Month: May 2023

In my recent conversations with many of my fellow Malaysians in recent months, especially those in political and corporate circles, a common complaint surfaced time and again: despite having been denied the top job for more than two decades, and having had the time in prison and outside of it to work out a clear agenda for how to reform Malaysia, Anwar Ibrahim currently gives the impression of leading a lightweight administration, with the propaganda and sloganeering posters laid on thick, but not much in the way of any clear new direction for the country.

I was one of those people who had high hopes especially for the Revised Budget that was announced in February. After the initial uncertainty of political jockeying, and having emerged finally as Prime Minister, Mr Reformasi was finally going to show us how his years of experience at the pinnacle of government, allied with his time outside of it, reflecting on the national mishaps in the years since he was in government himself, would have given him a unique vantage point for which to chart out a new direction for Malaysia.

Alas, the Revised Budget turned out to be nothing more than a reheated and replated version of what Tengku Zafrul had announced just a few months earlier. And since then, apart from a number of exhortations around better integrity and governance, and the usual musical chairs around GLC and government agency positions, it can be argued that the overall direction of travel for Malaysia has not changed much since November 2022.

In any other time, one could say that the heavy hand of government may not necessarily be helpful, if the animal spirits of a nation’s economy and society are to be given full expression and freedom. But these are unprecedented times. After more than three decades of a unipolar world, marked by the entry of China into the WTO and the ensuing high-watermark of globalisation whittling down the costs of manufacturing and raising up the standards of living for millions around the world, we are now entering a new era of global geopolitics and economic competition. After five centuries of European (read: white) hegemony, we are now faced with the prospect of an unmistakable swing of the economic pendulum back towards the East. For the rest of my lifetime, I believe, the geopolitical and economic competition between the United States (alongside its European / NATO allies) and China (with Russia and other authoritarian allies in tow) will form the macro narrative that will dominate economic and political calculations for nations around the world.

And these calculations will be especially fraught for Malaysia. We have done well with the colonial inheritance that fell into our hands at Merdeka: we shored up our security through close alliance with Britain and other Anglosphere countries, and made the fateful choice to cleave closely to the West during the years when the “domino theory” was an obsession amongst geopolitical planners. We plugged ourselves into the supply chains of Intel and other American electronics giants, took advantage of land reforms to pivot into palm oil, and made the most of our petroleum-soaked fortunes to carve out a unique place for Malaysia among the pantheon of nations: as one of the few Muslim countries that have truly embraced the modern global economy, and enjoyed the prosperity that came with that fateful (albeit still contested) choice.

And yet, even with all that we have done right, we cannot lose sight of the fact that even with all that we have done right as a nation, we still remain only the fifth largest economy in ASEAN, and the 38th largest in the world. Apart from those few debt-fuelled years of the 1990s, when the Malaysian stock market was the darling of the world’s most intrepid investors, the Malaysian economy has grown in a way that has become the very definition of the “middle income trap”: good enough to have raised living standards beyond what was thought possible when we had first gained independence, but clearly having missed the window towards first-world rich-economic status that Japan, South Korea, Taiwan and Singapore had managed to jump through.

From my own short experience of working in Government, I think it is worthwhile repeating that for a relatively small nation, with a number of strong but limited economic and social endowments, we must be absolutely ruthless in picking our battles. My former boss, Idris Jala, used to remind audiences that “Focus” and “Discipline” are the rational behind the National Key Economic Areas (NKEAs) and the Strategic Reform Initiatives (SRIs), and I would argue that these are absolutely essential watchwords for a nation that must learn to navigate between the Scylla of a still-very-powerful United States of America, and the Charybdis of a rising People’s Republic of China.

As mentioned earlier, in the grand narrative of economic development, “Focus” entails being very specific and targeted on which sectors of the economy ought to receive direct Government incentive and support. These are certainly finite (despite what most politicians might tell you, or what some government bureaucrats might reflexively believe), and need to be husbanded carefully to ensure that we send out the right signals to investors, corporations, entrepreneurs, educators, and the global community at large.

Another thing to say about “Focus” is that our sectoral development efforts must be aimed at specific value chains. Petronas is a good example of this. From being a merely asset owner, inviting foreign multinationals to excavate and extract our oil & gas assets, the state oil & gas company has progressively expanded across the oil & gas value chain, to become an oil refiner, a petrochemicals manufacturer, a Liquefied Natural Gas producer, and other things besides. We should focus on building upon the solid foundations we already have, and build upwards and outwards from that. What *not* to do, is to say, “Manufacturing” is a core sector. Manufacturing of what? There are different technical challenges in making petrochemicals as opposed to, say, making furniture. And certainly some sectors, like petrochemical manufacturing, or oleochemical manufacturing, are going to be more lucrative than, say, making soaps and candles.

The other thing to note about “Focus” is that some sectors simply write themselves in, given the nature of the Malaysian economy today. Oil & gas will always be an important part of our economy for some time to come. Same thing with the Electrical and Electronics sector, and the Palm Oil Plantations sector. These will continue to be engines of our economy for years to come.

So, bearing in mind that we will need to balance between existing engines of growth, against ongoing future areas of opportunity, while still being mindful for our limited resources as a nation, I would offer the following (slightly truncated compared to the list of 12 NKEAs we had to work with during the Pemandu years, remembering that even that list was a compromise of sorts) list of suggested Malaysian National Advancement Initiatives (see what I just did there eh):

1. Oil & Gas and Renewable Energy – leverage off the existing strengths of Petronas, as well as Malaysia’s own strategic location in ASEAN, to become a hub for renewable energy and petroleum-based industries.
2. Electrical & Electronics – five decades on, Penang is clearly an important industrial cluster in the global semiconductor and electronics industries. We need to build on the existing skills and talent pool available to make Malaysia the premier manufacturing hub for this sector.
3. Palm Oil – our Sime Darbies and FGVs and IOIs are world champions in this sector. And there is still so much opportunities in upstream automation as well as downstream oleochemicals that we have yet to fully tap into.
4. Healthcare – Malaysia is becoming an increasingly aged society, but so is Asia as a whole. We have already made strides as a health tourism destination. Also, many companies have taken on precision manufacturing skills from the electronics industry to pivot into the manufacturing of medical devices. The opportunities are plenty.
5. Tourism – those beaches, those white sands, the blue skies and the warm smiles: what’s not to like about Malaysia? There are still so many opportunities to truly package our endowments into becoming truly attractive tourism destinations.
6. Financial Services – thanks in part to Anwar Ibrahim’s own role in Government in the 1980s and 1990s, today Malaysia is a leading player in Islamic financial services, and our banks are true regional players in ASEAN. There are still so many opportunities for disintermediation with fintech, and Malaysia should be there along for the ride.

You can quibble about whether it should only be these six, or if these six are the correct six, but I say: keep the list small and focused. What about Digital, you ask? I say that should not be treated as a value chain on its own to focus on (especially when so much of it is still controlled by the economic behemoths of US and China), but as an enabler for *all* economic sectors, whether listed here or elsewhere. What about Halal Hub, you might say? My response is that other than making some lebais and conservative voters happy, I doubt we have much of an actual global edge in food manufacturing. And what is so special about making sure something is halal? Nestle can just hire one ustaz to inspect its factories in Australia, and all is sorted. What about Education, someone might pipe up. It will always be important as a cross-cutting enabler of human capital development, but if anyone thinks that we can out-Qatar Qatar in becoming an education hub, those people are sorely mistaken.

Anyways, the point of this essay is: be ruthless in remaining focused. Even 12 sectors, back in the Pemandu days, were too many, in my humble opinion. Even the most successful economies in the world, be it the US or China or Japan, can point to a handful of economic sectors where their local players are truly world-class at what they do. We should be able to do the same.

Onwards to the next item in this essay: “Discipline“. As mentioned earlier, during our Pemandu days we focused on “Discipline” as the anchoring principle for a handful of Strategic Reform Initiatives (SRI) that we believed were necessary for the Malaysian economy. Sadly, many of these were precisely the areas in which the Malaysian government lost the discipline of execution, and as a result, many of these reforms are still found wanting.

One thing to note here is that because of a quirk of history, Pemandu’s work commenced with a set of National Key Results Areas (NKRAs) aimed at improving government processes, prior to its subsequent and parallel focus on the NKEAs and SRIs. At least for my own self, many of these NKRAs and SRIs can be folded into one category of cross-cutting reforms that should form the bedrock of “Discipline” required for Malaysia to fix its creaking hardware as well as software infrastructure to face up to the challenges of a more competitive global arena. Again, in highly unscientific form (no Labs, no national Surveys, just my own personal feel and bias at work here), I would like to propose a set of Major Dimensional Adaptation Initiatives (oops, I did it again):

1. Urban Rejuvenation – strengthen the major infrastructure, communications, and talent networks for the key regional urban areas: Kuala Lumpur, Pulau Pinang, Johor Bharu, Kuching, Kota Kinabalu.
2. Literacy and Numeracy – enact specific measures to improve the quality of teaching and learning, especially at the preschool and primary levels.
3. Digitalisation – invest in infrastructure and processes and systems to encourage all Malaysian businesses and institutions to be fully wired and automated.
4. Rural Development – continue to invest in rural access to electricity, water, roads and Internet connection.
5. Public Service Delivery – retool JPA and the wider civil service to bring government services into the 21st century, and re-orient public services towards serving the rakyat.
6. Public Finance and Fiscal Reforms – identify the hard measures needed to bring the Malaysian government finances back into surplus, and put into place safeguards so that something like 1MDB can never happen again.

Again, just like our discussion of “Focus” earlier, keep the work limited to a handful of truly urgent and important initiatives, and work hard towards delivering tangible benefits.

There are two more aspects of a retooled economic agenda for Malaysia that I believe is worth discussing, and hopefully, adopting.

The first is the idea of “Opportunity“. As a small nation of 30 million people, we cannot afford to close the door on anyone who wants to grow and succeed in their lives. For too long, the Malaysian government has gained a reputation of being cosy with tycoons and the powerful. Many poor and middle class Malays could only stand by and watch, as the Rajas and Tengkus and Tan Sris and Datos engorged themselves on special Bumi shares and sweetheart monopoly business deals, making their fortunes in the name of the Bumiputera, the majority of whom still remain poor and marginalised. Anwar Ibrahim, with his lifelong emphasis on the poor and the downtrodden from back in the 1970s, fighting for poor farmers in Baling, should be the Prime Minister for which this lamentable emphasis can finally be truly put to rest.

For instance, there are those who criticise the Inisiatif Pendapatan Rakyat (“IPR”) launched by the Economy Ministry, arguing that entrepreneurship based on vending machines or planting chillies is too small-scale. But this, I believe, is precisely the point: given limited resources, the Government should place much greater emphasis on getting people to get onto the first few rungs of entrepreneurship. Let them start off in business, and climb up the ladder with their own grit and hard work.

The opposite side of the coin for this, should be the dawning realisation that for too long, we have poured billions of ringgits into developing a so-called Bumiputera capitalist class. We thought, back in the 1990s, that all we needed to spur the Malays on towards success, was to have really rich people who looked like and sounded like Malays. But where are the Halim Saads and the Tajudin Ramlis today? And when the patriarchs have left the scene, we find that their children are far more engaged at posing on the pages of Tatler, or showing skin on Instagram, than building a truly Bumiputera business that can last through the ages. I suppose “easy come, easy go” really holds true in many instances.

Rather than fall into the trap that Singapore is mired in, using the idea of “meritocracy” as a means of rewarding those who are already born into the right ethnicity or with the right educational pedigrees (enabled, no doubt, by a coterie of nannies and private tutors and chaffeurs) to blithely saunter into the commanding heights of government and the economy, Malaysia should offer a different narrative: a Malaysian Dream for National Improvement (help me I can’t stop)! What could this look like? I offer some of my own thoughts:

1. Focus on MSMEs – every Budget passed at Parliament must commit to a certain percentage of Government incentives and support for businesses to be devoted to MSMEs, ideally in direct proportion to MSMEs as part of the larger economy. More than giving them money, the emphasis should be on skills and capabilities to grow their business further.
2. Refocus Bumiputera support towards Education – enough of using the Bumiputera as a means to enrich the few at the expense of, and in the name of, the many. All those funds spent each year on shoring up hungry contractors (who will always ask for more, you should know by now) would be better served in educating the next generation of Bumiputera youths who can take all that knowledge and make their own mark in the world.
3. Make Malaysians trilingual – we are blessed to live in a country with such astounding diversity, and we should take advantage of this. Every Malaysian child should be able to speak and write in Malay (the national language and the lingua franca of the Nusantara), English (the current de facto lingua franca of the world, especially in the worlds of diplomacy and science) and any one of the many possible third languages that would be useful in the world of the 21st century, be it Mandarin or Arabic or French or Spanish or Tamil. In a world that will only become more fragmentary, a nation with command of multiple languages will always have an edge.
4. Make Malaysia welcoming for the best talents – as a nation that saw its population swell in the early 20th century with the influx of indentured Chinese and Indian labourers, immigration has continued to be a politically-sensitive subject in Malaysia. But given the size of our nation’s population, and the continued rising standards of living amongst Malaysians, we cannot deny that immigration is something that will always be with us for decades to come. How can we rebalance this wave of incomers, so that we continue to have enough manpower to run the country’s economy, as well as take advantage of the skills and talents of the best people from around the world? We will need an integrated approach to immigrant talent, and also work towards cleaning up the corruption that has been long a feature of this sector. It will be hard to do, when one of the biggest culprits is still roaming the halls of power, but Malaysia has no choice but to fix this. And quick.
5. Strengthen transparency via increased Parliamentary oversight – competition can only truly flourish when those intending to compete believe that the system is fair. We have seen too many instances in the past, of how sweetheart deals are concocted and then kept secret through mechanisms such as the Official Secrets Act. Those who were outside of government before, and now are in the seats of power in Putrajaya, will be quick to discover that most – if not all – of what has been kept secret as a matter of “national interests” are really just fig leaves to keep prying eyes away from awards given to cronies and family members. We should give Parliamentary committees full power to hold public hearings to hold government and private sector officials to account for their actions and behaviours. As they say, “sunlight is the best disinfectant”!
6. Broaden the spectrum of what it means to be Melayu in Malaysia – this will probably be the most contentious bit of this essay, but if I don’t say this out loud, then I would have been skirting around the elephant in the room, just like any other Malaysian politician in the past 60 years. And I think I should do (at least slightly) better. The “original sin” of this country we call Malaysia, to my mind, is the way in which we defined Malayness, and also how we placed Malayness within the wider context of the idea of Malaysian citizenship. There was no way that Malays would have allowed for Merdeka to proceed without sufficient protections put in place to shield them against the economic ignominy of having been placed almost dead last in the pecking order of the colonial economy, but there was also no way that the British would have allowed Malaysians independence if we did not carry the non-Malay population with us. The result: an infernal fudge that has doomed our politics to decades of fear-mongering and zero-sum thinking. Some questions to ponder: which other nation in the world would define an entire ethnicity in terms of a sole religion, and then use the powers of the state to force that religious identification, regardless of actual faith or conscience, down the throats of that people? What other nation would quite bluntly define some parts of its citizens as being deserving of more rights than others, through no other fact that an accident of birth? (Israel is a correct answer, but really is the exception that proves the rule.) To look at it from a different perspective: which Muslim nation, truly steeped in the Muhammad’s message of mercy and compassion and equality in the eyes of God, would countenance any sort of division or stratification in human worth other than that of his or her moral character? I realise this is a long-enough diatribe, and also one that would hardly win any adherents in our polarized present, but if Malaysia is to have any future in the decades and centuries to come, then this “original sin” needs to be fixed. I will offer no prescriptions here, because nothing I can say would make sense in today’s politics – but this is, to me, the ultimate test that will separate the true Malaysian statesmen from those merely happy to take a month’s paycheque and attend kenduris with everyone kissing their hands and paying obeisance.

The other thing to say, with respect to a retooled economic agenda for Malaysia, is the idea of “Humility“. Much of the political fracturing of the past five years since May 2018, I believe, is predicated on exactly the kind of zero-sum thinking that has really infected Malaysian politics. This Unity Government, for all its faults, is an interesting exercise in getting sworn enemies to finally get in bed together, and figure out how to run this country, without falling into the old tropes of racism and religious exclusionism of the past.

Five centuries ago, the citadel of Melaka fell into the hands of foreign adventurers eager to grasp control of the international spice trade away from Muslim hands. Today, a new geopolitical struggle is taking shape, and Malaysia itself may be an imperfect inheritor to the legacy of Melaka, but the lessons must be learnt. Focus and Discipline must be harnessed productively, in competition with the many nations that stand to gain if we lose our way. The only way for that to happen, is for us to open all doors of Opportunity to fellow Malaysians, as well as those from outside who are willing and able to play their role in helping us to become a better nation. But we also need Humility – to recognise that we are just one small nation amidst many, making our way forward in a treacherous world.

No lists here, but simply to say, As a nation: Be kind. Be gentle. Yang menang tak menang semua, yang kalah tak kalah semua. With Anwar at the helm, we have an opportunity now to move beyond the scorched-earth politics of the Mahathir era. We can set a new tone, not just for politics, but also for business, and in our daily lives. We need to build a nation of all talents, that can truly bring forth a civilized and advanced nation, build not merely on wealth and technological prowess alone, but more importantly, on a solid foundation of moral probity and good character.

I write this in hope, and with fervent desire that this nation can give the fullest expression to its best self, every day.