Chapter 7: Enhancing Human Capital
Competition in the Public service
There should also be competition in the public service and society. Today for example, admission into the public administrative service is almost exclusively from the liberal arts stream. Widen the talent pool to include anyone with a degree; actively sought engineering and science graduate. With their quantitative skills they would make excellent managers.
Promotions within the civil service are exclusively from within, hence its present intellectual and professional insularity. Revamp the personnel policies that state you must have five years seniority before you can be promoted to a senior management (“superscale”) position. This unduly restricts the much-needed infusion of fresh talent at the upper levels. When one examines the resume of the heads of ministries (Secretaries General), they are almost always liberal arts graduates even in those ministries with high technical component like the Energy, Public Works, and Transportation. I would have thought that an MBA in finance would be the necessary qualification for a senior position at Treasury, but few in that department have this qualification. Thus this embarrassing response from a former senior Treasury official I met recently when we were discussing interest rates, “An interest rate hike of 5 to 6 percent represented only a 1 percent raise!” To those with even the minimal understanding of simple arithmetic, that represented a massive 20 percent hike!
Instances like this make me recommend that the next time a senior position in the civil service becomes vacant, the government should open up the recruitment process. Consider candidates from the private sector and academia, instead of relying exclusively from within.
Malaysia has gone a long way in its privatization projects. But unlike Britain and America where these projects are awarded based on competitive bidding, in Malaysia they are awarded solely at the discretion of the minister. He or she alone presumes to know who would be successful in running the new entities. Unfortunately the track record thus far has been abysmal, from MAS to sewerage water treatment facilities and steel plants. No surprise then that many of these projects have been abject failures, costing the taxpayers a hefty bundle.
Had the government awarded these projects based on open competition, not only would the government have received considerably more for its valuable assets, but those projects would more likely end up in competent hands. Even if the government were intent on giving them to Bumiputras to satisfy its NEP goals, it should still have open competition to pick the best candidate, albeit the competition would be limited only to Bumiputras.
Preferably I would open the competition to all, including foreigners. If in the end the government were to award the project to its favorite Bumiputra, at least it would have known how much more of a premium that decision would have cost the government. This would also keep the winning Bumiputra from being smug and acquiring a highly inflated sense of his or her capability.
Lastly, if Malaysia is to be competitive, it must reward those citizens who have proven themselves successful and competitive. Earlier I alluded to the royal honor lists, but there are many other ways in which to reward successful citizens. For example, every year the nation continually laments on the lack of Malays in science, and every year yet another novel scheme introduced to induce Malays to pursue the subject. But the results remain disappointing. The reason of course Malaysia does not reward those Malays already in science.
Suppose instead of endlessly exhorting young Malays to take up science, our leaders instead visit the universities and pick those Malays with outstanding PhDs in the sciences and appoint them to the board of directors of the multitude of government-owned companies like Petronas, Pernas, and Renong. For one, these PhDs would be, as a group, a lot smarter and faster learner than the usual civil servants and politicians currently appointed to those positions. These smart individuals would also better protect the taxpayers’ interest. Two, the nation would be sending an important message to these Malay scientists and engineers. The nation cannot pay them extra as professors (the history professors too would want similar treatment) but it can reward them financially by appointing them to these boards. That message would later filter down to the young. That would prove to be a far stronger motivator than all the endless fiery rhetoric.
When I examine the boards of many government-sponsored companies that have failed, invariably they are made up of mediocre Malays from the civil service and political establishment. The most spectacular corporate failure was of course Bank Bumiputra, the very symbol of Bumiputra participation in the modern economy. Look at its board. Had the authorities appointed brilliant Malay scientists and engineers, the fate of that institution would be far different.
Thus to create a new breed of competitive Malaysians, they, especially Malays, must be exposed to greater, not less, competition. Competition must be a regular event in their lives. I can use the example of picking the best athletes. First there would be competition at the local village or school level. At school, there would be competition within, as between classes and houses. Then the winners would move on to the next level, between villagers or schools. From there the winners would go on to the state level, and then on to the national and international levels. At every level we should not be surprised with upsets or new stars being born. It would be presumptuous for a coach or athletic director to earmark someone from the village and immediately groom him for a national meet, no matter how promising the candidate looks. He has to prove himself in a real competition first. And only if he shines there would he then be taken to the next level.
Competition does not simply mean gauging one’s performance against another competitor. One can compete against oneself. Take the example of the track athlete. He may not win or be the first in his league for the 100-yard dash, but by taking part in the competition, he would find that his time this year would be better than last year’s. And if he continues with his training and competition, his personal time the following year would again be better. The object of competition is not necessarily to be to first or to beat the next fellow, rather to bring out the best in each one of us.
To enhance this competitive habit, the social institutions and culture must also be geared to encourage and reward this trait. How that can be achieved would be the subject of my next chapter. Before proceeding to that, some final thought on the flip side of competition. Invariably in any competition, there will be those who would fail. Society must address this inevitable consequence. A society’s attitude towards failure and those who fail will have a significant bearing on encouraging risk taking and success. Failure is the other side of success. You cannot have success if you do not have failures. The remarkable aspect about America is that failure is not looked upon derogatively. Even a financial bankrupt will have, after a few years, a clean slate. Thus failure is viewed not as a permanent state, rather a stage. He or she is given every opportunity to pull out of it.
One of the wonderful aspects of the American educational system is that every school has an adult program to cater to those who have missed out or failed earlier. Universities too, as mentioned earlier, have extension or “General Studies” division to cater to non-traditional students. The typical American undergraduate could (and indeed many do) take a year or two off to travel or work, without losing their academic credits. Similarly, failing students could retake their courses, change their major, or take time out to rethink matters. The system is very forgiving. There are many second chances.
At the social level, the various social safety net programs are meant to take care of those dislocated or who stumbled. As Malaysia enters globalization, one thing is certain, many of her citizens will be dislocated. The state must do its part to take care of them. Malaysia already has an excellent pubic health care system. It is not luxurious but is adequate. The waiting lines may be long and the service often wanting, but no one is turned away. Similarly, Malaysia has the Employees’ Provident Fund (EPF). I would extend that to include all workers including those self employed in the “informal sector” (hawkers, fishermen) by making it attractive for them to participate. I would also extend EPF beyond being simply a retirement fund to become a disability and unemployment insurance program.
In weaving an adequate social safety net however, it is important that Malaysia does not copy the examples of Western Europe and America by making it too comfortable or generous. As one wag had put it, the surest way to ensure unemployment is to have unemployment insurance! The safety net should take care of only the basic needs. Too comfortable a safety net, and you will have a hammock.
With a safety net in place, citizens could have peace of mind; then they would more likely take on challenges and risks. But the greatest safety net of all is the support of close family and friends. One danger of a generous social security program is that it breaks down familial ties, as is happening in America. Adult children, knowing that their parents would be taken care of by the state, abrogate their filial responsibilities. In the next chapter I will expand on the influence of the family on society and vice versa.
While Malaysia must strive to increase competition among its citizens by rewarding those who succeed, it must also ensure that those who fail be given ample second chances.
Next: Chapter 8: Culture, Institutions, and Leadership