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Here is my latest article in the 20th April issue of Netvalue, The Edge (Malaysia) on what Malaysia needs to do to move up to developed nation status.

In his book ‘Capitalism, socialism and democracy’, Joseph Schumpeter set out the idea that innovation leads to gales of ‘creative destruction’ as it causes old ideas, technologies and equipment to become obsolete. He states that the question is not “how capitalism administers existing structures, … [but] how it creates and destroys them.” He believed that this creative destruction is the essence of continuous progress and improves the standards of living of the society at large.

I believe Malaysia is now at a crossroads, where the old economic order is becoming obsolete and a new economic order is necessary to continue the progress of the last 30 years and to improve the living standards of its citizens. The fact that we are at this crossroads today coupled with a global crisis of confidence and ebbing confidence in the leadership of this country is critical to the future of our new Prime Minister Dato Sri Najib Tun Razak as it is to the future of Malaysia itself.

However, knowledge that we are at such a crossroads affords us the luxury to change direction and that is what Najib has to do. He can be the architect of a new economy, based on innovation and creatively destroying the old economic order, so that the nation can set itself on a new direction of prosperity.

This change is similar to what former Prime Minister Tun Dr. Mahathir did when he came to power. Until the 1970s Malaysia was an agrarian economy dependent for its growth on rubber, cocoa and palm oil as well as tin mining. What he did was turn a small agrarian economy into a high growth industrial economy by adopting friendly export oriented policies and by encouraging the formation of export based manufacturing industries. He fostered this growth through a stable government and inviting foreign direct investments (FDI) in these industries.

However, the world has moved on and export manufacturing that is dependent on abundant low cost labour has moved to countries that are still relatively economically under-developed with large population bases like China, India and Vietnam. Malaysia with its smaller population and higher relative labour costs is slowly losing out with FDI moving to these countries in search of cheap labour.

The world has moved on, but we are still stuck in the 1980s mentality of labour intensive industries. Hence despite all the progress we have made in the last 30 years, we still have factory workers earning less than RM1,000 a month and University graduates still only earning between RM1,500 and RM2,000 a month upon graduation. Amazingly that was what it was in the 1980s and 1990s and it’s the same today. This simply means our citizens have made little economic progress in 30 years. So despite the many gleaming buildings and wonderful highways, to the majority there has been no economic progress, only economic stagnation, despite 30 years of economic growth.

The main cause of this is the policies we continue to adopt especially our dependence on labour intensive, low cost manufacturing and resource based industries. Let us be very clear about this: traditional manufacturing jobs have moved to other countries; our oil and gas and timber resources will be depleted in 10 to 15 years; there will be a glut of crude palm oil in 15 years time when Indonesia will probably produce 3 times our production of palm oil; tourism will be highly competitive especially with the integrated casino resorts in Singapore and tax free pioneer status and similar policies will be offered by just about every country in the region to attract FDI.

In 15 years we will be in no man’s land, competing with all our neighbours for the same FDI and highly choosy investors who will go where the offer is the best. That will mean the lowest cost offer. If we don’t do anything today, then the future for our children is very bleak indeed. I cannot imagine factory workers still earning below RM1,000 a month and graduates less than RM2,000 even after 2020, but that is the most likely outlook. Unless we do some creative destruction of our own economy, before it is destroyed by competition in the future.

So what should we do? Firstly we must not just pay lip service to the change agenda, we must instead make a constructive and conscious decision to turn our economy and our policies around completely. The focus of our future must be on a “brain economy”, where innovation and brain power is the cornerstone of economic policies.

We must gradually stop the hiring of cheap, low cost, under-educated labour that powers the labour intensive industries. Manufacturers must be told that over the next 5 years import of cheap labour will be phased out completely and only manufacturing that uses high technology and information technology will be encouraged. Existing manufacturing plants also have to upgrade their operations to high tech operations or lose their tax incentives. In future only high tech manufacturing FDI will be allowed.

Next we must look seriously at advanced manufacturing and follow the direction of Japan and Germany in using technology intensive plant and equipment for manufacturing and move up the value chain into design and development and phase out original equipment manufacturing (where someone else designs the product and owns the brand but we provide the low cost manufacturing base).

We must also increase the support and effort towards the information and communications technology (ICT) and Biotechnology industries. While the support seems adequate, it is not sufficient if we are to move to the next level of growth. After 12 years the Multimedia Super Corridor is maturing and we have created many ICT companies who are now exporting their products and services globally, we must increase the support given to these companies to grow even further. We have done well but we can and must do more.

The Biotechnology industry is now showing signs of success with more than 100 Bionexus companies (many of which are already profitable) and plenty of biotech and agritech R&D being done in our universities. These need to be commercialised but for it to happen technology and education industry policies need to be liberalised and this can only be led by the Ministry of Higher Education and Ministry of Science, Technology and Innovation. We need to be more progressive if we are to move our universities to the next level of commercialisation success. The R&D is being done, but commercialisation is being held back by poor policies and guidelines.

We also need to create more competition and we need to reward the progressive Universities by giving them more incentives to create new R&D&C (Research, Development and Commercialisation). For a brain economy to succeed we need to have the brains in the first place and here we need to improve the quality of education at all levels from schools to Universities. Just because more students have 20 A’s does not make them smarter, because it is not the number of A’s but the quality of the A’s that matter. Our standards must be improved and we must follow international standards not create our own lower standards just to show more A’s. By doing that we are doing a huge disservice to our children because their future will be impacted by the quality of their education.

The country must change and we must create an economy that is based on science and technology and on creativity and innovation. It is a very difficult proposition and it is precisely because of that that we must do it. If it is simple other nations will also imitate what we do and that creates competition like what we are facing today. But by taking the difficult road we can create high-level competencies and capabilities for our citizens and that will secure our future and create the “brain economy” we need to survive and prosper. Maybe then our factory workers will earn RM5,000 a month and not need to survive by selling goreng pisang and tosai to supplement their income. We owe that much to our children and that’s what the new PM should do.

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Blog Experiment

Hello everyone, I am back! Its been 10 weeks since my last post. My friends Dash & Prem have been the only ones to constantly bug me about not posting, thanks guys, I appreciate this.

Since I was quite busy during this period, I thought I’d use the quiet period as an experiment, to determine if a Blog stays alive or dies if the Blogger does nothing. I am happy to note that the experiment was a success. Despite not posting anything (cartoons don’t count really) the Blog continued to attract readers.

My last post was on 27th January 2009 and that coincidentally was my Blog’s busiest day. It was my post on “A future fortune in video ads”. Obviously that interested quite a lot of readers.

My weekly viewership chart is given below and as can be seen the worst week had 62 views and the best 160. This is despite not having any posts. In fact I’ve had 1,762 unique views since I started the Blog.

Ok, ok this is not like the most popular Blog in Bloggersphere, but hey, I don’t even know 1,762 people but now that many people know me, must count for something right?

The most interesting discovery I made is that the use of tags is like super, super important if you want to get readers on to your Blog. My most read post was “Web2.0 and the Nature of Man” which had 630 views. The main reason for this was that I tagged it with ‘Maslows Hierarchy of Needs’, which is the main reasoning behind the article. Guess what, most people came to the article because a Google search for MHON brought them there. So if you want to capture Google traffic, use popolar or iconic words or terms & you will be highly placed on Google.

Blogging is definitely a great medium to promote yourself and share your ideas. Once your Blog is on the www, and you have a reasonable number of posts, visitors will keep coming back.

I declare my experiment a success. Now I just have to get off my butt and start writing again…. 8)

my-weekly-stats-from-jan-april-20093

I just love Calvin & Hobbs. I have the entire collection of comic books, at least whatever I could find in the book store. So when I came across this I just could not resist. This is a brilliant portrayal of corporate greed and CEO remuneration. Hope you like it.

calvin-hobbs-corporate-greed

Hitler Gets a Margin Call

Its been a while since my last post. I have been rather busy but interestingly enough I have still had many visitors to this Blog. Interesting!

So I thought I’d just post a nice little video on Hitler’s Margin Call for your viewing pleasure. I got a kick out of this one, I hope you do too. Enjoy.

Hi All,

For my Chinese friends, Happy Chinese New Year. May the year of the Ox bring prosperity and good fortune to you & your business.

Speaking of fortune, I came across some interesting articles in the NYT on video ads. Seriously folks, there are more and more articles these days on monetising videos & this can only mean one thing, there is going to be a boom in video ads in the near future. Its almost a prophesy & I strongly believe it will come true.

Discovery channel is discovering (pun intended) that there is money in its 23 year archive of video productions and has started to monetise them on the Web. This is strictly for the Internet as they expect Web video to grow and along with it video ads. Check out the NYT article here.

Then there’s the opportunity of making ads for the SMEs.  See the article here. The company Turnhere makes video ads for the SME industry on the cheap, just US$1,000 per video ad and according to Kelsey Group an advertising research group, the SME video  ad business will be worth US$ 1.5 billon in 2012. Thats just for small businesses.

Kelsey believes that Interactive advertising (which includes search, display, classifieds & other interactive ads) will increase from US$45 billion in 2007 to US$147 billion globally in 2012. Thats huge business.

Yet making money from video ads is tough at the moment. Pre-roll ads (just before the video starts) or ads either in between the video (a clear no-no in video advertising) or at the end of the video (who will watch it?) have all been tried with varying degrees of success (pre-roll is acceptable, the others not so). Companies like Turnhere make the entire video the ad and has had some success with this type of ad.

But how do you monetise other forms of video, news stories or documentaries or other short videos? I wrote about the Stanford startup that blends videos into videos and there is another startup in Israel called Innovid which also blends videos into videos, sort of like a “skin” over the original which is even clickable to take you to the advertiser’s site. Veeple is another startup that enables content owners and publishers to monetize their video content, by embedding interactive, clickable elements to their video. Thus you can embed clickable logos and links within your video to send viewers to your website, social network profile, etc. All these are innovations that will only help create the video ad industry of the future.

In terms of behaviour, are users taking to video ads? Apparently yes, based on a survey done by Kelsey (see below). Almost 43% of those who saw a video ad visited the website and 15% made a purchase. Thats pretty impressive & can be indicative of the future potential of video ads.

One company Blendtec even increased its brand recognition and sales by 500% thanks to its funny ads on YouTube. That is proof enough that you can monetise video.

Moral of the story? “There’s gold in them there video ads” (vads?)

Kelsey Video Ads Survey 2008

Malaysia is honoured to be the country to launch Global Entrepreneurship Week 2009. Having done extremely well as the 3rd most active country for GEW 2008, Malaysia and Warisan Global, the hosts for GEW in Malaysia, were given the honour of launching GEW 2009 on 21st January 2009 in our fair city of Kuala Lumpur.

The guests of honour at the launch were Dato’ Saifuddin Abdullah, the Deputy Minister of Entrepreneur Development, Malaysia and His Excellency Mr. Boyd McCleary, the British High Commissioner to Malaysia (on behalf of Mr.Gareth Thomas, MP, the British Minister of Trade who was supposed to launch it jointly with Dato Saifuddin but had to return urgently to Britain).

It was a fantastic and colorful occasion with more than 150 invited guests and GEW partners and even Bag Pipers and a lion dance to commerate the Chinese New Year on 26th January 2009. I must say, having been in Scotland for a few years, the Bag Pipers were top notch for a local group.

As HE Mr. McCleary said, this year Malaysia has to do better than 2008 and thats to be No. 1 in the world. Dash, my friend (CEO of Warisan Global) you have a great challenge ahead, but with everyone’s support I am sure we will achieve this target.

So everyone, lets help Dash, lets make Malaysia No. 1. Onward we go……

GEW Launch

A Full House

Audience Voting for What's Hot

Karamjit Singh of Netvalue, The Edge wrote an article on the What’s Hot 2009 Forum. Click here for the article.

Here are some photos of the event

The Panel