A Critique on our Economic Transformation Programme

Someone pooh-poohed our ETP successes... well, you be the judge to see if what he claimed made sense:

ALL NONSENSE!!!!

Najib’s 9 Early Wins

I had a great time this morning reading an article in the Straits Times this morning about the Malaysian Prime Minister boasting that his Economic Transformation Programme (ETP) had already secured 9 “early wins” in his economic transformation programme. It’s naïve beyond belief!

The following are the 9 and my reactions in italics.

1. Lfoundry from Germany will build 5 wafer fabrication plants over the next 5 years for a total
of MYR1.9 billion (US$613m)

The figure works out to be US$150 million per fab. This is hilarious. To give you some industry perspective, TSMC (Taiwan) recently announced a new 12-inch wafer fab that will cost US$9 BILLION. As it turns out Lfoundy manufactures analog and mixed-logic chips on 8 inch wafer. And judging by the cost of their fabs, they’re using line-width technology that is at least 15 years old! Hey, there’s lots of ageing 8 inch fabs all over the world who will gladly move to Malaysia if you classify them all as “wins” and give them tax incentives and free land. A kind of Silver Haired Fab scheme.

2. Hypermarket chain Mydin will open 14 new branches over the next 3 years for MYR 1 billion. This will assist sundry shops to upgrade their operations.

Would Mydin, a local hypermarket chain, have opened those branches anyway, regardless of Najib’s ETP? I suspect it would. It’s ridiculous that Malaysia considers being able to enjoy the big-box retail experience an “economic transformation”. There’s 7-Eleven in Zimbabwe but that did not help the country’s economy very much, did it? And since when did hypermarkets assist sundry shops? Historically, every time a hypermarket opens up, the mom-and-pop sundry shops in the area go out of business!

3. St Regis will build a MYR1.2 billion 6-star hotel in Kuala Lumpur.

There are already plenty of luxury hotels in Kuala Lumpur. I have no idea if they are doing well but since Malaysia offers one of the cheapest 5-star hotel accommodations in the world, they can’t be doing all that great! In any case, they haven’t prevented Malaysia from being a perennial economic underperformer. Oh yes, there are also 5-star hotels in Zimbabwe!

4. Schlumberger has opened its Eastern Hemisphere Global Financial Services Hub in Malaysia.

This actually sounds like a real value-added project. If only this list were filled with more of such...

5. Malaysia Airports Holdings will build a new complex at the low cost hub in KLIA.

Anyone who has been to KLIA will see that it is horrendously overbuilt and underutilised. And Malaysia is adding even more capacity? Sounds more like a real estate and construction deal –with all its attendant insinuations .

6. Abu Dhabi’s Mubadala and Malaysia’s IMDB will develop the MYR26bn KL International Financial District.

Sounds like a really gigantic real estate and construction deal. Financial centres do NOT start with buildings. They begin with good regulations and enforcement, consistency, reliability, transparency, etc . And these software elements have to be maintained for DECADES. Then, you become a financial centre - like Singapore. Any fool can put up skyscrapers. And sure enough, lots do. Just visit Dubai.

7. Premium Renewable Energy will build 5 bio-oil plants over the next 5 years, starting with a MYR124m plant in Sabah.

Who is Premium Renewable Energy? The company was started in 2007 (gasp!). The Chairman is a banker. His Deputy is a lawyer and yoga chain owner. The Managing Director is another lawyer. (double gasp!). Isn’t bio-fuels a science and engineering endeavour?. Do they have any track record or experience in biofuels? No. In fact, the company has no track record in anything as it is only 3- years old. At the moment, everything exists only on pieces of paper! Good luck to them. For their year end holidays, I strongly encourage them (Najib included) to visit the Mid-western United States and inspect the dozens of abandoned bio-ethanol projects! I just cannot imagine Singapore hinging its economic growth strategies on a me-too startup company run by people who have absolutely no experience or track record in the company’s sector.

8. Asia e-University has been appointed “gateway university” for developing online and distance learning

This is something good, in theory and spirit. But what on earth is a “gateway university”? Doesn't Malaysia realise that once you talk about online distance learning, there are no borders? Students can study and gain qualifications from ANY reputable, established online distance learning institutions anywhere in the world! For example, why would a Malaysian student enrol at this new Asia e-University when he can just as easily do so at UK’s Open University, which has been around for decades and is far more widely recognised. Why reinvent the wheel? Why not just offer incentives and assistance schemes to working adults to take up and graduate from courses from reputable online distance learning institutions?

9. Genting will build Johor Premium Outlets in Johor for MYR150million.

Sounds like a factory outlet shopping mall....great move for Genting. Full stop. Nothing more.

Why can’t the Malaysian government get it into its head that hardware is the easiest part of economic development? Malaysia already has pretty decent hardware compared to other developing countries. A real ETP should be working on Malaysia’s software. It should be all about changing the rules that hold the country and its society’s progress back. It should be about incentivising the Malaysian society to get out of all the bad habits that are preventing the people from realising their true potential.

Look around you, Malaysia. Other countries are talking about MULTIPLYING wealth. You are still talking about DIVIDING. In case you haven’t figured it out, when you multiply a number, it gets bigger. When you divide, it becomes smaller.

Enuff said. Tak Boleh-lah!


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