Towards A Competitive Malaysia #69
Chapter 9: Institutions Matter
Malaysian Geographic Attributes
Malaysia has many favorable geographic attributes. They will remain so only if we treat them as such and nurture them accordingly. While we may not be able to alter the other less-than-favorable geographic realities (except in a limited fashion as with draining a swamp or channeling the course of a river), we can modify and adapt our cultural attitude towards them.
Those towering monsoon swells that strike such terror in the hearts of the villagers in Trengganu may well be heaven on earth to surfers and whitewater sailors. There may not be much tourist dollars to be had from those youthful backpacking surfers, but Malaysia is trying hard to attract their affluent parents by organizing sailing regattas. The Mahkota regatta on the west coast is fast attracting sailors from all over the world. The government is attempting to have the sailors’ equivalent of the Formula I at Pulau Duyong, Trengganu, the Monsoon Cup. Its inaugural regatta scheduled for late 2006 is already attracting big-name sailors.
Sailing has not caught on with the youth or elite in Malaysia. With growing affluence the sports will soon become mainstream, as seen in Singapore and Hong Kong.
The waters off Pulau Perhentian may still harbor its hantu, but if we could teach those folks to be dive masters, boat operators, tour guides, and sailing instructors, those hantu would leave them alone and the hitherto poor villagers could now earn a good living from the sea. After all there is such a concept as a friendly hantu in Malay mythology.
As indicated earlier, Cancun was once a poor fishing village; today it is a major tourist destination, with former fishermen now working in hotels and resorts or as sports fishermen guides. The geographic facts of Cancun have not changed, only the attitude and values the Mexicans have of the place. Southeastern United States was once the backwaters of the nation. With air conditioning and the building of levees, marinas and waterways, those waterfront properties are now premium. Similarly, the desert Southwest, once the home of gila monsters and rattlesnakes, are today desirable winter vacation spots. The geography has not changed; what has is the attitude towards those geographic factors.
I will consider Malaysia’s four favorable geographical factors: location, tropical climate, maritime nature, and the rain forests, and how best to leverage those advantages.
Location, Location, Location
Malaysia is located roughly midway between Europe and Australia, and between Europe and the Far East. As real estate professionals readily attest, location is everything.
With air transportation now becoming important, developing an airport is a wise investment. KLIA is a superb facility; it could compete with Singapore’s Changi and Thailand’s new airport. KLIA already has a great head start in having a lower cost structure. Combined with superb services, it would give the region’s airports stiff competition. Low cost is important but not enough in itself; besides, Thailand’s proposed new airport would also have that.
Improving services cannot be achieved merely by wishing it. Those running KLIA must be well trained; their executives must be sent to good management schools for formal training, not those mini (culup) courses. Additionally, we should send them to work at other leading airports to see how they are being run. This is necessarily a slow process. When we send our executives abroad to the best schools, there is no guarantee that when they return, they would not revert to their old bad habits or acquire new equally bad ones from their entrenched superiors.
One sure and fast way to transfer “soft” skills like management expertise would be to invite established companies to run KLIA. Arrange the management contract such that they would benefit directly from the increased businesses and suffer the consequences if they do not improve the revenue.
Malaysia made a great leap forward in privatizing KLIA, but its operators were a local entity with no experience or competence. Malaysia should instead open the tender process and invite bids from experienced operators. If that means foreigners so what, at least the locals could benefit from the diffusion of management expertise and other skills. Presently KLIA is a private enterprise only in name, in culture it is still like any government agency.
One way to increase volume and revenue would be to offer part equity ownership to a major carrier, passenger or freight. Fed Ex already owns and operates a major facility in the Philippines. There is nothing stopping Malaysia from approaching other entities like UPS. This is the strategy the Port of Johore is successfully pursuing; it lets foreign shippers like Evergreen have an ownership stake and with it, its businesses that hitherto been going to Singapore.
Running airports and ports are new ventures; they are not usually seen as commercial enterprises. Many Third World nations consider their airlines less as a commercial entity and more as a national prestige. Their mission is less at providing a service or bringing in revenue and more showing of the flag. This is one reason why Malaysia Airlines is bleeding money.
I could not care less who owns KLIA and Malaysia Airlines as long as they provide superior and profitable services. There is no reflected glory if natives were to run or own them but do a lousy job. KLIA right now is plagued with pilferage problems, lax security, and low efficiency. Those are the surest ways to drive away customers.
United Emirate Airlines is a new player and yet it is now one of the best. Its Arab owners have broken the traditional Third World mentality and secured the best talent to run their enterprise. As there are few Arabs with the skills and experience, the airline has not hesitated in recruiting foreigners. Likewise with Dubai World Port; it is now managing some of the biggest ports in the world. Those enlightened Arabs are not at all bothered that many of the executives and senior personnel are foreigners. Malaysians should also have the same attitude; emphasizing competence over nationality.
With increasing affluence and sailing fast becoming mainstream, seaside towns like Malacca, Port Dickson and Johore Baru could have marinas catering to affluent boat owners from the region. Visit a marina in Los Angeles and we have boat owners from thousands of miles away. Langkawi is proving that marinas can be a thriving industry. Small coastal communities in California that once hosted local fishermen are now finding lucrative new businesses serving the leisure boat market. For that to happen in Malaysia, our seas and beaches must remain clean and attractive. Those hitherto fishermen would have a better chance of earning a decent living manning those marinas than with fishing in their old inefficient ways. Of course they have to be properly trained. That should be the focus, not on maintaining some mystical dream of the traditional lifestyle.
Next: Tropical Climate
Malaysian Geographic Attributes
Malaysia has many favorable geographic attributes. They will remain so only if we treat them as such and nurture them accordingly. While we may not be able to alter the other less-than-favorable geographic realities (except in a limited fashion as with draining a swamp or channeling the course of a river), we can modify and adapt our cultural attitude towards them.
Those towering monsoon swells that strike such terror in the hearts of the villagers in Trengganu may well be heaven on earth to surfers and whitewater sailors. There may not be much tourist dollars to be had from those youthful backpacking surfers, but Malaysia is trying hard to attract their affluent parents by organizing sailing regattas. The Mahkota regatta on the west coast is fast attracting sailors from all over the world. The government is attempting to have the sailors’ equivalent of the Formula I at Pulau Duyong, Trengganu, the Monsoon Cup. Its inaugural regatta scheduled for late 2006 is already attracting big-name sailors.
Sailing has not caught on with the youth or elite in Malaysia. With growing affluence the sports will soon become mainstream, as seen in Singapore and Hong Kong.
The waters off Pulau Perhentian may still harbor its hantu, but if we could teach those folks to be dive masters, boat operators, tour guides, and sailing instructors, those hantu would leave them alone and the hitherto poor villagers could now earn a good living from the sea. After all there is such a concept as a friendly hantu in Malay mythology.
As indicated earlier, Cancun was once a poor fishing village; today it is a major tourist destination, with former fishermen now working in hotels and resorts or as sports fishermen guides. The geographic facts of Cancun have not changed, only the attitude and values the Mexicans have of the place. Southeastern United States was once the backwaters of the nation. With air conditioning and the building of levees, marinas and waterways, those waterfront properties are now premium. Similarly, the desert Southwest, once the home of gila monsters and rattlesnakes, are today desirable winter vacation spots. The geography has not changed; what has is the attitude towards those geographic factors.
I will consider Malaysia’s four favorable geographical factors: location, tropical climate, maritime nature, and the rain forests, and how best to leverage those advantages.
Location, Location, Location
Malaysia is located roughly midway between Europe and Australia, and between Europe and the Far East. As real estate professionals readily attest, location is everything.
With air transportation now becoming important, developing an airport is a wise investment. KLIA is a superb facility; it could compete with Singapore’s Changi and Thailand’s new airport. KLIA already has a great head start in having a lower cost structure. Combined with superb services, it would give the region’s airports stiff competition. Low cost is important but not enough in itself; besides, Thailand’s proposed new airport would also have that.
Improving services cannot be achieved merely by wishing it. Those running KLIA must be well trained; their executives must be sent to good management schools for formal training, not those mini (culup) courses. Additionally, we should send them to work at other leading airports to see how they are being run. This is necessarily a slow process. When we send our executives abroad to the best schools, there is no guarantee that when they return, they would not revert to their old bad habits or acquire new equally bad ones from their entrenched superiors.
One sure and fast way to transfer “soft” skills like management expertise would be to invite established companies to run KLIA. Arrange the management contract such that they would benefit directly from the increased businesses and suffer the consequences if they do not improve the revenue.
Malaysia made a great leap forward in privatizing KLIA, but its operators were a local entity with no experience or competence. Malaysia should instead open the tender process and invite bids from experienced operators. If that means foreigners so what, at least the locals could benefit from the diffusion of management expertise and other skills. Presently KLIA is a private enterprise only in name, in culture it is still like any government agency.
One way to increase volume and revenue would be to offer part equity ownership to a major carrier, passenger or freight. Fed Ex already owns and operates a major facility in the Philippines. There is nothing stopping Malaysia from approaching other entities like UPS. This is the strategy the Port of Johore is successfully pursuing; it lets foreign shippers like Evergreen have an ownership stake and with it, its businesses that hitherto been going to Singapore.
Running airports and ports are new ventures; they are not usually seen as commercial enterprises. Many Third World nations consider their airlines less as a commercial entity and more as a national prestige. Their mission is less at providing a service or bringing in revenue and more showing of the flag. This is one reason why Malaysia Airlines is bleeding money.
I could not care less who owns KLIA and Malaysia Airlines as long as they provide superior and profitable services. There is no reflected glory if natives were to run or own them but do a lousy job. KLIA right now is plagued with pilferage problems, lax security, and low efficiency. Those are the surest ways to drive away customers.
United Emirate Airlines is a new player and yet it is now one of the best. Its Arab owners have broken the traditional Third World mentality and secured the best talent to run their enterprise. As there are few Arabs with the skills and experience, the airline has not hesitated in recruiting foreigners. Likewise with Dubai World Port; it is now managing some of the biggest ports in the world. Those enlightened Arabs are not at all bothered that many of the executives and senior personnel are foreigners. Malaysians should also have the same attitude; emphasizing competence over nationality.
With increasing affluence and sailing fast becoming mainstream, seaside towns like Malacca, Port Dickson and Johore Baru could have marinas catering to affluent boat owners from the region. Visit a marina in Los Angeles and we have boat owners from thousands of miles away. Langkawi is proving that marinas can be a thriving industry. Small coastal communities in California that once hosted local fishermen are now finding lucrative new businesses serving the leisure boat market. For that to happen in Malaysia, our seas and beaches must remain clean and attractive. Those hitherto fishermen would have a better chance of earning a decent living manning those marinas than with fishing in their old inefficient ways. Of course they have to be properly trained. That should be the focus, not on maintaining some mystical dream of the traditional lifestyle.
Next: Tropical Climate
posted by M. Bakri Musa | 4:59 PM
1 Comments:
Dear Doc,
I agree with on the issue of outsourcing the managing of KLIA-Airport management.
In fact I would also suggest that we also give a peek at Petronas. Although, Petronas is making billion and is in the fortune 500 companies, but presently, it act more like a government supervisory body. The real peoples who managed Malaysian oil & gas resources zre the PSCs-foreign companies such as Shell,Mobil-Exxon, Talisman etc.
For your info, in term of technology, Petronas do not have real technologist since they are not hands on.They behave like the goverment officers at Putrajaya. Yes, they are mostly trained in oil and gas industry but due to their enviroment which may not be conducive for them to grasp the advance in technology.
I deals with most of the PSCs and I am sorry to note that, Petronas staff are far behind in skill, be it technology savvy or business acumen. Well sad to say, most are malays.
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