Towards A Competitive Malaysia #101
Chapter 14: Environmental, Regional, and Global Challenges
ASEAN Follies
The ten-member Association of Southeast Asian Nations (ASEAN) is nothing more than a social club for its leaders, its lofty goals and aspirations merely substituting for its lack of substantive achievements. Its latest member, Myanmar, is a continuous embarrassment to the organization, demonstrating its collective impotence. Nonetheless the leaders deem the organization important, and world leaders fall for it by regularly sending high-level delegations to its annual meetings.
ASEAN is committed to regional cooperation and ultimately a common market by 2020. Thus far, that is all there is to it, only a commitment. At its Foreign Ministers meeting in Manila in May 2006, they committed to accelerate the date to 2015. I suggest a more modest and doable beginning, with a common market comprising of only Indonesia, Malaysia, and Brunei (IMB).
It is hard to integrate such disparate states as Laos, Malaysia, Singapore and Indonesia. The only commonality is geography: there is no shared history, experience, language, or culture.
Normally geography can be a powerful binding element. The western Canadian provinces have much more in common with western United States than with their eastern counterparts. This is reflected in the flow of people, goods, and services. There are similar traditional flows between the ASEAN states, but there is no official acknowledgement much less encouragement. Worse, such natural flows remain illegal (as between Sabah and the Philippines) or considered as “tourists.” Malaysia bragged about increases in tourism. Analyzed carefully, and the bulk of such “tourists” are nothing more than friends and relatives going back and forth across hitherto (pre-colonial) non-existing borders. It makes the tourism statistics look impressive. If only the ASEAN states were to legalize and thus encourage such natural flows, then regional trade would blossom.
Those limitations notwithstanding, it is still good for the region’s leaders to meet regularly even if only for social reasons as with its silly end-of-meeting karaoke skits. That would only increase understanding. Malaysia would be wasting its time and effort to go much beyond that.
ASEAN was supposed to represent the region as a unified and thus powerful voice in international affairs. With the member states being at such disparate stages of development (Laos and Singapore being the extremes) and with their accompanying varying interests, it is impossible to achieve this. That objective remains just an aspiration, or more accurately, an illusion.
ASEAN was to negotiate as a group for free trade agreements with its major trading partners (Japan, America, and EU). Certainly a regional grouping of ten nations with a population of nearly half a billion people would carry substantial clout, if only they could first agree among themselves. Singapore was the first to break ranks by securing its own free trade agreements with America. Thailand soon followed. With that, the myth of ASEAN solidarity was effectively punctured. Now Malaysia too is belatedly seeking its own free trade agreements with its major trading partners.
Nor can ASEAN point to any substantive achievement in non-economic matters. They could not even put any semblance of common understanding on major international issues. Singapore, Thailand, and to some extent Vietnam, are more concerned with currying America’s favor. Post-Mahathir Malaysia is gradually recognizing the importance of being on America’s good side, and is thus reducing its anti-American rhetoric.
The ASEAN states will continue to pursue their own separate course and looking after their own national interests. As the American scholar Donald Weatherbee perceptively noted, Southeast Asia is a region because its elite say it is. There is nothing beyond that. Malaysia should assign a junior diplomat to the ASEAN desk.
Globalization: Challenges and Opportunities
Malaysia should take aggressive steps towards integrating itself with the global mainstream. That would be the most effective strategy to achieve economic growth and realize its ambitious Vision 2020 goals.
Malaysia has gone further than many Third World countries in opening itself to global trade. It was an early member of the World Trade Organization. The value of its trade is substantial, twice its GDP. The figure for United States is only 25 percent. Despite this apparent embrace of globalization and capitalism, nonetheless there is a significant segment of the leadership, in particular Malay leaders, which is resisting globalization. The non-Bumiputra community generally welcomes globalization; Malays fear losing their treasured special privileges. It is not so much that Malays would lose those privileges rather that they would become irrelevant.
Economists generally (except those in Malaysia) are the strongest advocates for globalization and free trade. Experience proves that countries embracing free trade and globalization have greater economic development than those that do not. We have as examples the two “experiments in nature:” the recent miraculous achievements of modern China and India. Hundreds of millions of Chinese and Indians—more people than at any time in history—have escaped the dehumanizing clutches of poverty through trade and globalization. If the successes of China and India were to be replicated elsewhere, poverty would no longer be the scourge of humanity. Trade and globalization did more for poverty in these two countries than all the foreign aid, missionary work, or even Mother Teresa (in the case of India).
Even smaller nations have benefited from globalization. As late as the 1950s, Ireland was one of the poorest nations in Europe, and an unending source of poor immigrants to the West. Since joining the EU and embracing globalization, it is growing rapidly, outpacing even Britain. The English now no longer look disdainfully upon the Irish. Similarly, back in the 1950s South Korea was in ruins. Its main source of income was foreign aid and the spending money of foreign soldiers. By joining the global mainstream, South Korea is today an economic powerhouse, its people healthy and thriving.
Malaysian leaders and intellectuals rail against globalization, viewing it as another “subtle” vehicle for Western hegemony and neo-colonization. Their incessant diatribes tire me easily. We should instead be devising strategies on how best to exploit the benefits of globalization and prepare Malaysians for its challenges. Technology, specifically ICT, drives globalization. The earlier Industrial Revolution too was spearheaded by technology, specifically the steam engine and later the petroleum-powered machines. That made production and transportation of goods considerably cheaper, consistent, and predictable. Textiles manufactured in Scotland could now be cheaply transported and made affordable to the Indians; in turn, the English could enjoy Indian tea.
The crux of the ICT Revolution is the digitization of data. Information (or data) in any form (texts, images and spoken words) can now be digitized (reduced into series of bytes or “off” and “on” switches) and then transported anywhere at the speed of light. With the earlier Industrial Revolution, it was goods that could be transported in the matter of days and weeks; with the ICT revolution, it is information that is transported instantaneously.
There may be little value in the instantaneous transmission of information on how to make widgets. In other instances however, the rapid transmission of information is pivotal not only in maximizing returns on investments but also in saving lives and preventing property damages.
With ICT, information on an earthquake in Indonesia could be transmitted quickly worldwide. That would help coastal communities prepare for any subsequent destructive tidal waves. Thanks to ICT, we can track storm centers and predict their path, and help communities be better prepared. In America, property damages and lives lost through hurricanes are minimal because of the rapid spread of vital weather information. In case of the New Orleans Katrina tragedy, the authorities received the information timely but they did not act on it effectively.
Information about distant markets can be liberating to farmers. By using cell phones, jute farmers in rural Bangladesh could determine the price of their commodity at Dacca. Previously they were at the mercy of the middlemen; today those middlemen act merely as transporters and can no longer gouge the farmers through their monopoly of market information. ICT empowers those jute farmers; such is the liberating power of information! Technology effectively breaks the monopoly and monopsony of the parasitic middlemen far more effectively than the strongest socialist mandate.
The post-industrial economy is increasingly concerned with services. Most of the associated jobs (Robert Reich’s “in-person services”11) cannot be outsourced; someone remote from the customer cannot effectively perform those jobs. To be a nurse or waiter, you have to be with the patient or customer, not a thousand miles away in India. Similarly with being a surgeon, robotic and tele-surgery notwithstanding.
In contrast, the “routine production services work,” the kind of repetitive standardized work being done in factories and offices could be readily and are indeed being outsourced thousands of miles away.
Yes, some service jobs could be done remotely. American data entry work and consumers’ enquires are now being done in Bangalore rather than Baltimore. Untwisting the thick rolling Indian accent and making those Indians sound like lithe Midwesterners turned out to be very easy, requiring only a few sessions with “accent reduction” coaches. At the other end of the skills spectrum, the CAT scans and MRIs at my hospital are being read by radiologists thousands of miles away in Honolulu. It could easily be done in Sydney or Seremban if doctors there have American qualifications.
Previously, young Indians would aspire to emigrate to America; today the American way of life comes to them. America gains by having its work done cheaply abroad and by having fewer Indian immigrants. India too gains by not losing its talented young.
With the proper smart strategy, Malaysia could also reap the benefits of globalization. Malaysia does not need to re-invent new ways on how best to prepare for globalization. Simply adopt the successful strategies of such countries as South Korea and Ireland. Ireland is a particularly relevant model.
Next: Lessons From Ireland
ASEAN Follies
The ten-member Association of Southeast Asian Nations (ASEAN) is nothing more than a social club for its leaders, its lofty goals and aspirations merely substituting for its lack of substantive achievements. Its latest member, Myanmar, is a continuous embarrassment to the organization, demonstrating its collective impotence. Nonetheless the leaders deem the organization important, and world leaders fall for it by regularly sending high-level delegations to its annual meetings.
ASEAN is committed to regional cooperation and ultimately a common market by 2020. Thus far, that is all there is to it, only a commitment. At its Foreign Ministers meeting in Manila in May 2006, they committed to accelerate the date to 2015. I suggest a more modest and doable beginning, with a common market comprising of only Indonesia, Malaysia, and Brunei (IMB).
It is hard to integrate such disparate states as Laos, Malaysia, Singapore and Indonesia. The only commonality is geography: there is no shared history, experience, language, or culture.
Normally geography can be a powerful binding element. The western Canadian provinces have much more in common with western United States than with their eastern counterparts. This is reflected in the flow of people, goods, and services. There are similar traditional flows between the ASEAN states, but there is no official acknowledgement much less encouragement. Worse, such natural flows remain illegal (as between Sabah and the Philippines) or considered as “tourists.” Malaysia bragged about increases in tourism. Analyzed carefully, and the bulk of such “tourists” are nothing more than friends and relatives going back and forth across hitherto (pre-colonial) non-existing borders. It makes the tourism statistics look impressive. If only the ASEAN states were to legalize and thus encourage such natural flows, then regional trade would blossom.
Those limitations notwithstanding, it is still good for the region’s leaders to meet regularly even if only for social reasons as with its silly end-of-meeting karaoke skits. That would only increase understanding. Malaysia would be wasting its time and effort to go much beyond that.
ASEAN was supposed to represent the region as a unified and thus powerful voice in international affairs. With the member states being at such disparate stages of development (Laos and Singapore being the extremes) and with their accompanying varying interests, it is impossible to achieve this. That objective remains just an aspiration, or more accurately, an illusion.
ASEAN was to negotiate as a group for free trade agreements with its major trading partners (Japan, America, and EU). Certainly a regional grouping of ten nations with a population of nearly half a billion people would carry substantial clout, if only they could first agree among themselves. Singapore was the first to break ranks by securing its own free trade agreements with America. Thailand soon followed. With that, the myth of ASEAN solidarity was effectively punctured. Now Malaysia too is belatedly seeking its own free trade agreements with its major trading partners.
Nor can ASEAN point to any substantive achievement in non-economic matters. They could not even put any semblance of common understanding on major international issues. Singapore, Thailand, and to some extent Vietnam, are more concerned with currying America’s favor. Post-Mahathir Malaysia is gradually recognizing the importance of being on America’s good side, and is thus reducing its anti-American rhetoric.
The ASEAN states will continue to pursue their own separate course and looking after their own national interests. As the American scholar Donald Weatherbee perceptively noted, Southeast Asia is a region because its elite say it is. There is nothing beyond that. Malaysia should assign a junior diplomat to the ASEAN desk.
Globalization: Challenges and Opportunities
Malaysia should take aggressive steps towards integrating itself with the global mainstream. That would be the most effective strategy to achieve economic growth and realize its ambitious Vision 2020 goals.
Malaysia has gone further than many Third World countries in opening itself to global trade. It was an early member of the World Trade Organization. The value of its trade is substantial, twice its GDP. The figure for United States is only 25 percent. Despite this apparent embrace of globalization and capitalism, nonetheless there is a significant segment of the leadership, in particular Malay leaders, which is resisting globalization. The non-Bumiputra community generally welcomes globalization; Malays fear losing their treasured special privileges. It is not so much that Malays would lose those privileges rather that they would become irrelevant.
Economists generally (except those in Malaysia) are the strongest advocates for globalization and free trade. Experience proves that countries embracing free trade and globalization have greater economic development than those that do not. We have as examples the two “experiments in nature:” the recent miraculous achievements of modern China and India. Hundreds of millions of Chinese and Indians—more people than at any time in history—have escaped the dehumanizing clutches of poverty through trade and globalization. If the successes of China and India were to be replicated elsewhere, poverty would no longer be the scourge of humanity. Trade and globalization did more for poverty in these two countries than all the foreign aid, missionary work, or even Mother Teresa (in the case of India).
Even smaller nations have benefited from globalization. As late as the 1950s, Ireland was one of the poorest nations in Europe, and an unending source of poor immigrants to the West. Since joining the EU and embracing globalization, it is growing rapidly, outpacing even Britain. The English now no longer look disdainfully upon the Irish. Similarly, back in the 1950s South Korea was in ruins. Its main source of income was foreign aid and the spending money of foreign soldiers. By joining the global mainstream, South Korea is today an economic powerhouse, its people healthy and thriving.
Malaysian leaders and intellectuals rail against globalization, viewing it as another “subtle” vehicle for Western hegemony and neo-colonization. Their incessant diatribes tire me easily. We should instead be devising strategies on how best to exploit the benefits of globalization and prepare Malaysians for its challenges. Technology, specifically ICT, drives globalization. The earlier Industrial Revolution too was spearheaded by technology, specifically the steam engine and later the petroleum-powered machines. That made production and transportation of goods considerably cheaper, consistent, and predictable. Textiles manufactured in Scotland could now be cheaply transported and made affordable to the Indians; in turn, the English could enjoy Indian tea.
The crux of the ICT Revolution is the digitization of data. Information (or data) in any form (texts, images and spoken words) can now be digitized (reduced into series of bytes or “off” and “on” switches) and then transported anywhere at the speed of light. With the earlier Industrial Revolution, it was goods that could be transported in the matter of days and weeks; with the ICT revolution, it is information that is transported instantaneously.
There may be little value in the instantaneous transmission of information on how to make widgets. In other instances however, the rapid transmission of information is pivotal not only in maximizing returns on investments but also in saving lives and preventing property damages.
With ICT, information on an earthquake in Indonesia could be transmitted quickly worldwide. That would help coastal communities prepare for any subsequent destructive tidal waves. Thanks to ICT, we can track storm centers and predict their path, and help communities be better prepared. In America, property damages and lives lost through hurricanes are minimal because of the rapid spread of vital weather information. In case of the New Orleans Katrina tragedy, the authorities received the information timely but they did not act on it effectively.
Information about distant markets can be liberating to farmers. By using cell phones, jute farmers in rural Bangladesh could determine the price of their commodity at Dacca. Previously they were at the mercy of the middlemen; today those middlemen act merely as transporters and can no longer gouge the farmers through their monopoly of market information. ICT empowers those jute farmers; such is the liberating power of information! Technology effectively breaks the monopoly and monopsony of the parasitic middlemen far more effectively than the strongest socialist mandate.
The post-industrial economy is increasingly concerned with services. Most of the associated jobs (Robert Reich’s “in-person services”11) cannot be outsourced; someone remote from the customer cannot effectively perform those jobs. To be a nurse or waiter, you have to be with the patient or customer, not a thousand miles away in India. Similarly with being a surgeon, robotic and tele-surgery notwithstanding.
In contrast, the “routine production services work,” the kind of repetitive standardized work being done in factories and offices could be readily and are indeed being outsourced thousands of miles away.
Yes, some service jobs could be done remotely. American data entry work and consumers’ enquires are now being done in Bangalore rather than Baltimore. Untwisting the thick rolling Indian accent and making those Indians sound like lithe Midwesterners turned out to be very easy, requiring only a few sessions with “accent reduction” coaches. At the other end of the skills spectrum, the CAT scans and MRIs at my hospital are being read by radiologists thousands of miles away in Honolulu. It could easily be done in Sydney or Seremban if doctors there have American qualifications.
Previously, young Indians would aspire to emigrate to America; today the American way of life comes to them. America gains by having its work done cheaply abroad and by having fewer Indian immigrants. India too gains by not losing its talented young.
With the proper smart strategy, Malaysia could also reap the benefits of globalization. Malaysia does not need to re-invent new ways on how best to prepare for globalization. Simply adopt the successful strategies of such countries as South Korea and Ireland. Ireland is a particularly relevant model.
Next: Lessons From Ireland
posted by M. Bakri Musa | 6:31 PM
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