Has Najib And UMNO Copped Out On Malay Rights?

When DS Najib announced that 27 services sub-sectors were being liberalised, meaning specifically that the 30% Bumiputra equity quota requirement was to be rescinded, the response was varied across the nation. As intended, the news rippled out and is already affecting the regional as well as international business and political communities' perception of Malaysia.

However, as is always the case in Malaysia, discourse on the immediate economic benefits of this surprise move by DS Najib so soon after taking power is being slowly drowned by the furore over what this means for Malay and Bumi Rights. Some have even directly questioned whether DS Najib, and by extension, due to the muted response, whether UMNO has abandoned Malay Rights.

I wasn't actually planning to write on this as I did not expect people to be surprised, but they are! There seems to have been the following different types of responses:

1. The normal pro-government media stance... but informative at least.


2. The pro-view, which is typically from the business community, both Malay and non-Malay!


3. The anti-view, which is being held by many ultra-Malays... interestingly, many who are vocal on this view are not involved in business!


4. The opportunist view, as usual the PKR boys think this was all DS Anwar's idea in the first place and that DS Najib is stealing it... grow up!

Why was I not surprised? Because even if we aren't too bound by the WTO due to the on-going breakdown of trade talks and there being worse offenders, Malaysia has signed up to AFTA, the ASEAN Free Trade Agreement, and being a leading light in ASEAN, we have to open up these sectors to ASEAN competition by 2010 anyway! Doing this early, at a time when our economy is arguably stronger than Thailand's and Singapore's has its advantages.

Being an ultra myself, and even knowing the above, I was still a little taken aback at how zen I was when the announcement was made. I know I'm not a pro-Najib fanatic, so I have done some soul searching about why I'm so relaxed about this... then it occured to me... for many of these service industries that are being liberalised:

1. Even if international competition wants to come in, IT CANNOT SUCCEED WITHOUT LOCAL PARTNERS! This includes industries such as transport and tourism.


2. There are some services in these sectors that MUSLIM MALAYS/BUMIS DON'T WANT TO BE INVOLVED IN ANYWAY AS IT IS PARTLY NON-HALAL! So, removing the 30% cap doesn't cause any loss to Malays, as we would not be interested in participating anyway. In fact, if said sectors are hence developed post cap removal, the resulting employment, and if you have scrupples, even indirect Halal employment, will be good for Malays.


3. There is always the regulatory lever that the government can apply to safeguard not just Bumi, but Malaysian rights. Significant area would be in Healthcare. We can learn much from how the US, Australia and West Europeans do this.

I do have a couple of caveats though in my guarded indifference, if not enthusiasm, over this new policy move:

1. I would oppose this if it ends up being a precursor to us signing up to the USFTA, which I believe is detrimental to the country's well-being, sovereignity and with even less benefit to be imagined now that the US economy is a mess and they have become more inward looking.


2. I would oppose excessive liberalisation of the Financial sector... but we'll have to wait and see what gets announced there...

And the answer to the question as titled, I is believe NO. DS Najib and UMNO HAVE NOT COPPED OUT on Malay Rights... not yet anyway... hopefully not ever!

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?