GST and reduction of income tax

The introduction of GST should have 2 key implications apart from the obvious ones of the GST, being a broadbased consumption tax, being a more efficient form of taxation than income tax.

First, there must be a commensurate reduction in personal income tax. I still maintain that the ultimate target should be an 18% top tax rate. This will help to put Malaysia back on the competitive map.

Second, given the trade liberalisations that Malaysia so strongly subscribes to, the GST's value-added tax features will ameliorate some of the losses of customs revenue from tariff reductions.

That said, platitudinous and suitably nebulous remarks have been made on how GST will not be a burden on the ordinary rakyat. I hope there is true sincerity and genuine understanding on the part of the government regarding the true effect of the GST because all consumption taxes have a regressive effect i.e. where the lower income groups pay more as a percentage of their income than the higher income groups. The rakyat will want to know how "gentle" the implementation will be and what are the measures to "safeguard the interest of the people".

There is a projected increase in government revenues to the tune of an additional RM1 billion when GST is implemented (and sales tax retired ... what about personal income tax reduction???).
______________________

Here's a useful excursus on the impending GST regime done by KPMG.

GST may be at 4%

No editorialising here. Thanks to bro Walla, here's the link to the GST Discussion Paper dated 18th July 2005 prepared by the Ministry of Finance. I'm just posting this report for the record:

The government plans to impose goods and services tax (GST) at 4%, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said Thursday.

"We are replacing the current sales and services tax, which is currently at 5% to 10%," he told reporters at the Culture, Ideas and Values Workshop organised by Foundation For the Future at Country Heights Resorts in Kajang.

He said the GST implementation was important for the country's future.

"The revenue source must be sustainable. If we can get sustainable revenues, we can get a good budget," he said.

He said the Consumer Price Index (CPI) would not increase as a result of the GST implementation.

Some selected items especially essential goods like rice, sugar, cooking oil and flour as well as domestic transportation would not be subject to GST.

Husni said the Bill on GST would be tabled in Parliament for the first reading this year, with a second reading in March next year.

GST would be implemented 18 months after the second reading.

The government expected an additional RM1 billion revenue annually after the first year of its introduction.

GST bill: Where can the public give comments?

A bill relating to the proposed introduction of the goods and services tax (GST) will be tabled for first reading at the end of the current Dewan Rakyat sitting.

Najib is quoted as saying that, "This will allow the public to give their comments, engage them, and if we find it necessary to fine tune it, we'll do so".

He stressed that if the government decided to introduce the GST in Malaysia, it would do so "very gently".

"It's not going to be an abrupt introduction," Najib said, adding that if the GST materialised, the rate would not burden the poor or middle-class Malaysians.

"And, it would not lead to inflation," he added.

Firstly, by tabling a Bill, the legislative process has commenced. There's a First Reading, then, there's a Second Reading and, then, a formal Third Reading whereupon the Bill becomes an Act of Parliament. The speed of the legislative process is at the discretion of the coalition in power.

A sincere effort at allowing public input should involve putting up the draft Bill in a suitable website, perhaps by the Treasury where comments can be received in an orderly fashion.

Tabling a Bill is a fait accompli which is, by definition, "an accomplished, presumably irreversible deed or fact".

Secondly, all consumption taxes has an inflationary effect even if it is a once-off effect.

Thirdly, "not be(ing) abrupt" is a relative view of the Prime Minister. If by "not be(ing) abrupt" he means that there will be lots of publicity about the Bill (and, therefore, following the reasoning, there should not be any psychological shock), then, he may be correct. But, the moment the Bill becomes an Act of Parliament and, it is given the Royal Assent and, is given a Commencement Date, then the implementation will still inevitably be felt by the public and the Malaysian economy as an "abrupt" phenomenon.

The question, therefore, is why the draft Bill should be tabled in Parliament when it can easily be posted at Treasury's website where public opinion can be sought for a period of, say, 6 months?

Why Malaysia lacks innovation hotspots

World Bank expert on development issues Dr Shahid Yusof Malaysia is reported to have informed our NEAC that Malaysia lacks innovation hotspots to propel the development of homegrown technology.

What are "innovation hotspots"?

Dr Shahid, who is also World Bank economic adviser, defined innovation hotspots as urban areas that are a rich source of technological findings and has the entrepreneurship to convert some of these findings into commercial innovations. This is important to note.

Artificial innovation hotspots won't work

He made the disturbing and devastating observation that despite huge investments over the years to create such centres like Cyberjaya and Iskandar Malaysia, Malaysia has yet to produce these innovation hotspots. This is a clear indictment of the wrongheaded strategy pursued all along. The Malaysian government has been building, building and building hardware. There has been an utter disregard for the "software". Our education standards has declined appallingly.

So, can such an innovation hotspot be created? The short answer is “yes”, Dr Shahid said, but - and, please note this Najib and Idris Jala - it would probably take five to 10 years to achieve.

It would also require 3 things:

• strong political commitment from the Government,
  

• raising the quality of education and
  

• a generous research funding policy.

FDIs don't engender innovation

“Foreign direct investment can help, but thus far spillovers have been weak,’’ the good Doctor said. This is an indictment of MITI and MIDA. I've read their charter about technology transfers for years. Yet, there's nothing to show in the form of budgrafting any technological prowess to Malaysians.

What it takes to create innovation hotspots

A key ingredient to develop hotspots is to have centres of basic and applied research that generate surplus ideas and entrepreneurial talents to commercialise them.

Above and, absolutely beyond everything else is the quality of Malaysian education.

There's really nothing more important than education. Without education there is no thinking mind, no inquisitive mind.

But, education must encourage a culture of questioning, a spirit of inquisitiveness.

My concern is that our nervous Malaysian government is not confident enough and intelligent enough to open the Pandora's Box of academic freedom in local universities that will push young Malaysian minds towards an innovative mindset.

Without local unversities being permitted to push the envelope in all respects, not just in science, and technology but equally so in sociology, economics, socio-economics and political science - for, all these fields are interconnected - there will be no light at the end of the tunnel.

That is why I place some hope with what Idris Jala and his team are trying to do. And, I fervently hope that I'm not wrong to place some faith in them.

They have to review the University and University Colleges Act 1971 which has probably snuffed out 2 generations of potential. Is there a political will for this?

English at work is 'weird'

It is this type of completely flabbergasting views from within the ruling coalition's senior ranks that rankles and baffles the rest of Malaysia. This is the report:

MALAYSIA'S deputy education minister has said that speaking English in the workplace is 'weird' and harmful to the nation's culture and identity, a report said on Wednesday.

Mr Mohd Puad Zarkashi said employees in the private sector used English 99 per cent of the time and should switch to Bahasa Malaysia in order to show pride in the national language, the New Straits Times reported.

'This also occurs in government-linked companies where we have this weird culture of people speaking to each other in English instead of the national language,' he said at the launch of a linguistics seminar. 'We are polluting our own culture and identity as a nation,' he said.

'It would be difficult to strengthen the position of Bahasa Malaysia if this culture continued,' he added, urging Malaysians to emulate the French, Japanese and Koreans, who stuck to their own language.

The New Straits Times said Mr Mohd Puad also criticised young people for using a mix of English and Bahasa Malaysia in SMS text messages and on the Internet.

He called on the nation's leaders to use Bahasa Malaysia for all meetings and events and said that when he receives letters in English he returns them and asks for them to be written in the national language.

It is hard to imagine the Deputy Education Minister being able to understand this piece of advice given by Vikram Nehru, chief economist for East Asia and the Pacific for the World Bank:

THE World Bank said on Wednesday that Malaysia must introduce sweeping reforms if it wants to achieve its ambitious goal of becoming a developed nation by 2020.

'To reach the 2020 developed status, the World Bank is proposing a four-pillar strategy,' Mr Vikram Nehru, chief economist for East Asia and the Pacific, told reporters.

'Malaysia must specialise the economy further, improve the skills of its workforce, make growth more inclusive and strengthen public finances,' he told reporters at the launch of a report on the Malaysian economy.

The World Bank said Malaysia's economy will shrink 2.3 per cent this year but rebound to a 4.1 per cent expansion in 2010.

Mr Nehru said the South-east Asian economy was on track to grow between 5.6 to 5.9 per cent in 2011 and 2012.

The report said Malaysia faced the challenge of shifting from an upper-middle economy to a high-income economy.

Nationalistic hubris and fervour may be a form of gallery-pandering. But, it is tragi-comedy in the context of the difficult and challenging task of re-positioning Malaysia's economic competitiveness.

We are heading towards a rock and a hard place, as the Americans say, when we are no longer a low-income destination and, nowhere near a high-income sophistication in terms of human resources and skill sets.

The significantly lower amount of foreign direct investments is a telling sign that Malaysia's previous comparative advantage as a low-income, low- to mid-skilled manufacturing hub is waning.

What this country needs are political leaders who understand what's going on, not some opportunistic superficial mouthpiece who only spew nonsensical, inane and unhelpful remarks that serves only to rankle the rest of us who are trying to get the job done.

Idris Jala has some positive strategies

If this report is accurate, it will be seen as the BN having recognised one of the key bugbears in Malaysia's nation-building and, earnestly working to remedy it. It appears that Idris Jala hasn't wasted any time:

Some of the most robust discussions about the future of Malaysia have been taking place in Putrajaya over the past several weeks. And if some suggestions are actually implemented, Datuk Seri Najib Razak could actually pull the rug from under his political foes.

This includes the idea to overhaul the controversial Biro Tata Negara or National Civics Bureau that has been seen to be more of a propaganda unit, the possibility of a mediation council to handle disputes among different religions and making the government procurement process more transparent.

Government officials told The Malaysian Insider that these proposals are part of initiatives being pushed by Datuk Seri Idris Jala and a task force set up to promote 1 Malaysia, Najib's concept announced when he took the top job on April 3.

1 Malaysia is one of several laboratories set up to push through ideas on Key Performance Index (KPI) and National Key Results Areas (NKRAs) that Najib knows will be the tipping point in the general election.

His ruling Barisan Nasional coalition was badly beaten in Election 2008 under the leadership of former Prime Minister Tun Abdullah Ahmad Badawi when it lost four more states and 82 federal seats to give up its customary two-thirds parliamentary majority.

But his recent appointment of Idris, the former Malaysia Airlines managing director, to the Cabinet as Minister in the Prime Minister's Department to take charge of KPIs could help make the difference.

Idris has started his work by setting up labs outside the government administrative complex with select people to test out ideas and strategies to move Najib's 1 Malaysia concept

Arguably the 1 Malaysia lab is the most important now because Idris and his team are incubating ideas which touch on race, religion and other stumbling blocks to better race relations which have deteriorated over the years.

Last week, Najib and several key ministers were given a briefing on some of the ideas and many of the Cabinet ministers appeared supportive of some of the initiatives. Among the ministers in the visit were Deputy Prime Minister Tan Sri Muhyiddin Yassin, Higher Education Minister Datuk Seri Khaled Nordin and Minister Datuk Seri Nazri Abdul Aziz.

It is understood that the lab felt the Biro Tata Negara needed a complete makeover to promote inclusiveness. Several young Pakatan Rakyat leaders have complained it was "brainwashing" students who were taught to hate opposition parties.

What is clear is that Najib remains Idris' strongest ally and is willing to push the envelope for changes in the government. Several Umno ministers are also more supportive of change than before, government officials said.

"Idris and his team's biggest task will be presenting their ideas at a Cabinet retreat next month. If there is buy-in, some of the biggest bugbears in our country will finally be addressed," one government official told The Malaysian Insider.

An analyst with knowledge of the 1 Malaysia lab activities concurred.

"If these initiatives are endorsed by the Najib administration and implemented, they could pull the carpet from under the Pakatan Rakyat," the analyst told The Malaysian Insider.

He said the key would remain in the implementation and also acceptance by the civil service.

One thing Malaysia can learn from China

According to this piece there are 5 things that the U.S. can learn from China. They are:

1. Ambition
2. Education
3. Looking after elderly
4. Save more
5. Look over the horizon

There's not that much that's in the piece that is new to us. What needs emphasising, though , to the people running Malaysia's education policy, is this part that I am extracting. We've told you once, Muhiyiddin and Wee and we'll tell you a million times ... it's education in English, education in English, education in English, education in English.....education in English.....education in English :

2. Education Matters
On a recent Saturday afternoon, at a nice restaurant in central Shanghai, Liu Zhi-he sat fidgeting at the table, knowing that it was about time for him to leave. All around him sat relatives from an extended family that had gathered for a momentous occasion: the 90th birthday of Liu's great-grandmother Ling Shu Zhen, the still spry and elegant matriarch of a sprawling clan. But Liu had to leave because it was time for him to go to school. This Saturday, as he does every Saturday, Liu was attending two special classes. He takes a math tutorial, and he studies English.

Liu is 7 years old.

A lot of foreigners — and, indeed, a fair number of Chinese — believe that the obsession (and that's the right word) with education in China is overdone. The system stresses rote memorization. It drives kids crazy — aren't 7-year-olds supposed to have fun on Saturday afternoons? — and doesn't necessarily prepare them, economically speaking, for the job market or, emotionally speaking, for adulthood. Add to that the fact that the system, while incredibly competitive, has become corrupt.

All true — and all, for the most part, beside the point. After decades of investment in an educational system that reaches the remotest peasant villages, the literacy rate in China is now over 90%. (The U.S.'s is 86%.) And in urban China, in particular, students don't just learn to read. They learn math. They learn science. As William McCahill, a former deputy chief of mission in the U.S. embassy in Beijing, says, "Fundamentally, they are getting the basics right, particularly in math and science. We need to do the same. Their kids are often ahead of ours."

What the Chinese can teach are verities, home truths that have started to make a comeback in the U.S. but that could still use a push. The Chinese understand that there is no substitute for putting in the hours and doing the work. And more than anything else, the kids in China do lots of work. In the U.S., according to a 2007 survey by the Department of Education, 37% of 10th-graders in 2002 spent more than 10 hours on homework each week. That's not bad; in fact, it's much better than it used to be (in 1980 a mere 7% of kids did that much work at home each week). But Chinese students, according to a 2006 report by the Asia Society, spend twice as many hours doing homework as do their U.S. peers.

Part of the reason is family involvement. Consider Liu, the 7-year-old who had to leave the birthday party to go to Saturday school. Both his parents work, so when he goes home each day, his grandparents are there to greet him and put him through his after-school paces. His mother says simply, "This is normal. All his classmates work like this after school."

Yes, big corporate employers in China will tell you the best students coming out of U.S. universities are just as bright as and, generally speaking, far more creative than their counterparts from China's élite universities. But the big hump in the bell curve — the majority of the school-age population — matters a lot for the economic health of countries. Simply put, the more smart, well-educated people there are — of the sort that hard work creates — the more economies (and companies) benefit. Remember what venture capitalist Tam said about China and the electric-vehicle industry. A single, relatively new company working on developing an electric-car battery — BYD Co. — employs an astounding 10,000 engineers.

China, critics will point out, doesn't produce (at least not yet) many Nobel Prize winners. But don't think the basic educational competence of the workforce isn't a key factor in its having become the manufacturing workshop of the world. It isn't just about cheap labor; it's about smart labor. "Whether it's line workers or engineers, we're finding the candlepower of our employees here as good as or better than anywhere in the world," says Nick Reilly, a top executive at General Motors in Shanghai. "It all starts with the emphasis families put on the importance of education. That puts pressure on the government to deliver a decent system."

And the Chinese government responds to that pressure in some intriguing ways. It insists that primary-school teachers in math and science have degrees in those subjects. (Less than half of eighth-grade math teachers in the U.S. majored in math.) There is a "master teacher" program nationwide that provides mentoring for younger teachers. Zhang Dianzhou, a professor emeritus of mathematics at East China Normal University in Shanghai who co-chaired a committee charged with redesigning high school mathematics programs across the country, says recent changes have begun to reflect more of a "real-world emphasis." Computer-science courses, for example, have been integrated into the math curriculum for high school students. And China is placing even more importance on teaching young students English and other foreign languages. If you think China's willingness to constantly fine-tune its educational system is not going to have much of an impact 20 years from now, there's a 7-year-old boy in Shanghai who'd be happy to discuss the issue with you. In English.(emphasis mine)

Microfinance: Amanah Ikhtiar and RM1 billion

I've previously written extensively about microfinance or microcredit and I have highlighted the good work done by Amanah Ikhtiar in this area.

What I haven't highlighted is that Malaysia's approach to microfinance/microcredit is what I characterise as an "institutional approach" where microfunds are disbursed to borrowers in a manner not much different from a regular bank (who are also in the microfinance/microcredit game...albeit reluctantly).

With RM1 billion allocated from the Malaysian Government for lending in 2010, Amanah Ikhtiar will be a busy organisation.

I wonder if the impersonal approach used by Amanah Ikhtiar in dispensing microfinance/microcredit may result in higher defaults and delinquencies than the original Grameen Bank approach which emphasised community-based microfinance/microcredit.

In its original guise, microfinance required groups of five community members to receive funding and they acted as a loose collective, having vouched for each other. This minimises defaults and delinquencies because other members of the group will rally around any ailing member. And, each member would not want to risk the ire and opprobrium of his/her community by having defaulted.

This was a fail-safe feature in Grameen Bank's lending paradigm.

Does Amanah Ikhtiar have this feature in mind?

If not, what is the provision that Amanah Ikhtiar plans to make on loan defaults? 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50% .... when do alarm bells start ringing?

Rupert Murdoch vs Google

As I read this piece on media mogul Rupert Murdoch's crusade against the search engines and portals like Google, I was reminded about the legend of King Canute.

pix from here

Wo ai Zhong-guo ren

Let's be tongue-in-cheek at the dawn of Friday the 13th. Let's start with a classic Monty Python song, The Chinese Song:

The world today is absolutely cracked.
With nuclear bombs to blow us all sky high.
There's fools and idiots sitting on the trigger.
It's depressing, and it's senseless, and that's why...

(singing)
I like chinese,
I like chinese,
They only come up to you knees,
Yet they're always friendly and they're ready to to please.

I like chinese,
I like chinese,
There's nine hundred million of them in the world today,
You'd better learn to like them, that's what I say.

I like chinese,
I like chinese,
They come from a long way overseas,
But they're cute, and they're cuddly, and they're ready to please.

I like chinese food,
The waiters never are rude,
Think the many things they've done to impress,
There's maoism, taoism, eging and chess.

I like chinese,
I like chinese,
I like their tiny little trees,
Their zen, their ping-pong, their ying and yang-eze.

I like chinese thought,
The wisdom that Confusious taught,
If Darwin is anything to shout about,
The chinese will survive us all without any doubt.

So, I like chinese,
I like chinese,
They only come up to you knees,
Yet they're wise, and they're witty, and they're ready to please

Wo ai Zhong-guo ren [Wo, I chumba run]
Wo ai Zhong-guo ren
Wo ai Zhong-guo ren
Ni Hao Ma? Ni Hao Ma? Ni Hao Ma? Zai zhen [Ne hamma? ... Chi Chen]

I like chinese,
I like chinese,
They're food is guaranteed to please,
A fourteen, a seven, a nine and li-chese

I like chinese,
I like chinese,
I like their tiny little trees,
Their zen, their ping-pong, their yin and yang-eze

I like chinese,
I like chinese,
(fade out....)

And, more to the serious side of things, here's the Bloomberg write-up on President Hu's brief, but materially significant visit to Malaysia a few days ago. I'm too lazy to editorialise. It's Friday...

Nov. 11 (Bloomberg) -- China will help Malaysia build up its transport infrastructure as it seeks to tap more of the Southeast Asian nation’s natural resources.

The two countries will work on railway, bridge, water and energy projects as China imports more Malaysian palm oil and timber, according to memorandums of understanding signed on the final day of President Hu Jintao’s state visit to Malaysia.

“We are looking at advancing strategic cooperation in all fields,” Hu told reporters after meeting Malaysian Prime Minister Najib Razak today in the administrative capital of Putrajaya, about an hour’s drive from Kuala Lumpur.

China is the world’s largest edible oil importer. The resource-hungry nation bought 357,570 metric tons last month from Malaysia, the world’s No. 2 palm exporter of the crop. Beijing has been scouring the world for natural resources to feed an economy that has grown at least 6 percent annually since 1997. In return, it has pledged financing and help with construction of infrastructure.

“China’s appetite for commodities is almost unquenchable,” said Dorab Mistry, director of Godrej International Ltd. “We expect growth of consumption per capita of between 3 and 4 percent in China even now, they will continue to be a very good buyer of Malaysian palm oil.”

The Malaysian government is opening up to more business from China as data from the Statistics Department showed that from January to September this year, China is the second-largest market for Malaysia’s exports valued at 46.8 billion ringgit. Malaysian exports to China jumped 16 percent last month from a year earlier, figures released in Beijing today showed.

Dam Builders

Malaysia will work with Chinese companies to build a dam in Penang state, Najib said. The Mengkuang Dam will be the biggest in the area with a storage capacity of 23,639 million liters of water, supplying both Penang and surrounding areas.

A Chinese company will be awarded a contract by the Malaysian government to help develop a double-track railway that will run from Johor Bahru, bordering Singapore, to Gemas in the state of Negeri Sembilan, Najib added. Global Rail Sdn. is leading the construction of the 28 billion ringgit ($8.2 billion) project, Malaysia’s Business Times reported on Oct. 8.

Malaysia will also work with Chinese companies to build a pulp and paper mill and aluminum smelter in Sarawak state, Najib said, without naming of the China businesses that will be involved in these projects.

Second Bridge

Export-Import Bank of China, a state export credit agency, signed a credit agreement with Jambatan Kedua Sdn. for a second bridge linking Penang Island to the Malaysian peninsula. Jambatan Kedua is building the superstructure for the bridge for main developer UEM Builders Bhd.

Meanwhile, Beijing Enterprise Water Group Ltd. will work with the Malaysian government to improve the country’s sewerage services, according to one MoU signed today.

Hu last visited Malaysia in April 2002 when he was China’s vice president, Malaysia’s foreign affairs ministry said in a statement dated Nov. 6. Malaysia started diplomatic relations with China in 1974.

"Potong" saga

Malaysia really needs to loosen up...a lot.

I thought the P1 Wimax advertisements were a hoot. It's the double-entendre that made it so funny...and memorable. It's just the type of brilliance and innovative thinking that we always need.

The response from TM Streamyx was equally brilliant. The "cut, cut, cut" jibes in the TM ads were just as brilliant.

This was, in my opinion, one of the sparkling friendly jibes that corporate rivals gave one another. The exchange over the airwaves was a reminder that Malaysians can be imaginative, innovative and, humorous.

I really don't see what the fuss is all about and, I do strongly recommend that those who took umbrage at the "potong" ad should improve the quality of their lives and attend courses on how to acquire a sense of humour and learn to appreciate creativity and innovative thinking instead of pretending to be guardians of public morals.

Cut it out, I say!

MACC clears Eusoff and Lingam of wrongdoing in NZ trip

Here's what the media report says:

Datuk Seri Nazri Aziz revealed today that Malaysian Anti-Corruption Commission (MACC) investigations had found no elements of corruption when Tun Eusoff Chin and lawyer V. K. Lingam went for a holiday to New Zealand together.

The MACC decision is another reminder to Malaysians that there is something very seriously wrong with the way in which Malaysia is being governed. It is as if nothing has changed since March 8, 2008. It's really "business as usual".

Something's got to give...

Education: Can we flow into a single stream?

I must say that P. Gunasegaram of The Star has offered another balanced and sensible view of the education malaise that has dogged this country for at least 3 decades now. The pigeons have not only come home to roost. Worse, several generations of pigeons have hatched. They are flying in all directions.

Schools are incubators for young citizens. If schools are structured in a manner that enhances ethnocentricity, then, what we have are citizens that mingle only with their own race.

We are the sum of shared experiences. If I didn't sit beside Maniam in Standard Two and paid him 5 sen to solve every one of my intractable Maths problems and, tolerated his filthy habit of picking his nose in class, how could he ever have been my friend? If I didn't covet the chance to play Under-15 football and, needed to impress Baharom, the school football captain, and, needed to hang around with him and his team, how could I have become his friend?

We, each, are atoms floating around within a nation. Education and schooling gives us a chance to go beyond the comfort zone of our homes and our community to mingle and mix with other young Malaysians. That gives us a chance to transform from single atoms into compounds and complex compounds.

Education and schools are venues where the nation is built and renewed and regenerated.

Take that away and we will have what we have today. A multiracial nation that lives separate lives under the same sky.

There is much that is wrong about the Malaysian education system. Much work needs to be done.

Some of the advocates of single stream should avoid racist taunts and ethnic stereotyping in their impatient advocacy of the single stream. They should also desist from their insistence on using one dominant language.

It is when we are able to cast aside negative pettiness and racist motivations that the possibility of a single stream can materialise.

The issue of education and, choice of language medium is not a matter that we can legislate upon. Rather, it is a matter that needs positive and constructive engagement.

Such an ambience cannot be created until distrust is removed.

The fact that there is distrust over a single stream is an indictment of the political leadership of Malaysia. It's not just the BN coalition that is guilty. It is also the Pakatan Rakyat fellows who are equally guilty.

Here's Guna's most sensible analysis:

Improving the quality of national schools will solve that and provide myriad other benefits too.

WHEN the founding fathers agreed that vernacular and religious schools should exist alongside the national school system, they had no idea of the kind of problems it would give rise to.

They had no idea that it would help to polarise the education system so much that many Malaysian school children will go to schools based on their racial and religious heritage, and have little interaction with students of other races.

They had no idea that, especially in primary schools, there would be very little intermingling of children of different races, seriously exacerbating the problem of a lack of national unity.

While at the time of independence those who wanted their children to do well sent their children to national schools, these have now, along with religious schools, become largely the preserve of Malay children.

While national schools were once considered centres of excellence, their quality of education has deteriorated over the years leading to a mass exodus of non-Malay students to vernacular schools, while more religious Malays opt for religious schools. Those who can afford it opt for private education.

While national schools, because of their quality and open nature, were at one time considered natural choices for most Malaysians, well over 80% of Chinese schoolchildren and a significant proportion of Indians go to vernacular schools for their primary education.

At secondary school level, some of those in the vernacular and religious schools do come into the national school stream but by then, because of their experience in their formative years, they do not mingle as much as their parents did.

The problem gets worse at tertiary level, with government universities populated largely by Malays while private colleges and universities are dominated by non-Malays.

Some non-Malays could not gain admission to government universities and others, both Malays and non-Malays, feel the quality of local universities has fallen and want international recognition for their degrees.

Without doubt, the problem originated from one single cause – the massive deterioration of the quality of the teaching in national schools.

This was made worse by the perceived “Islamisation” of many national schools, which made non-Muslims uncomfortable about sending their students to these schools.

Well-funded Chinese schools with better infrastructure and dedicated teachers developed a reputation for quality, rigour and working their students hard.

That eventually led to most Chinese parents sending their children to these schools.

All these have left Malaysia in rather poor circumstances – it may well be the only country in the world with a fragmented educational system.

It has a peculiar set of problems which is rather difficult to overcome.

First, the move to a single stream cannot be compelled because vernacular and religious schools are guaranteed under the Constitution. Even if consensus can be reached to move to a single stream, there are other questions.

How would one ensure that mother tongue education continues unabated?

If, as is most likely, consensus cannot be reached, imaginative ways have to be thought of to overcome these problems.

Vision schools, where vernacular and national schools are located close together and some activities integrated, are likely to be of only limited help because it won’t be physically possible to put most schools close together.

Sports may help, but if you have teams largely comprising single races, that could make things worse rather than better even if there is interaction among the players.

Consensus on a single stream is best, and perhaps we need someone of stature to go around and build such a consensus from various community leaders. But it is a tough task.

The precursor to that consensus is safeguards to devote enough time and resources to mother tongue education in schools to ensure that language and cultural heritage are not lost, and a monitoring and corrective mechanism in which all will have faith.

Ultimately, even if vernacular and religious schools are present, national unity aims will be better served if you simply move more students and eventually most students of all races into national schools.

There is only one way that can be done short of a single stream.

That is simply to improve the quality of the national schools, so that they are better than the others and to make Malaysians of all races equally welcome in those schools.

Nobody is pretending that this is an easy task. But it may be easier to do than to obtain a consensus on a single stream.

And there are other attendant benefits. If the national educational system improves, so will the population. The opportunities that it will present to all equally will close the gap between the races and the rich and the poor.

It will lead to a better quality workforce, a greater social conscience, excellence, more moral behaviour - and better quality leaders.

The icing on the cake is that an improved national school system will also improve national unity.

Ku Li: The infrastructure of institutions

I'm reiterating my bewilderment as to why UMNO and BN still choose to ignore Tengku Razaleigh Hamzah. Granted that there is an entire political power superstructure that is dominated by the likes of Najib and Muhyiddin presently, but, why can't UMNO-BN loyalists like Tengku Razaleigh be given the political forum and space within UMNO and BN to contribute his considerable experience and wisdom?

The fact that men like Tengku Razaleigh continue to be marginalised lends credence to the perception that UMNO and BN are still in the "divide-and-rule" and denial mode in spite of clear and incontrovertible evidence that all is still not well for the coalition and each component.

Here's another piece of perspective from the great man. Do read my end-notes below, though.

The best of what we already had, come 1957 and 1963, were a set of viable modern institutions practices and skills: the Westminster model of Parliamentary democracy, civil law grounded in a Constitution, a capable and independent civil service, including an excellent teaching service, armed forces and police, good schools, sophisticated trade practices and markets, financial markets, and modern methods of management such as those applied in our plantation sector. We were already a functioning country integrated into global markets. The challenges of development and nation-building were serious, but we faced them with an independent judiciary, a professional civil service and a well-defined set of relationships between a Federal Government and our individually sovereign states. Indeed we were able to face these challenges because these institutions functioned well.

Institutionally, we had a good start as a nation. Why is it important to recall this?

For one it makes sense of the feeling among many Malaysians and international friends who have observed Malaysia over a longer period that Malaysia has seen better days. There is a feeling of wasted promise, of having lost our way, or declined beyond the point of no return.

This feeling is too sharp, and too pervasive to be put down to the nostalgia of always finding “the good old days best.” The illusion of nostalgia doesn’t explain why we are losing our best and brightest. Those who can stay away and settle overseas do so, with the encouragement of their parents. Their parents tell them to remain where they are, there is nothing for them here. The illusion of nostalgia does not explain why parents fight to send their children to private and international schools rather than the national schools they themselves went to. The very same politicians who recite nationalist slogans about our national schools and turn the curriculum into an ideological hammer send their own children to international schools here or in Australia and Britain. They know better than anyone else the shape our schools are in. It is no illusion that people do not have the faith in our judiciary and police that they once had.

Malaysians are losing faith in their future despite the evidence of material progress around us, despite being a relatively successful country. We have lots of infrastructure. Lots of malls and highways. Especially toll highways. It is not for want of physical infrastructure, dubious as some of it is, that we feel we languish. It is a sense that we are losing the institutional infrastructure of civilized society.

That infrastructure, whether indigenous or acquired, was already in place at independence. Having secured our political independence through a consultative and deliberative process, we were well placed to build upon this foundation. We had a complex system of laws, conventions and practices but crucially we had the people capable of understanding and administering such a system. We had a civil service and a political class trained and socialized into the practices of the Westminster system of parliamentary democracy. Core principles of accountability, check and balance and independence were lodged in the habits, thought patterns and behaviour of our civil servants and judges.

If Malaysians feel a sense of loss, tell their children not to come home from overseas, or are making plans to emigrate, it is not because they do not love this country or are ungrateful for tarred roads and bridges. It is because they feel the erosion of the institutional infrastructure of our society. Institutional intangibles such as the rule of law, accountability and transparency are the basis of a people’s confidence in their society.
.......

We acknowledge and celebrate our ties to British education and British institutions not out of sentimentality but out of an understanding that these are foundational influences that have had much to do with stability and competitiveness as a nation. British educational, administrative, legal and cultural institutions continue to be of vital importance to us as Malaysians. We need to affirm these links without political blinkers, understand their cultural, political and economic importance to us, and build on them. One result of such a change of attitude should be a rethinking of our attitude to the English language. By now it is also a Malaysian language. It would be sheer hypocrisy to deny its value and centrality to us as Malaysians. Do we continue to deny in political rhetoric what we practice in reality, or do we grasp the situation and come up with better policies for the teaching and adoption of the language?

____________________

I cannot deny that Tengku Razaleigh's words and perspectives are a balm to soothe the sores of the pronouncements and policies and administrative decisions of the Malaysian government agencies that seem to frame all policies and decisions on the basis of race instead of principle.

However, the stark contrast between what the Tengku espouses and what many of his colleagues in UMNO are doing publicly and within the Malaysian government is quite glaring.

What is a Malaysian voter to make of this Jekyll and Hyde nature of UMNO?

Robert Kuok's departure from sugar business: A sign of the times?

This transaction may have more stories that will never be told than what is told. Is it a sign of the times?

Why would a solidly run company dispose off a key contributor to the Malaysian arm of its food commodities business? Why sell off it's market dominance in Malaysia? That is so very unlike Robert Kuok.

Kuok isn't called "The Sugar King" for nothing. Well, he's still got his sugar interests outside of Malaysia.

This is a nuanced post because the transaction is nuanced.

PPB Group Bhd, controlled by tycoon Tan Sri Robert Kuok, stands to lose its dominance of the domestic sugar market under a proposal to sell its entire stake in two sugar units and land used for sugar cane cultivation to Federal Land Development Authority (Felda) for RM1.29 billion.

The proposed sale will see PPB exiting the local sugar industry, which had earned founder Kuok his nickname of "Sugar King".

PPB said it will dispose of its entire 36.36 million shares of RM1 each in Malayan Sugar Manufacturing Co Bhd (MSM) to Felda Global Ventures Holdings Sdn Bhd, a wholly-owned unit of Felda.

It is also selling its 50 per cent stake, or six million shares of RM1 each, in Kilang Gula Felda Perlis Sdn Bhd to Felda Global Ventures for RM26.31 million.

Felda Holdings Bhd already holds a 50 per cent stake in the company, which is involved in sugar cane milling and refining of domestic and imported raw sugar.

The group said the disposal of these three assets will help it realise its investments with a substantial gain.

Meanwhile, its 49 per cent-owned associate Grenfell Holdings Sdn Bhd will sell its stake in plantation group and sugar refiner Tradewinds (M) Bhd for RM207.53 million.

Tradewinds is controlled by businessman Tan Sri Syed Mokhtar Al-Bukhary.

According to PPB's 2008 annual report, MSM and Kilang Gula Felda Perlis produced more than 750,000 tonnes of refined sugar, supplying some 60 per cent of the domestic sugar requirements last year.

Its sugar refining and cane plantation business contributed 27 per cent to the group's revenue of RM3.46 billion and 36.5 per cent to its operating profit of RM431.2 million in the fiscal year ended December 31 2008.

This makes the business its second largest contributor, after its grains and feed business.

Outrageous!

This report from the Malaysian Mirror makes me outraged. This is either bureaucratic stupidity or plain subversive racism. And, people wonder why so many Sarawakians are pissed off.

KUCHING - For 17 years, Marina Undau lived a life of a child growing into a young adult.

School, her family and friends were a central part of her existence. She dreamt of doing her parents proud by furthering her education in a university and eventually getting a good job.

SPM came and went, and the 18-year-old science stream student of SMK Simanggang did well, scoring 9As and 1B last year.

But then she had a rude shock.

Not eligible

The education system said she was not eligible to enroll in a matriculation course, a prelude to varsity and a degree. The reason? She was, it seemed, not a bumiputra.

Born to an Iban father and a Chinese mother, Marina’s hope for a smooth climb up academia was dashed. With it went a part of her identity and the drive that made her a top scorer.

In an interview with The Borneo Post at her house in Sri Aman on Wednesday, Marina expressed her feelings in Iban: “Aku amai enda puas ati nadai olih nyambung sekula ngagai universiti (I’m very sad that I can’t pursue my university education).”

Meantime, she has started Form Six in her old school as a workaround solution.

Upset and bewildered

Seated between her parents, Undau Liap and Wong Pick Sing, the disappointment in the teenager was plain to see.

Her elder sister never had a problem getting into a university. Her identity was never questioned and she is at present in her second year at Universiti Sains Malaysia in Penang.

Marina is worried that a similar obstacle she faced after SPM awaits once she completes her STPM.

“If I get good results, what’s next?”

Marina’s father, Undau, would not take no for an answer.

When her application to enter matriculation was rejected, Undau, a civil servant, contacted the Education Ministry’s Matriculation Department in Putrajaya on June 23 and was told that her daughter was not a bumiputra.

Pressing on

Dissatisfied, the father wrote to the ministry on July 1. The reply he received shocked him, and it is bound to challenge the identity of many Sarawakians who are of mixed-parentage.

The ministry said in a reply on July 14 that Undau’s appeal was turned down because “the candidate is categorised as non-bumiputra (father is Iban and mother is Chinese)” based on a definition used by the Student Intake Management Division, Higher Learning Department and Higher Education Ministry.

Their definition is as follows:

• If either parent of a candidate is a Malay who is a Muslim/Orang Asli as defined in Article 160 (2) of the Federal Constitution, the child is considered a bumiputra.

• Sabah – If the father of the candidate is a Malay who is a Muslim/native of Sabah as defined by Article 161A(6)(a) of the Federal Constitution, the child is considered a bumiputra.

• Sarawak – If the father and mother is a native of Sarawak as defined under Article 161A(6)(b) of the Federal Constitution, the child is considered a bumiputra.

Despite the explanation, Undau is still dissatisfied and urged the government to clear up education issues that differentiate bumiputras from non-bumiputras.

He said the 1Malaysia concept would be rather hollow if education today continues to be polarised along such lines

“Why all the differences in the intake of students for higher learning? I am not questioning the Constitution, but what is the meaning of 1Malaysia if things like this happen?”

NRD and Native Court weigh in

The National Registration Department (NRD) headquarters here said it has received a flurry of enquiries about the bumiputra status of late.

An NRD spokesman said that in Sarawak, a person’s race is registered based only on the race of the father.

On whether such a person is automatically accorded bumiputra rights, the spokesman said: “We don’t actually handle that. We look at the race of the father. If the father is Iban, the child is Iban. If the father is Chinese, the child is Chinese. The bumiputra status comes under the Native Court.”

Native Court registrar Ronnie Edward said the bumiputra status was a “birthright” and the Native Court only hear cases where a person who was to be declared a bumiputra although his father was not a native.

He said Marina was not alone in facing this problem.

Edward believes the only way to clear the air is to amend the Federal Constitution.

“Article 161(A) of the Constitution has to be amended. The article says that in Sarawak, both parents have to be ‘exclusively’ a native,” he said.

Institutionalising innovation?

I get the idea of setting up a National Innovation Centre. But I don't get the idea of a chain of innovation centres of excellence to be set up throughout the country.

I really don't get the proposal to set up an iconic innovation centre similar to the Multimedia Super Corridor. The word "iconic" sounds expensive.

Besides, can innovation be institutionalised?

Innovation is about creativity. Creativity is about being inquisitive. Being inquisitive means having a burning desire and having an unquenchable thirst for knowledge and information. This means being a self-starter. This means having the street smarts to look things up oneself and being completely unaware of time and space.

Setting up a Centre is fine. But to be sure, such a Centre should purely be a catalyst to point Malaysians towards trends such as nanotechnology.

Such a Centre should have a substantial focus on whether the school curriculum can be improved and teaching methods improved in order to foster innovative thinking instead of creating automatons.

The spark comes from within, not without
Innovative thinking cannot be institutionalised. It can only be sparked from within each Malaysian. This kind of spark can only come from having a sound and solid education. It does not come from iconic buildings. It certainly won't come from having mini-iconic centres, all of which sounds expensive.

Tax incentives for R&D spending will help to spark innovation
Instead of spending on building an iconic Centre, which really does sound expensive, really, there should be triple and quadruple tax deductions for R&D spending. That's how the Government can foster genuine and meaningful innovation.

It's the education, stupid
And, greater resources should be put into improving the school curriculum instead of wasting money with buku pinjaman untuk semua. Resources should be put into training better teachers. More allocations should be given to the remuneration of teachers so that the best and brightest will want to enter the noble profession. And, the teachers must have the skills to generate the inquisitive spirit and thirst for knowledge. That's where the real spark of innovation starts.

That's the way to foster innovation.

What I'm seeing so far is blah, blah, blah...build iconic centre...spend money on buildings..blah, blah, blah.

Innovation is software, NOT hardware

Just to be sure, it must be understood that innovation is a SOFTWARE item. It's about enhancing the quality of the human resources of Malaysia. Done correctly, the fruits of higher income and value-added can be reaped for generations.

In contrast, building innovation centres is only about HARDWARE. There's only one round of making money from the construction contract and, then, only a small coterie of cronies benefit.

While waiting for Budget 2010...

While waiting for Budget 2010, the one observation that I wish to make is that the very public display of conciliation by the leaders of the MCA is to be commended. Certainly the wounds are still fresh. Yes, cynics may say that they needed a pikestaff up their arses from Najib to get them to display the public conciliation...which, in a figurative sense may have been true. But, it's a start.

The one thing that piques my interest with a curl on my lips is the extract from The Star:

At about 2.30pm, the press were ushered into the 9th floor meeting room.

Ong together with Dr Chua and other central committee members then entered the room and took their seats.

However, the chair next to Ong - meant for deputy president Datuk Seri Liow Tiong Lai - was empty.

Everyone waited for a while but there was still no sign of Liow.

Party secretary-general Datuk Wong Foon Meng then walked in and had a word with Ong.

The two then went out of the room.

About 10 minutes later, Ong came back into the meeting room, followed by Wong, Liow and vice-president Datuk Seri Kong Cho Ha.

As all Malaysians know, reading between the lines is an artform in a nation where leaders and their Press minions have mastered the dark art of saying things without so much saying so. These are gestures, nebulous words and phrases, body language and the like.

So.....is there anything that The Star report is alluding to? Might it be a pointer towards lingering, simmering matters that may fester and putrefy before breaking out as an angry pus-laden sore at some future date?

I'm not sure. As Mrs Pot sang to the Candlestand and the Clock in the Disney animation, Beauty and the Beast, maybe there's something there that wasn't there before (or, some such lyric).

An eBay For Innovation

Here's one crazy crowdsourcing/crowdfunding concept that works as a bulletin board cum research prize. It is a completely merit-based, populist omnibus approach to getting a piece of research put out into the Internet for anyone who is interested to either pose a challenge or, post a solution. The prize money is funded by netizens. The judge is the person who posed the challenge.

If you think this is crazy, you may be correct. But, then again, you may be wrong. Read these swatches from the Forbes piece and think again...

What if you don't have millions of dollars to offer yet have a problem you want solved? A new Web site called ChallengePost aims to fill the gap between the small goals and the lofty ambitions of X Prize Foundation. Started in New York City by 35-year-old former record label owner Brandon Kessler, ChallengePost gives anyone the ability to establish a goal, rally a community around it and raise funds with which to reward winners.
......

But ChallengePost's Kessler is hoping his site will collect a wider range of challenges and prize-linked innovation goals by simplifying and democratizing the process. Anyone can post a challenge directly on the site, and visitors can give their thumbs-up to a cause or pledge money to build up a prize even if they haven't a clue how to solve the problem. Users can also share their activity on the site with friends through social networking sites.

Kessler sees the site as a great marketing vehicle for brands that want to connect with their customers' altruism. A company such as Dell ( DELL - news - people ) or Starbucks ( SBUX - news - people ) could, for example, issue a challenge to come up with ways to reduce their packaging costs. (Neither have signed up with ChallengePost yet.) ChallengePost is working with several companies and already has a deal with ad agency Deutsch Inc.

ChallengePost plans to make money by charging an 8% fee off the amount of any prize solved, and it negotiates separate, flat fees with companies that post or sponsor a challenge. Any intellectual property generated by the solutions is public domain by default, but challengers can retain property rights if they wish. If someone finds an existing solution to a prize-attached challenge, no one gets any money.

Kessler became interested in the idea of building a Web site to aggregate innovation challenges back in 2006, when he caught wind of a project called Windows on a Mac, which sought to reward anyone who could make the Microsoft Windows operating system run on the new Intel-based ( INTC - news - people ) Apple Macintosh computers. The sponsor of the contest ended up raising $14,000 from strangers sending him money through PayPal. The problem was solved in three weeks, months before Apple released its own software to run Windows. That software solution never became a commercial product, but it "showed how much action and involvement a challenge could inspire," says Kessler.

Visit ChallengePost and start thinking out of the box. You might make some money, too. Great innovation, great model to stimulate innovation and, potentially, a great way to make some money.

Lessons from The Damned United

The movie, The Damned United which is the core matter for the preceding post contains some principles that may be extracted for business leadership and, of late and, possibly more importantly, for political leadership.

The protagonist, Brian Clough (played most excellently by Michael Sheen) was an ascerbic and caustic maverick with a gigantic ego. His 44-day saga as manager of the then-English First Division League Champions, Leeds United offers interesting lessons.

First, keep your most loyal man beside you. Clough ditched his long-time deputy, Peter Taylor in a fit of hubris. Taylor is the type of deputy every mercurial leader needs. While Clough went on his visonary exploits, he needed Taylor to put the nuts and bolts together. Taylor was the talent-spotter. Taylor was the one players went to after another tempestous outburst by Clough. Taylor was the man who patched the team together. Every leader needs a deputy like Taylor. Needless to say, without Taylor's soft skills, Clough was quickly left in an alienated position in Leeds United.

Second, build the team spirit. The first time Clough met with the highly-decorated Leeds United team he antagonised them by telling them that they won their trophies by cheating. This is hardly the way to get a team spirit going.

Third, taking over a team or organisation with a successful past track record requires patience. The new leader can never emulate nor imitate his predescessor. But, that does not mean that the new leader should go on an iconoclastic binge of destroying the predescessor's reputation or trivialise his record. Instead, he needs to patiently deconstruct and, then, reconstruct. This is a process that takes time.

Fourth, the leader who ignores the above principles is not lost. He or she can move on to achieve great things again through another club or organisation.

The Damned United

When I was in Form One there was only one football hero for me. It was Norman Hunter. The team was Leeds United. Playing at left-back, Norman Hunter was a certainty to put a snarling stop to any flanking attacks down the left side of the pitch. And, once the ball was won, Hunter used his trusty left foot to lay on inch-perfect passes back to the centre of the pitch. He was my role model. It was 1975. Leeds were still at their peak. In that same year, Leeds reached the European Cup Final playing a dominant match against Bayern Munich. But, in that foggy day, Bayern prevailed. It was a heartbreaking match.

The year before that, 1974, was in many ways a pivotal year. Don Revie, the legendary Leeds manager who had nurtured a Second Division team from 1961 to become League Champions in the 1968/69 season and again in the 1973/74 season with many silverware in a trot was tapped by the English FA to replace Sir Alf Ramsey as England manager. Regrettably, Revie never repeated his success at the international stage, resigning as England manager in 1977 under controversial circumstances to a lucrative stint as manager for the UAE team.

David Peace, wrote a historical fiction about one key episode for Leeds United in 1974. It was about the highly emotional and controversial replacement for Don Revie. That replacement manager was Brian Clough. He was manager of Leeds United for only 44 days. It was a stormy 44 days.

Peace's book was made into a movie called The Damned United.



The movie is about the great friendship and partnership between Brian Clough and Peter Taylor. This great partnership created the great Nottingham Forest team that won back-to-back European Cup victories in the 1980s. But, to me, the movie is a nostalgic period piece that transports me back to the 1970s, when my boyhood footballing hero, Norman Hunter and his team mates, Billy Bremner, John Giles, Paul Madeley, Allan Clarke, Terry Cooper, Jack Charlton, Eddie Gray, Peter Lorimer, Paul Reaney, Trevor Cherry and, later on, Terry Yorath, Gordon McQueen, Joe Jordan, David Harvey, Duncan McKenzie and the rest of them dominated the English First Division.

Norman Hunter pix from here.

The movie also speaks of the terrible animosity between Revie and Clough which begged the question as to why, for the life of me, the Leeds United board determined that Clough was a logical successor to the Don. The following Youtube clip is revealing of the hostility between the two gentlemen. Until today, Leeds United partisans believe that Clough planted himself as a Trojan Horse to sow the seeds of the eventual destruction of the great Revie team.



With the great character actor, Michael Sheen (he was Tony Blair in The Queen), playing the protagonist Clough, and ably supported by a great cast, The Damned United is a must-watch for fans of football and, others.

For me, it is well and truly a nostalgic trip. Proof absolute that the team that now dominates the League One, the old Third Division has the necessary pedigree to bring the historic Elland Road Stadium back to the glory of the English Premier League. It may take a little while longer. But, we'll get there.

Hardcore Leeds United supporters can get a full dose of Leeds United history here.

HAPPY DEEPAVALI

Happy Deepavali Malaysia.

MCA's future

The phrase "MCA's future" may appear to be an oxymoron, but that would be an unkind view and, more importantly, an erroneous view.

Like most BN components, the MCA has great franchise strength. It has a huge warchest through asset-holdings and astutely managed corporates such as The Star media behemoth. The corporate equivalent to the current MCA travails must surely be the saga of KFC Holdings in recent years. In spite of boardroom struggles, the KFC franchise maintained its retail and financial strengths.

pix from here.

The palpable difference must surely be that while KFC maintained and extended it's market share, the MCA's "market share" is shrinking...politically vis-a-vis the wider Chinese Malaysian polity.

But, all is not lost.

The key question is whether the MCA, as with many BN components, can identify a transformational leader who can parlay MCA's structural and franchise strengths into regaining the support of Chinese Malaysians and, the wider Malaysian electorate.

In an ideal world, this should be the key issue that the MCA Central Committee should deliberate on when they meet this Thursday.

But, I suspect and expect that this issue will be deferred to another day. It is a "macro" issue that is secondary to the "micro" issue of leadership jostling.

Ong Tee Keat must resign
On the matter of leadership jostling, what the Central Committee needs to bear in mind is that in the wake of last Saturday's EGM, Ong Tee Keat must resign as party president. No matter how one attempts to spin the outcome, the fact remains that Ong lost the vote of no confidence. The honourable thing to do, if he is a true party loyalist, is to resign. He blew his chance big time. And, so, he has to go.

When he won the presidency, he should have risen above the fray and urged party unity. But, regrettably, he went on a witch-hunt. The pigeons have come home to roost. And, the pigeons are shitting all over him. I'm sorry but this means his time is well and truly up.

Chua Soi Lek must remain out
As for Chua Soi Lek, Saturday's outcome was even more emphatic. He is not reinstated. He is no longer accepted as a party leader. So, he should remain outside the party leadership. He should be content that his son is rising just as his star is waning (pardon the pun).

Beyond the leadership struggle
So, whether it is Liow's turn, Kong's turn, Yen Yen's turn or, even Fong Chan On's turn, who ever ascends to party leadership needs to be a transformational leader.

Get the party to close ranks and let the healing start as soon as possible.

Then and, only then, can MCA get back on track.

Whoever is in charge, MCA needs to change the "C" from Chinese to "Community". MCA needs to re-position itself as a Malaysian political party that cares for the issues faced by all Malaysian communities. Ironically, by expanding it's franchise, MCA will regain its lost lustre.

Malaysian communities, be they Malay, Chinese, Indian, Ceylonese, Kadazan, Dayak or any suku kaum, are fed-up with the communal paradigm. Every racial and ethnic group have become increasingly aware that they are in the same boat, the Malaysian boat. The sooner the MCA gets that, the faster it can recover from the debacle of the 12th General Election and, the faster it will get into jockeying position for the 13th General Elections.

So, yes. It ain't over. It's a chance for a new beginning.

Pakatan Rakyat to register as a coalition

This is one of the best pieces of news that I've heard from the Pakatan Rakyat for some time. By having PKR, PAS and DAP register as a coalition party called Pakatan Rakyat, this motley crew is signalling a sense of deeper purpose than is evident hitherto.

pix from here.

Many Malaysians who had contributed to and, ridden the euphoric waves, post-March 8, 2008 have become jaded by the dysfunctional amalgamation that Pakatan Rakyat is. Even wiser heads within the Pakatan pantheon has become exasperated by the cross-purposes at which issues are dealt with.

So, the formalisation of the Pakatan Rakyat as a coalition is a positive sign. It may not quell the raucousness within the nascent coalition. But, it should go a long way to temper the process in which differing views can be managed and moderated.

For neutrals, the formation of a new coalition augurs well for the orderly democratic transformation that Malaysia's constitutional evolutionary journey is taking us all on. It also signals the greater likelihood of a more stable 2-party system that so typifies advanced economies.

Independent Directors: Bursa Malaysia's screwy thinking

The following extract reveals the blinkered thinking that dogs Malaysian regulators:

STOCK market operator Bursa Malaysia said it will not set a timeframe on how long an independent director can serve a company, but suggests that an annual competency assessment be carried out within the company itself.

"The Malaysian Code on Corporate Governance clearly says that on an annual basis, boards must undertake an assessment of competency, skills and experience. So in that assessment, they need to look at the independence element - is the independent director able to discharge his duty and does he bring an unbias judgement to the board?" said Bursa Malaysia chief regulatory officer Selvarany Rasiah.

Once a company is publicly listed, there is a need to protect minority shareholders who tend to be more focused on their day job than to be spending time tracking stocks. This is the reality. Malaysian minority shareholders are indolent and, have this tendency to wait for manna to fall from the heavens. When things go awry, as they tend to from time to time, they find themselves flailing helplessly in the wind.

Of course, the wise ones among us would respond to this by saying that such small investors and, yes, punters, should keep their money in the bank or, under their mattresses. But that would be missing the point on the matter of corporate governance.

The principle that has dogged regulators in Malaysia and, of course, the world over, is how much statutory or regulatory intervention is required without dampening the free market.

Well, we have witnessed how unfettered regulation has benefitted Wall Street. Perhaps that is a bit dramatic as an example and a tad unfair to compare with the issue of Independent Directors. But, if you care to extract the broad principles, you may find key things that are common to Wall Street unregulated activities and, the issue of leaving the fate of Independent Directors to the boards of Malaysian PLCs.

Independent Directors of Malaysian PLCs are an emasculated lot. Board papers are delivered at the eleventh hour. Board papers are hugely thick with reams of accounting data that are based on assumptions that are printed in size 8 fonts i.e. fine-print.

Independent Directors in Malaysia are invited to the board of Malaysian PLCs at the pleasure of his majesty the man in charge, whoever that might be. Usually it is the imperial dominant shareholder or, the imperious political master or, his eunuch.

So, absent any external regulation such as creating a pool of public directors that are empanelled by the likes of the Shareholder Minority Watchdog Group or, the Malaysian Institute of Corporate Governance or, some such body or group, Bursa Malaysia's stated position on Independent Directors points to 2 principles that tend to be ignored:

First, who will guard the guards themselves? Checks and balances and audits are necessary.

Second, can a person be the best judge of his own cause? If there is a true independent in the board, can the executive members tolerate his or her continued annoying presence? Or, will the recalcitrant independent's tenure not be renewed?

Independent Directors can only be independent if their appointment is externalised.

The guiding rationale and principle must be that once a company is publicly listed in Bursa Malaysia, the public investors and, yes, even punters, deserve protection not just by the auditors who come in each quarter but, also by genuinely independent directors.

The Achilles heel is actually the appointment process. But, it would appear that Bursa Malaysia has preferred to put its head in the sand on this matter.

DAP's alternative Budget 2010

DAP has produced what I believe to be their second alternative budget, the first one being presented last year.

I'm perusing it. There are many interesting proposals that are worthy of consideration for those who are prepared to keep an open mind and refrain from petty polemics.

The DAP Budget 2010 can be read in toto here.

Made in U.S.A. - Coconut water as a health and sports drink

How's this for innovative thinking and marketing? There's a wonderful U.S. company that has taken a drink that Malaysians have enjoyed, like, forever...COCONUT WATER... and, has packaged it as a health and sports drink.

Many of us are aware that coconut water has amazing properties. We know it to be a "cooling drink" when we feel "heaty" which may be translated as a re-hydrating drink. So, dengue patients have been advised to either drink isotonic drinks such as 100-Plus OR coconut water.

In Malaysia, coconut water is widely sold in its natural state...in a coconut! Or, sold in generic plastic bags and bottles.

But, if the coconut and the coconut tree is the proverbial lembu here, look at the American sapi below. Pandainya... As they say, it's all in the packaging.

Original packaging...

pix from here.


American packaging....
pix from here.

Click here to read more about the U.S. company that sells coconut water and learn from its great product positioning and marketing strategy. Now, this is the type of thinking that Malaysians need to acquire.

Malaysian corporate governance lacks bite

Nestor Advisor Ltd senior advisor Ken Rushton's observations on Malaysian corporate governance are accurate. Here are some of his reported observations:

“The culture here does not seem entirely supportive of good governance. And you cannot write a code of culture. You need more education. Education is part of ethics,” he said, adding that change had to come from the grassroots and not necessarily from the government.

“Good people who could be coming on the board (of directors) are worried about reputation risk. This is unfortunate as you need competent people on the board,” he said.

“It seems to me a surprisingly immature market. The perception of Malaysia as far as corporate governance is concerned is not good overseas and that does not encourage foreign direct investment because foreign investors will only come in if they have confidence,” he said.

In spite of listed companies having committees to evaluate candidates for board positions, the truth of the matter is that board of directors appointments are, in the main, based on perceived loyalties and, in many cases, sycophantic attributes. Kaki ampu are usually favoured over more independent-minded persons.

It is equally true that intelligent directors tend to be reticent in board meetings so as not to say the hard truths that will make the dominant director-shareholder lose face and cause personal offence.

It is imperative that a pool of non-executive directorial candidates be created by corporate governance entities such as the Minority Shareholders Watchdog Group to be available as directorial candidates based on the "cab rank" principle i.e. "first-come-first-served" basis to ensure that there is true and genuine independence on the part of those directors that are designated as "independent directors". Barring this development the true state of Malaysian corporate governance will remain as moribund as ever in spite of the best written corporate governance codes.

Positive perceptions of stimulus packages

Economic policymakers will be reassured that their stimulus packages were not acts of insanity when they read Krugman's views here which suggests that the stimulus packages has a likelihood of catalysing a virtuous cycle where increased fiscal debts will be increasingly offset (but not completely negated) by increased economic activity.

Increased economic activity means greater revenues. Greater revenues points toward higher tax revenue to governments which will ameliorate the fiscal deficit burden.

Will this view hold up in a "W" recovery pattern? We will all have to revisit Krugman if there is a change of circumstances.

MIC: Leave with dignity, not in shame

M. Veera Pandiyan's column in The Star on Friday is a rare combination of candour and insight written at a personal level. It does tell us that times have changed that the piece could even be approved for publication. In another time and age, it may well be that a piece of this nature would have been blue-pencilled to nothingness. Then again, it may be that this piece was "approved" because the apex leadership of BN wants to see a major revamp of the MIC.

In any event, here we are. And, this part that I extracted is most rivetting. The column piece should be read in toto to do it justice for, as the columnist intoned at the end of the piece, I might be inviting a garland of slippers for this, but there is a danger of the MIC ending up as an abbreviation for Megalomaniac In Command if he chooses to stay on to the end of his 11th term. (emphasis mine)

“You have sold your community for a fistful of dollars!”

The thundering voice was that of Datuk Seri S. Samy Vellu, then, and still, president of the MIC, during a press conference in January 1983 to announce the launch of Maika Holdings.

The initial reaction of shock segued into amusement. In the mind, the image of the party leader who had just taken over the helm of the Indian component party of Barisan Nasional morphed into that of a cowboy – albeit more like Bud Spencer than Clint Eastwood in the old spaghetti Western movies.

The reason for Samy Vellu anger? I had asked a question that I felt was fair: How is Maika going to be any different from the party’s existing business entities like Koperasi Nesa and Koperasi Pekerja Jaya?

“You Indian reporters in The Star are always running down the MIC, you have all sold out your community for a company run by the MCA!” he said.

If I remember correctly, that was the end of the press conference.

As other bewildered reporters and I walked down the steps of the party headquarters, one of the president’s then economic advisers, who has since moved on to champion human rights and other currently politically correct causes, asked me: “Why do you all always belittle the MIC?”

But when asked to name the instances, the economist could not be specific. By then we had reached the end of the stairway and the still incensed party leader, who must have seen us arguing, came rushing forward with some of his aides.

Fortunately, the late Datuk K. Pathmanaban, then a deputy minister and party vice-president, pulled me away and cooled off the situation.

It’s unthinkable for a tainted man to lead MCA

I found this view offered by Tan Sri Robert Phang to be sensible. It is a sentiment that is along similar lines to what Dr M and Tengku Razaleigh Hamzah has said about the selection of candidates for the Bagan Pinang by-election.

The surest way for BN and its components to regain lost ground is to lead by example. The clearest message of leadership must surely be exemplified by verbs such as "clean", "moral", "upright", "honest", "humble" and the like.

I was tempted to suggest words like "sanitize" or "hygienise" but I realised quickly that such words may suggest meanings such as "To make more acceptable by removing unpleasant or offensive features from..." which may inadvertently remind any person reading the verb to subliminally infer that there were "unpleasant" or "offensive" features that were whitewashed earlier.

In any event, this form of "recycling" (of politicians "with a past") is bad for the political environment.

I have digressed. Read on...

It is unthinkable for a tainted leader – and by his own admission, too – to become the MCA president, said community leader Tan Sri Robert Phang.

“The Chinese community will also feel its future and welfare will never be protected or enhanced by a leader with a tainted record,” he said.

The Social Care Foundation chairman was referring to Datuk Seri Dr Chua Soi Lek, the MCA deputy president who was recently suspended for four years by the MCA central committee.

Phang added that “morality is definitely a very important fundamental requisite part of political leadership.”

Wise words: Phang appealling to all MCA delegates to do away with emotion, exercise prudence and due diligence in exercising their votes.

“What affects MCA will certainly affect Barisan Nasional,” he added.

The future and welfare of the Chinese community, said Phang, would also be at stake should Dr Chua become MCA president.

The party would always be subject to blackmail and intimidation by members of the public and other political parties should they choose a “tainted” person to be its leader, he added.

Phang said the five proposed resolutions submitted by Dr Chua’s camp for the Oct 10 extraordinary general meeting (EGM) were well constructed.

“Dr Chua has said many times he was never, and is still not, interested in becoming the party president or a Cabinet member.

“However, it has become very clear that the five resolutions are well engineered and if they are passed, party president Datuk Seri Ong Tee Keat would have no choice but to step down,” he said, adding that Dr Chua would automatically take over from Ong.

He said such a scenario would definitely create anxiety for the Chinese community and cause the central delegates to be affected.

Phang also called on Dr Chua to retire from politics permanently.

“If this decision is taken, I’m sure it will go down in history that you have further contributed and become a tremendous helping hand to the party by not disrupting its machinery.

Property market distortion

The elements of the stimulus package and low interest rates may be fueling the apparent recovery of the Malaysian property market. Property prices are holding steady. It hasn't really come down. This has something to do with low interest rates. Lots of speculative property buyers are refinancing in the hope of unloading at the appropriate time.

There is local buying interest. This may be due to the ridiculously low fixed deposit rates. People may be shifting their savings into properties in the hope that capital gains will be better than fixed deposit interest rates and, maybe higher than government-issued savings bonds. In a sense this portfolio shift is part of the excessive liquidity that typifies the menu of economic stimulus measures taken by the government.

While this phenomenon is not quite a property bubble, it does point to a facade of economic recovery. It is an artifice that may lend support to the notion of a double-dip "W" recovery pattern.

The concern is that property developers may be misreading the signs. The original intent of the stimulus package was to permit existing property projects to be completed so that excess inventory can be cleared. But, the buying interest is engendering new property launches so that a potential vicious cycle is being created if there is another economic correction forming part of the "W" recovery pattern. What happens then? Can the government afford another stimulus package when it is struggling with a 7.6% of GDP deficit?

There is a disconcerting policy dysfunction where new property development plans are approved by state governments and local authorities while macroeconomic planning is done at the federal level. The federal economic planners need to communicate the macroeconomic concerns to the state governments and local authorities to avoid another round of excessive property inventory build-up. Failure to do so may negatively affect the economic recovery efforts.

Sarkozy and Stiglitz on happiness, sustainability and social well-being

French President Nicolas Sarkozy is quoted as saying that he wants France to move beyond GDP measurements as the primary measure of economic welfare. Sarkozy wants to urge his Group of 20 counterparts to join him in what he calls “a great revolution” in which economic performance will be measured in terms of happiness, sustainability and social well-being.

Sarkozy is also quoted as saying, “The crisis not only makes us free to imagine other models, another world. It obliges us to.”

Sarkozy was responding to a report from a commission headed by Nobel economics laureate Joseph Stiglitz which called for measures of growth to be expanded to include concepts such as work-life balance, environmental sustainability and mental health.

One observation made in tha report is that “There often seems to be a marked difference between standard measures of socio-economic variables like growth...and widespread perceptions of these realities.”

Here is one observation of the GDP:

GDP is a basic measure of a country’s economic performance and is the market value of all final goods and services made within the borders of a nation in a year.

Revered for 60 years as a benchmark of performance, progress and prosperity, and referred to slavishly by politicians eager to point to a number going upwards, this measure of economic output has itself fallen on hard times, embarrassed by the crisis it failed to foretell and discredited by the large disconnect between the ‘growth’ it suggests and the grubbier realities of everyday life.

To put it bluntly, few people really trust GDP as a measure of anything any more. The fact that it has started rising again in most developed countries while millions struggle joblessly onwards merely underscores the point: GDP is anachronistic, a throwback to an era last century when the material privations of life meant it was important to know how much stuff we were producing.

Nowadays, it’s just a Grossly Dated Parameter. As one analogy puts it, measuring progress by calculating GDP is like measuring a person’s health purely through the amount of food he takes in.

Many leading economists have been suggesting this for years, but until now only one country — Bhutan — has moved to a more qualitative measure of life, incorporating factors as diverse as pollution, noise, serious illness, divorce rates and democratic freedoms into its assessment of social progress.

I fully and wholeheartedly support this move. There is so much neurosis building up in the modern urban human that is caused by GDP as the measure of the idea of success. The GDP measure may have contributed to a misplaced value system that extols materialism at the expense of true happiness.

Many of us know that GDP cannot measure the economic value of a home-making and parenting? Is it any wonder that these roles have been trivialised in urban living?

How many people do you know have expressed a belief that they would be better off (career-wise) without a spouse, children or ageing parents? That, I believe, is an attitude and value that can be traced back to the use of GDP as a measure of economic success.