Category: Bakri Musa

By M. Bakri Musa

Chapter 7: Enhancing Human Capital
Enhancing Human Capital Through Education

Globalization is driven essentially by knowledge; the new economy is appropriately called the K(for knowledge)-economy. Knowledge is the important ingredient of the new economy, and also its measure. Knowledge has replaced the economists’ “factors of production” – land, labor, and capital – as the chief economic resource.

The philosopher Saidina Ali perceptively observed that knowledge, unlike wealth, protects us under all circumstances, but we have to protect our wealth constantly against theft and inflation. The world around may crumble but with my knowledge and skills as a surgeon, I can still contribute and be productive. Further, wealth is diluted when shared; knowledge on the other hand, increases and gets enhanced when shared. A discovery in one field often stimulates innovations in another, thereby increasing our overall knowledge. Knowledge is also amplified through such exchanges. The nuclear magnetic resonance (NMR) that was used initially in basic research to identify chemical molecules is now used routinely in clinical medicine. Indeed the market for this is worth considerably more. Wealth if kept secret may retain its value, but knowledge kept secret will quickly become obsolete and worthless.
Continue reading “Malaysia in the Era of Globalization #55”

By M. Bakri Musa

Chapter 7: Enhancing Human Capital

Enhancing Human Capital Through Better Health

Good health is good for the economy. A National Bureau of Economic Research (NBER) paper showed that a one-year improvement in a country’s life expectancy (an index of health) contributes to a four percent increase in its economic output, and that good health has a greater impact on the economy than work experience or years of schooling.

The World Health Organization’s (WHO) Commission on Macroeconomics and Health (CMH) Report reaffirms the powerful link between health, poverty reduction, and economic growth. The report challenges the traditional argument that health of the citizens will automatically improve as the result of economic growth. Indeed the opposite is true; improved health is a critical requirement for economic development in poor countries.
Continue reading “Malaysia in the Era of Globalization #54”

by M. Bakri Musa

Chapter 7: Enhancing Human Capital
Adding Value to a Routine Airport Taxi Ride

The second anecdote concerns an airport trip in Atlanta my wife and I took after a medical convention. On discovering that a limousine was only slightly more expensive than a taxi, we decided to go in style. We stepped into this luxurious limousine, with the driver in tuxedo no less, dutifully opening the door and helping us in. I felt like a celebrity, or perhaps a sultan. The driver inquired of our flight and he immediately phoned ahead to find its status. As the flight was going to be delayed, he suggested we take the scenic country road. Normally he would charge extra for such a detour but since he would be saving gas by not getting stuck on the freeway at peak commuting time, he would dispense with it. Delighted, we cheered him on. He also welcomed us to some complimentary beverages and fresh fruits from his small fridge. We felt vindicated; the extra cost more than compensated by the freebies!
Continue reading “Malaysia in the Era of Globalization #53”

By M. Bakri Musa

Chapter 7: Enhancing Human Capital

People are the real wealth of nations.
—UNDP Human Development Report 2001

One surprising observation following the American stock market meltdown of October 1987 was that there was very little change in the behavior of American consumers. The Dow Jones Index may have dropped by over 40 percent but stockbrokers and their clients did not jump off the skyscrapers on Wall Street. Citizens did not hoard food or withdraw their savings as they would when faced with major uncertainties. Nor did they withhold spending in anticipation of tough times. To be sure the sales of luxury cars and yachts were dampened, but by and large there were minimal changes in the economic behavior of Americans.

Citizens’ reactions in Malaysia to the much more severe economic crisis of 1997 were also similar to the Americans’. Both were in marked contrast in nearby Indonesia, where the nation was nearly ripped apart because of the economic crisis.
Continue reading “Malaysia in the Era of Globalization #52”

by Bakri Musa
Malaysia in the Era of Globalization #51

Chapter Six: Malaysia: Assets and Liabilities

Enhancing Special Privileges

To enhance the efficacy of special privileges I would first focus on the bottom 50 percent (better still, bottom 25) of Bumiputras. I agree with Grameen Bank’s Muhammad Yunus who feels that development should be defined to mean positive changes in the economic status of the bottom half of the population. Consequently I would cut off the top quartile Bumiputras (or those with certain net worth or income) from special privileges. Such a modification would effectively target special privileges on truly needy Bumiputras. At the same time it would reduce the resentment felt by non-Bumiputras. Disqualifying ministers, top leaders, royal families, and affluent Bumiputras would also have the additional salutary effect of forcing them to be self-reliant.

This “means testing” at the gross level would not entail much administrative costs or erecting another huge bureaucracy. A simple statuary declaration under sever penalty of perjury and intent to defraud the government would deterrent enough. For added weight, have those applying for benefits of special privileges submit their or their parents’ previous year’s tax returns.

For the royal class, I would eliminate many of their present tax-free privileges. Make them pay their share of income, property, road and other taxes. If Britain’s Queen Elizabeth has to pay income tax, Malaysian sultans should also do likewise. The aggregate impact of such measures on the Treasury would be minuscule, but the psychological benefits to members of the royalty would be immense. For one, they would share in the pain suffered by ordinary citizens, always a salutary experience. For another, if they had to pay their share of taxes on their luxurious toys, that would likely rein in their obscenely flamboyant lifestyles. Malaysia should not have to put up with such nonsense as when the Sultan of Kelantan drove off with his impounded luxury sports car without paying the necessary road tax.

Lastly, seeing families of leaders, royalty, and aristocrats being kicked off the dole would appease immensely the social sensibility and sense of justice of ordinary Malaysians. At the very least that would eliminate the current hypocrisy where many of these leaders would with nauseating frequency exhort the masses to be berdikari (self reliant) while they and their families are the first to hog the public trough. I am astounded at how many members of the immediate families of ministers are getting government scholarships, aids, subsidies, or otherwise dependent on public dole. They have no shame. If they cannot be independent on their ministerial income, then they have no right to lecture the masses on being berdikari. Continue reading “Enhancing Special Privileges”

By M. Bakri Musa

Chapter Six: Malaysia: Assets and Liabilities

The Barnacles of Special Privileges

Malaysia’s affirmative action programs can be viewed in one of two ways. One, they were designed to ameliorate the deteriorating socioeconomic status of Bumiputras; and two, they are part and parcel of the inherent rights of Bumiputras consequent to their being the indigenous people of the country. With the first, the primary objective is to enhance Bumiputras’ competitiveness so they could compete effectively not only with non-Bumiputras but also the rest of the world. The program’s effectiveness could thus be objectively evaluated by this ready criterion.

The second premise views these privileges as essentially being part of our heritage. It is a right. There is nothing to assess; the program would be permanent. Whether such privileges are boon or bane depends on how they are administered and on the recipients. Native American Indians have many privileges not afforded to ordinary Americans (sovereignty of their reservations, free education, tax free status, etc.), but they still remain far behind. They have become essentially wards of the state; their initiative and industry sucked dry out of them.
Continue reading “Malaysia in the Era of Globalization #50”

By M. Bakri Musa

Chapter Six: Malaysia: Assets and Liabilities

Malaysia’s Digital Divide

The digital divide (the lag in IT) is seen not only between Malaysia and the developed world but also within the nation itself: between Malays and non-Malays, rich and poor, and urban and rural. It is widening. This digital divide is also reflective of a more general technology gap.

For Malaysians to benefit from globalization, we must not only be comfortable with these new technologies, and specifically IT, but also be able to master and make full use of their potential.

Technologies directly impact productivity. A generation ago it took 16 farmers to feed 100 Americans; today only 2 or 3, thanks to superior technology. One man can now effectively farm hundreds of acres by using combines and tractors. Similarly, with efficient fertilizers, pesticides, and improved seeds, the yields have increased tremendously.
Continue reading “Malaysia in the Era of Globalization #49”

By M. Bakri Musa

Chapter Six: Malaysia: Assets and Liabilities

The Far and Pervasive Reach of the Malaysian Government

In Malaysia, the government’s powerful reach is extensive and pervasive, affecting everything and everybody all the time. This was dramatically demonstrated to me recently. A bright Malay student on her own effort was accepted for graduate work at Cambridge University. She applied to a local university for funding under its academic training program, and was accepted. But to get that scholarship she had to be interviewed by the Public Service Department (PSD). Fair enough. Then she was told that because her TOEFL (a standardized English test) score was outdated she would not qualify, she would have to re-sit the test.

Here she was, accepted by Cambridge and deemed qualified by the dean of a local university, but the bureaucrat at PSD had veto power over her. Never mind that she had graduated from a top American university (which was why she was accepted to Cambridge in the first place) and had aced the TOEFL years ago, but those facts did not persuade the esteemed civil servant. Fortunately she was tenacious enough to fight such inanities; but it took the personal intervention of the deputy prime minister no less to resolve the issue in her favor. Why should the deputy prime minister have to decide a simple matter like this? Is he not busy enough?
Continue reading “Malaysia in the Era of Globalization #48”

Malaysia in the Era of Globalization #47
Chapter Six: Malaysia: Assets and Liabilities
Big Government, Big Problems
by M. Bakri Musa

The remarkable achievement of the Reagan Revolution in America and Thatcher’s in Britain is the recognition, long overdue, that government is not always the solution. In many instances, it is the problem. The most spectacular example of the failure of big government is the Soviet Empire. It collapsed not because it was defeated in war (although the West would like to claim that it won the Cold War) but because the Soviet state had been too massive and highly intrusive. Given the momentum of globalization, the Soviet system would have imploded anyway.

The only other major totalitarian government today is China; it survived because its leaders were smart enough to recognize the desperate need for change, and did it quickly. The 1989 Tiananmen Square uprising was a rude awakening for those leaders. Today’s Chinese communists are a far cry from their dogmatic Mao comrades. This difference is best encapsulated by Deng Xiapeng’s celebrated slogan, “To get rich is glorious!”

Deng was decidedly more pragmatic. He quoted the Chinese proverb to the effect that it matters not what color is the cat as long as it catches the mice. The Chinese are now realizing that capitalist cats are more productive (can catch more mice!) than communist ones! Continue reading “Big Government, Big Problems”

By M. Bakri Musa

Chapter Six: Malaysia: Assets and Liabilities

Bless Our Geography!

Allah has been generous to Malaysia. Malaysians are reminded of this every time they read about natural disasters occurring elsewhere. There are no earthquakes, hurricanes, volcanic eruptions, or devastating floods. God has spared Malaysia such natural calamities.

Then there is the climate; it is not visited by extremes of heat or cold. Whereas Californians have to pay to warm their houses in winter and cool them in summer, Malaysians are spared such expenses. And if Malaysians were to design their homes well with cross drafts and adequate natural ventilation, air conditioning would not be essential. It is only for comfort. In temperate zones heating a home is essential lest you freeze. Home designs in temperate zones must necessarily be more complex to cope with both winter and summer. Unlike Malaysians, those living in temperate zones need two sets of clothing.
Continue reading “Malaysia in the Era of Globalization #46”

by Bakri Musa

(Malaysia in the Era of Globalization #45)

Our Plurality An Asset

Malaysians, especially the leaders, have always regarded their plural society as a liability. If only the nation were racially and culturally homogenous, these leaders would lament, many of our problems would be gone. Such wishful thinking! I argue the contrary. That is, Malaysia’s racial plurality, far from being a liability, is actually an asset. And a significant one at that!

Malaysian policies and strategies are constantly being looked at and analyzed in racial terms. Often the implicit assumption is that what is good for Malays must necessarily be bad for non-Malays, and the reverse, what is good for non-Malays is bad for Malays. This mentality is ingrained at all levels. As noted earlier, Malaysia’s racial plurality is another legacy of the British colonial rule.

The country’s multiracial society has indeed been a source of problems, both past and present. In part this Malaysian dilemma results from socioeconomic divisions paralleling racial lines. This is not a uniquely Malaysian problem. With the massive migrations and arbitrary drawings of political boundaries in the last century, many countries have ethnically and culturally diverse populations. Today’s headlines are filled with tragedies consequent to those diversities: the ethnic cleansing in the Balkans; the genocide of Rwanda; the continuing sectarian strife in Northern Ireland; and ethnic hostilities in Sri Lanka. Continue reading “Chapter Six: Malaysia: Assets and Liabilities”

By M. Bakri Musa

Chapter Six: Malaysia: Assets and Liabilities

Other Colonial Legacies

The other enduring British colonial legacy – a professional army – saw Malaysia through many a crisis, from the konfrontasi against Indonesia in the early 1960s and the 1969 race riot, to the constitutional crisis of the 1980s, and the recent unrest over the Anwar affair. Through it all the military remained neutral and loyal to its elected civilian commanders. Malaysia has not fallen into the trap visited upon many previously colonized countries where the army is part of the problem. In Indonesia, the military is the only viable institution; unfortunately it squandered that unique trust by actively meddling in civilian matters. What was once a noble and highly regarded institution is now no different from the nation’s other corrupt and ineffective institutions. Indonesia’s armed services are less the guardian of the nation but more a constant threat to its stability. Malaysia is fortunately spared such a fate.
Continue reading “Malaysia in the Era of Globalization #44”

Malaysia in the Era of Globalization #43

by Bakri Musa

Part II: Transforming Malaysia

The instinct to censor is a powerful one. It is also an acknowledgment of the unpredictable power of words. Goenawan Mohamad, Indonesian editor and journalist.

Chapter Six: Malaysia: Assets and Liabilities

To prepare for globalization Malaysia must first take stock of herself. She must assess her positive as well as negative attributes; and enhance her assets and lessen her liabilities. She must also be mindful that with ingenuity, liabilities can be turned into assets while assets not improved upon or left to deteriorate can become liabilities.

Malaysia is vulnerable on a number of fronts, with many simmering problems yet to be addressed or even acknowledged. Malaysian leaders must critically reexamine their policies and revisit their assumptions. They must not hesitate to jettison ineffective policies, modify inadequate ones, and expand on effective strategies.

In this chapter I will review some of Malaysia’s attributes, both positive and negative. Continue reading “Malaysia: Assets and Liabilities (Malaysia in the Era of Globalization #43)”

By M. Bakri Musa

Chapter 5: Understanding Globalization (Cont’d)

Maximizing the Benefits and Minimizing the Downside of Globalization

Understanding the consequences of and the forces driving globalization would help us maximize its benefits and minimize the risks. Globalization has its own dynamics, and like the mighty Mississippi, there is no point in trying to stop it and getting swamped in the process. Malaysians would be better off trying to channel and tame the beast to benefit them. Levees along the Mississippi created vast expanses of rich fertile farms while at the same time controlling the floods. Channels and locks converted the river into an efficient and vital transportation artery. Likewise, damming provided cheap hydroelectric power as well as vast recreational lakes.

Thus instead of bemoaning the erratic cycles and the seemingly overwhelming power of globalization, Malaysia would be better off preparing her citizens to meet this new challenge and making it benefit the nation. Malaysians should concentrate on building the equivalent of channels, levees, and dams to tame and exploit globalization so it could benefit Malaysians by taking advantage of this massive global flow.
Continue reading “Malaysia in the Era of Globalization #42”

By M. Bakri Musa

Chapter 5: Understanding Globalization (Cont’d)
Globalization and the Free Movement of People

Earlier, I alluded to the fact that unlike imperialism where there was mobility of labor, today’s globalization does not have the comparable freedom of movement of people. Unlike goods, services and capital that can slip in and out of borders readily, people still have to go through tedious immigration controls. Leaders like Mahathir challenged advocates of globalization to also equally liberalize immigration, that is, to make the movement of people as free as that of ideas and capital.

Much as I agree with this ideal, it is unlikely to happen, given present-day realities. Western countries that are today’s champions of globalization have elaborate social safety nets for their citizens. Indeed the greatest asset one can have at birth is not one’s set of genes, rather one’s birthplace. There are significant benefits just by being born as Americans or Western Europeans regardless whether you are contributing or not. These include free education and other generous entitlements. No wonder these citizens want to restrict immigration; it is a manifestation of the classic “rent seeking” economic behavior.
Continue reading “Malaysia in the Era of Globalization #41”

By M. Bakri Musa

Chapter 5: Understanding Globalization (Cont’d)
Correlates of the IT Revolution

What marvels me is that this IT revolution has not even reached its maximal potential. Each day promises even more dramatic improvements and new achievements. Today’s personal computer is a quantum leap in performance over those of only a few years ago. Bill Gates is planning to encircle the globe with low orbiting satellites to enable any one anywhere to get Internet connectivity. While such a development may not seem impressive to someone in America who already has convenient Internet access, imagine what it would do for areas like East Malaysia and Africa. They would leapfrog into the IT age overnight. There would need to wait for the local government or telephone company to lay phone lines and cables.

With ease of communication, ideas and information would spread easily. News is no longer controlled by any one authority. Whereas in the past citizens had to rely on one government-controlled source (as in Malaysia) or a few commercial outlets controlled by powerful groups (as in America), today we have literally limitless sources of news and information on the Internet. Malaysia’s independent web daily Malaysiakini.com is now more popular than the established media. During the Afghanistan bombing in the war against terrorists following the 9-11 attacks, with the mainstream American media not doing any frontline reporting, readers could still follow the news by tuning into the Arab television channel Al Jazeera (available on cable and the Internet).
Continue reading “Malaysia in the Era of Globalization #40”

by Bakri Musa

Chapter 5: Understanding Globalization (Cont’d)

The Corollary to Globalization

A corollary to globalization is the development of a common acceptable standard, or to use the language of computers, a common platform, or at least a compatible operating system. In the computer industry, a common platform enables my computer to link and communicate with thousands of other computers. One of the common platforms of globalization is language. There is a need for a common language to facilitate communication. By default English is now assuming that role. This is not a dictate from Britain or America but simply the result of an evolving pattern.

Another imperative would be a common currency. At present there is no single currency that has successfully assumed the role of a global currency. In pre-Breton Wood days when the dollar was tied to gold, it could probably be acceptable as a world currency. And indeed it was. Currently the dollar is like any other currency, backed only by the confidence consumers and investors have on the underlying American economy. When that confidence is high, the value of the American dollar shoots up; when America runs chronic deficits and its financial house in disarray, the dollar plummets. It has ranged from over 300 yen to under 80, all within a few decades.

It is more likely that eventually the world would settle into a few major currencies, with the others tied to one of them. Western Europe has dispensed with its multitude of currencies into the euro. The dollar is fast becoming the currency of choice in the Western hemisphere. Continue reading “The Corollary to Globalization”

By M. Bakri Musa

Chapter 5: Understanding Globalization (Cont’d)

The Forces Driving Globalization

Much as the Industrial Revolution of the 18th Century was driven by machines, so too is today’s globalization propelled by technology, in particular Information Technology (IT), and knowledge. The Industrial Revolution began with the invention of steam engines that were used primarily to pump water out of mines. Later they were adapted for other uses, from weaving machines to steamships and locomotives.

The mechanized weaving mills revolutionized the textile industry; locomotives and steamships, transportation. Machines could produce goods not only in mass quantities but also of consistent and reliable quality. And those goods could now be transported to vast distant markets, thanks to cheap mechanized transportation modes. The locomotive was also instrumental in opening up the vast American continent and propelling America into a major economic power.
Continue reading “Malaysia in the Era of Globalization #38”

By M. Bakri Musa

Chapter 5: Understanding Globalization (Cont’d)

Trading in Money

Malaysia cannot modernize its financial sector and capital markets in part because its leaders are stuck in the pre-globalization mindset, especially in their attitude towards money and capital. While to consumers everywhere money is now simply a convenient medium of commercial transaction, to Mahathir and other Third World nationalists it assumes a more important symbolic function. Currency represents the nation’s sovereignty. It is instructive that one of the first orders of business for many newly independent nations is to declare a new currency or to rename its old one. Malaysia has the ringgit, and to symbolize its new beginning, prints a portrait of its king on the paper notes. Money is no longer simply money, rather a powerful symbol of the nation’s sovereignty.

It is this symbolic attachment to the currency that irrationally dictates many economic policies. Governments often go to extreme lengths to defend the value of their currency when market conditions dictate otherwise, as happened in Thailand and Malaysia during the 1997 crisis. They forget that the value of a currency is a reflection of consumers’ and investors’ confidence in the underlying economy. A weak economy will have a weak currency, regardless of the nationalistic frenzy used to whip support for it. Malaysia lost billions and nearly exhausted its foreign exchange reserves in the early part of the 1997 economic crisis trying to defend the value of the ringgit, only to admit finally that the market was correct.
Continue reading “Malaysia in the Era of Globalization #37”

By M. Bakri Musa

Chapter 5: Understanding Globalization (Cont’d)

Missing the Japanese Lesson

In truth many misread the Japanese success story. As Harvard’s Michael Porter observes in his book, The Competitive Advantage of Nations, the successful Japanese companies that now dominate global markets – the Sonys, Olympus, and Toyotas – had survived rigorous competition at home. They competed aggressively among themselves and only the most vigorous, those who have mastered the art of satisfying their customers and reducing the costs, go on to conquer the world. Meanwhile their “protected” industries – their banks and other financial institutions – are wallowing in misery, unable to compete beyond their shores.

As a result of its commitment to foreign trade, Malaysia enjoyed a boom in direct foreign investments in the 1980s and 90s. These later investors were chiefly in manufacturing, especially semiconductors. They were welcomed because, quite apart from the employment opportunities provided and foreign exchange earned, they spread the “Made in Malaysia” brand names worldwide. Malaysians also discovered that being a factory worker, even a foreign-owned one, was much more agreeable to working the land under the blistering sun. Indeed those foreign employers, yes even those companies owned by our former colonizers, were much more enlightened and generous with their benefits than native ones!
Continue reading “Malaysia in the Era of Globalization #36”