Malaysia Chronicle: An AirAsia wake-up call to the BN crony-infested business model... by Maclean Patrick

An AirAsia wake-up call to the BN crony-infested business model

Written by  Maclean Patrick, Malaysia Chronicle, Monday, 25 July 2011 12:42

In what many see as a blow to Prime Minister Najib Razak’s grandoise economic plans to create a high-income nation, AirAsia’s decision to move their headquarters to Jakarta may spell the acceleration of an exodus of businesses out of Malaysia, though not many will be as big or as shiny a jewel in the crown as the homespun low-cost air carrier.

When interviewed by the media, Tony Fernandes was rather guarded in his comments as to why Jakarta was picked. But the AirAsia group chief executive, confirmed the decision in Tokyo, saying the move is an effort to upgrade his company’s image as a regional Southeast Asian airline rather than just a Malaysian carrier.

Fernandes characterized the move as a simple business decision to take advantage of Indonesia’s vastly larger economy and population. This is nearly 10 times that of Malaysia’s, although Malaysian annual per-capita gross domestic product of US$14,700 by purchasing power parity is much higher than Indonesia’s US$4,200.

However, the sheer size of the country's populace means that the Indonesian economy is at towering US$1.03 trillion versus Malaysia's US$414.4 billion, based on estimates in the CIA Factbook for 2010.

Business is business

Business is business and Fernandes' decision seems timely. For years, AirAsia has been battling for more rights to fly in Malaysian air-space with the government-backed MAS jealously throwing obstacles in its way. But again, in business, this is to be expected.

Even so, every decision to fly within Malaysia has to be scrutinized by the government, often-times favoring MAS and at AirAsia's expense. It is a small miracle that Fernandes has stuck this long with Malaysia, so when opportunity knocks, it is not unfitting for AirAsia to put aside sentimental feelings and allow good business sense to take charge.

AirAsia may well among the more visible Malaysian brands besides the state-owned energy giant Petronas to have made an international impact – and Petronas gets its profile by advertising extensively during Formula 1 races and by sponsoring a car – which Fernandes does as well. Launched in 2002 as a regional no-frills carrier with just two planes, AirAsia now flies 93 planes all over Asia. In addition, a long-haul service, AirAsia X, flies to Europe, Japan and Korea. The company earlier ordered 300 Airbus A320neos.to expand its routes across Asia and beyond.

Despite being a homegrown Malaysian start-up, Fernandes has had to contend with bias - yes, racial bias of not being tied to an UMNO crony. Malaysia's business circles are largely controlled by the UMNO-led government. This form of control by the government playing favourites is irritating, degrading and most of all makes Malaysia uncompetitive. It can only hinder firms from becoming the best in the region or even the world, and Air Asia is no different.

Asked why he chose to move the fast-growing airline’s principal corporate base to Jakarta from Kuala Lumpur, Fernandes said: “Asean is based in Jakarta, and Indonesia will be the largest economy in ASEAN in time to come. And I like it there."

Riding on a resurgent Indonesia

According to AirAsia, the move is also a bid to take advantage of access to the ASEAN secretariat, which is based in Jakarta, ahead of an open skies agreement expected to go into effect in 2015 and which is designed to lower barriers for air travel between the region’s capitals.

The Indonesia National Air Carriers Association forecasts passenger growth at 10 percent to 15 percent this year. Indonesia’s Central Statistics Agency reported that domestic air traffic grew 22 percent to 53.4 million passengers in 2010 on growing demand from the middle class for domestic flights. That is higher than the 9 percent average increase recorded by Asia-Pacific carriers, according to data from the International Air Transport Association.

Indonesia’s economy is also poised to grow and with it a growing interest in domestic low-cost airlines which will benefit AirAsia. However, local customer confidence in its own low-cost carrier has been hampered by poor maintenance, which has led to some of the worst airline crashes in Indonesian history.

AirAsia, with their service record, has a good chance to win people over; the potential for profit on just the Indonesian domestic routes alone, would grow AirAsia’s profits in folds. Yet, AirAsia’s move to Indonesia is the story of most Malaysian start-ups that have had to diversify and move operations out of the country just to see their businesses grow due to the suppressive conditions at home.

There was also Genting

Another Malaysian start-up and successfull business entity is Genting Berhad, which has a market capitalisation of US$13.6 billion as of 31 May 2011, making it the leading Malaysian corporation to date. Fearing a shift to Islamic puritanism in the 1990s and it’s affects on his Genting Highland’s operations, Lim Goh Tong, the late company founder, diversified Genting Berhad’s business ventures.

From its initial leisure and hospitality activities, the Genting Group has since expanded and diversified into other activities including plantations, properties, power generation, oil and gas, e-commerce and the development of information technology.

Genting Group is the founder of Star Cruises the third largest cruise liner company in the world and largest cruise liner in Asia and its headquarter is based in Hong Kong. As of December 31, 2010 Genting Malaysia now owns the the largest number of casinos in the UK with 46 casinos. Lim’s business empire have interests in Singapore, United Kingdom, Philippines, USA and Australia.

The feared curbs on the Genting Highlands' expansion never came to pass, but Lim's relationship with the government was odd. He was forced to renew his business licence every three months, while the sin of gambling was constantly denounced in the run-up to every election.

In other words, Lim had to live in fear his business empire could be closed down any day and any time the religious extremists in UMNO decided to do so. His son, Kok Thay is now in charge and has diversified the Genting franchise beyond recognition into Singapore, Europe and US.

Before Genting, there was sugar-King Robert Kuok who reinvested his money in Hong Kong and China in the 1980s. Even the YTL group has diversified the eggs in its baskets by acquiring stakes in utilities in the UK, Singapore and other parts of the world.

Not that AirAsia, Genting, Robert Kuok or YTL have not benefited from the BN model. For example, Robert Kuok and YTL's Francis Yeoh are frequently reported as being close to former premier Mahathir Mohamad and Genting got its first break from Tunku Andul Rahman, the first prime minister. But in the case of Genting and Kuok, their overseas success is very much their own effort and overshadow their Malaysian assets.

Ineffective GTP, ETP

Najib, for all his grand-sounding Economic Transformation Programmes, would do well to study what makes true businesses work. It is not wild pie-in-the sky figures that scare potential investors at the mere mention of the zeroes involved in his grandoise plans but sheer savvy and enormous hard work.

There is also such a thing called level-playing-field and rewards based on merit, rather than, "I help you, you help me". If Najib wants to spout such philosophies, he would do better to the treasurer of a community hall in a remote village collecting rents for the badminton court and ping-pong tables, rather than be the Finance minister of Malaysia.

In bid business - without corruption that is - recognition must be given to the best talent, to best bid and to the most productive venture. As the Robert Kuoks, Gentings and AirAsias fly off for greener and fairer pastures, the BN's Government Transformation Programme is still stuck and left to languish amid regret for not being able to retain Malaysian start-ups destined for global glory because of its fatal mistake of over-politicising business.

- Malaysia Chronicle

Malaysian human capital outflow... By Michael Lee

Malaysian human capital outflow

By Michael Lee
May 14, 2011 | The Malaysian Insider

MAY 14 — Once, on the way to the airport in the cold dead of night, I had a heated discussion with an acquaintance of my father from the US about having a life outside of Malaysia.

I was in my teens then, fresh from the Malaysian public education system and was a staunch supporter of our government’s policies. The man who initiated the discussion, on the other hand, was a successful overseas Malaysian himself and was going on about the many merits of leaving Malaysia for a better life abroad. He himself had left Malaysia decades ago after getting his degree and has since found success in an auto-parts business he founded.

Throughout the drive, he cherry picked on the rampant corruption and injustices, particularly against non-Bumiputeras, like us, deep set in the Malaysian social, economic and political system.

While I believed most of what he said to be true, it was not something I haven’t heard before.

Again and again, my defence was that Malaysia was young in being independent compared with the US and needed more time to mature before the inequalities and inefficiencies fade away. The conversation ended in, what I believe, a stalemate, with his detailed reasoning unable to pierce the wall that was my youthful optimism. This took place about 18 years ago.

Fast forward another 6-7 years, in a mamak stall somewhere south of the Klang Valley, with my two friends, both many years my senior. One of them raised his decision to move to Taiwan and to start a life there with his Taiwanese wife. Coincidentally, he had just a few months previously returned from Taiwan after his privately-funded tertiary education there ended. Despite our suggestion, he did not believe that bringing his new Taiwanese wife to Malaysia instead would be an alternative worth considering.

Again, as with my father’s friend, I attempted to sway him home, albeit unsuccessfully. Halfway into the drinks, his reasons for leaving unmasked into, again, the injustices, perceived or real, that plagued the non-Bumis in Malaysia. He saw no agreeable future for him in Malaysia. There was nothing we could have said to convince him otherwise. He moved to Taiwan later that year and has since worked hard to start a small food shop that sustained his family’s life there.

By far the most poignant experience I have on the matter was with my distant cousin in Ireland. He was there working part time as a small-time cook for a former Malaysian in a two-man operated neighbourhood curry shop to finance his culinary studies in a nearby town. He studied during the morning and worked in the afternoon and late into the night. On weekends, he worked all day and well into the night. All the while, he stayed in the cramp and dusty attic of the curry shop by himself, sleeping on an old mattress on the floor.

It was during my visit in the middle of winter that I experienced for myself first hand just how lonely and bitter that type of living arrangement was. Unlike the previous two, it was obvious, even to me, that the man did not need any convincing Malaysia is good, because evidently, his willingness to go through what he had been going through daily was conviction enough for all to see. As it worked out, a handful of years of perseverance later, he is now residing in UK as a successful chef and, the last I heard, had since succeeded in his own pastry business there.

On a related note, and I’m not sure if it’s still the going trend these days, but back when I was a secondary student at my Sekolah Menengah Kebangsaan (SMK), I have watched many of my better-than-average secondary classmates whisked away to Singapore via the Asean scholarship and, to my knowledge, none have returned back to Malaysia. Our southern neighbour was so keen on Malaysian academic achievers that some of those who failed to apply for the Asean scholarship programme were approached individually after their STPM exam.

A close friend of mine attests to this as she herself has experienced this. In her first few months in Universiti Kebangsaan Malaysia (UKM), Nanyang Technology University of Singapore (NTU) contacted her directly at her house to offer her a full scholarship for a degree course in information technology. Ironically, the course offered has always been her first choice but the course she was studying at UKM at the time was the last on her list of choices.

Due to family obligations at that point in time of her life, she was forced to decline the offer. But this was not the end to it. Further to this, NTU called her again days later to ask her reasons for declining their offer and gave her the opportunity to reconsider again.

After much thought and consultation with her friends and family which was unanimous in their bias, she took up NTU’s offer and left for Singapore. She is now working with a multinational corporation there and has since taken up permanent residence in Singapore.

The above are just an inkling of some of the real cases that I have personally come across. I don’t think it’s necessary to point out other examples as I’m pretty sure a lot of Malaysians may be already intimately acquainted with this phenomenon. Given the very recent World Bank statistics on Malaysia’s human capital outflow, the above, unfortunately, are but a scratch on the surface.

The fact was not lost on me, of course, that the Malaysian government throughout the years has had more than its fair share of unflattering news, deserved or otherwise. But I always held on to the hope that all the corruption, inefficiencies and misdirection would be scraped away eventually in due time. Not so because of some inner sense of righteousness or of my own naive optimism in the conscience from our leaders but from a more practical and realistic standpoint — that being, because we live in among an increasingly competitive global economy and we are quickly running out of excuses and options.

But that did not happen.

As a nation, we have been steadily but surely reaching an impasse. The fact that we are overlooked by foreign and even domestic investors nowadays shows that Malaysia is no longer the “Asian tiger” it once was.

The rise of the opposition political parties after the 2008 “tsunami” elections intensified the in-fighting among our leaders and stirred the incumbent BN leaders to become more preoccupied in staying in power rather than to govern the country properly for once.

The news we read in the media grew more and more unbelievable and outrageous. From unsinkable submarines to RM25,000 laptops purchased by civil servants, from the provocative act of dragging of a cow’s head in public to the Molotov cocktail attacks on churches, from the rise of Perkasa/Pembela to the Allah debacle in east Malaysia, from calling for the abandonment of English in our education system to the recent import of 300 American teachers, etc, etc. The list goes on, even today.

And while those sensationalistic news peppered itself regularly all over the local media, boiling beneath the surface are the bread-and-butter issues that have been increasingly plaguing the day-to-day lives of the average working Malaysian.

From the price of homes to the price of food, the rapid rise in the cost of living is now more prominent than ever. For an ordinary salaryman like myself, even as a degree holder, I foresee that my meagre income will no longer be able to meet my young family’s future financial needs.

I found myself starting to apply for a job overseas since a year ago, just to chance the possibility that some company outside of Malaysia might want to consider hiring me. In the beginning, my family, I especially, had been very reluctant to even consider leaving as I have a very rewarding career in Malaysia. Also, Malaysia is my home. I was born and raised in Malaysia and has always felt that Malaysia is a wonderful place to call live. This is not solely because I’ve been told this repeatedly by the government-sponsored media since I was young, or because I grew up well integrated with our public national school system philosophies.

To cut a long story short, and to my surprise, a job did find me months later, and following in my predecessor’s footsteps, my wife and I, together with our three-year old son have recently moved to Hong Kong. To be honest, the overall package offered was only slightly more lucrative than my job in Malaysia when one factors in the cost of living. Even so, it did not affect our eventual decision to take the job because that was not the sole reason for applying for an overseas job in the first place.

I do not think it’s necessary to go through the faults of Malaysia, or more specifically, its government, just to prove that it has faults. Perfection is not something to be expected from an individual let alone from a collection of provincial populists strung loosely together by bureaucracy. Understandably, no government is perfect. But that’s not really the point.

Even as I type this, I am watching the headline news on HK local television network talking about the effects of the recent minimum wage implementation. I believe that this is a newsworthy issue that directly affects the majority of HK residents. Now contrast this with the headline news in Malaysia two days ago about a major Malaysian newspaper inciting fear against the Christians for allegedly wanting a Christian Malaysian prime minister?

I cannot speak for others who had left the country as to their reasons or their motivations for doing so. I can only speak for myself and, to an extent, my wife. I came to seek our fortunes overseas because I feel that the opportunity cost of just staying put is far too high. Furthermore, in my line of work, I may soon find it difficult to get work in the future due to the shrinking pool of my potential employers.

With regards to the human capital outflow, it is my humble opinion that the government should take steps to build up the country properly first before even considering setting up ad hoc agencies like Talent Corp.

If Malaysians like me who has only recently left Malaysia would not consider moving back to Malaysia solely based upon any temporary and half-hearted measures by our Talent Corp, what are the chances of enticing Malaysians that have been overseas for much longer than I and more entrenched in their lives abroad?

If anything, I believe that, at the moment, the government would be better focused in creating reasons and opportunities for Malaysians living in Malaysia now to prevent them from leaving rather than waste money and effort trying to lure overseas Malaysians to come back.

No one really wants to go through the difficult decision of leaving home, away from family and friends for an extended amount of time if they felt that they had a reasonable choice in the first place.

* Michael Lee reads The Malaysian Insider.

malaysiakini: Lim Guan Eng: Brain drain has swelled to tsunami levels

Guan Eng: Brain drain has swelled to tsunami levels

Oct 20, 10 3:08pm

Top Cambridge University law student, Ipoh-born Tan Zhongshan, is lost to Malaysia due to the consequences of the country's 'failed economic policies'.

 

Penang Chief Minister Lim Guan Eng said today that the country's economic policies stress on material growth such as the proposed 100-storey Warisan Merdeka Tower over human capital formation.

Lim (right) said it not clear how Malaysia's Talent Corporation, slated to start operations in January, will be able to succeed in attracting back 750,000 Malaysians working overseas, if the federal government is more concerned about spending tens of billions on mega-projects that do not build human capital.

He added that Tan's departure from Malaysia is not surprising as he is part of the alarming brain drain that has swelled to almost "tsunami levels".

 

"The number of Malaysian migrants rose by more than 100-fold in a 45-year period, from 9,576 Malaysians in 1960 to 1,489,168 Malaysians in 2005, according to the World Bank, which warned that a lack of human capital is a "critical constraint in Malaysia's ambition to become a high-income economy," he added in a statement today.

Recently, Deputy Foreign Minister and senator A Kohilan Pillay (left) said that 304,358 Malaysians had migrated since March 2008 to Aug 2009 compared with 139,696 Malaysians in 2007.

Nearly two million have left

It is learnt that a total of 1,942,798 mostly bright and talented Malaysians have left over the past 50 years since 1960 until August last year.

Najib told Parliament this month that less than one percent of 784,900 Malaysians working overseas have returned to the country during the past nine years.

He added that Singapore has the highest number of Malaysians with 303,828 people, followed by Australia with 78,858.

Tan recently won several prizes in becoming the top law student in the Cambridge.

However, he will not be returning to Malaysia but will heading to Singapore to join its Legal Service commission.

Lim said that not only non-Malays were leaving the country for better employment opportunities, as Malays are also doing the same.

"When I went to Dubai nearly two years ago, I was surprised to learn there were thousands of Malay professionals there who left Malaysia due to lack of promotional opportunities as they were not politically connected to top Umno leaders," he said.

"Clearly stressing other considerations such as race or political connections over merits and needs not only drives away top talents, but also depresses standards and encourages a culture of mediocrity over excellence," he added.

Mysinchew: The moment when dream is awakened

The moment when dream is awakened 

mysinchew, 02/12/2009

I wonder if you feel the same as me, all of the sudden, I realized friends and relatives around me seem to get lesser by the day.

Those years when the New Year drew near, all sorts of gathering appointments almost completely filled the diaries, but this year it seems so quiet.

Even in normal time, phone calls become less and less, face to face meet up also become much less.

Perhaps, everybody is busy with their own things, or perhaps, nowadays people prefer to stay in.

However, it is not entirely like this, thinking further, actually old friends and relatives are not around any more. God bless, they are still alive and well, they just left the country, Malaysia.

They have gone to China to set factory; Ah Wang quit his engineer job and migrated to Australia to set up his little food store business, Ah Fong left the local University went to Hong Kong as a lecturer. 'Frog' went to Taiwan to pursue his second career life. Others went to Americia, England, even Indonesia... 

At first, I thought these are individual cases, but gradually, people around me realized the same, these are not individual cases but a general symptoms of our society. they are not small numbers but the pretty big indeed.

Department of Foreign Affairs released the figures earlier, it confirmed the situation is real.

From March 2008 through September 2009, a total of 300,000 Malaysian migrated to other countries, among them 200,000 left between Jan - Aug 2009. (in 8 months)

Cumulatively, there are 2 million Malaysian migrated, this figure is close to the number of Indonesian workers in Malaysia today.

The difference are, those migrated are mostly professional and middle class people.

They have many reasons to leave: pursue career development, for the future of
their children,  in search of better life and environment...   

In one sentence, they lost hope of Malaysia.

50 years ago people said: Malaysia is very good, better than Hong Kong and even Japan.

30 years ago people said: Malaysia is not bad, comparable to S.. Korea and Taiwan. (No mention of Hong Kong and Japan any more).

20 years ago people said: Malaysia can do lah, at least better than China and Thailand (Cannot compare with Taiwan and Korea lah)

10 years ago poeple said: No matter how bad Malaysia is, cannot be worse than Vietnam and Indonesia (China is already in a different category).

Today, the economic growth rate of Vietnam and Indonesia already far exceeded Malaysia. Social activity and intellectual development of the country is also better, the gap between us and them is closing up.

Why worry? there are still Philipines, Cambodia and Myanmar behind us.  
However, according to an economist who recently surveyed Phillipines,  he thinks in 20 years' time, Malaysia can replace Phillipines to become the World exporter of Malaysian maids. 

Over half the century, Malaysians live in the big old imperial housing complex, closed up and survive on properties left behind by the ancestor; continue to consume up social resources, wasteful, and drive away talents; they never talk about competitiveness, totally neglect productivity and hate meritocracy. 

When Asia economic storm hit in 1997, Malaysia closed their doors, thinking we beautifully avoided a disaster, they even think of themselves as genius being able to handle the situation so well.

However, just look at other countries in our neighbourhood, they stand up, face the storm, and walk out of the storm. They overhauled the system, improve the processes and march forward, they moved up to a new level. And Malaysia, still walking on the same spot.

Dear Malaysia, it's time to wake up! We are very very late now ! 

For original article, please see link below: http://opinions.sinchew-i.com/node/12566