Economic Transformation Programme: A context

The Economic Transformation Programme (ETP) was bound to generate much chatter in the mainstream media, blogosphere and, of course, warungs and kopi tiams. The Government's point-man, Idris Jala, is once again, in the limelight.

There are a few observations that I wish to make. And, no, the observations are not wonky economics analysis (too much work! I'll wait for bloggers like etheorist and hishamh to offer their insights on it).

Here we go.

First, I recall that the whole point of Idris Jala and his Labs was to engender a consultative approach with as many Malaysians as possible, from as many stakeholding clusters as possible, so that a broadbased buy-in from Malaysians can take place.

To the Malaysian Government's credit, this is precisely what Idris Jala and his team has done. All the chatter, good, bad, cynical, positive, effusive and downright rude, reflects precisely this intent. It is a good thing albeit patchy in terms of quality of thought and analysis.

The whole point of the exercise is to set an agenda for discussion on Malaysia's economic future; our collective future. I believe this is being achieved.

Second, the ETP and other economic proposals emanating from Idris Jala's Labs have been accused of being long on rhetoric but short on specifics. I have also made similar observations. That said and, in fairness, Idris Jala's brief was to set the vision and parameters of the Malaysian economy's strategic goals. If we recall de Bono's injunction, there is a big difference between strategic goals and tactical planning.

Strategic goals embodies a clear vision and clear, but, broad objectives. This is the ETP. Tactical planning and implementation takes place within the parameters set by the strategic goals. This is the Tenth Malaysia Plan (10MP). This is why I am non-plussed by comments made at the sidelines of Idris Jala's recent ETP briefing about the lack of details. We should be trying to help Idris Jala and his team fill in the details by our constructive comments and analysis.

Third, and, this is only my observation, the recent excoriation of Perkasa by UMNO leaders points to a clear awareness that the negative sentiments catalysed by crude racialist remarks and, the expected and, equally negative responses, has not done Malaysia's economic investment climate any good at all. The nexus between the two also contradicted the stated policy of inclusiveness that was touted by the Prime Minister himself last year.

I have not really touched on anything Perkasa because there is hardly any real substantive contribution offered by them for consideration, analysis and examination save for generating polemics and emotions. And, in the book of the businessman and investor, emotions are often irrational and unreliable. There may be some votes to be had in it. But, there's no money to be had - investment money, that is.

So, the distancing is a necessary tactical move.

I don't believe for one moment that by distancing itself from Perkasa the UMNO leaders are abandoning or diluting the Bumiputra economic agenda. That will never happen. It will never happen simply because there is a real issue of the Bumiputra being an economic laggard. Any sensible Malaysian economic policy that is soaked in realpolitik must address the challenge of bootstrapping the Bumiputra economic development. That said, the corollary issue is whether UMNO has lost the plot on developing the Bumiputra community due to the myopia caused by greed and corruption.

This is the issue that troubles the Malaysian voter and investors. This is the perception that Idris Jala and the ETP can never, ever deal with. It is something that only UMNO can deal with by way of cleaning UMNO's own Augean stables.

Fourth, and, finally, and this is linked to the third point above, there is a trust deficit between the Malaysian voter and Barisan Nasional. The trust deficit is caused by the disconnect between what the BN-led Federal Government has been doing since March, 8 2008 until today in the form of day-to-day contact between the rakyat and kerajaan, the mega deals and mega scandals that still dogs and, the attractive strategic vision offered by 1Malaysia and the ETP.

How can BN address and eliminate the trust deficit?

That is the challenge.

Why some people have power and others don’t

Okay, it's not my title. I merely borrowed it from Schumpeter's column in the Economist.

But, first, by way of an important digression, please note that I have temporarily removed links to Dr M's Blog and the Malay Mail website feed because of the annoying Malware warning that kept popping up.

Okay, back to the programme. What I do say is that the topic of power - who's got it - who doesn't - who wants it - who's losing it - how to get it - how to hold on to it - well, it never goes out of date. That's probably why you're on this page.

Well, Schumpeter's book review-of-sorts on Jeffrey Pfeffer's book, “Power: Why Some People Have It—and Others Don’t” is at the column's insightful best.

pix from here

Here's Schumpeter's column. As always, I have taken the liberty to emphasise passages and phrases that caught my eye:

HENRY KISSINGER was guilty of understatement when he said that power is the ultimate aphrodisiac. In fact, power is the ultimate life-improver tout court. Powerful people not only have more friends than the rest of us. They also enjoy better health. Numerous studies demonstrate that low status is more strongly associated with heart disease than physical hazards like obesity and high blood pressure.

The benefits of power have grown dramatically in recent years. CEOs and other C-suite types have seen their salaries surge at a time when the median wage has either stagnated (in the United States) or grown slowly (in Europe). Politicians have learned how to monetise their pull. The Clintons earned $109m in the eight years after they left the White House. Tony Blair has turned himself into a wealthy man in the three years since his retirement from national politics.

But the greasy pole is getting harder to climb and, once you’ve climbed it, harder to cling on to. Companies have introduced more complicated structures—removing layers, replacing hierarchies with teams and dispersing functions around the world. They have also made life harder for chief executives. In the 1990s it was not unusual to find CEOs who had been in the job for ten or 15 years. Over the past decade the average tenure of departing CEOs around the world has dropped from 8.1 years to 6.3 years. In the 1990s it was the norm for CEOs to double dip as chairmen (which allowed them to report to themselves). In 2009 less than 12% of incoming CEOs were also given the job of chairman.

So how do you get your hands on power? And how do you keep hold of it once you’ve got it? Management gurus are surprisingly disappointing on this subject given its overwhelming importance to their clients. Academics and consultants are happier focusing on subjects such as return on investment. Both have an interest in presenting business as a rational enterprise that can be reduced to rules. This leaves the analysis of power to retired businesspeople like Jack Welch (who strive to present themselves as business geniuses rather than Machiavellis) and practising snake-oil salesmen (who tell you that all you need to do is “unleash the power within” and the CEO’s job will be yours).

Jeffrey Pfeffer of Stanford Business School is an exception to this rule. He has been teaching a popular course on “paths to power” for years. Now he has condensed many of his findings into a book that is part academic analysis and part how-to guide, “Power: Why Some People Have It—and Others Don’t”.

Mr Pfeffer starts by rubbishing the notion that the world is just—that the best way to win power is to be good at your job. The relationship between rewards and competence is loose at best. Bob Nardelli was a disastrous CEO of Home Depot. But he was paid nearly a quarter of a billion dollars to leave and quickly moved to the top slot at Chrysler, which then went bankrupt. Mr Pfeffer points out that CEOs who presided over three years of poor earnings and led their firms into bankruptcy only faced a 50% chance of losing their jobs (and perfectly successful senior managers are routinely cleaned out when new CEOs take over). There are plenty of things that matter more than competence, such as the ability to project drive and self-confidence.

The best way to increase your chances of reaching the top is to choose the right department to join. The most powerful departments are the ones that have produced the current big-wigs (R&D in Germany, finance in America), and the ones that pay the most. But the trick is to find the department that is on the rise. Robert McNamara and his fellow whizz kids flourished in post-war America because they realised that power was shifting to finance. Zia Yusuf zoomed up the ranks of SAP, a German software company, because he offered something that the engineering-dominated company lacked: expertise in corporate strategy. Men with pay-TV backgrounds have risen in media companies like News Corporation and Time Warner—rightly so, given the importance of cable and satellite TV to those businesses.

Tips for the top

Once you have chosen the right department three things matter more than anything else. The first is the ability to “manage upwards”. This means turning yourself into a supplicant: Barack Obama asked about a third of his fellow senators for help when he first arrived in the institution. It also means mastering the art of flattery: Jennifer Chatman, of the University of California, Berkeley, conducted experiments in which she tried to find a point at which flattery became ineffective. It turned out there wasn’t one. The second is the ability to network. One of the quickest ways to the top is to turn yourself into a “node” by starting an organisation or forging a link between separate parts of a company. The third, more admirable, quality is loyalty: Booz, a consultancy, calculates that four out of every five CEO appointments go to insiders. Those insiders last almost two years longer in their jobs than outsiders.

And what happens if all this loyalty and networking pays off? How do you keep power once you win it? The old saw about power corrupting has been laboriously confirmed by academic studies of everything from risk-taking to cookie-eating (powerful people are more likely to eat with their mouths open and to scatter crumbs over their faces). The key to keeping power is to understand its corrupting effects. Powerful people need to cultivate a combination of paranoia and humility—paranoia about how much other people want them out and humility about their own replaceability. They also need to know when to quit. People who do not know when to leave an organisation frequently crash and burn. People who jump before they are pushed have a good chance of leaping to yet another aphrodisiacal throne.

Malaysia's Quantum Leap Criteria: Help the SMEs

As a nation, Malaysia is wasting far too much energy with racial economics and racial polemics.

Check any statistics in the correct way and we will find incontrovertible proof that the largest employers are SMEs. Likewise the largest economic output is generated by the SMEs.

But, read any papers and watch any business media reports and, it's all about large corporations and GLCs.

SMEs are virtually invisible and unrecognised.

When Malaysian policy makers urge more private investments from within the country, I wonder who they are making the call to?

Large statutory funds like Khazanah Nasional and EPF are looking outside of Malaysia for yields and returns.

Large Malaysian corporations are expatriating funds overseas.

These large entities may be making purely rational decisions. There is no harm in that at all and, in fact, I applaud it.

But, who, then, form the bulk of the Malaysian private investment pool? It is obviously the SMEs.

I want to know if the policy makers are truly sincere in wanting to encourage more private investments? For, I know that many SMEs that wish to expand their productions lines and increase their capacities to respond to increasing demand are desperate.

The banks are the worst business sector in Malaysia in my books. They just want to lend to entities that are cash-rich and, who do not need further borrowing.

The banks do not want to lend to most SMEs.

Banks do not want to extend further loans to SMEs in large part because bank lending practices are now so de-personalised that the traditional bank manager who was part of the community are extinct. They have been replaced by faceless automatons in their respective head offices or, some central loan and security documentation units located in a faraway place that uses a meaningless check-list matrix for bank lending decision-making.

What are the SMEs to do?

My colleagues have helped clients apply for matching grants and soft loans from SMIDEC (now known as SME Corp)when the Malaysian Government announced the Stimulus Packages. We were told that the processing would take 6 months. When 6 months elapsed we were told that the allocation had been used up.

I don't even want to ask who benefited from and, received these matching grants and soft loans.

Check websites like this and you'll feel encouraged. Contact them and go through the process and, you'll feel despair.

It is in scenarios like this, beyond all the politics, that the real Malaysia exists.

After experiences like these, being spurned by commercial banks and, receiving no assistance from SME Corp aka SMIDEC, those of us who choose to survive learn to live by our wits and street-smarts.

But, I laugh out loud when I read the print media and watch the evening news because of the sheer disconnect that ordinary, hardworking, honest-to-goodness Malaysians must feel between their experiences with the banking sector and SMIDEC and, to read and listen to the cooing sounds made by politicians, civil servants and big industry leaders on the need to foster greater private investments in Malaysia.

It ain't happening.

Not for the want of SMEs trying to increase their private investments.

...but due purely to the structural nonsense that exists in our banking policies and badly implemented SME-assistance programmes.

Cakap langsung tidak serupa bikin.

THE BEST COUNTRY IN THE WORLD

I wish all Malaysians anywhere in the world a happy MALAYSIA DAY!

Some say that Malaysia is worse off today compared to the past. I look around me and wonder why they say that.

Those who obsessively read extremist blogs are convinced that everyone in Malaysia is racist. I wonder why my Indian Malaysian friend laughed when I told him an Indian joke. I wonder why my Malay Malaysian friend laughed when I told him how P. Ramlee's movie Labu dan Labi so typifies many Malays. And I wonder why they laughed even louder when I told them a well-worn story about how Mankind would never have been cast out of the Garden of Eden if Adam was Chinese because he would have eaten the Serpent for dinner, ate the apple for dessert and made wild love to Eve...and still get to live in Eden.

our national dish...i think

The one thing that Malaysians have is a sense of humour and our ability to laugh at ourselves and, at each other.

There's a lot to be happy about.

Nokia's Downfall Holds Three Lessons for Malaysia

The title caption paraphrases an article by Bloomberg's Matthew Lynn here. Lynn's article was directed at tracing the rise and decline of Nokia and applying it to the economic challenges now facing Europe. The same points apply to Malaysia. Read on:

What was the most successful European company of the 1990s? Easy. The Finnish mobile phone manufacturer Nokia Oyj. And the most disappointing one of the 2000s? Easy again. Nokia.

A company once held up as an example of how Europe could still compete in technology and create new industrial giants, Nokia has been in steep decline -- a point emphasized last week by its decision to hire the first non-Finn as chief executive officer, charged with turning the business around.

And just as the company’s rise held lessons about how Europe could succeed, its downfall tells us much about why the region so often fails. Nokia rested too comfortably on its laurels. It was never willing to re-invent its business, even if it meant completely changing its products. It was never located at the heart of the information technology industry, among competitors who might force it to keep innovating. Other European companies should study Nokia’s fate to make sure they don’t repeat it.

A decade ago, Nokia was the most successful business Europe had produced in a generation. It captured the emerging market for mobile phones and built the industry’s most powerful brand.

Politicians lined up to praise the company as an example of how Europe could still prosper in the 21st century. No less a figure than Romano Prodi, president of the European Commission, drew attention to the success of Nokia and its rival, Sweden’s Ericsson AB, in a speech in 2002.

“Their achievement in mobile telephones helped to create two vibrant clusters, around Oulu in Finland and Stockholm in Sweden, which have attracted a large number of startups as well as investment from foreign companies,” Prodi said. “These examples demonstrate that European regions are capable of developing new, high-tech clusters.”

Reversal of Fortune

It doesn’t look so good now. In the last three years, the news out of Nokia has only been bad. Since Apple Inc. introduced its iPhone in January 2007, Nokia shares have fallen by 47 percent. The company’s brand, once one of the coolest in the world, is battered. In a ranking of global brands by Millward Brown Optimor this year, Nokia ranked No. 43, dropping 30 places in 12 months. Its profit margins have been shrinking, along with the average price of its phones and its market share.

True, it still has more than one-third of global mobile phone sales. But it looks stranded in the middle of the market. Korean electronics manufacturers such as Samsung Electronics Co. are leading the main consumer market. Apple’s iPhone and Research In Motion Ltd.’s BlackBerry dominate the upscale, smartphone industry.

Importing Leadership

Last week, Nokia recognized the scale of its challenges, hiring Stephen Elop, the head ofMicrosoft Corp.’s business unit, to turn the company around. Can he succeed? Everyone will wish him well. But if the guy knows so much about phones, he’s kept it a secret. Microsoft has never made any progress in that industry.

The cruel truth is that for all its residual market share, Nokia looks like a has-been. It misread the way the mobile phone industry was merging with computing and social networking. It is probably now too late to turn that around.

There are uncomfortable lessons here for European industry.

First, never rest on your laurels. Nokia got to the top of its industry quickly. But once there, it became complacent in an industry where laziness is fatal. It worried too much about hanging onto its market share, rather than creating new products to excite customers.

Failing to Mature

Second, Nokia was unwilling to challenge itself. The company clung to the model that mobile phones were mainly about calling people. It failed to notice that they were just as much about checking your e-mail, finding a good restaurant nearby, and updating your Twitter page.

Finally, it wasn’t located near a cluster of similar companies. Building a technology giant in Finland was a great achievement. But Nokia wasn’t surrounded by Web companies or consumer-electronics manufacturers. That meant it wasn’t in the mix of innovative ideas, which would have forced it to question its assumptions every day. The company should have relocated to California. Sure, that would have caused an outcry at home. But that’s better than watching its slow decline into irrelevance.

It may be too late for Nokia to turn itself around. But Europe still has companies that dominate industries such as oil, aerospace, pharmaceuticals, automobiles and financial services.

They are all prone to similar missteps. Are the auto manufacturers doing enough to prepare for the arrival of electric cars? Are the drugs companies ready for the merging of computing and biotechnology? Are banks positioned for a decade when debt is steadily reduced, not increased? Probably not.

Politicians and business experts spent a lot of time praising Nokia and trying to learn from its rise. They should devote as much time studying the lessons of its downfall. If they don’t, much of the rest of European industry will repeat its mistakes. And Europe can’t afford to lose many more world leaders.

Selamat Hari Raya

To all my Muslim friends, especially the Muslim Malaysians:

pix from here.

For the rest of Malaysia, have a happy holiday.

Do drive safely if you are driving out of town to visit your loved ones.

Snake

Ever since I came across DH Lawrence's poem Snake, the last 2 lines has intrigued me. "And I have something to expiate: A pettiness".

And, for some strange, unfathomable reason, when I recoil at reading the stuff and nonsense being spewed by Malaysian politicians and their minions about race and racial what-nots, I was, reminded of DH Lawrence's poem.

I am literally an ophidiophobiac. But, to focus on DH Lawrence's poem from the perspective of the fear of a snake would be too superficial. In the current climate of divisive racial mindsets, the poem points to irrational emotions and a thorough lack of tolerance for diversity.

Some may say that this blog has over-intellectualised and under-analysed of late and, that, this post is along the same mundane lines. I wouldn't really care if this is the widespread view. This is the tone and timbre that has defined Malaysia for 53 years. Why should we descend into the depths of the Id now? Just because Dr M sets this basal tempo? I think not. We should rise from the murky morass.

Perhaps this descent into racial epithets gives rise to a groundswell of sentiment that, to paraphrase what the Jack Nicholson "Joker" said in Batman, "This (country) needs an enema".

Be that as it may, I have reproduced DH Lawrence's poem in full below:

A snake came to my water-trough
On a hot, hot day, and I in pyjamas for the heat,
To drink there.
In the deep, strange-scented shade of the great dark carob-tree
I came down the steps with my pitcher
And must wait, must stand and wait, for there he was at the trough before
me.

He reached down from a fissure in the earth-wall in the gloom
And trailed his yellow-brown slackness soft-bellied down, over the edge of
the stone trough
And rested his throat upon the stone bottom,
And where the water had dripped from the tap, in a small clearness,
He sipped with his straight mouth,
Softly drank through his straight gums, into his slack long body,
Silently.

Someone was before me at my water-trough,
And I, like a second comer, waiting.

He lifted his head from his drinking, as cattle do,
And looked at me vaguely, as drinking cattle do,
And flickered his two-forked tongue from his lips, and mused a moment,
And stooped and drank a little more,
Being earth-brown, earth-golden from the burning bowels of the earth
On the day of Sicilian July, with Etna smoking.
The voice of my education said to me
He must be killed,
For in Sicily the black, black snakes are innocent, the gold are venomous.

And voices in me said, If you were a man
You would take a stick and break him now, and finish him off.

But must I confess how I liked him,
How glad I was he had come like a guest in quiet, to drink at my water-trough
And depart peaceful, pacified, and thankless,
Into the burning bowels of this earth?

Was it cowardice, that I dared not kill him? Was it perversity, that I longed to talk to him? Was it humility, to feel so honoured?
I felt so honoured.

And yet those voices:
If you were not afraid, you would kill him!

And truly I was afraid, I was most afraid, But even so, honoured still more
That he should seek my hospitality
From out the dark door of the secret earth.

He drank enough
And lifted his head, dreamily, as one who has drunken,
And flickered his tongue like a forked night on the air, so black,
Seeming to lick his lips,
And looked around like a god, unseeing, into the air,
And slowly turned his head,
And slowly, very slowly, as if thrice adream,
Proceeded to draw his slow length curving round
And climb again the broken bank of my wall-face.

And as he put his head into that dreadful hole,
And as he slowly drew up, snake-easing his shoulders, and entered farther,
A sort of horror, a sort of protest against his withdrawing into that horrid black hole,
Deliberately going into the blackness, and slowly drawing himself after,
Overcame me now his back was turned.

I looked round, I put down my pitcher,
I picked up a clumsy log
And threw it at the water-trough with a clatter.

I think it did not hit him,
But suddenly that part of him that was left behind convulsed in undignified haste.
Writhed like lightning, and was gone
Into the black hole, the earth-lipped fissure in the wall-front,
At which, in the intense still noon, I stared with fascination.

And immediately I regretted it.
I thought how paltry, how vulgar, what a mean act!
I despised myself and the voices of my accursed human education.

And I thought of the albatross
And I wished he would come back, my snake.

For he seemed to me again like a king,
Like a king in exile, uncrowned in the underworld,
Now due to be crowned again.

And so, I missed my chance with one of the lords
Of life.
And I have something to expiate:
A pettiness.

Getaran Jiwa

P. Ramlee's seminal rendition of Getaran Jiwa never gets old.

The soundtrack is much better on this one, though:

Lyrics from here:

Getaran jiwa

Melanda hatiku

Tersusun nada

Irama dan lagu

Walau hanya sederhana

Tetapi tak mengapa

Moga dapat membangkitkan

Sedarlah kamu wahai insan

.

Tak mungkin hilang

Irama dan lagu

Bagaikan kembang

Sentiasa bermadu

Andai dipisah

Lagu dan irama

Lemah tiada berjiwa

Hampa

Busy-ness

It may have come to the notice of some people that this is probably the longest period between posts that this blog has experienced.

This is probably the best personal example I can give about the importance of creating jobs and economic value. If every Malaysian of working age is kept busy with deadlines and products and services to deliver in exchange for payment or wages or salaries, there will be no time for anything except to savour the non-working hours in pursuit of leisure.

No time to stare at the person sitting across the table from you in business discussion and wonder what his racial preferences are.

The only colour we'll wonder about is the colour of money. Is it blue, green, red or purple?

Forget about the brown, dark-brown, black or yellow stuff. There's no money in it.