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"We will surely get to our destination if we join hands."

- Aung San Suu Kyi

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Dear readers,


I am very grateful to all of you who, despite the obvious deterioration of the quality of my posts since late last year, continued to read my Arrested Development. Thank you.


Tomorrow is polling day. Gandhi once said, "the spirit of democracy cannot be imposed from without. It has to come from within". Malaysia is far from perfect but it is our home; tanah tumpahnya darah kita. Many of us are disillusioned but it is my earnest conviction that deep inside, everyone harbours a hope for a better future of a nation united. Do our part. Put our apathy and cynicism aside, even if it is for a day.


Vote. Malaysia needs us.


Anak Bangsa Malaysia,
Elanor

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Malaysian Economy: Slow and Dangerous Descent

The latest Morgan Stanley Global Economic Forum entry has a piece on the Malaysian economy by their in-house analysts, Deyi Tan and Chetan Ahya. Its concluding paragraphs nicely summarise the deep concern of most of us who understand the macroeconomic situations of Malaysia:

Long-term Risks − Economy Outside of Commodity and Construction Pump-priming Losing Shine

Beyond the cyclical short term, we are also less sanguine about Malaysia’s structural prospects. Its natural resource endowment and the leverage of that to finance investment and subsidizing growth have allowed the economy to grow with reasonable momentum. This has likely lessened the urgency to improve the competitiveness of the economy outside of commodity and construction pump-priming. Indeed, we note that Malaysia’s export sector likely suffered, not only from cyclical pressures but also structural pressures. Export growth has been dragged down by weak electronics performance and, at 2.7%Y, export momentum is one of the lowest in the region for 2007. Malaysia has been losing market shares in key export segments. Integrated circuits and telecommunications equipment have seen their global market share decline from 8.0% and 4.5%, respectively, in early 2000 to 6.5% and 2.6%, respectively, in 2006 − at a time when Singapore has improved its global share in higher value-added production such as integrated circuits from 11.2% to 17.3%.

Additionally, the government’s efforts to move further up the value-added chain have been hampered by its lopsided focus on infrastructure hardware – which contributes relatively little to long-run competitiveness – rather than human-capital software. Its standards of the education system have fallen behind the government’s policy aspiration of economy upgrading. Policies such as the National Economic Policy (NEP), which give privileges to the bumiputras, have also led to a brain drain, compounding the problem of talent-pool shortage.

Malaysia has 13 years before its oil runs dry in 2021. Concerted government efforts to improve overall competitiveness would be essential to grow the economy beyond the medium term, in our view.

Just want to add on to the bit on oil: in a longer perspective, I believe that the oil that we have is a curse. It has muted much of the urgency that the economy needs in reforming itself structurally. Ironically, it is somewhat analogous to the subsidy curse that the Malaysian society is suffering from, perpetuated by misguided policy emphasis motivated by short-sighted political expediency. When these 'protections' are lifted, Malaysia will be very ill-equipped to face the challenges of the world.

If you want to protect your children from the uncertainties of the world, you do not lock them up and make them weak. You should educate and make them stronger, so that they could rise to the challenge the world has to offer and turn adversities into opportunities.

Elanor

PS: "Concerted government efforts to improve overall competitiveness would be essential...". It is difficult to imagine how, the current government, being the source of much of the problem, can also be the solution to the same problem. Especially given the state of complacency, institutional corruption and lack of political competition that it is currently afflicting the country.

Wealth of Knowledge and Talents

A close friend recently had his co-authored paper published. Written on China and published in Hong Kong, the paper is a product of two Malaysians. Titled: The External Wealth of China: An Investigation from the International Balance Sheet Perspective (Sheng and Ng, 2008, Hong Kong Institute of Monetary Research, WP 01/08), the paper is very short and readable (i.e., highly non-technical), but insightful nonetheless as it emphasised on a new perspective of looking at economies.


The Paper

This short paper is actually based on a longer piece of work done on Malaysia two years ago by the authors. The unpublished draft of the original research is still available here: The External Wealth of Malaysia (Sheng and Ng, 2006). In my opinion, the original work is more in-depth, detailed and insightful, especially given that it was written two years ago.

Unfortunately, existing channels for publishing properly peer-reviewed papers are so limited and inadequate in Malaysia, the paper never had a chance to be published. It was eventually rewritten to emphasise on China instead of Malaysia and was submitted to the Hong Kong Institute of Monetary Research for publication as a working paper.

This makes me think of all the silly rhetorics on turning Malaysia into a Knowledge Economy and producing Nobel Laureates by 2057, and ponders the tragic irony that is the reality.


The Main Author

The irony alluded to above fits perfectly well into the life of the main author of the paper, Andrew Sheng. He is perhaps the most impressive self-made global technocrat from Malaysia alive today, and at the same time, the most locally under-appreciated one. Ask any Malaysians if they know who Andrew Sheng is, and chances are, you will get a blank stare.

Andrew Sheng is a Sabah boy who begun his career in Radio Malaysia. He then worked for close to two decades in Bank Negara Malaysia, and became a legend in the Central Bank for his brilliance and leadership quality. His highest position was as the Assistant Governor and Chief Economist of the Central Bank.

Unfortunately, his development was clearly arrested in Bank Negara and Malaysia overall. The position he held was as high as he could go in his own country. He was soon seconded to World Bank in Washington as a Senior Manager, and eventually given the position of the second in command of the Hong Kong Monetary Authority, the "Bank Negara" of Hong Kong. He was in the crisis rescue team for Hong Kong when the financial crisis unravelled in 1997, and was awarded the Silver Bauhinia Star for his service. Soon after, he was then promoted to be the Chairman of the Hong Kong Futures and Securities Commission, essentially becoming the chief regulator of the biggest financial market in the Asia.

Retired, he is now an adjunct professor in Tsinghua University, Beijing and Chief Advisor of the China Banking Regulatory Commission, contributing regular articles and short pieces in publications such as International Herald Tribune, IMF Finance and Development and Caijing Magazine.

One can't help but to wonder what he could have achieved, and the opportunities Malaysia could have given him if he had chosen to remain in the country. It is sad that the greatest Malaysians are often those whom are not in Malaysia.

Come to think of it, the title of the original paper is ironically apt: The External Wealth of Malaysia.

Indeed.

Elanor

Postal Voting

I went to London yesterday, to the Malaysian High Commission to register myself as a postal voter. Apparently, it was the last day to do so.

When I reached there, I was directed to the consular office to fill in the necessary form. I was rather heartened that I was not the only one there to register for postal voting. Yes, most people were there to register their marriage, renew their passport and other usual administrative matters, but quite a number were there to register to vote too.

At least more than I thought there would be. In the hour or so that I was in consular office, I met at least 10 other people who were there to exercise their civic duty. Some, like me, were not from London and most, including me, were rather clueless on the whole process. But the whole thing was surprisingly quick and easy, and the nice lady who attended us was very helpful.

While waiting and filling in the form, some of us joked if we should write down "Malaysia" under the "Bangsa" column instead of "Cina" or "dan Lain2". Teehee.

But I did noticed a rather curious pattern: everyone whom I met to register was Chinese and female. Hmmm. I can think of many interesting implications.

Oh well, looking forward to going to London again on the 8th.

Here's to greater political competition :)

Elanor

The Picture of Corruption

From the Royal Government of Bhutan.

Our Choice

“Freedom is a rare and delicate plant. Our minds tell us, and history confirms, that the great threat to freedom is the concentration of power. Government is necessary to preserve our freedom, it is an instrument through which we can exercise our freedom; yet by concentrating power in political hands, it is also a threat to freedom. Even though the men who wield this power initially be of-good will and even though they be not corrupted by the power they exercise, the power will both attract and form men of a different stamp.”

- Milton Friedman, 1962

You do not have to be a liberal to appreciate this passage; any Malaysian who cares enough to be marginally aware of the current situation of the country would find it difficult to disagree. It is not about philosophy or ideology. It is about reality. It is agreeable not because we are captivated by the convincing reasoning of Milton Friedman, but because we are informed by very own experience on what is happening now.

And this is what I am trying earnestly to convey about the state of our country. Most were enthralled by the apparent conviction of the current Prime Minister to fight corruption in 2004, and for the right reasons. Ironically, we reacted by giving him near absolute power. If corruption is what we fear, giving the ruling party absolute power is about the last thing that we should do.

And herein lies my sorrow too; that Malaysians will make the same mistake again of allowing such concentration of power to persist due to apathy, fear and indolence; and due to the tyranny of status quo and fallacy of reasoning.

Most of us would be lying if we say that we do not want a change for the better, but change would not happen if we insist on granting the current government absolute power. Political competition is absolutely vital, for the country and for the future.

Elanor

The Sinking Ship

The parliament was dissolved yesterday.

When I woke up today and found out, I was … excited. Did not know why I should be, but I was. Just so. Perhaps it was the sense that change is abound. That something different will happen this time. The outcome of the election would be such that Malaysia would be rid of a corrupt and disgustingly inefficient and self-serving political hegemony.

I was pondering in my shower, that I should do something. Not knowing what to do, I thought perhaps I would start by blogging. The usual economics unspining. I thought that it will be good to somehow vent out my dissatisfactions of being treated like a complete idiot by the leaders of our country. That our GDP per capita has increased by 5000% since 2002 if calculated in Zimbabwean currency or that Malaysia is the world leader in competitiveness for a country that is near the equator with a population of exactly 27.5021 million. So we should all be driving our beamers to buy our nasi lemak for breakfast. Or something of such.

Or perhaps something more formal, using reasons and rationales to argue why Malaysia needs political competition specifically and change in general. Why the situation now is not a matter of lesser of two evils, but of lessening the power of a blatant corrupt political monster, on why competition provides balance of power and overall improvement of things, on why no votes are truly marginal. But I have done so before. And it was satisfying; intellectual masturbation they say. But like how Def Leppard would sing, it leaves you high and dry.

Moooo: Malaysian Politics

Then it occurred to me: what for? It is not that most people are too stupid to believe the lies. Or that Malaysians support the current government because it is doing great. Oh no. Malaysians are too smart for that.

But I have come to believe that Malaysians love statue quos; whatever they might be. Even if the status quo means a slow but sure decline of the entire nation. Aversion to change perhaps. Change is too risky. Why bother with a crisis that takes like decades to surface (although by then it would be irreversible) when you could ensure your stable life and income for the next two years or so. The future is not for me to worry about. Or is that apathy? Apathetic and risk-averse. Passive cynics, chronic defeatists, or just god damn bloody do not care. I don’t know anymore.

Funny thing is, for me, it is like, you are in this sinking ship, but all you care is to not ruin the fancy dinner you are having. If you worry, it is because the rising water is wetting your nice dinner dress.

And how apt, I am thinking of Titanic.

As the day came to an end, my excitement dissipated. This election will be the same as the previous ones. Malaysians will choose a choice that is akin to not choosing. The ship will continue to sink. I could hope that this time will be different and it is almost certain to be a false hope.

Maybe Obama is right; there is no such thing as a false hope.

But I am a Clinton fan.

Happy Valentine’s Day.

Mental note: No more Artois before sleep. A diatribe like this is so unbecoming...