Goodbye Motorola! How Chicago’s greatest tech company fell to earth?


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Prospering with Belt and Road to reap the benefits of China’s initiative


Malaysia is one of 64 countries to reap the benefits of China’s initiative.

CAN money grow on fruit trees?

Yes, that is as far as Agriculture and Agro-based Industry Minister Datuk Seri Ahmad Shabery Cheek is concerned.

After witnessing the signing of a deal worth US$1.53bil (RM6.65bil) between Malaysia’s AgroFresh International and China’s Dashang Group for the export of local Cavendish bananas and tropical fruits to China, he said:

“Money does grow on fruit trees if our agriculture products could open up China’s market.”

The deal was part of the nine memorandums of understanding (MoUs) and agreements, with value totalling more than US$7.22bil (RM31.26bil), which were signed between Malaysian and Chinese companies on May 14.

But Datuk Seri Ong Ka Chuan, International Trade and Industry Minister II, sees more money flooding in once Malaysia is linked up with other Asean nations, China and Europe via rail connection under China’s Belt and Road Initiative, now termed as the New Silk Road project.

“Our trade figures can jump by three to four folds once Malaysia can export and import goods to our major trade partners (such as China, Europe and Middle East) overland via rail systems,” he tells Sunday Star.

Both ministers are among Cabinet members in the Malaysian delegation led by Prime Minister Datuk Seri Najib Tun Razak to attend the Belt and Road Forum for International Cooperation held in Beijing from May 14 to 15.

Malaysia is one of the 64 countries outside China that have benefited from the Belt and Road Initiative, propounded by Chinese President Xi Jinping in the autumn of 2013.

One project to be launched soon will be the RM55bil East Coast Rail Link. Examples of existing projects include Xiamen University and the deepening of Kuantan Port.

At the opening ceremony of the forum, Xi injected fresh impetus to his pet project by announcing hundreds of billions in new funds for infrastructure investment in Belt and Road countries that span Asia, Middle East and Europe.

According to some estimates, Chinese funds allocated for investing in Belt and Road countries – which include several exiting funds announced since 2013 – total around US$900bil (about RM4 trillion) now.

“Model of regional cooperation”

From Mongolia to Malaysia, Thailand to Pakistan and Laos to Uzbekistan, many projects, including high-speed railways, bridges, ports, industrial parks, oil pipelines and power grids, are being built, Xi said.

Since 2013, Chinese private businesses have invested more than US$60bil (RM260bil) in countries along the Belt and Road, in addition to the US$50bil invested by the Chinese government.

Xi’s speech also reveals that China will expand China-Europe railway cargo services, which are stirring up excitement in European nations – particularly Britain.

Belt-road: Ong signing Belt and Road MoU with Vice Chairman of National Development and Reform Commission of China Zhong Yong on May 13, 2017. Witnessing are Najib and China’s Premier Li Keqiang.

Calling his brand of globalisation as “project of the century” to achieve a win-win situation for all, Xi has committed to importing US$2 trillion (RM8.7bil) of goods from the 64 Belt and Road countries – many of which are under-developed and impoverished nations hungry for infrastructure and industrial investments.

The Chinese leader’s pledge of “non-interference” with the domestic politics of other countries is comforting, given that there are concerns that China could aim to be a hegemony with its economic and military might.

“What we hope is to create a big family where we can co-exist harmoniously,” Xi said last Sunday in his speech that also focused on connectivity in policy, infrastructure, trade, finance and people.

The forum is by far the most important and largest meeting on the Belt and Road Initiative since 2013.

About 130 countries were represented at the forum and they accounted for two thirds of the world’s population. Their combined gross domestic product accounts for 90% of the world’s total, according to Xinhua.

Klaus Schwab, founder and executive chairman of the World Economic Forum, regards the Belt and Road Initiative as “a shining model for regional collaboration, development and growth”.

“This initiative respects the differences between countries and their various paths for development, not imposing a specific plan or ideological framework, but seeking to create common ground for cooperation and mutual benefit,” Schwab told Xinhua.

UN secretary-general Antonio Guterres, also told Xinhua: “China will play a very important role in multi-lateralism with the Belt and Road. The initiative reflects a new model of international cooperation and interaction with mutually beneficial cooperation through the connection of policies and development strategies.”

And Jack Ma, executive chairman of Alibaba Group, shared: “The initiative goes far beyond the economic strategy of any single country or region. Its mission is to make the world more innovative, dynamic, and equal.”

Big step: Fernandes is excited that China has allowed AirAsia to be the first low-cost carrier to set up shop in the Middle Kingdom.

AirAsia deal – another first in China

On the sideline of the forum, Malaysian and Chinese leaders took the opportunity to clinch more agreements that brought bilateral ties to another new high.

While the deals signed last November were far more than this round and higher in total value, the Chinese Government continued to grant “first” to Malaysia. This was reflected in a project given to Tan Sri Tony Fernandes, group chief executive officer and founder of AirAsia Bhd. Soon, the sky will see AirAsia China.

“It is the first time a foreign airline is given permission to establish and operate a low-cost carrier in China. We are the first country to be granted such licence,” Najib told reporters at the conclusion of his visit to China.

AirAsia is establishing a joint venture with China Everbright Group, with an initial stake of 22%. However, AirAsia may raise its stake in future.

China Everbright is a government-owned financial services conglomerate, which is a major shareholder in China Aircraft Leasing Group Holdings Ltd and the Henan Government Working Group.

The plan is to set up AirAsia China to be based in Zhengzhou, the capital of Henan, to ply domestic and international flights.

“Tony Fernandes was very excited because he was able to meet the top transport and aviation officials, whom he could not secure appointments with previously. He has been working on this project for years,” a minister told Sunday Star.

Other Cabinet ministers are also upbeat after attending the Belt and Road Forum.

“I have witnessed the fruits of the close diplomatic ties between Malaysia and China, and between Najib and Xi Jinping during this trip,” says Transport Minister Datuk Seri Liow Tiong Lai, who signed a MoU on infrastructure cooperation with China.

“In China, economic developments are influenced by government policies. Now that our leaders have good ties with China, it is very timely for Malaysian businessmen to enter China, and vice versa,” he tells Sunday Star.

Important talks: Liow (second from left) leading a Malaysian delegation at a meeting with his Chinese counterpart at China’s Transport Ministry in Beijing on May 12 morning. From left are Transport Ministry deputy secretary-general Datuk Chua Kok Ching, MCA vice president Datuk Dr Hou Kok Chung and Fernandes.

“We have to promote economic growth fast enough so that we can harvest the fruits of the Belt and Road Initiative.

“The opportunities for Malaysia to develop the infrastructure and boost economic growth would not be available if not for the Belt and Road Initiative pushed forward by China,” he adds.

Minister in the Prime Minister’s Department Datuk Seri Dr Wee Ka Siong observes: “There are quite a number of business-to-business MoUs signed during this trip, in addition to the nine witnessed by Prime Minister Datuk Seri Najib Tun Razak.

“I was also invited to attend many discussions and meetings, sometimes I had to have many meals a day! (as discussions were held over meals).”

Wee, whose ministerial portfolio covers development of Chinese small and medium enterprises (SMEs), has personally requested Ma to reduce charges for Malaysian SMEs when they use Alibaba’s platform to sell products.

Ma, an e-commerce wizard and China’s second richest man, is expected to give consideration to the proposal as he has pledged to help Malaysia develop its digital economy. Ma will set up the Asean data centre in Malaysia before the end of the year.

Analysing Belt and Road Initiative, Shabery Cheek says: “Belt and Road is a different form of cooperation from other pacts, such as the Trans-Pacific Partnership (TPP) and World Trade Organisation (WTO). Those emphasised on what goods were tax-free and what were not, which sectors to open up and which could not. Essentially, they focused on how to protect the self-interests of individual countries.

“However, the Belt and Road talks about infrastructure networking, which is very important. They take the cue from the ancient Silk Road, which was not only a channel to transport goods, but also to spread Islam and Buddhism. That is a great thing.”

Source: Sunday Star by Ho Wah FoonTho Xin Yi

Related Link:

Trade can be boosted several fold
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Liberty, Equality and Fraternity in the 21st century of China’s One Belt One Road strategy

Arrest decline in productivity and competitiveness in Malaysia


COINCIDENTLY, two major reports were released on June 1 on the decline of our national productivity and competitiveness. The first was our own Productivity Report 2016/2017, which was launched by Minister of International Trade and Industry Datuk Seri Mustapa Mohamad (pic) and the second one was the World Competitiveness Yearbook WCY issued by the Institute for Management Development.

This coincidence in decline is understandable since both productivity and competitiveness are closely inter-related. Lower productivity leads to lower international competitiveness.

Productivity

Our labour productivity fell short of our 11th Plan target of 3.7% growth by 0.2% to 3.5% last year. This is a small decline and has been rightly explained with confidence by the Minister of Trade in positive terms when he said that Malaysia was “on track”.

I think he will agree that we must be concerned enough to ask what are the causes and whether this is just a mere slip or could it be the beginning of a trend.

We have to take this fall as a wake up call, in case this decline happens again next year and later on. We have to review many recurrent and uncomfortable issues like brain drain and unemployed graduates – who could number over 200,000 – also reflect the low productivity of many graduates who are newly employed. The lower productivity can be attributed to our low use of automation, high employment of unskilled foreign and cheap labour and the new challenges of the digital economy.

The Minister’s proposal for the Government and private sector to “join forces to embark on initiatives” to improve productivity in nine sectors “of lower productivity”, is most welcome. The private sector has to make profit unlike the Government. Hence it has a greater sense of urgency in wanting to improve not only labour productivity but productivity from all factors of production, including good governance and integrity and quality services to the public. Thus it will be very interesting for the public to be made fully aware of the productivity improvements that should materialise not only in the private sector, but for the Government as well. For instance government departments can learn from the private sector how to provide better or excellent services in the fields of health and education and counter services at police stations, Customs, Immigration, etc .

Productivity in both the private sector and the government machinery should improve to raise our total national productivity. Only then will our nation be able to compete much more efficiently and effectively in the global economy.

We can have the best Productivity Blueprint like that which was launched on May 8 but our productivity can continue to slip and even slide, if we do not ensure that the blueprint is fully implemented and its progress diligently monitored and improved along the way. One way to seriously pursue our goal to raise productivity would be to increase the small sum of only RM200mil for a new Automation Fund. Modern machinery and equipment are expensive but the returns in terms of higher productivity can be very significant. So let’s go for higher productivity with greater automation and not approach the challenge on an ad hoc and piecemeal basis. The Treasury would need to support the Productivity Blueprint much more productively!

Competitiveness

Malaysia registered its lowest ranking in five years in the WCY.

This reflects our decline in productivity as competitiveness is the other side of the coin. However, I am surprised that the relationship is so sensitive. Just a drop of 0.2% in productivity can cause a drop in our international competitiveness ranking from 19th place to the 24th!

What this could show is that while we are sluggish in our productivity, other countries are much more aggressive in improving both their productivity and competitiveness.

There is thus no point in taking pride that we scored better in our ranking compared to the industrial countries like Austria (25th) Japan (26th) and Korea (29th). They are highly developed countries which enjoy much higher standards of living and a better quality of life that we do. They have reached the top of Mount Fuji and other mountains, while we are still climbing up from a lower economic base.

The drop in our competitiveness is significant and we have to take this decline very seriously. Malaysia slipped in all four sectors, that is, economic performance, business efficiency, government efficiency and infrastructure. That is why it is essential to investigate in depth into all these major falls in performance and tell the public what is being done to improve our rankings and ratings.

It is appreciated that Malaysia Productivity Corp’s Director General Datuk Mohd Razali Hussain has established Nine Working Cluster Groups to examine these poor indicators and report on improvements that must be made expeditiously.


Conclusion

It is good that we have these reports on productivity and international competitiveness to benchmark our national performance against them. We have to take advantage of these annual indicators and ensure that we keep improving rather than falling in productivity and competitiveness .

Our efforts to improve will be watched closely by our domestic and particularly international investors and international competitors .

We can only hope that these declines are not just coincidental but are also not developing declining trends. This could spell pessimism and falling confidence in our socio-economic management.

Instead we should take these set backs as warning signals and rededicate ourselves to a greater commitment to higher competition, more meritocracy and building a better socio-economic and political environment in Malaysia.

TAN SRI RAMON NAVARATNAM

Chairman Asli’s Centre of Public Policy Studies


Related links:

 

Launching of Productivity Report 2016/2017 – Ministry of International …

World Competitiveness Rankings – IMD

 

Fix election processes before GE14

 

CM may have too much on his plate – Nation | The Star Online

 

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Chinese car-maker Geely to make Malaysia its global hub, help Proton drive into future


PUTRAJAYA: The entry of a major Chinese carmaker into Proton Holdings Bhd will not only ease its financial woes, but also bring fresh capacity to the group’s underutilised factories.

Zhejiang Geely Automotive Co Ltd plans to turn Malaysia into its global hub to manufacture all of its right-hand drive cars, including its premium Volvo brand.

Geely will take a leadership role in production, sales and marketing. Proton will be responsible for distribution of the brand in Malaysia.
These were among the highlights mentioned at the signing ceremony in Putrajaya between DRB-Hicom, the parent company of Proton, and Geely.

Proton and Geely yesterday signed an agreement that would see Geely take a 49.9% stake in Proton. Both parties have not finalised the price Geely would pay for the stake.

Through the partnership, Geely executive vice-president and chief financial officer Daniel Li said Geely would focus on assisting Proton to sell 500,000 cars in Malaysia and around the region by 2020.

He said Geely would be contributing technology, talent and money to Proton. These include platform-sharing that would see the development of Proton’s first-ever SUV model from Geely’s best selling model – the Boyue.

DRB-Hicom group managing director Datuk Seri Syed Faisal Albar said in the competitive automotive industry, partnership among carmakers globally was common.

A partnership would also further expand Proton’s reach to other markets and give it better economies of scale.

“This partnership with Geely will create more jobs in Proton,” he told reporters yesterday.

Proton has a workforce of about 10,000 which produces about 100,000 cars a year. In 2016, sales of Proton cars dropped 30% to 72,290 units from 102,174 previously.

The company reported a loss of almost RM1bil last year.

Proton’s Tanjung Malim plant, which is designed to produce a million cars every year, will be made a new manufacturing hub for Geely.

Syed Faisal said Proton would relocate its entire production from Shah Alam to Tanjung Malim within five years.

Despite the entry of a new foreign partner, Proton will maintain its national car status. This means its industrial linkages, including vendors and dealers, will not be affected by the change in shareholding.

Under the heads of agreement signed between DRB-Hicom and Geely, the Chinese carmaker will take a 49.9% equity interest in Proton and also a controlling stake in Lotus, the British sportscar maker, from Proton.

No financial details were disclosed in the sale of a stake in Proton, while for Lotus, Geely would be paying £51mil (RM284mil) for a 51% stake in Lotus.

Syed Faisal said DRB-Hicom planned to sign a definitive agreement with Geely in July.

Also present at the signing ceremony was Second Finance Minister Datuk Seri Johari Abdul Ghani, who clarified that with the partnership with Geely in place, Proton would need to repay its RM1.25bil soft loan from the Government.

As part of the conditions for the soft loan, Proton was required to collaborate with a well-known strategic partner.

The requirement to collaborate with a well-known strategic partner was imposed on Proton as part of the conditions issued by the Government for its approval of the RM1.25bil soft loan to Proton, in which a bulk of the money was used to pay its vendors.

Separately, Johari said Proton was entitled to a RM1.1bil reimbursement from the Government for its RM3.5bil spent on research and development in the past.

Johari also said there would be no more “subsidy” for Proton from now on, and that the Government would no longer have a golden share in Proton with Geely entering into a partnership with the national carmaker.

Source: The Star by intan farhana zainulandizwan idris

‘Geely to help Proton drive into future’

IPOH: The decision by Proton to embark on a partnership with China’s Zheijiang Geely Automotive Co Ltd is timely because cars are predicted to be next in line to undergo sweeping innovations.

International Trade and Industry Minister II Datuk Seri Ong Ka Chuan said that in light of Industrial Revolution 4.0, bringing in Geely as Proton’s strategic partner would ensure the Malaysian company’s survival as cars increasingly adopt digital technology.

Industrial Revolution 4.0, or Industry 4.0, is the current trend of automation and data exchange in manufacturing technologies which include cyber-physical systems, the Internet of Things and cloud computing.

“After attending the Hannover Messe, the world’s biggest trade fair for industrial technology, I learned that self-driving cars are the next big thing.

“This means that you are looking at a future where cars will have no steering wheel.

“With just the touch of a panel, the car will bring you to your destination,” Ong said after witnessing the swearing-in of the new committee of the Perak Chinese Cemeteries Management Association yesterday.

He said Geely would be Proton’s channel to embracing technological innovations.

“I’m not saying to expect Proton to be a frontliner in this, but at least with a strategic partner it can move along with the times,” he added.

He said Geely would also open a new market for Proton, which was important for the national carmaker’s survival.

He said it was not a decision made purely in favour of China.

“Over the years, it’s been no secret that Proton accumulated losses and will need a big market to cater to in order to settle all the debts. This is the reality.

“Proton only narrowly met its sales target of 580,000 units last year, while Chinese brands sold 28 million units,” he said.

In view of its small volume, Ong said it would be difficult for Proton to fund sophisticated research and development initiatives.

“We need a larger market for things to work out. The Industrial Revolution 4.0 is all about innovation. We can’t do it ourselves, which is why working with advanced nations is our best bet,” he added.

The Star by Amanda Yeap

Related links:

Najib: Up to RM1bil losses for Proton if sale to Geely blocked …

RM500 aid for civil servants – Nation

PM: Sovereignty will never be compromised – Nation

No place for sentiment in Proton deal – theSundaily

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Huge Civil Service Size, Attractive Emoluments and Benefits are costing Malaysia !


Prized job: While long-term security like the pension scheme free healthcare and easy loans have been among the perks of joining the public service, many job seekers now want to become civil servants because it pays well. — Bernama

The attractive emoluments and benefits in the public sector are costing the country, say experts.

THE civil service had never been *Sofea Mohd’s dream job but in the current competi­tive job market, the final year Economics student at a local public university is seriously weighing the option. Especially since she was offered a temporary position at a ministry where she had just completed an internship.

“My seniors advised me to take the offer – one said she had to wait years before she got a job, another said he had to work in a fastfood restaurant and sell pens and children’s books on the street, so I thought I should listen to them and just take it.

“They say my chances of being hired permanently will be higher then,” says the 22-year-old.

The main reason she decided to accept the offer, however, is the pay, she tells, “It’s not as low as people say. I will get a daily wage but I can earn at least RM2,000 a month. The pay for permanent staff is of course better.”

Her friend *Azman Jailani dreams of starting his own business but is also planning to join the public sector after graduation.

“That’s what my parents want me to do. They say there is more security in the civil service. I can start my business later if I want,” says the final year business studies student.

With the academic year coming to a close at most tertiary institution in the country, many graduating students are preparing for the next chapter in their life. And like these two, many are looking at the civil service for a job guarantee.

It was reported recently that the Public Service Commission received 1.56 million applications last year to fill 25,046 job vacancies in the public sector. In 2015, the PSC received 1.63 million applications for 24,606 vacancies.

While the attraction of a government job is well-noted – long-term security; a pension scheme; cheap, if not free, healthcare; easy loans – many job seekers are now drawn to the public sector because of its pay.

Shamsuddin: ‘Duplications impact the private sector. When there are too many agencies, that will bound to cause delays.’

The pay for the public sector, especially for entry-level jobs, is on par with the private sector, says Malaysian Employers Federation (MEF) director Datuk Shamsuddin Bardan.

“It has to be noted that public sector wages have risen, in some cases outstripping the wages in the private sector. And that is only the basic pay. When you add the different allowances and bonuses, the public sector’s salaries – perhaps except for those at senior management level – could be more attractive than that of the private sector.

“Then there are also many benefits for civil servants such as house loans and healthcare benefits for them and family that continue even after they retire.

“In the private sector, the health insurance coverage ends when you leave a company’s employment or retire,” he says.

But the attractive emolument and benefits in the public sector have come at a price for the country, say economists, one that Malaysia will not be able to afford in the future. In fact, some believe it is already hurting Malaysia’s economy – it has been reported that it will now cost the nation more than 40% of government revenue to maintain the public sector.

Experts have pointed to its sheer size as a reason for the burgeoning bill of the civil service.

In February, Second Finance Minister Datuk Seri Johari Abdul Ghani told a local Chinese daily in an interview that it is a growing challenge for the Government to run the public sector due to the rising costs.

“One of the issues that we have to address is the ever-increasing government operating costs and expenses.

“For example, we have about 1.6 million civil servants, which is one of the world’s largest proportion of civil service,” Johari was quoted as saying.

With a population of 31 million, this means Malaysia has a ratio of one civil servant to 19 people, said the news report, which cited corresponding ratios for other countries in comparison: Singapore (1 to 71 people), Indonesia (1:110), China (1:108) and Britain (1:118).

The reported size of the civil service caused a stir, with the Public Service Department director-general Datuk Seri Zainal Rahim Seman refuting criticisms that the civil service is oversized by reiterating Chief Secretary to the Government Tan Sri Dr Ali Hamsa’s statement that the size of the civil service is a matter of definition under the Federal Constitution, which includes the police, the armed forces, and healthcare and education personnel.

 

As Zainal Rahim told the press, the actual size of the civil service would only be 682,790 should Malaysia adopt the same calculation used by other countries. This would make the ratio of civil servant to population as 1 to 44, instead of 1:19, he said.

The Organisation for Economic Co-operation and Development, meanwhile, put  Malaysia’s employment in the public sector as only 10.8% of the total labour force in 2013.

But as Johari highlighted, the fact is, emoluments make up the biggest portion of the Government’s operating expenditure, and that cost has been and will keep expanding.

“In 2003, the pay of public servants totalled RM22bil but it increased to RM74bil by 2016. In 2003, the pension of civil servants was RM5.9bil and in 2016 the amount soared to RM19bil.”

This year, some RM77.4bil have been allocated in the 2017 Budget for public servants’ pay and some RM21bil for the pension and gratuity payments of retirees, which is about 45% of the allocated operating expenditure of the country.

The challenge to cover the spiking cost is intensified by the declining Government reve­nue, the vernacular newspaper reported Johari as saying.

“In particular, revenues from the palm oil and natural gas industries, which generated profits of about RM65bil in 2014, fell sharply to RM30bil in 2016,” he was quoted.

Concurring, economist Dr Yeah Kim Leng says the rising operating expenditure is also a concern due to its impact on the country’s development.

“Over the last decade or so, we are seeing the operating expenditure in the government budget expand to the extent that we are not able to expand the development expenditure,” says Dr Yeah, who is an economics professor at Sunway Business School.

Some RM214.8bil was allocated for operating expenditure in the 2017 Budget while only RM46bil was allocated for development.

“By right, the development expenditure should be half of the budget if we want a dynamic economy as we see in many countries, especially in the developed countries,” he adds.

“But in Malaysia, the development expenditure has shrunk to as low as 20% of the budget. This will have a multiplier effect on our economy.”

He argues we should be spending more on our development, both in increasing the quantum of development expenditure and at the same time focusing the development expenditure on the right sectors – not just hard infrastructure but also soft infrastructure like social and human capital development.

“This is important in improving the quality of our workforce and their skills, in terms of boosting the talent development that can push the frontiers of growth in the country, especially in science and technology and other emerging knowledge and industries.

“The Government needs to attract investments in these new sectors, so that is why development expenditure is one of the key contributions to spark growth in those sectors and accelerate the growth of the economy towards becoming high end, high value.”

He points out, various studies have shown that the country’s civil service is big, with a low productivity rate.

“Regardless of how we calculate the total, we definitely have more people in the public sector than necessary, and studies have shown that labour productivity is quite low for the public sector.”

Rightsizing the civil service is the way to go, he asserts, but it should be treated as part of the continuous effort of improving the efficiency of its delivery service.

“The key is to be able to provide the services required by the people optimally, which is at the smallest number and lowest cost possible without sacrificing the quality of service,” he says, stressing that the underlying note is that “we should be getting bigger banks for our bucks, that is the taxpayers’ money.”

Crucially, Dr Yeah adds, while rightsizing the civil service is important to sustain growth, it is important that we rightsize without disrupting economic growth in terms of the employment situation in the country.

“We have to ensure meaningful employment for all while sustaining a low unemployment rate so that we can maintain the domestic economic growth momentum.”

Any prudent government would seize the opportunity to rightsize and enhance the public sector efficiency, Dr Yeah says.

“It is important to rightsize gradually and incrementally at a pace that does not disrupt the economy.

“Because the risk is that if we are hit by a downturn and the government is forced to undertake the pending cuts then that would be more painful and damaging to the economy. There would be a loss of productive capital when we face that kind of situation,” he says.

Tan Sri Mohd Sheriff Mohd Kassim, immediate past president of the Malaysian Economic Association (MEA) also believes it is time for Malaysia to rightsize the civil service due to the huge sum of civil servants’ salaries and pensions in the government expenditure.

As he had told the “Economic Governance: Public Sector Governance” forum in February, it could be a problem for Malaysia if it runs into a financial crisis and rightsizing is “better sooner than later” if Malaysia wanted to avoid falling into a Greece-like crisis, where the European country had to cut salaries and state pensions for its civil service.

“It is worthwhile to do it now while we can still afford it.

“I think we should do it gradually. It is kinder to do it now with incentives than to suddenly cut their salaries and pensions at a time when they can least afford it,” he was reported as saying.

Mohd Sheriff, who is also the former Finance Ministry secretary-general and Economic Planning Unit director-general, points out that there are ways of rightsizing in a humane and caring manner including providing free courses on skills development that will make people employable in the right sector like ICT, English, basic accounting, corporate law and others.

He says with the right skills, many would even leave the service on their own accord to improve their lives.

Dr Yeah agrees.

“While their pay is comparable to the private sector, many of the second layer and support jobs in the civil service have low long-term prospect,” he says.

“If their skills are improved, they and their families could get better prospects for the future. And if they are forced to look at other opportunities in the private sector or in entrepreneurship, in the end they could be better off,” he says, pointing to some of the initiatives already taken to rightsize the civil service and improve its productivity and efficiency, especially under Pemandu.

Dr Lee Hwok Aun, senior fellow at the Institute of Southeast Asian Studies in Singapore, says the Government should explore different ways to raise more revenue, such as by introducing a capital gains tax.

As a former lecturer at a Malaysian public university, Dr Lee says he can appreciate the enormous difficulty of rightsizing the civil service.

“The projected increasing burden of civil service salaries and proven continuous increase of operational expenditures in overall federal government spending, at the expense of investment, are major causes for concern. And the size of the civil service matters, but the long-term issues are even more complex,” he says.

For the civil service to be effective, nimble and efficient, it will need to attract and retain talent in certain sectors – which means paying higher salaries, especially for key positions such as teachers, he says.

As he sees it, the main problem is over-bureaucratisation.

“There are various unnecessary administrative posts, which add cost and tend to perpetuate procedures and heavy paperwork. I can attest to this from my experience working in a public university. An overhaul of administrative strategy and operations is probably necessary in many departments, before making any staff reductions. If not, when staff retire or relocate, the same amount of tedious work becomes distributed among fewer people, causing service and morale to decline,” he says, adding there will also be resistance from civil servants who stand to lose their pension if they leave.

“We should be understanding and merciful about this situation. Forms of compensation, or the option to convert from public sector pension to an EPF lump sum, could be explored.”

MEF’s Shamsuddin concurs, pointing out that there are also a lot of duplications of service and work at the federal level and state level and so on.

“A good example is tourism where there is a tourism agency at the federal level while the state has its own tourism Exco and office.

Duplications impact the private sector as it is a problem to deal with different government agencies to get something done. When there are too many agencies, that will bound to cause delays,” says Shamsuddin.

Dr Yeah says it is imperative for the Government to enhance the efficiency of the delivery service and effectiveness of the public sector across the board, such as putting them to work in priority areas and where they will have the highest impact.

“Crucially, when we focus on improving productivity through redeployment, retraining and re-skilling, quite naturally, we will be rightsizing.”

It can even be a win-win situation for the public servants as a smaller number of employees that commensurate with a higher productivity will mean an increase in profit, so the civil servants can receive higher wages, he notes.

Still, Dr Yeah feels the public sector’s emolument bill should be capped.

“We need to ensure that the public sector wages do not exceed the workers’ productivity or rate of inflation, as that itself will lead to a productivity decline.

“We should cascade it so that the wages in private sector could rise in tandem with thepublic sector,” he says, adding that at the same time the size of the civil service needs to be reduced. “If we don’t rightsize and instead create more civil service jobs, it will be a downward spiral.”

The Government also needs to enhance Malaysia’s investment climate and attract more foreign investments, he adds, “The strategy of the country should be to push for private sector growth, especially in new and emerging areas which would boost demand for highly skilled labour.”

Ultimately, says Dr Yeah, the public service sector should not be the job reserve or employer of the last resort in the country.

To achieve this, we need to stop the disproportionate interest in the public sector which is not healthy for the economy, he says.

“We should be steering the workforce towards the private sector or they should become entrepreneurs so that they can raise their income opportunities and create jobs.”

The tightening of the job market can lead to higher investment, higher productivity and higher wages, Dr Yeah notes, “This is the virtuous cycle we need to kickstart to sustain an economic growth for the country at a higher level.”

*not real name

Next: Some of the initiatives already taken by the Government to rightsize the civil service and improve its productivity and efficiency.

Source: The Star/ANN by Hariati Azizan

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Boost for Bayan Lepas: Global biz hub for Penang


Hi-tech facility aims at rejuvenating economy in Bayan Lepas

 

An artist’s impression of the proposed GBS By The Sea project in Bayan Lepas.

Penang Development Corporation (PDC) general manager Datuk Rosli Jaafar said the RM200mil project dubbed ‘GBS By The Sea’ would be part of a rejuvenation exercise for the Bayan Lepas industrial area.Hi-tech facility aims at rejuvenating economy in Bayan Lepas

“The project, which will be located beside the Motorola factory, will also be used as a catalyst to rejuvenate the economy.

“Under the first phase, 2.7ha of space will be developed and will feature a nine-storey seafont building which will house the Multimedia Super Corridor Malaysia Cybercentre,” he said after announcing the project in Komtar on Tuesday.

Rosli added that there would be a multi-storey 2,500-bay car park complex, retail and F&B outlets, and also an integrated centre for IT and R&D activities.

“The futuristic hub will also have a central meeting place for people to meet up.

“It will also harness natural sunlight as lighting, making it an environment-friendly development.

“When completed in 2020, the project will create some 3,000 jobs,” he said.

Chief Minister Lim Guan Eng, who was present, said the project would provide higher value jobs in the manufacturing industry through expansion and diversification of the GBS business.

“Penang aims to be part of the Industry 4.0 Transformation, which revolves around big data analytics, e-commerce, crowdsourcing, cloud computing and the Internet of Things.

“GBS By The Sea is expected to attract many key international players into the state,” he said.

Lim added that according to a study by Outsourcing Malaysia, the country’s GBS sector is expected to see a compounded annual growth rate of 10% to 15% over the next three years.

Global biz hub for Penang 

 

\Part of the buildings to be built at the GBS centre.

PENANG has identified a 72.8ha site in Bayan Lepas to be turned into a Global Business Services (GBS) centre.

Penang Development Corporation (PDC) general manager Datuk Rosli Jaafar said the RM200mil project dubbed ‘GBS By The Sea’ would be part of a rejuvenation exercise for the Bayan Lepas industrial area.

“The project, which will be located beside the Motorola factory, will also be used as a catalyst to rejuvenate the economy.

“Under the first phase, 2.7ha of space will be developed and will feature a nine-storey seafont building which will house the Multimedia Super Corridor Malaysia Cybercentre,” he said after announcing the project in Komtar on Tuesday.

Rosli added that there would be a multi-storey 2,500-bay car park complex, retail and F&B outlets, and also an integrated centre for IT and R&D activities.

“The futuristic hub will also have a central meeting place for people to meet up.

“It will also harness natural sunlight as lighting, making it an environment-friendly development.

“When completed in 2020, the project will create some 3,000 jobs,” he said.

Chief Minister Lim Guan Eng, who was present, said the project would provide higher value jobs in the manufacturing industry through expansion and diversification of the GBS business.

“Penang aims to be part of the Industry 4.0 Transformation, which revolves around big data analytics, e-commerce, crowdsourcing, cloud computing and the Internet of Things.

“GBS By The Sea is expected to attract many key international players into the state,” he said.

Lim added that according to a study by Outsourcing Malaysia, the country’s GBS sector is expected to see a compounded annual growth rate of 10% to 15% over the next three years.

Also present were Deputy Chief Minister Datuk Mohd Rashid Hasnon, investPenang general manager Loo Lee Lian and other state exco members.

Penang homes priced beyond reach of most youths 

 

More than 90% of respondents surveyed hope to own property but only half believe that it is possible.

THE majority of youths in Penang have no choice but to rent due to high property prices.

Most (73.2%) are staying in a property owned by a family member or a relative and many (93.7%) are hoping to own a house within the next five years.

These are some of the findings of an opinion poll carried out by the state government on a sample group of 606 youths, aged 18 to 29.

Penang Institute senior analyst Yeong Pey Jung (pic) said an overwhelming 90.2% of respondents found it difficult to purchase property in Penang while 43.4% revealed that it was not difficult to rent a property here.

“In looking at the responses on perception towards property prices, 91.8% found prices in Penang to be considerably expensive while 69.3% are of the opinion that affordable housing in Penang is not affordable.

“If we look into the 24 to 29 age group, who have a higher purchasing power, 81.7% conclude that affordable housing is unaffordable. This is a phenomenon observed throughout Malaysia especially in urban areas,” she told a press conference on the outcome of the Penang youth survey in Komtar on Tuesday.

Yeong added that more than 90% of respondents hoped to own property but only half of them believe that it is possible.

“The telephone survey, which was conducted in February this year, was to find out how Penang youths feel towards social, economic and political concerns.”

The survey also showed that over 70% of youths involved in community projects were not interested in taking up leadership roles.

They also expressed a general disinterest in politics.

In terms of health, more than half of youths engaged in regular exercise.

About 56.4% found difficulty in gaining employment, a sentiment shared by their peers and immediate social circle.

Penang Youth and Sports, Women, Family and Community Development Committee chairman Chong Eng said the survey was an initiative towards the Penang Youth Development Blueprint.

“The blueprint will be inclusive and function as a guide to encourage social upward mobility and enhance the youths’ development socially, economically and politically.”

The next phase is to conduct a focus group discussion and in-depth interviews with all sectors of the youth community.

Sources: The Star/ANN



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One Belt One Road paving the way to success


In 2013, Chinese President Xi Jinping proposed building the Silk Road Economic Belt and 21st-Century Maritime Silk Road, which became known as the Belt and Road Initiative.

Countries along the Belt and Road have their own resource advantages, and their economies are mutually complementary. This means there is a great potential and space for cooperation.

Connecting facilities is a priority in implementing the initiative. On the basis of respecting each other’s sovereignty and security concerns, countries along the Belt and Road are improving the connectivity of their infrastructure construction plans and technical standard systems, jointly pushing forward the construction of international passageways, and forming an infrastructure network connecting all sub-regions in Asia, and between Asia, Europe and Africa.

At the same time, China and countries along the way are making efforts to promote green and low-carbon infrastructure construction and operation management, taking into full account the impact of climate change on any construction.

With regard to transport infrastructure construction, they are focusing on key passageways, junctions and projects, and giving priority to linking up unconnected road sections, removing transport bottlenecks, advancing road safety facilities and traffic management facilities and equipment, and improving road network connectivity.

Countries along the Belt and Road are building a unified coordination mechanism for whole-course transportation, increasing connectivity in customs clearance, reloading and multimodal transport, and gradually formulating compatible and standard transport rules, in order to facilitate international transport.

China suggests pushing forward port infrastructure construction, building smooth land-water transportation channels, and advancing port cooperation, increasing sea routes and the number of voyages, and enhancing information technology cooperation in maritime logistics. We should expand and build platforms and mechanisms for comprehensive civil aviation cooperation, and quicken our pace in improving aviation infrastructure.

In this episode, we will see how Belt and Road helps close the distance between people around the world.

The Belt and Road:

http://watchthis.chinadaily.com.cn/video/column/belt-and-road/

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