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Archive for the ‘Patriotism’ Category

It is the moment when I love Islam wholeheartedly.

This is a story of how it happened.

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The 1st night of eid-ul-fitr I have no idea why my heart told me to read Ibn Khaldun’s book Muqaddima, again.

I felt the urge of reading Islamic Culture and it’s decline.

And the puzzle seems to come together and address my long years of questions and concerns as below.

FOLLOWING BLINDLY

I share the same experience with majority of Muslims in Malaysia (not all):

  1. We can read and recite Arabic, but we DO NOT know the meaning of arabic language. Hence we read Quran and do not know what on earth in means, except for a few surahs where we frequently read and bother to find the meaning.
  2. We pray 5 times or less a day but we do not understand what we say in our prayers.
  3. We complete our prayers and recite our doa together with our imam. Little do we understand what the imam is reciting, we just say; Amen.
  4. We were told by our Ustaz (religious teacher) that Quran and Hadith is the truth and we cannot question the laws of sharia because we lack knowledge for ijtihad.
  5. As Muslims in Malaysia we are accorded “Bumiputera” status, hence we receive many privileges from priority in housing to financial backup.
  6. We are muslims because our parents were muslims.

There is an arab saying: “what comes from lips reaches the ears and what comes from the heart, reaches the heart”.

Hence if our parents rumble and cane us when we were young to discipline us and perform the prayers and Quran, it goes from their lips and goes out of our ears.

We are imposed to do, not taught to love our religion.

When we ask our teachers in school on sharia law and how it was derived, none could explain except the vague explanations where it is from the Quran and Hadith.

If we ask for more and question the unquestionable truth, we were told we could not ask because it is God’s will.

How on earth can someone love something without knowledge?

THE TRUTH DOES NOT MATCH OUR ACTIONS

As a “Merdeka son”, for years I questionned the following:

  1. If Islam was the religion of truth and best for me, why then do we see Muslims feel tight and imposed a lot of restrictions which sometimes does not make sense? (like the poco2 dance which was suddenly banned and now it is ok).  None would dare ask as if we do, we would be put down because we have no knowledge.
  2. We were told we are the best of all people because we are Muslims, but why do I see Malay Muslims the most dependent, complacent, lazy and do not make themselves better everyday? (not all).
  3. We are a Muslim country but why are we oppressing the non-Muslims (non Bumis)? I have a friend (non Muslims) which live in dire of all flats and in mass poverty while at that age, I am living in luxury. Where is the leadership of the Muslim leader as the defender of the ummah and his people?
  4. The bumiputera policy which prioritizes Malays at the expense of others (I agree it was needed in the short term, not long term), where is the righteousness called for as a Muslim as Allah’s vicegerent?

I pondered and felt upset.

I am extremely patriotic and refuse to follow things blindly. I feel stupid when I do things where others tell me it is right without the evidence.

I prayed to Allah for hidayah (guide) every single day, not to lead me astray, to show me the truth in Islam.

WHAT I SEEK MADE ME DISCOVER THE MOST BEAUTIFUL THING ABOUT ISLAM

I found it in the books of Ibn Khaldun and the stories of how Islam was founded by our dear prophet Muhammad (pbuh) up to this day.

I read Incoherence of Philosophers by Ibn Ghazali (Al Gazel) and Incoherence of Incoherence by Ibn Rusyd (Averroes).

And lastly I was guided to read on Islamic Culture and it’s decline up till now.

This is what I found:

  1. Islam is a religion of equality paired with social justice. Yes, equality. That is the reason why Arabs converted in droves during the period of prophet Muhammad. They were oppressed by the system and Islam gave way for equality for men, women and slaves.
  2. Islam is a religion of democracy. Mutual consultation (syura) is mentioned in the Quran and was practiced by prophet Muhammad (pbuh). The first four caliphs were elected based on democracy. It was the Omayyad dynasty which killed this process and widespread corruption & lavishness in life started to corrupt the Muslims until their overthrow by the Abbasids.
  3. People are no different than any other people, colour, language or race but the highest among them are those who does righteousness and taqwa.
  4. After the Mongols sacked Baghdad and killed the Caliph, Islamic jurists perceive it as the wrath of Allah because of their deeds, hence the philosophy of Al-Ghazali started to take root and the continuous process of Islamic jurisprudence development went to a halt in 1253.
  5. Little do people see the other end where Baghdad was sacked because of the injustice of the Caliph, the puppetness of the Caliph as a result of provinces “kingdom” holding more power than the caliph and the decline in Islamic economics (corruption, etc).
  6. Finger pointing arised but for centuries none tried to emulate the characters of Umar Al Khattab and Umar Ibn Al Aziz as role models to administer their kingdom.

HOW DID WE LOSE THIS?

How could a religion which possess the fundamentals of liberty, equality and social justice not loved by anyone?

Where is the spirit of Umar Al Khattab which prioritized the welfare of his people regardless of race, colour and religion?

Where are leaders which are afraid of the wrath of Allah if he does not be just to his people, be accountable and serve his people?

How could our leaders sleep soundly when there are men in the streets which are starving?

Where is the social development enjoined by Islam to give to the poor and needy, provide the proper infrastructure and do righteousness without prejudice and with equality?

Is it so hard to put in a mindset of “I am not different than other people in the eyes of Allah except doing righteousness deeds?”

When we do righteousness deeds, we will automatically do kind deeds and follow Islamic principles.

Why do we need others to tell us things that put us down like “janganlah bermegah dengan kereta tu semua nikmat dunia, etc.” when they can remind us of doing good righteousness deeds like “jom tolong rumah anak angkat tu, kita org Islam mulia di mata Allah kalau buat bende baik”.

Why do our society prefer to tell us what to do and finger point that we are wrong, rather than motivate us to seek and do righteousness deeds?

PRAISE BE TO GOD

Indeed, I know some would dispute equality in Islam with your hujah. But know this, the reason people follow prophet Muhammad is because of the equality he preached, paired up with social justice. That is something we cannot dispute.

For I have fell in love with the principles of Islam, and this is the best eid Mubarak for me.

Have you (Muslim) found the reason why you love Islam and not follow it’s teachings blindly?

I will make it a point to go to Hajj this year not just for salvation; perform Islamic rites while taking the effort to know the meaning of it, learn and cherish the history of Islam and get into it deeper, understand it’s benevolence as the religion of peace.

For to do righteousness deeds, I must first do righteousness deeds to myself.

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“O Mankind! We have created you from a male and female, and made you into nations and tribes, that you may know one another. Verily, the most honorable of you in the sight of Allah is he who has most taqwa among of you. Verily, Allah is All-Knowing, All-Aware.” (43:12)

“O People! Your God is one; your father is one; no preference of an Arab neither over non-Arab nor of a non-Arab over an Arab or red over black or black over red except for the most righteous. Verily the most honored of you is the most righteous.” – Prophet Muhammad pbuh

Amen.

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THE IGNORANCE PERIOD

When I was in the university, clueless I was on middle income trap.

How could a country with plenty of resources is still trap in the middle income segment? (to see how far we are behind: Malaysia GDP = USD 256 billion while US GDP = USD 14 trillion, China = USD 5.6 trillion).

During my tenure as the student leader, I championed causes with other student leaders in other universities to lower the burden of rakyat. We persuaded the govt to maintain subsidies for petrol, sugar, etc. Little did we pause and think, where do this money come from and how much money do we have?

Even upon graduation, I understand DS Idris Jala’s presentation on the importance of subsidy elimination but I couldn’t understand fully.

Until now.

WHAT I REALISED AS A RAKYAT

The reality is our government wouldn’t be forever rich with cash to fuel our subsidy demands.

The subsidy given to us is paid by someone.

Who is that? It is paid mainly by you taxpayers, borrowers (yes government need to borrow money) & receipts from government ventures (those company owned by govt like Khazanah).

Don’t for a second think your tax or corporate tax is enough to cover our subsidy demands. Imagine how many cents we take from each litre of petrol.

Every litre of petrol you consume, someone is paying for it.

To add to our addiction, some local graduates are not working hard enough to enhance their capabilities.

So what? I still get a job anyway right?

When graduates have less capabilities, it forces companies to hire someone else, which adds to cost.

It forces companies to focus on firefighting, take shortcuts (hire cheap foreign labour), do not innovate, hence in the long run, we lose in terms of cost (imagine using your grandma’s aircond and your aircond today. Which one consume more power and cost?).

To make it worse, since 1980s, we have adopted policies of bringing in cheap labour to work.

So what? Good for business right? No, in the long run.

Cheap labour means companies are not forced to innovate hence they are dependant on foreign workers (easy way out).

That makes the demand for high skilled workers like graduates, a no issue for them.

Imagine a welding company can get foreign labours to weld it. But…… Imagine a welding company which utilizes advanced machinery to weld stainless steel with no need of foreign labour. Obviously this company needs graduates to look after the machinery which would give higher income to the graduate.

To make it even much much much worse, as a result of dependence on cheap labour, companies do not see the point to innovate, hence MSC companies are finding it hard to market solutions like CRM, cloud computing, ERP, etc.

Simply put, these companies are not forced to innovate to compete and they don’t care.

Some don’t even see the need to use technologies to upgrade their competitiveness to reduce costs and increase profitability.

There needs to be someone to tell them how to reduce costs from all angle; operations, finance, admin, etc. Not just IT!

Hence all of us are trapped in the middle income trap.

Except for entrepreneurs who succeed and investors who speculate (like those that buy properties, many of them using debt on debt).

CORRUPTION

This completes the cycle.

Everytime a greedy big bad wolf “crony” gets a job, he hikes up the price of the contract and the government needs to pay more.

When the government pays more, they need to use money from? Taxpayers, borrowers and government receipts lah!

So the government has less money to spend on other useful things.

And when these cronies dress down their accounts and implement tax reduction measures, government do not get back the money that was given to them through the contract!

Then all of us have less money.

And how about those contracts given under a special under-table arrangements?

When it is not given via merit / capabilities, it is given to someone without the skills, we lose out.

Why? They get the money, we get the contract, fair la! No.

Each money spent on non-competitive companies result in less innovation because there is no one to compete! So these companies get cheap labour, alternative ways to save up cost, without building human capital and innovation.

Hence, the middle income trap again.

THE WEAK POINTS

It all happens in a loop.

We are SO RICH with resources yet we waste it. I am truly sad of us being in the middle income trap. I want us out, ETP is really the driving force now but little do we realise, the driving force is actually us the rakyat. But when will we realise this?

So the weak points:

  • Our government is rich but we milk them with our subsidy.
  • Graduates who do not raise their capabilities adds to non-competitiveness of our firms.
  • Non-competitive firms go for shortcuts: foreign labour, etc.
  • Usage of cheap costs measures (foreign labour) results in companies which do not care about innovation.
  • Companies selling high-tech solutions couldn’t make it when companies do not want their solutions.
  • Cronies jacking up prices from government contracts result in less money for government to spend on other good projects.
  • Contracts awarded based on preference, leads to non-innovative culture which leads to middle income trap.

I know there are more problems, FDI, but this is something that can make sense to the ordinary Malaysian why we are in the middle income trap.

RECOMMENDATIONS

  • Force companies to innovate by limiting foreign labour in the long run.
  • Focus on commercialization of our research output in universities so that industries can use them. At the moment, getting research grants are more important than commercialization.
  • Offer subsidy or ITA / pioneer status to companies for commercialization capital investment.
  • Force students to enhance their capabilities by tying up CGPA with practical jobs performance, innovation reflection and financial literacy.
  • Get corporate leaders to be mentors to student leaders rather than focus on politicians in its entirety.
  • Rid off corruption through pre-requisites and standards in contract awards (if no ISO 9001, GMP, no contract). – must take into account the industry capabilities as a whole and use median standards.
  • Increase grants for standards like SME Corp.

I know some of these recommendations are already out, but it is not being emphasized with a big FOCUS. Like imagine if the PM talks about ETP, then everyone would talk about it. So he should champion these things. At the moment the issue is IMPACT. How many research projects are commercialized with the current implementation plan? If you can give me a good answer then you win. But I don’t see my SME peers adopting Malaysian technology from universities en masse.

WHAT I COULD DO, PANDAI AJE RECOMMEND

Well, I would aim to increase innovation to reduce costs & increase profitability as per below:

  1. Utilize cloud computing with proven companies like Xero, Salesforce to reduce the need to hire an accountant, telemarketer.
  2. Increase productivity through documents collaboration to eliminate the need for secretaries and many admin clerks.
  3. Use high technology equipments such as blast chillers, sous vide, to eliminate waste and increase profits.
  4. Research and pair up with universities to come up with a robotic kitchen to reduce kitchen overheads.
  5. Focus on employing high performance workers with high salaries with dividend schemes.
  6. Get all grants from governments which focus on standards and work automation with the aim of reducing costs, not complicating things.
  7. Lower price down to compete with competitors through cost advantage infrastructure and force other competitors to innovate as well.

Just my 2 cents.

Not meant to bang the government or support the opposition. Just some thoughts to improve the country and it must start with something. So I’ll start the culture and if others wanna do it, please by all means because I would love to see Malaysia be no 1. Malaysia Boleh! Not “Malaysia Boleh” as of those Bolehland genre.

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Character assassination and fear.

I am getting tired of the drama because it went overboard. I am not a supporter of Anwar but Anwar Ibrahim is being accused of everything; from a crook to a sodomizer to an agent of Zionist to an agent of about everything.

I seriously believe the government in power had done lots of things for the rakyat, the ETP, although looks more like a publicity stunt does help our economy bring in the FDIs and GTP is slowly transforming the government machinery into an effective one. But it has it’s downsides as well, with all these political above ethics going on.

Pakatan Rakyat on the other hand looks like the “storming” period as a team is over. They are getting more synchronized and the Buku Jingga is a good read, it’s aspirations can help Malaysia transform democracy into greater heights. However they have their downsides as well, they can’t even form a Shadow Cabinet by appointing each ministry to a single person which leads me to wonder whether there will be chaos if they become the government in power.

But the character assassination for Anwar Ibrahim is getting annoying. I couldn’t find a day since last year when I read Utusan, I wouldn’t see “Anwar’s” name with bad things about him on the paper.

While my aunt who is not IT savvy supports Utusan’s view wholeheartedly, I won’t blame her.

If you keep on telling the rakyat thousands of times, it will rhyme with him.

This is the problem with some Malaysians:

  • They read and hear gossip from others and believe it without asking for the source.
  • They believe everything in the news while almost every media is owned indirectly by the government.
  • They are in awe when they see ministers, it’s like ministers are celebrities.
  • The youth is most gullible, taking pictures and being close with people in power (ministers, key government officials, etc) boosts their ego. Post it up on FB and it’s an upper status for you to show to friends.
  • They care not for politics as it’s messed up.
  • They don’t realise by not taking a stand on politics, they are the reason why corruption and abuse of power are rampant. They fail to see themselves as decision makers or judge for the politicians, instead they do not care and become instruments of puppets to keep corrupted politicians in power.
  • They see character as the pre-requisite of voting someone.
  • They seldom vote someone because of the government policies or governance but vote because they fear by voting another party, they lose their rights.
  • They think loyalty to the government means loyalty to the party-in-power.
  • They are confused and think that government = party-in-power.

Politicians have all the traits of luring people to believe them, a part con-man but with a noble cause, they know how to twist and turn events to their advantage. They are also masters of strategizing and making it look like they are the good guy but their machinery is creating propoganda to get their advantage.

If you think these are all assumptions, think again; I come from an UMNO based family which previously held power in the government and I was myself a pro-government supporter and leader in the university.

Don’t let them lie to you.

Always ask and be inquisitive, seek for the truth. For those who believe others at an instant are like “keldai”.

We are not just a voter, we are the decision-maker and judge for all politicians.

We must stop thinking that only one-party serves our purpose.

Competition is good and give the rakyat better options and alternatives. Although it comes at a cost.

Our loyalty is to the country and it’s people, not to the party in power.

We can choose whoever we like and not be ruled by fear because we choose who will be in power.

Be it BN or PR, I will vote based on governance not fear.

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How I craft my views on the Dilemma

I’ve been out of the political realm ever since I graduated.

And I do not plan to go into it until I prove my point.

Although I admit I was in the pro-government (Aspirasi) camp in university, my leadership has always been about democracy, fair rule, good governance, social justice and non-partisan leadership.

Although being a Malay and in Aspirasi automatically associate yourself as pro-UMNO, I did not favour any party or be favoured by any.

Since childhood I am deeply attached to my late grandfather and harboured ambitions to be a politician like him.

He was a strongman in UMNO, being appointed as  Chief Minister and sits in the UMNO Supreme Council until his death.

I remembered fondly of the times when I was young, we would visit the old Seri Perdana every year and I was very proud to meet Tun Mahathir at a very young age.

Like any young Malaysian, I am proud of my Prime Minister.

However, as I grow older, my views differ from my late grandfather but nonetheless, I respect their contribution to grow this country and their sacrifices in making things better for everyone.

Dilemma in my eyes

I do NOT believe government intervention is the ONLY solution to help the Malays. It is only a PART of a solution.

Government legislation / intervention creates tangible results but intangibles are never created if the focus is entirely on the former.

Businesses in Malaysia should be an open market economy with competition where new entrants could enter the market with minimum regulation while monopolies, cartels and racial discrimination in trade should be prosecuted to the CORE.

Entrepreneurs are made to compete, affirmative action lessens the effect of competition and creativity which could decrease our competitiveness to create more wealth.

What the Malays lack is intangibles.

What are these intangibles?

The ability and knowledge to make money. The ability to create wealth. The ability to compete and reach greater heights.

Looks around us today, if you pick your Malay friends and ask them about growing money; property flipping, stock analyis, understanding of fundamental and technical analysis, simple mechanics in returns and costs of debts?

Sadly to say few. (Pease prove me wrong).

I see my non-Malay friends having more than RM30k above although they come from a middle class family after they graduate.

Where did they get those money?

It’s because of knowledge passed down from generations.

Look at bumiputera shares allocation in Bursa? The government is struggling to get “us” to subscribe.

This proves my point, how strong our government advocates Malay prosperity (benchmark of 30% equity), they will never reach it unless someone steps up into the crowd and get the Malays equipped with knowledge.

The real dilemma is equipping our people with knowledge.

As for now, the knowledge we get from universities are purely theoretical.

Someone or anyone needs to play their part to open the eyes of the Malays and equip them.

Not fuel their fear and anger.

Because that will lead to nowhere.

It is sad to see Malaysia lagging behind in the world economy.

The only way everyone can grow, is where Malaysians regardless of race help one another to grow their knowledge and subsequently wealth.

Being taught to fear others is like living in a trap. Not going further nor backwards.

I fear the real dilemma.

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Please read this with an open mind. It is to be looked at from a MACRO economic perspective (xmicro) and not from a political point of view.

I have 3 months to go before I complete my masters of entrepreneurship and during these academic years, I decided to pursue my own venture to match academic knowledge and real life practices. Navigating through the rough waters without financial assistance made me realise many important things in transforming my life from being in a middle class family (working with others) into an entrepreneurial family. This was what I found based on the ventures I got into.

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1. Hardship and marginalization accelerates entrepreneurial creation

Let’s put aside racism discussion but let’s look from the psycho-social-analysis context. Being a minority in a society helps to make one be more creative in achieving their objectives. Successful Indian businessmen in the United States / UK, the Malays in South Africa, Germans/Japanese in South America and the Chinese in Southeast Asia. When one stumbles into a position where he must survive and other resources are controlled by the majority of the society, he would think all ways, high and low, to ensure he can survive. For example when the British recruited Chinese labourers where majority are farmers from China during the Boxer rebellion into then-Malaya, the residents owned all lands for farming. So what can the labourers do since farming is no more available option?

Engage in trade, bring in products from China and create new business establishments in new industries. That was how the Chinese in Malaysia became known as great entrepreneurs in new industries. Multiplier effect came when entrepreneurs who are few in the industry group together to create new opportunities, hence giving rise to trade associations. The myth spread by the English at that time, that Malays are lazy is incorrect because they had to bring in labourers to work in their tin mines and the Malays are owners of their own land for farming and trade. Why should someone who owns his own land and get economic benefits from it, work for others? So, in a way, Malays at the times were also entrepreneurs because they controlled the economy.

The issue here is not to be taken at a racial context, but to understand that being a minority in a majority based group could help one to be more creative and create new economic opportunities.

2. The Craved Partnership

A person with all the entrepreneurial character and an investor which understands the business he is venturing into, is a match-make in heaven. A venture falls apart when the person do not have entrepreneurial values and the investor just think that he is the boss. A simple acid test is to look at those who purchase shares in the stock market without understanding the company he is investing money in, would stand a higher chance of losing money due to market speculation and lack of market information.This was particularly true the financial crisis in the late 90s.

3. Government’s Role

So what must our government do? We can’t let entrepreneurs be those who are marginalized and suffer to succeed? The key here is to smoothen the process of doing business related to government; getting licenses, establishing business, recruiting labourers, etc. This helps the entrepreneur to accelerate his venture. The government must provide creative education not text-book theory for to-be-entrepreneurs. A simple example is a course of “how to make money” which teach students how to make new revenue streams, potential income and investments. Not those management, marketing or theoretical books.

The government must understand that society’s behaviour plays a larger role in any outcome. Policies effect how a society behave and grow. One thing for sure is this: entrepreneurs are built upon the pillars of strong internal locus of control, belief that they could do something even if obstacles are there. So they in essence are those who are constantly needed to solve problems therefore policies which decrease their problems directly would not help to develop their attitude. If they lose the edge of solving problems, then they could not compete in a globalized world. If they can’t compete, Malaysia can’t trade effectively hence brings our economy to a halt or slowdown and everyone loses.

It’s kind of tricky for the Malaysian government. On one hand entrepreneurs need to be developed but on the other hand preferential treatment and open market creates both good and bad effect. I believe entrepreneurs should face hardship in aspects of trade and not hardship in economic distortions. Distortions such as monopoly of a supply chain by a corporation or group, monopoly of a certain segment, cost killing in a group (cartels) to kill new entrants must be stopped. Entrepreneurs can only succeed when they face hardships in terms of advancing their business, but when politics & distortions comes into place, it kills everyone. No entrepreneurs should be discriminated against by any group when they enter the market to create new economic opportunities, be it by the government or businessmen.

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Yesterday I had a chat with another micro entrepreneur which sells honey chicken wings by the road side without a license. They came from Sabah, without any education and decided that they must strive to survive. Today, they have a chain of “gerai without license” in Taman Kosas, Ampang Point, Pandan Jaya, Temerloh and Johor Bahru. These are the entrepreneurs. And they will be successful because of hardship. It proves that without politics and economic distortions by any group, they could grow. What they need, is creative education, not just education.

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Richard Branson arrived in KL today for an investment conference and when asked on how Malaysia could attract more FDIs, his answer in a nutshell: privatise our GLCs, increase competition and stop the political parade (Anwar’s sodomy II case).

The government in power could not possibly do this nor would our opposition headed by PKR / PAS. We are facing the dilemma of racial balance in terms of economy. What would happen to the bumis if GLCs are made private? The bumis equity would be almost diminished. Why? GLCs are what makes the bumi companies empowered through projects.

This is a political issue, not an economics issue in it’s entirety.

The issue to be solved here politically is how to make bumis equity (not stock market bullshit equity, real equity in terms of personal networth) increase while at the same time realise what Richard Branson mentioned?

The Economics Transformation Programme (ETP) and the establishment of the Equinas is a good step. My question here would be “how many bumis really understand how to tap into these opportunities, secure investors and grow them?”. A good indicator is to ask public uni students and I’m sure you will get quite a disappointing answer in terms of ignorance.

Government should not govern by mere policies to protect the bumis equity but grow it through “direction pointing” to the bumis in raising and maintaining money. It will only be when signifcant amount of bumis who are literate financially, can we induce free market competition as they themselves, would demand for it. The key here is not for government to guide them, but to be the facilitator in matching successful businessman with those who wants to be in business. Knowledge transferred is an equity forever owned. Only then, would we have a competitive Malaysia.

Little napoleons in supply chain could now be eliminated through the advancement of globalisation. That is something to be understood. Gone are the days when just a particular “race” could dominate an industry.

Economy is made to grow bigger and bigger. Trust the economists (Ibn Khaldun, Keynes, Hayek) as it is true. The pie is big enough for everyone when it is growing.

Let promoted industries secure investors globally and let them compete on a global scale. For Malaysia’s diversity is her strength in terms of economic power.

Empower the bumis through inspiration, knowledge , experience and team effort. Not mere policies and “memanjakan”. It takes time but it is worth doing to solve the political dilemma.

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This article is not meant to point fingers to anyone in particular. It only explains “what will happen” and the “causes”.


I may not be an economist, but I am currently an entrepreneur. My family encounters this, and so do my friends in the business and professional field.

What is the death sentence? Our corruption.

So what? No big deal. Corruption can’t effect our economy. If that’s what you think, that is where you are dead wrong.

It effects our economic performance if corruption is a norm, evolves into culture and becomes a practice.

How?

Theoretically, take a look at the simple equation of GDP* =Consumer spending (your spending) + investments + government spending + (export – import).

*GDP in layman terms is the output of all economic activities in our country. It’s almost similar to total revenues earned by a company.

The question is, which part will corruption effect the GDP?

Let me explain through a story. Malaysia is a country. For a country to grow and make money, it needs to sell it’s resources. But to sell resources, you need people (labour) to develop, harness and market the resources. So when the resources are sold, the country generates income by charging taxes on individual/enterprise that sell/develop/harness/market the resources. Understandable?

Ok here is where corruption comes to kill our economy.

1. Astronomical costs of government spending (Relation to GDP: government spending)

let’s say the government decides to build a community hall. the hall costs RM200,000. So a tender comes out and companies bid for it. Before a company gets the project, he is required to pay “hidden costs” to the clerk, approving guy and those that come for site supervision. That’s 3 people which you would have to incur additional costs. Let’s say each of them require RM10k, 10% from the project cost and another RM20k. That would be extra RM40k. So if previously the costs was RM200k, it is now RM240k. The only way the company could profit from this is to either increase the cost to RM240k, or build something which is valued at RM160k.

Try and figure out what happens if everyone in the government practices this, and the figure adds up, hence government spending increases and adds up to our GDP. Good right? Wrong again. The money spent is big but the results are inefficient. When the results are inefficient, it can’t be utilized to the maximum and when productivity falls, government can’t get more taxes because businesses could not generate extra income. Hence the GDP decreases after a long term period.

2. Blind patronage kills entrepreneurship (Relation to GDP: consumer spending)

Let’s say an entrepreneur decides to do a due diligence for a potential coal mine. He incurs costs, and get positive results that the place can be used for a coal mine. He proposes to the government and waits for the results. Because of his honesty, the next 3 months when he checked with the gov officer, the land is disapproved for mining. However, he later noticed that another company is now in charge of doing the mining. What happened? I guess his proposal was “transferred” to a favourable third party. Remarkable!

The entrepreneur could not generate money for himself and goes back to the labour market to work. So he has less money on his hands and he spends less in the economy. When he spends less, he don’t easily buy anything from the retail market. And when the retail market can’t sell, it effects businesses. And when businesses can’t sell, tutup kedai. When tutup kedai, no contribution to GDP.

3. Proxy practices kill overall consumer spending (Relation to GDP: consumer spending)

Insider trading is a commercial crime, but it seems in the mysterious world of politics, it is a perk and advantage. Let’s say the government decides to create a new high-tech RM100 million project. The officer that knows this policy calls on his friends to bid and propose for the project. Other companies put in the proposal as well. But the bad part comes when the company awarded is not being awarded based on capabilities but “kawan” in it’s entirety. There is nothing wrong is the “kawan” is capable of doing it with business experience. It is a sin when that “kawan” do not have the experience and later practice “sub-contracting”. So he’ll take profit margin as high as >100% but the sub-contractor, bagi murah2. Outsourcing kan.

These proxies / “kawan”, not all of them are entrepreneurs. Because of that, inefficiency is bound to happen and not everyone have the chance to get a piece of the project/wealth. When this things happen, only the proxies will be getting more and more projects, while the masses wouldn’t get any. When the masses couldn’t get any of the wealth opportunities, their consumer spending decreases because no money. So they can’t spend and the economy contracts.

4. Competitiveness Decrease Exports (Relation to GDP: export-import)

In the globalized world, international trade is beyond national government control. When growing companies (proxies/patrons) decides to export their products, they will be less competitive as they have enjoyed patronage rather than competing to be the best to get customers. This decreases their likelihood of succeeding in the free market system but could however flourish in a political corrupt country. When this things happen, the export decreases hence GDP decreases.

5. Slow technology adoption (Relation to GDP: consumer spending and investment)

Because of the practices above, we find consumer spending decreasing right? A new problem emerge: One of the reasons of slow technology adoption is when consumers do not have money to spend. When they don’t, they only spend on their “needs” and not on “complementary products”. When technology adoption is slow, high-tech businesses decreases because they can’t sell. When they can’t sell domestically without any track record, it would be very extremely tough to sell on the international market. So when businesses can’t sell, investors won’t invest and GDP decrease again.

6. Slow growth for SMEs (Relation to GDP: consumer spending)

SMEs (small medium enterprises) constitute >90% of Malaysia’s overall entreprises. When these enterprises could not compete because of corruption practices when dealing with licenses, approval, etc., their costs rise because they have to pay for additional costs to do business. When these things happen, they can’t give more money to their workers to spend. When their workers can’t spend, the GDP decreases.

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There are more corruption practices, when practiced will bring harm to the New Economic Model. As economy is inter-linked it would be a problem for us to move up the economy ladder and make the dreams of a “balanced-developed nation” a dream come true.

There is a reason bribes / riba / interest are haram in Islam. It’s just that some Muslims choose to see it from an ethical point of view. That is the reason why Islamic economics forbids the above. It devastates our economy completely in the long run.

Imagine an entrepreneur who aspire to create new things decide to create a high-tech venture. But when the product is created, there is no domestic demand. Why? Look at the above, lack of consumer spending, less inquiry into high-tech venture. We need to maximize the total funds held by each consumer, only then would it help to create more entrepreneurs. And when entrepreneurs could access the market, only then, would we see new technologies emerge as they get more and more creative. If they can’t sustain their own living expenditure or their company, how do we expect creativity to flourish. When no creativity is apparent, no new enterprises are created hence no contribution to GDP.

Good luck Malaysia. I wish to see you prosperous and I will do my duty to ensure NEM becomes a reality. Truly, corruption is the devil which brought many empires in the past on it’s knees.

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