• Education Center
• More Issues to do with Fundamentals
• Pump at the right places
• Eliminating bottlenecks
• Conclusion

 The idea that Malaysia develops into a regional of educational hub to serve the region has been much discussed for a couple of years now.  The government has also allowed as many as 600 private colleges to be opened in the last decade. Is the idea of the education business sound?

The issue of offering education services is sound only if the economy is matured and developed, as the purpose of institutions of learning is not for profit but to develop solutions to support the economic growth of the economies they are serving; their raison de'tre is to serve their own country; not created as an export or for foreign revenue generation. This is the case with more recent developed societies such as Taiwan and Australia. These two countries developed such excellent universities and educational institutions; which produce the human resources their economies needed; and economic success of their countries ensured. The education sector became export industries only subsequently, I suspect more by default than by design.

Before Malaysia could realize its ambition of becoming a center of education excellence, it has first to develop universities of world class statue. At present none of the national universities in the country is listed with the top universities in the world or in Asia. The priority should therefore to strengthen the local universities; get them up to world class status, and to liberalize education and allow for the setting up of private universities to fulfil needs for quality education. 

The practice of local colleges twining with foreign universities is not quite different from the OEM in manufacturing; you don't have your own franchise and you don't award your own degrees; and more importantly your faculty teaches a curriculum developed by someone else, designed to suit their social, economic conditions. 

One can understand the universality of education and globalization is harmonizing things; with due respect to the Malaysian teaching profession, this practice of just doing the teaching work for some foreign universities is not quite different from the "assembly workers" in the OEM value chain. Allowing branch campuses to be opened seems like a good solution; but there are also flaws in this argument. Where would the world's best universities want to set up branch campuses? 

Europe's Insead and the University of Chicago have both set up programs in Singapore, five of China's leading Universities have also started MBA programs in the island republic. Incidentally if we can allow foreign universities to set up branch campuses in Malaysia, why aren't we liberalizing for outstanding Malaysian academics and institutions of higher learning to elevate to University status; develop their faculty and assume a greater and active role in devising solutions for development? 

There are many issues dealing with restoring Malaysia's competitive position and repair our fundamentals.  These are important issues on our economic structure. While government planners, the press and many others are busy debating and analyzing short run outcome of the US-slowdown, i.e. whether Malaysia will attain high growth for 2001, 5-7%, it is more important to focus on the basics; if the basics are right, real GDP growth will originate from the healthy functioning of the real economy; not by pump priming or continuously deployed input / investment driven growth, where year in year out, new sources of spending or investment are needed to maintain growth at a certain level. No economy can take too much fire fighting or be on aspirins on the long run. 

The government has said that it is confident that Malaysia can achieve positive growth, and for 2001, targeted at 5-6%. Let's try to understand the logic behind the need for high growth. Yes, high growth is desirable; prosperity is good for all. If Malaysia is capable of doing so by a self-sustaining real economy, not by incurring huge debts that commit the future generation or generations, well and good, we ought to celebrate and applaud the government for its economic management skills. 

Malaysia was blessed with a robust export market, and the boom in the US to helped it pick up during the post 1997 days. The large over--investment in the US and the corrections that is now causing the slowdown will take way this external lifeblood. The government's recent additional measures reflect concern of a major slack from export contraction and it intends to make up growth by pump priming in order that we maintain high growth. The Government has said before that we need to at least generate 4% GDP growth to ensure social stability. The governor of the Bank Negara has indicated that the pump priming will focus on physical infrastructure building.

Should we not stop and pause for a moment?

First the government should not be faulted for pump priming measures; but everyone knows how important that such "artificial growth," i.e. undertaking economic activities we may not need now to generate the kind of growth target desired, be directed. Pump priming creates future liabilities for the economic system, and constraints future growth, burdens future generation or generations. 

First shouldn't we ask: what minimum rate of growth is needed by pump priming that we can afford?  Is it wise to put up so much more billions to create another 1.1% in order to make 5-6% GDP? Isn't there a better way, a less damaging way, to handle the fallout if growth does not reach 4%?

The concern of social problems arising from economic difficulties is understandable and legitimate. Perhaps we should ask ourselves if indeed growth comes short, what level of unemployment would the country has to live with? How should we manage the fall out? We don't have a social security system that provides for unemployment benefits; can we not create a contingency short term (say maximum 5 years, renewable depending on macro economic conditions) loans to unemployed workers or families? Already the banks have difficulties lending money to productive businesses, instead of good money get locked into unproductive assets, why not rechannel the money back to the people to create spending? Unlike infrastructure projects, which are not needed, loans are productive by definition; the risk for the banking system is lower especially if they are spread in small sums over a large base.

Once the social instability issue is addressed, we can then focused on how best to use the pump priming funds. Malaysia has an urgent total factor productivity issue, much talked about, but lack the will and discipline to confront. For over a decade now, Malaysia's total factor productivity has been fallen. The robust growth in the 3-5 years prior to the 1997 crisis and the speedily recovery after the crisis were due to increased government spending and boasting of consumer spending through easier lending terms for housing and automobile purchase. We know, but have failed to act on this fundamental productivity challenge, and much of that has to do with workers' work ethics, education, managerial competence, in short the overall raising of standards and quality of our human resource. How much longer can the country postpone this? Isn't this productivity problem that has created the bottleneck for the manufacturing sector's inability to move up the value chain?

 Where to direct pump-priming funds:

• Training, retraining of our workforce. Improve the standards and competence at all levels. First begin with the education system. The shortage of teachers has been a persistent problem, school curriculums have fallen out of date; the teaching profession is demoralized because of poor pay, poor teaching conditions and lack of faculty development opportunities. The shortage of talents for the "knowledge-based" economy will not be overcome if we don't start at the source; and how can we develop people with relevant skills if we don't start retraining and motivating the teachers?
• Develop continuous learning programs to get the workforce to improve themselves; focus on developing a learning culture, either by initiatives or coercion, or jointly, to get the workforce to renew their skills so that they stay renewable. If workers are retrenched because businesses find no use of their skills; and they become a burden to the economy; they eventually become a source of social problems. The only way to reduce this challenge is to be proactive; get workers to be self responsible for their own employability. In this respect, get the banks to provide loans for higher education, second degrees, diplomas, specialized courses, tie further educational attainments to tax incentives and promotion criteria and so on. In the U.S, the education loans market is huge; and that probably explains why higher education is more accessible to the average person.
• Information, the media and the local publishing industry must be improved to connect Malaysians to the realities of a more sophisticated and competitive world: economic development can only spread with uplifting productivity or raising the average in society; and this can only be done with quality and superior information dissemination. We need a media that understand the issues; able to do in-depth analysis, do the thinking and asking the right questions on issues that impact on our economic destiny. In this regard, transparency of the government operation becomes a source of competitive advantage; we need a government agency that is prompt and accurate in organizing information and delivering data to the people and businesses. The people need real information, not 'packaged or selected" information to help them make decisions. The local publishing ought to be nurtured; no economy can create any further value it does not renew its stock of knowledge.
• Have the will to develop low cost or more appropriately called community housing. A healthier and well-housed workforce is capable of greater productivity. In this respect, the bottlenecks in the public transportation system must be tackled immediately; review and rethink the models to which projects have been privatized. Nothing is more important than a smooth and efficient public transformation for the majority of the workforce.

In addition to the above, there are critical bottlenecks in the Malaysian economic and social system that is constraining growth.  Many of these bottleneck issues have been adequately discussed in the local media; the subject of many memos from industrial associations to the government, it is worth repeating the most pressing and critical one on human resources.

Human resources, no matter how old this issue is, must always be tackled with priority. At the present level of the economy, dependable labor is critical. Malaysia lacks a strategic approach to the human resource issue; we allow in foreign workers with a maximum permit period of 6 years, and after they are trained, they are sent away. Manufacturers complain that after 2-3 years of solid training given to these workers, you can only have them for another 3 years, which is not adequate for you to recoup the investment, and what is worse, you are training up human resource to compete with you eventually. These workers return to their homeland or moved on elsewhere to service your competition. This is a value-subtract policy. 

Countries needing foreign labor need to think very hard on the kind of people they allowed in, from the beginning they have to come to terms of having to finally accept and integrate these people into their local society; that is probably the reason why Shanghai is giving away 15,000 green cards; permits for permanent residents status for professionals in the financial, insurance and broking industries to fill its expanding news.

Many projects, government departments and positions in public listed companies have a mismatch between man and job. If we truly want to see efficiency and effectiveness; the guiding principle should be to find the cat that catches mice; no matter who he/she is or where he/she comes from. It is shocking to learn that directors of public companies have to be made to attend courses in a mandatory manner; directors of companies are appointed to serve with their experience and competence relevant to the business!  Man or women with the right industry exposure and experience will have the industry knowledge, depth and the ability to provide the stewardship; especially in positions and departments within the government that deals with the complex marketplace.

When someone goes to the doctor for suspected cancer, he or she usually keeps postponing the visit to see the medical report. It is understandable and only human. The bad news is traumatic to say the least; but no matter what, the inevitable will happen. You either be brave and face it; and then work on what you can do; or continue with the denial and let the disease develop to the point when the final discovery is so late that death is certain and near. 

An economy can not continue with fire fighting, the government's supply of aspirins in its pockets is also running out. Pain is certain; but it is best felt early so prompt remedy can be dispensed.

Finally politicians and government leaders will do the nation a great service if they are more honest with the actual situations. No one expect the government to have all the solutions and responsible for delivering the growth; the government must be forthright to shift that responsibility back to its people. Let the people know what it is and prepare them. The government should recognize what its role is, and execute that role well. 

Businesses must also be more involved by engaging the government in market issues; which they know better and help suggest policy guidelines to make the overall economic and social system more efficient. Businesses have a lot at stake, as their own competitiveness is based on the system in which they operate in; they have a role in guiding public policies. The complexity of the economic world today demands commitment from the workforce; no government can guarantee lifetime employment, no matter how well intentioned government leaders are. 

The quality and quantum of growth of any economy is a sum total of the collective intellect, energy and creativity of all. The government, private businesses and the individual citizens each recognizing their role and responsibility, and collaborate to build a better world for one and all.

Feedback Welcomed!

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