Some Quick Bytes On The NCER

I wanted to resume my blogging on something else, but thought to do a 'quick' commentary on a current economic mego-project first. The Northern Corridor Economic Region (NCER) - a new mega project - was launched yesterday. Some observations:

1. I am quite supportive of the agricultural modernisation thrust, only such efforts tend to result in employment reducing in the agricultural sector! So, is there a real engine for alternative employment in place, or is government again hoping to rely on infrastructure projects on the outset?


2. The strategic plan is actually better thought out than the SJER/WPI was. Probably the result of more time, effort and more considered input from people who know what they are talking about. Outside of the Seeds R&D and waste materials businesses though, I find the plan has nothing new and earth-shaking, or as Dato' Marina Mahathir would say,"Kurang Merah". The plan is actually just conventionally sound.


3. Can't help but note quirk no 1 being the 'Halal Hub'. This concept is still unclear to many people in Malaysia, let alone investors globally. It detracts from the Malaysian Halal brand even, giving people cause to wonder why Malaysia needs 'Halal Hubs' if its Halal certification is the best around.


4. Nice maneuvering of Gurun as an 'Automotive Hub' (quirk no 2) with incentives in the NCER plan referring also to the failed National Automotive Policy (NAP). Continuing to help SM Nasimuddin's family at Naza we see... I hope not at the expense of Proton again...


5. Quirk 3 appears in page 14 of the pdf doc on this link http://thestar.com.my/archives/2007/7/30/nation/northernCorridor.pdf where the IMT-GT (Indonesia Malaysia Thailand -Growth Triangle) is incorrectly drawn, such as to exclude much of Thailand but include Singapore instead! Is this the Singapore friendly 4th Floor's contribution to the document?


6. I expressed before of the government's over-reliance on Sime Darby's competency. Firstly, Sime Darby's meant to lead the 'Synergy Drive' effort. It has to continue to deliver as a conglomerate. It was even touted as a Proton saviour. It is also meant to continue to lead the effort for the NCER. Will something give?

On a more petty side, I take great offense in the picture here showing Kedah to be much smaller than North Perak. Most insulting to us Kedahans!

The verdict is nonetheless a big tick compared to efforts of the past efforts by the Lah-ist regime. Thankfully, as they can't convert the NCER name to refer to 3 Sultans simultaneously (at least my non-Oxbridge brain can't!) and as they are also not likely to involve the outdated walking PR disaster that is Musa Derhaka in this, they should be able to avoid boo-boos that continue to dog the ever-unfortunate SJER.

Will Tun Dr M be considered to chair the committee equivalent to Musa's down south?

Re-Focussing Angst And Efforts On Foreign Direct Investments (FDIs) - SJER


After my last posting, a fellow Promudan challenged my cynicism towards the IDR, citing the government's intention for IDR to emulate the the Pan-Pearl River Delta Development in China; where Singapore plays the role of Hong Kong and IDR region that of the mainland provinces of South China.

At this stage, allow me to begin referring to the IDR by its old name, the SJER or South Johor Economic Region. The reasons for this I will present later.

I actually do not agree that the SJER emulates the critical elements of Pan-Pearl River Delta Development. Those who equate then have accidentally, or by choice,ignored the following factors:

• LEVEL OF INTEGRATED DEVELOPMENT - Pan Pearl is also called 9+2, where Fujian, Jiangxi, Hunan, Guangdong, Guangxi, Hainan, Sichuan, Guizhou and Yunnan are jointly developed WITH Hong Kong and Macau in one development effort. The effort is integrated for the benefit of the whole or majority of the whole, with the following implications:

1. The focus of development should be equally weighed against the needs of all parties, whereas the government pitch seems to be overly-sensitive of fulfilling Singapore's needs for SJER, specifically, land (low land investment oversight), labour (passport-less region?) and basic resources like water.
2. In reality, for SJER to be equivalent to Pan-Pearl, the SJER region must include Singapore WITHIN SJER, with the SJER management body having a say in directing Singapore's development to support SJER. Can't imagine Harry Lee Kuan Yew agreeing to this though! He would basically be reporting to the state government under the rule of the Sultan of Johor!
   

• RIGHTS OF SOVEREIGNITY - for which the problem seems to be very much our own government's lack of sensitivity of what the inherent rights they should be protecting.
  

1. As mentioned, for SJER to be like Pan-Pearl, Singapore's development must also be driven by needs dictated by SJER development board etc for the sake of SJER as a whole. I see it unlikely for Singapore to agree as it would abrogate their sovereign rights.
   
2. It is hence strange that the Malaysian government does not seem to mind having Singapore government reps give direct input as part of SJER's management core. This must be one of the few instances in the world were even a slice of power is surrendered voluntarily by a government to a foreign power to decide on the fate of some of its citizens on its own sovereign soil!
3. Pan-Pearl does not have this issue of course, as HK and Macau are part of China, avoiding any sovereign issues.
   

• SIZE - The biggest difference between the SJER and Pan-Pearl is by far in size and scale. Pan-Pearl River Delta's 9 Chinese provinces are significantly larger than Malaysia - why then is the focus so South Johor-centric!

1. If the government was right serious and about emulating Pan-Pearl, the region should be LARGER, and even incorporate slices of Indonesia, perhaps also Thailand and Southern Indo-China.
2. The government can then have tried to be clever by positioning South Johor as an alternative secondary (but fast growing to equal) hub to Singapore for the wider Pan-Central ASEAN Development.
   

• REGRESSION TO THE 80's FTZ ERA - The SJER seems to be a regression from the MSC and BioTech corridors we had been moving to as offerings. The MSC, Kulim Hi-Tech Park, etc included a focus on key industry niches that also pushes Malaysia up the FDI value chain. The SJER is just a broad-based resource Free Trade Zone (FTZ) with some glitz, but no apparent value focus.

1. Hence, by ignoring all the above, the government has not offered up a real equivalent to Pan-Pearl with SJER, when comparing FTZ to FTZ! FTZ - this is so 1980's! (Incidentally, when Musa Hitam was last involved actively in development as a cabinet minister)
2. As an FTZ, on size alone, the SJER is hence poor competition to Pan-Pearl, and certainly struggles to provide an ASEAN-wide offering to challenge it. Indeed, this is probably why the SJER is being poorly received by the West (who'd rather invest in China), Japan (prefer Indochina) and even Oil-Rich Arabs (Dubai is still being pumped up). Hence probably the over-focus on one ever interested party - Singapore.
   

But as I said before... Singapore should not matter so much...

As I'm busy with a new baby and now with my sister's coming wedding, I'll keep a running brief on this piece and perhaps update it from this stage onwards as and when info, understanding and opinion gels.

So, why do I wish to still refer to the IDR as the SJER. Well the reasons are:

1. I understand that permission for use of his name for the SJER has not as yet been sought from the Sultan of Johor. The name "IDR" was unveiled as a 'surprise', against all rules of protocol and Malay propriety at the launching of SJER, to the Sultan's chagrin, and it seems he is still waiting for the request from those 'in charge'.
2. SJER is a more appropriate acronym for it, being Singapore's Johor Economic Rape!
   

One last running word on the NEP thing - I don't see why the NEP and its removal or otherwise is such a big deal where attracting FDI is concerned. In truth, EU commissioners like Rommel have something to complain about all ASEAN countries - Indonesian corruption, Thai's military, Philippines' gunpowder democracy, even Singapore's authoritarianism.

In the end, NEP had not been able to deter investment in Malaysia throughout the 70's through to even post 2000. Why should it 'magically' be factor now? The outside investors just don't care about our social-engineering agenda - as long as their investments are not risked by it... Is there anyone out there selling the story that the NEP puts investor's good money at risk...? Who...?

Re-Focussing Angst And Efforts On Foreign Direct Investments (FDIs)?

A discussion on the Promuda Circle on our Foreign Direct Investment (FDI) performance (which can be tracked by even non-members from this link) has such potential that I'm taking a break from my new baby. (Yes, the another son of mine has arrived, Alhamdulillah!)

Of the matters not yet said on the discussion at the Circle, which also explored the issue of Malaysia's competitiveness vs China and Singapore, I put forth the following to be noted in discussions on FDIs:

1. W.r.t. competition for FDI, Malaysia is typically not seen as a competitor to China, but the ASEAN Free Trade Agreement (AFTA) region, i.e. ASEAN, is seen to be so. In fact, outside of the cash-rich aberration that is the gulf states, the demographically attractive regions for FDI now are seen as China, ASEAN and India, in order of 'sexiness'.
2. Malaysia is hence not really competing with China for FTA, but rather with other members of ASEAN for FDI into ASEAN. Of course our own competitiveness may help drive ASEAN competitiveness upwards to help ASEAN compete against China, but in a country perspective, Malaysia competes with say Thailand for ASEAN FDI, much like Jiangsu competes with Shandong for China FDI, or Tamil Naidu with Karnataka for India FDI.
3. Malaysia also does not, or rather should not, compete with Singapore for ASEAN FDI. This is because Singapore's role in ASEAN as a region is much like Hong-Kong's or Shanghai's, that of an enabler of inter and intra regional trade. It also fulfills a role familiar in other regions as a neutral clearing house for finances, like the Swiss performs for Europe and Frankfurt and London from within the EU.
4. Malaysia's competition is really the other 'almost there nations' of Thailand, and if you like, perhaps Jawa and Luzon as high net-worth regions within Indonesia and the Philippines. These countries and regions compete for FDI to fulfill its own development and also when acting as launching pads into higher risk and potential areas of development in Indochina, and the rest of Indonesia and the Philippines.
5. The main reason some ASEAN countries like Malaysia, Indonesia and Thailand, are annoyed with Singapore is because it misbehaves whilst trying to impose a stronger presence in the region (than it deserves?). In the case of Shanghai and HK, this had resulted in swift reprisals (corruption charges on Shanghai Mayor and the general put-down of over-zealous democratic activists in HK by mother China). Hence the Thais are trying to emulate such actions with their treatment of Temasek's Thai holdings post-Thaksin.

Perhaps Singapore behaves this way on behalf of LKY, who's ego likely suffers from the fact that he had never been considered the leader of the ASEAN or South East Asian nations when two of his Malaysian rivals (Malays to boot!) had been seen as such; Tunku Abdul Rahman (with MaPhilIndo and the Konfrantasi) and Tun Dr Mahathir (when he pushed for EAEC which resulted in ASEAN+/EAEG being formed regionally and APEC being formed by the US as a counter).
Please note that from the outset I assume that we are trying to attract the right sort of FDI, the type that will result in Greenfield economic development, not simply selling Malaysian companies to foreigners (individuals and entities) and calling them FDI!

In the end, Malaysians should consider the following 2 approaches to enhancing our attractiveness to the right form of FDI:

1. We should benchmark against and close the gap between us and the competitors that are beating us, and Indonesia (Jawa most likely) and Thailand are beating us to FDIs at the moment.
2. We have to remove the factors that erode our value as an FDI destination, and I'm not talking about the NEP et al, using this as an excuse is simply politicising the issue out of ignorance.
   

The factors that erode our value as an FDI destination include:

• inefficiencies in actions and infirmities in government policies.
• the continued perception of indecisiveness and lackadaisical attitude of our nation's current leaders.
• being trapped in the old models for development, like free trade zones/special development regions (the IDR being a case in point)
• in our insecurity, forgetting to nurture our real strengths as a nation, such as our creativity, openness and appreciation of diversity.
• being over-respectful of the ideas and initiatives of others whilst neglecting to value local talent, achievements and initiatives
  

The Singapore factor is only a factor as long as we allow it to be a factor. In the end, Singapore should not matter. Else, Tunku Abdul Rahman would not have thought its 'value' to be insufficient to compensate for its bothersome leaders, leading him to expel Singapore from the Federation for the greater good of Malaysia!

It hence continues to puzzle me why the Lah-ist regime is so hard-up for Singapore to participate in the IDR? In fact, why have an IDR at all? I would have thought North Perak or the Malaysia-Thai Border or perhaps Sarawak from Sibu to the interior deserves more development focus than the IDR. Could it be because Singapore sees no benefit from developing these other regions? Why should it matter what Singapore thinks about Malaysia's priorities?