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Phar Kim Beng
Pak Lah (Datuk Seri Abdullah Ahmad Badawi), the fifth Prime Minister of Malaysia, has been known as a 'subtle' man. But the measure of Pak Lah's 'subtleness' is not absolute. Rather, it is derivative of what Malaysia had hitherto experienced under Tun Dr Mahathir, whose irascible and at times confrontational leadership style was seen as almost 'un-Malay'. Put differently, if Pak Lah is subtle, it is by virtue of the fact that Tun Dr Mahathir was a complete opposite.
Pak Lah came into office, almost by default. He was the main beneficiary of the fiasco over Anwar Ibrahim in 1998. He was not anointed by the ruling party UMNO to be the Prime Minister. Rather, his current position came via his appointment as Deputy Prime Minister by Tun Dr Mahathir in 1999. Thus, Pak Lah's rise to office was due to a particular quirk of events.
Leaders who reach the top through this peculiar route tend to believe that they have been 'selected' - in this case by Divine Providence - for a certain mission. In Islamic idiom, this is tantamount to a form of 'rzk', or 'rezeki' (in Malay) - something given by God rather than achieved through sheer effort. Consistent with this belief is the tendency of such a leader to see out his term in office until incapacitated by physical debilitation.
But beyond remaining in power, one must expect such a leader to believe that he has a 'special mission' too. For Pak Lah, this mission is clearly the transformation of Malaysia into a 'quality nation' - a theme of his electoral and other campaigns.
Instead of latching on to the 'Malaysia Boleh' (Malaysia can do) creed of his predecessor, Pak Lah came into office attesting to the importance of Malaysians becoming 'cemerlang, gemilang and terbilang'. These three words can be respectively rendered into English as striving for 'glory', 'excellence' and 'distinction'.
Pak Lah's stress on Islam Hadhari (civilizational Islam) is indicative of a plan to alter the template that forms the Malay psychology, albeit through the acquisitive process of gaining knowledge.
But quality cannot be distilled unless workers are first employed in a discipline-driven environment. Pak Lah has urged the more than thirty government-linked companies (GLCs) to raise their performance and profitability; ostensibly to operate under the dictates of market forces.
While this strategy may appear sound, it has a tendency to push GLCs to expand their operations abroad, or to seek mergers and acquisitions with foreign firms, rather than to focus on honing their core businesses. While corporate leaders may receive training through such international exposure, workers based in Malaysia may not get the same benefit. This creates a paradox, where quality may only be obtained at the highest tier, at the exclusion of the workers on the ground. As an example, Telekom - faced with a mature market in Malaysia where more than 85 per cent of the Malaysian population already owns a phone - is following the lead of MAXIS in venturing abroad.
A result of the stress on bottom-line, cost-cutting exercises may lead to the possibility of retrenchments, which may not necessarily serve the objective of creating a quality nation.
Competitiveness will clearly be a key focus. But the extent to which this can be achieved will redound first and foremost on the nature of UMNO, which is the mainstay of the entire political edifice. If the tentacles of UMNO continue to spread themselves into the private sector, creating various forms of rent economy driven by patronage and concessions, then the Malaysian economy is bound to not change at all. If Pak Lah feels that his mission is to transform Malaysia into a 'quality nation', perhaps he should begin by transforming UMNO, without which all else would be insignificant.
In the 9th Malaysian Plan tabled in parliament on 31 March, emphasis has been placed on getting the Malaysian economy on track for a growth rate of at least 6 per cent a year until 2020. A total of MR$220 billion has been earmarked for various development projects over the next five years. The Malaysian Multimedia Supercorridor (MSC) has also been given a new management and facelift. The Multimedia Development Corporation (MDC), rather than the National Information Technology Council (NITC), is now the key body.
But the government is spending around 70 per cent of its annual budget on administrative expenditure. Such a large financial outlay each year implies that the Malaysian government may not be able to get a good rate on bonds and other loans from the international financial community.
Indeed, it is not surprising that in the 9th Malaysian Plan, close to MR$20 billion is to be raised locally through private finance initiative; a plan that might see CIMB and ECM Libra, two of the biggest investment entities in Malaysia, fighting it out to be the main underwriter.
Invariably, either Petronas or government-linked companies, especially the banks, have been relied upon to come to the rescue of the government. However, with the intention of abolishing fuel subsidies completely, though progressively, Petronas has signaled that it can't be perpetually coming to the rescue of the government.
Nor should local banks be expected to make loans available to the government. This sets the precedent for bad practice, in addition to producing what economists called a 'mop up effect' in the banking system's liquidity. When local banks set aside money for the purpose of assisting the government, this can put pressure of interest rates to rise, which may induce an inflationary cycle.
The question he is facing is whether UMNO or party elders can be transformed by his subtle tactics, or whether they be brought to book based on tests of stringency.
With the 2007 UMNO party election now in the offing, it is difficult to imagine Pak Lah acquiring the zeal to crack down on errant UMNO members. Pak Lah's political base within the party remains weak. Less than radical cabinet changes in February 2006 suggest a preference for the status quo. But the status quo does not favor him either. By allowing his son-in-law Khairy Jamaluddin, who is concurrently the deputy chief of UMNO Youth, to rise so quickly through the ranks, Pak Lah's own credibility has been dented.
Given both the political and economic challenges and the questions of credibility surrounding Pak Lah, one would have to wonder how subtleness can yet rule the day to transform Malaysia into a 'quality nation'?
WATCHPOINT: Come what may, all eyes will be turning to the UMNO Assembly of September 2007. The contest in this election will significantly decide who gets to lead Malaysia to 2020 and beyond.
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AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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