Perak’s Future – Part I

Last year, I wrote an essay for a local magazine outlining my broad idea of what Perak can do to revive the languishing state of its economy, and fitting in to the overall development model of Malaysia. It was written in a journalistic manner with emphasis on stylised trends to drive in its core messages, which include not just an assessment on Perak, but also general lesson pertaining to the overall state of the nation.

I am dividing the essay into three parts, with the first part being on the development of Perak in the past, and how the fate of its economy was, and still is intimately related to events in the global economic landscape.

Charting the Future of Perak:

On why technology and heritage matter

By Elanor Tan

Exploring the relevant development model and economic potentials of the state

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For every story, there is a defining moment – a moment which sets in motion subsequent chain of events; a moment which characterises the essence of the story and charts the future direction of the plot. For the story of Perak, the moment is the Industrial Revolution which began in Britain in the late 18^th century. The revolution changed the international economic landscape, and with this change, the global demand of primary commodities increased tremendously. Tin, one of the more valuable commodities fuelling this revolution, became much sought-after.

And this is how, Kinta Valley, the heart of Perak, was drawn intimately into the global economy. Perak, reputed for having the richest tin ore deposit in the world under its earth, benefited much from this surge in demand. For more than a century, tin-mining underlined the development of Perak, shaping its towns as much as it shaped its land. Kinta Valley became the first industrialised economic model of Malaya and showpiece of modern development, turning Perak into arguably the richest state of the country. By the end of the 19^th century, Malaya become the biggest exporter of tin, providing over 50% of the global supply, and Perak was at the heart of this richness.

As how the rise of Perak was shaped by global events, so was the end of this tin-induced progress. In the beginning of the 1980s, the global economy entered into a recession and the prices of most primary commodities began to drop. By the end of 1985, the price of tin collapsed, falling by almost 50% and the tin mining industry shrank rapidly. Continued depression of global demand eventually pushed the industry into economic irrelevance by the 1990s.

Unlike the Klang Valley and other states in the country which managed to ride on the new wave of global economic development in the shape of manufacturing and financial services fuelled by foreign direct investment and other form of international capital flows, Perak languished behind the shadow of its tin-mining heyday, unable to find its niche. Attempts to address this predicament through economic diversification resulted in a hodgepodge of industries, none of which could fill the void left by the tin-mining industry.

This is the story of Perak, and herein lies the clue to what is needed to unlock its economic potentials in the future – a truly integrated development model to create a new niche for the state.

Learn to look at the Bigger Picture

Global events shaped the economic development of Perak in the past, and it will do so in the future. We need to be aware of these events and capitalise on them. A prominent technocrat of the international policy-making arena once told me; the key of solving an issue is to look at it from the ground, zoom out at 3000-feet from above, seeing the surrounding issues, and then zoom out to further 30000-feet above to get a truly global picture, before going back to the ground. Economic decisions for Perak can no longer be made in isolation of the bigger picture, lest we risk being marginalised further.

First and foremost, it is important to realise that the world is fast changing. The heightened international financial integration in recent years, compounded by the continuous globalisation of trade and unprecedented sophistication of cross-border information flow, has inevitably resulted in an increasingly integrated world. While political ones remain, economic borders are fast vanishing. International economic forces now increasingly serve the interests of the consumers, not that of the governments; and wealth is created from the marketplace, not from natural resources. Like what Michael Corleone said in the Godfather, “It is not personal… it is strictly business” – movement of wealth is dictated by incentives and this realisation is important in finding an effective developmental strategy.

The best example is that of the emergence of the two ancient civilisations in Asia, China and India. For Malaysia to compete directly with China and India in what they are good at will be a certain suicide. Remaining at status quo would mean marginalisation, and competing with more advanced economies is not really an option. Thus, having a different strategy is crucial. We have to be willing to tap unexplored territories. We can’t rely solely on our traditional, but increasingly irrelevant, strengths. Instead, we have to create new niches and generate new competitive advantages. It is easy to see how the same applies for Perak.

Secondly, we have to realise that the development of Perak is a part of the overall development of Malaysia. We are in the same boat together, facing the same challenges. As such, the strategy for Perak shouldn’t be considered as a competition with other states. The notion of we are Perakeans should never be considered above the notion that we are Malaysians. Similarly, Perak shouldn’t be duplicating the same development strategy of the other more advanced states. There is very little point in turning Perak into a mini-version of Kuala Lumpur or Penang. What we need is a complementary model, a strategy that fits into the overall national picture. It should be emphasising on Perak riding on the growth of other states and concurrently enhancing the growth potential of others.

… to be continued…