Livelihood of yours and mine: how can the country helps itself and its people

I once came across a Taiwanese comic where the father chided the whole family, “Our bills have gone out of control! We will have a family meeting now and you all should examine yourselves!” The mother, son and daughter huddled together and after a quick discussion, shot back, “we have identified the root of the problem dad, you simply do not earn enough!”

Malaysians have been facing livelihood issues for decades. In my humble opinion, there are 2 sides of the issue – high cost of living and unfair distribution of income resulting in certain quarters not earning enough.

Here is my 2 cents worth on the first part, i.e. high cost of living.

I suppose most of us would view the prices we pay for goods and services comprise of cost of production plus the profit element to the business. In Malaysia, there is every possibility that the price we pay for consist of cost of production, cost of inefficiency, cost of corruption, normal profits and super normal profits hence the phenomenon of significant price increases we see every day.

I remembered back in the mid 1990’s, a plate of mixed rice near my office cost me RM1.80 but now I am lucky if I can pay RM4.00 to get something similar. That is a whopping 122% increase over some 15 years and a simple average of 8% per annum. Talk to the hawkers and their living standard might not differ too much from 15 years ago except for hand phones and Astro. Where did our money go?

Modern business modules advocate shorter supply chain, which would guarantee freshness, lower prices and shorter delivery time. One thing that is not transparent to all and sundry is the supply chain in Malaysia. I hope the Domestic Trade Ministry can make public the supply chain of common goods and services. We can then see how many times the goods changed hands from producers, distributors, deals, retailers and eventually to you and me.

The Malaysian defense ministry needs a consultant to assist it to deal with French submarine manufacturers and this makes me wonder if this sort of practice is the norm rather than the exception. (By the way, how much experience Razak has with submarines?) The public has the right to know the make up of our supply chain while the government of the day who issues the relevant licenses must justify the existence of the various parties in the link.

Free and intense competition promotes better and more creative deals hence lower prices for the consumers. Take a trip down to Singapore and see what I mean. I have come across deals such as free KFC vouchers if you top up your handset’s prepaid top-up, free hand phone if you sign up for particular mobile phone network, further discounts on discounts if you are a Robinson’s card member etc. I am not much of a shopper even I can’t miss out on the fact that there are much more better deals in Singapore than in Malaysia. If there are more businesses competing with each other, there will be more job opportunities and better options for consumers.

Those in the know might agree with me that to get a business license in Malaysia is not a quick process. There are many unlicensed hawkers around KL and a few of them I spoke to mention how difficult it is for them to get their license. On the other hand, I also heard of many licenses been granted to certain individuals who would make a tidy rent-seekers’ profit. Was there not a case of the son of someone important with the Police who was involved in the Ramadan temporary license incident a few years ago?

Then of course, the old chest nut about corruption. Need I say more? Businesses have no other way then to re-coup their cost from the consumers. Another thing is the funny structures Malaysian business have evolved into, thanks to Mahathir’s mutated privatization programmes. Theoretically privatization is meant to lower tax rate, allow more the efficient private sector to take over the provision of public services that would allow consumers to get better and cheaper services.

In the toll concessionaire companies, the above fundamental reasons for privatization has been completed turned over. Not only there was no tendering process to get the most economically justified candidate (back in 1982, YB Lim Kit Siang questioned why UEM was given the contract when its quotation was the highest of the 3 received), the fact that there is a contractual guarantee of profits would negate the incentive for the concessionaire to be efficient and cost conscious. In fact, we can see that uncontrolled cost overruns are being paid for by the tax payers in one way or the other. It would be interesting to examine the directors’ and staff remuneration schemes and their procurement process for everything from tar to pencil case.

In a recent seminar, YB Teo Nie Ching spoke of a contract can be void if the person signing it was of unsound mind. Any administrator of public money agreeing to the profit guarantee terms is either of unsound mind or sense of fair play. It is also my understanding that a contract can be voidable should there be a fundamental breach of terms and conditions. Recently, Tan Seri Khalid spoke about breach of a condition pertaining to tendering process by Syabas……

Our weak ringgit has resulted in imported inflation or causing import items to be out of reach of many. One way to bring down prices is to have a stronger ringgit that will cause the price of imported raw materials and finished goods to be lower in ringgit terms. I am no foreign currency expert but I believe the strength of the currency can be determined by the demand for it. The biggest and most obvious stumbling block to foreign investors are the capital requirement regulation in Malaysia. The huge number of foreign workers here, I imagine, would dump more ringgit in exchange for their home currency when they repatriate home their wages.

Lastly, mis-implementation of the NEP has resulted in Malaysia becoming an “anti-talent” destination. In his memoir, Lee Kuan Yew spoke of Tun Razak’s interpretation of “talent drain” as “trouble drain”. God knows how many brilliant entrepreneurs, business managers, research and development experts, professionals and keen workers we lost over the years. I believe they would have come up with creative and effective business modules, practice good work ethnics, leadership that would have made Malaysia a more vibrant and competitive business environment.

It is perhaps time for us to allow talent, domestic and foreign, to flourish in Malaysia. If the government is worried about uncompetitive people lagging behind, they can either 1) strengthen the welfare department with money wasted on unwanted submarines and jets or 2) allow an environment whereby Malaysians are hardened by rigorous competition from both domestic and foreign circles as there are no running away from it. In this way, any inefficiency and complacency in Malaysians nurtured by a protective shell can be stripped away hence a more competitive work culture will ensure to the long term benefit and survival of the nation.