Sunday, August 26, 2018

Reduce focus on controlling prices. Focus on developing the country's talent

When Dr Mahathir visited China, I presume he must be sad as his vision of turning Malaysia into a highly developed nation and exporting technologies to the world seems far from fruition. He was introduced to Alibaba, DJI - the drones company, Geely - companies that were not even around when we mooted MSC. What was envisioned through the Multimedia Super Corridor back in 1996, has remained a vision. Cyberjaya is now a place where outsource services is more prevalent than companies developing solutions that are used by people from all over the world.

We now invite Alibaba, a company which was created by Jack Ma and his partners after MSC was mooted - i.e. 1997. What rubs salt into the wound is that when Jack Ma visited Dr Mahathir, he told our PM his vision of Alibaba was partly inspired from Mahathir's vision of MSC.

I know of friends who work in Alibaba's Malaysia's office, Lazada which is 80+% controlled by Alibaba. Jack is not interested in developing or help Malaysia. He is interested in developing Malaysia as a trading hub - which is an import and export base. He is much more interested in bringing Chinese goods into Malaysia and the region. In short, Jack Ma is economically colonising us in Mahathir's words and we do not have any other options.

Alibaba and Lazada means reducing opportunities for local entrepreneurs, but we are happy because we are buying cheaper goods through Taobao - an Alibaba equivalent of Amazon. Yes, someone may say there is little choice as we are not opening up, other countries will - such as Thailand and Vietnam.

But do check Alibaba out. Are they hiring any Malaysian developers? Their developers are from China, India and even Vietnam. Malaysia is not a place for them where they think about hiring and training knowledge people - or if this is what we called. In short, we are not a place where they look at our people, but more of a geo location for trade.

Alibaba's vision for Malaysia is no better than Ikea's vision of making this place a distribution centre. Why? Because we are geographically strategic in Asia and South East Asia and our labor costs is right for them. They can't go to Singapore as it is too expensive, but still Lazada is based off Singapore. Why? We must ask ourselves although Singapore's costs is easily 300% to 400% more.

When companies like Lazada, Alibaba, Grab sets up its regional centers in Singapore, what does this mean? We, Malaysia lacks the opportunity to train people who are able to develop strategies, plan, manage. We are only a nation whom develops middle managers for these multinationals. They deploy, but when comes to making decisions, we are not given opportunities, hence not trained well.

I meet a lot of people from big multinationals - Intel, Motorola, HP, Agilent, Flex. Most of the people they hire in Malaysia are just to deliver - little questions ask. Hence, for many years we have the opportunity to develop a team who delivers the small projects, solving non-critical problems but creative and strategic thinking skills is lacking.

Ask any senior employees who have worked in the technology sectors through 1980s, 1990s to today, they are not as optimistic.

Here, I am also questioning the message on trying to reduce prices of goods. Are we serious? We are a country that do lots of imports and exports. For decades, we have been a trading nation. The fishes, meat, fruits, vegetables that we eat, the building materials used to build houses - many of them are imported. Even the labor used to serve us at certain restaurants, build our houses are from foreign countries. How are we to control prices. It is a task which will most probably fail. I have this opportunity to meet a non-politically aligned senior government servant. He was telling me the reason for the country to reduce subsidies is because subsidies more often than not goes to the poor and who are the poor in Malaysia? The B40 or Bottom 40? Not quite so.

Actually, they are the foreign workers. They are the ones that consume the most subsidized goods. Flour, rice, free or subsidized transport. Foreign workers comprise as much as 25% of Malaysian workforce. And we often missed them out in our policy making. Not so much to support them but whatever we subsidise, it goes more often to them than the average Malaysians.

Today the country is promoting Industry 4.0 - a buzzword which means using technologies that are available today and integrate them to bring advantage to manufacturers. In the process, reducing dependence on low skillled workers. It is about using cloud, big data, analytics, AI, robots.

Again, are we serious? If we are serious, as a country we have to seriously do things differently. Often it is about biting some bullets then only we see sunshine. If we are still dependent on low costs foreign labors, the Industry 4.0 will not happen, no matter how much is the incentives. It is about bringing foreign workers - but the ones with talent. It is about not afraid of sending away industries which is dependent on huge low costs labors. Perhaps the rubber gloves industry in Malaysia is not going to be as big as we have today as some are still complaining about the minimum wages which we implemented few years ago. I respect the rubber gloves industry as this is one industry which we have successfully dominate globally but not the low costs labor they continue to use and continually ask for government support for that.

When I invest in some of the stocks in Malaysia, there is a strategy. I invest in companies such as Airasia, Power Root, IJM. Some of these are simple business, but they are the ones that create their own expertise, brands, marketing channels. I like those that, so called "Create their own destinies." especially Airasia - and often I also complain as a country we try to suppress these companies who are building their expertise from within the country.

Seriously, as a country we have to think of supporting companies that directly and indirectly think of Malaysia as a home - which in the past 2 decades we have not. That's how we really develop the needed talent for the country.


Anonymous said...

Talent comes from the education system.

Just make the Public Universities competitive, Darwinian - let the cream rise and wick the scum away.

As simple (or impossible) as that. Mollycoddling isn't going to produce talent. Steel isn't forged in a lukewarm bubble bath, for sure.

- Z

GL said...

So long there is the crutch culture, Malaysia will never be competitive and real talents will be suppressed and we will continue to benefit our neighbor that values our talents more than their "tanah tumpah darahku ... " It's such a pity ...

lacko said...


Malaysia is truly Asia but never saw any branding as strong from MIDA or any other Government organization Malaysia Truly Global Business.

As anonymous said its all about Education but I do have many Malaysia friends working in Singapore for mid level management with execution (not many decision making) doe better paid.
I do have friends who studied in UK, US or Singapore just to get ahead of crowd ending in Singapore, China or Australia.

What I lack is moving away from trading and to create and execute a vision

Anonymous said...

A wild idea - why don't we let the RM appreciate?

This will force out our unproductive, race-to-the-bottom manufacturers who purely compete on price and cheap (foreign) labour.

Then we focus more on skills and productivity. Compete on creating value, instead of cost-savings.

More spending power for local consumers.

Reduce foreign workers and their repatriated billions.

Stem the outflow of talent with a stronger currency.

And best-nya - can even get political mileage out of it. RM strengthen, less foreign workers, implement minimal wage, do away with BRIM.... a good report card to take into the next GE.

- Z

felicity said...

The government will not dare to do it, not just ours but many others as well. Allowing currency to appreciate is also better said than done, which I think we are not able to control.

At the same time, due to the Trade War, China is also depreciating its currency.