food ... I miss laksa, curry noodles, chee cheong fun and all the other delicious dishes we have here.

"I also miss the lifestyle and quality of life here. When I come back, I am always amazed to see people hanging out and relaxing at mamak shops at night. In Taiwan, most people would still be at work at that time of the night!

"Before I got married, I used to work for 15 to 17 hours a day, everyday. Now that I have children, my wife has forbidden me to stay so late. Now, I go to work at 9am and come home by 11pm. These hours are quite normal for the Taiwanese."

The man who invented USB pen-drive is a young modest Malaysian who can't even get into a local University but invented the most versatile, indispensable computer peripheral today. And helped his adopted country, Taiwan made $31bil in the process. The rest is history....