While Malaysia fiddles, its opportunities are running dry
Michael Backman
November 15, 2006 - The Age, Melbourne.
MALAYSIA'S been at it again, arguing about what proportion of the
economy each of its two main races - the Malays and the Chinese -
owns. It's an argument that's been running for 40 years. That wealth
and race are not synonymous is important for national cohesion, but
really it's time Malaysia grew up.
It's a tough world out there and there can be little sympathy for a
country that prefers to argue about how to divide wealth rather than
get on with the job of creating it.
The long-held aim is for 30 per cent of corporate equity to be in
Malay hands, but the figure that the Government uses to justify
handing over huge swathes of public companies to Malays but not to
other races is absurd. It bases its figure on equity valued, not at
market value, but at par value.
Many shares have a par value of say $1 but a market value of $12. And
so the Government figure (18.9 per cent is the most recent figure) is
a gross underestimate. Last month a paper by a researcher at a local
think-tank came up with a figure of 45 per cent based on actual stock
prices. All hell broke loose. The paper was withdrawn and the
researcher resigned in protest. Part of the problem is that he is
Chinese.
"Malaysia boleh!" is Malaysia's national catch cry. It translates to
"Malaysia can!" and Malaysia certainly can. Few countries are as good
at wasting money. It is richly endowed with natural resources and the
national obsession seems to be to extract these, sell them off and
then collectively spray the proceeds up against the wall.
This all happens in the context of Malaysia's grossly inflated sense
of its place in the world.
Most Malaysians are convinced that the eyes of the world are on their
country and that their leaders are world figures. This is thanks to
Malaysia's tame media and the bravado of former prime minister
Mahathir Mohamad. The truth is, few people on the streets of London or
New York could point to Malaysia on a map much less name its prime
minister or capital city.
As if to make this point, a recent episode of The Simpsons features a
newsreader trying to announce that a tidal wave had hit some place
called Kuala Lumpur. He couldn't pronounce the city's name and so made
up one, as if no-one cared anyway. But the joke was on the script
writers - Kuala Lumpur is inland.
Petronas, the national oil company is well run, particularly when
compared to the disaster that passes for a national oil company in
neighbouring Indonesia. But in some respects, this is Malaysia's
problem. The very success of Petronas means that it is used to
underwrite all manner of excess.
The KLCC development in central Kuala Lumpur is an example. It
includes the Twin Towers, the tallest buildings in the world when they
were built, which was their point.
It certainly wasn't that there was an office shortage in Kuala Lumpur - there wasn't.
Malaysians are very proud of these towers. Goodness knows why. They
had little to do with them. The money for them came out of the ground
and the engineering was contracted out to South Korean companies.
They don't even run the shopping centre that's beneath them. That's
handled by Australia's Westfield.
Next year, a Malaysian astronaut will go into space aboard a Russian
rocket — the first Malay in space. And the cost? $RM95 million ($A34.3
million), to be footed by Malaysian taxpayers. The Science and
Technology Minister has said that a moon landing in 2020 is the next
target, aboard a US flight. There's no indication of what the
Americans will charge for this, assuming there's even a chance that
they will consider it. But what is Malaysia getting by using the space
programs of others as a taxi service? There are no obvious technical
benefits, but no doubt Malaysians will be told once again, that they
are "boleh". The trouble is, they're not. It's not their space
program.
Back in July, the Government announced that it would spend $RM490
million on a sports complex near the London Olympics site so that
Malaysian athletes can train there and "get used to cold weather".
But the summer Olympics are held in the summer.
So what is the complex's real purpose? The dozens of goodwill missions
by ministers and bureaucrats to London to check on the centre's
construction and then on the athletes while they train might provide a
clue.
Bank bale outs, a formula one racing track, an entire new capital city -
Petronas has paid for them all. It's been an orgy of nonsense that
Malaysia can ill afford.
Why? Because Malaysia's oil will run out in about 19 years. As it is,
Malaysia will become a net oil importer in 2011 — that's just five
years away.
So it's in this context that the latest debate about race and wealth is so sad.
It is time to move on, time to prepare the economy for life after oil.
But, like Nero fiddling while Rome burned, the Malaysian Government is
more interested in stunts like sending a Malaysian into space when
Malaysia's inadequate schools could have done with the cash, and
arguing about wealth distribution using transparently ridiculous
statistics.
That's not Malaysia "boleh", that's Malaysia "bodoh" (stupid).
Mr Backman has a regular Asian business column with the Melbourne Age
newspaper and has authored numerous articles on the
complexities of Asian business, cultures and corporate governance for
The Times of London, the International Herald Tribune, the
Asian Wall Street Journal, the Far Eastern Economic Review, the
Australian Financial Review and the Business Times of Singapore,
among others.
He is a frequent speaker at seminars and conferences in Asia, Europe
and Australia and a regular commentator in the media on
Asian business matters, having appeared in publications such as
Euromoney, Time, Fortune, the New York Times, and the Financial
Times.
Mr Backman holds a First Class Economics Degree. He lives in London
when he is not travelling.
4 comments:
you got it spot on.
although it is a bit bitter, i have to say it is partially true.
but never dismiss the under-assumption that there is a lot of people out there who wants & love to Malaysia cease to exist - economically & geographically.
somehow i can smell the urge of politically-motivated & apparent jealousy from mr backman.
but i will not say that this country (Malaysia) is losing it all. some of foreign economists aka capitalists, they just love to meddle & dribble & 'score' with growing countries like us.
when we crumble, they will laugh & spit at us like nobody's business. since when building KLCC is something little & disrespectful? since when Malaysia is losing its oil in 19 years? (for all i know, geophysically speaking, we're running out of oil because the current technologies only permits the exploration & production of well below 30%)
since when 45% equity in the economy is the spot-on statistics for Malay ownership? - do you have a stake in any?
since when outsiders, foreigners care about the troubles we had to endure to know all the troubles that we're having now?
just look at China, the EU decided to cut their textile export to europe round about last year. why? because these Chinamen control about 70% of the textile industry.
so this must mean that we're doing awfully well for past few decades.
but having said that, with all the crap projects that the government is doing (mentioned in backman's report and a thousand more), i can see the rationale of us being impoverish in the years to come.
do you have RM 1 million on your bank balance, at least? congratulations.
otherwise, start pack up your bags and leave.
to mr backman,
i know you care about malaysia. but nobody told us anything or consulted us on anything when we collide with the 1997 economics recession. we had to endure this alone. don't ever talk about racial unity or separation or disunity when white australians were attacking young arabs on the beach (if i'm not mistaken). don't tell us about making malaysian economy healthier when you discreetly supporting Timor Timur to assume independency from Indonesia and you rape their natural gas' reserves.
well, if you're australian mr backman, i say, tidy up your own backyard. Australian Dollar 1 = RM 2.8 means nothing to us. that doesn't mean you're any better than us.
to the blogger,
very inquisitive posting this time around. wish you all the best in the future.
My anonymous.. strong opinion, strong points. I don't say I agree with Backman, but he did point out some good issues that I found was good to highlight, eg. astronout. I love Malaysia very much, but I can also take critisme well.
His recent comment.
The response to my recent column 'While Malaysia fiddles, its
opportunities are running dry', published in The Age newspaper
on November 15 has been overwhelming. I've received hundreds of e-mails and messages, many from Malaysians both in Malaysia and outside, of which perhaps 95% have been supportive. Thank you for these. It seems that the column has given voice to concerns that many Malaysians have.
I'd like to emphasise (and as many of you realise already), that I
wrote the column as constructive criticism. I like Malaysia very much.
I visit often and have many Malaysian friends of all races.
I've also written a lot that is positive about Malaysia in the past, most notably in a previous book of mine - The Asian Insider:
Unconventional Wisdom for Asian Business, which has no less than
five chapters to explain to people outside Malaysia why I feel that Malaysia should be given more credit than it gets.
There have been many achievements. There is much about which Malaysians can be proud. Malaysia, for example, is far more politically mature and
developed than is Singapore. The media is more open too (but of course not as open as it could or should be.) Malaysians are more entrepreneurial too.
AirAsia started in Malaysia and has revolutionised air travel across Asia.
In Singapore, there is very much a sense that the government has to do
everything.
I also believe that the NEP, which has seen special advantages given
to bumiputeras over other groups, has been important for Malaysia.
It has been essential for nation building. Malaysia is peaceful and
while the various groups may not mix much there is clear mutual respect between them.
That is a huge achievement.
However, the problem as I said in my column, is waste. And also the
use of statistics that are blatantly wrong. Malaysia also has a big problem with transparency.
Too little account is made of how other people's money is spent.
The police too are way too corrupt for a country as developed as
Malaysia. The rote learning that is practiced in the schools also
needs to be done away with. Generations of Malaysian children are missing out on an education that should teach them how to be creative and critical - this is what a truly modern, boleh country needs. Again, my comments are meant to be constructive.
And I make them as a non-Malaysian largely because many Malaysians
feel rightly or wrongly that they cannot say these things themselves
in their own country.
Since my column was published, plans for a new RM400 million Istana have been announced and the Agriculture Ministry parliamentary
secretary has told Parliament that Malaysia's first astronaut will be playing batu seremban
and spinning tops and making teh tarik while in space. There are
countless scientists around the world who would give anything for the opportunity to go to space and do real experiments. For the Malaysian government to send an
astronaut into space to play Malay children's games serves only to
re-emphasise my point about waste. Not only that, it makes Malaysia
look infantile in the eyes of the rest of the world, which is a great pity when Malaysia has
made so many real achievements. The world is getting more clever, more competitive and more dynamic every day. There are too many in Malaysia who don't seem to understand this.
Of course my views are just that: my views. But I have spent most of
my adult life analysing and writing about Asia. I am direct and critical; I do not veil my criticisms because I don't want to waste my time or yours with readers trying to guess what I really mean. Open debate is absolutely critical for all
modern, dynamic countries. The free flow of ideas and information helps to make countries rich. Political leaders cannot do everything on their own be they in
the UK, Australia or Malaysia. They need help. Otherwise they make
mistakes. And when they do, whose fault is that? Those who prefer to stay quiet?
And should I as a non-Malaysian be commenting on Malaysia? Of course.
Malaysian political leaders and commentators routinely comment about other countries. That's how the world is now, an inter-dependent, global world.
And the world is much better for it.
I will write another column about Malaysia soon.
Michael Backman
November 17 2006
Dear koncil,
it is true that this country is in ruins if not paving the way. i'm a bit saddened by the fact that this country has since gotten the limelight for the wrong reason.
people, intelligent people like you & a lot more are being hindered their chances.
this country, to my personal opinion, is rule by some mofo-gangsters & idiots. mudahan Allah lindungi rakyat malaysia. semuanya.
it's - make or break.
have a lovely day!
Yes, one side is telling one thing while the other keep queiet. Would be interesting to see government fight their way through this instead of the normal silence.
But I love it when big issues arises. It make you realise that the togetherness is still there! Malaysia.. cai yok!
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