My first book of Mr. Friedman was "The Lexus & Olive Tree." A friend had read it earlier and suggested that I should do the same. I didn't finish the book. In retrospect, perhaps, I wasn't ready to reach such literature. When your mind is developing at different stages, it absorbs different form of knowledge. Anyway, that's just my personal theory; unproven and untested.
The World is Flat talked about globalisation in great length; from how it started, the driving forces and the impact on societies, especially to Americans. I was amazed at his foresightness and the ability to connect the dots. Many can be looking at the same image, not many can envision the picture. He pointed out some really interesting trends that have been happening and where they could possibly lead us in the future.
For example, the growth of Mexico and China in the past ten years. Mexico, since NAFTA, was seen as an emerging market that would reap great benefits from the advantages of being close to the world's biggest economy ie. the US. It was second biggest exporter of the US after Canada; from manufacturing of electricals to textiles to consumer goods. In less than 10 years later, that position has been overtaken by China although the country is located at the other end of the world (therefore higher freight rates). Reason being, China was able to manouver its policies and design frameworks accordingly to enhance its competitiveness while Mexico struggled with rising wages and greater demands from interest groups.
Malaysia, in contrast, still struggles with structural issues and lack of transparency in distribution of wealth and resources. While we can be thankful that we have ample of natural resources to shelter us in tough times, we have to be prepared one day that those God-given gifts would disminish one day. And when that day comes, I hope Malaysia is more prepared than now to face the real competition.
I consider the broadband speed to be a reflection of the kind of situation that we're stuck in. I remembered one of the first press conferences that I attended of Keng Yaik (the former Water, Energy & Communication Minister) was related to telecommunication. That was four years ago and he was harping on increasing the penetration of broadband to over 10%. To date, we have yet to reach the target, let alone talk about speed. Of the four 3-G licences, only two licencees are deploying the services while the remaining two have stayed out of radar, of which one of them has sold the licence to the third teleco in the country, which was one of the bidders that did not win the licence in the first place. The most obvious question is why didn't the Government just award it to the telco in the first place? Million dollar answer that no one knows. At the mean time, our peers have moved ahead in cyberspace.
In a couple more years, we can't afford to be slow adopter of technology because it would mean the rice bowl (survival) for us.
I thank the privillege of having the luxury of reading the economic report as part of my job. Yes, it is a boring material especially when the statistics just stare back at you. I've been writing reports on it in the past four years. This year, I decided to spend a bit more time to have a look at the numbers and try to discern some kind of trends that we're seeing in the country. I'm no economist hence I wouldn't say that I'm accurate. But it is rather alarming that I saw the country's budget deficit has ballooned to RM4.8% this year when it was only forecast at 3.3% in last year's budget. I still remember one of the promises that the current PM gave when he first took office was to reduce the economic deficits. He probably didn't realise then what a big task this was.
If we're unaware, the US kept its economy afloat in more than a decade on deficits - borrowing more money to pump prime the economy instead of generating more income internally to fund those developments. Yes, it has seen many years of wealth and jobs for its people but the deficits have come to a point that it is highly damaging. If the US were to declare bankrupt today, a number of countries will go with it because it is their biggest borrower. While Malaysia is not in the same league as the US, we shouldn't be too comfortable when we spend too much money on developments that may not yield the kind of stimulus that would sustain us in the long run. Based on the track record of developed countries (the pathway that developing countries should similarly walk past to become developed), the private sector needs to grow much faster than the public sector for economic growth to reach the next level. This means, the private sector is the growth catalyst while the public sector takes a backseat after being the main driver initially.
If we were to look at the trends in the past five years, the public sector in Malaysia has been the main driver and the spending and consumption take on the larger portion of the economy. The argument is we had the financial crisis in the late 1990s that left private sector wounded and the US mild recession in the early 2000s that caused the economy to lose momentum. But let us not forget that our neighbours are receiving more and more foreign direct investments every year while ours have stayed inconsistent. This could be an indication that our peers are eating into our pie, if we're not careful.
I wish someone would write a book on the world is flat and focus on Malaysia and its future competitiveness. Perhaps then, we would have the kind of urgency to have a paradigm shift.
