Business Education Politics

5 real ways Malaysia can make itself more attractive to businesses

Bad news! One of the world’s top oil and gas supermajor is LEAVING¬†Malaysia. ūüôĀ¬†Shell confirmed¬†on 9 April that its IT unit in Cyberjaya¬†is moving¬†to Bangalore, according to¬†Sim Wie Boon’s report on The Rakyat Post.¬†Lo said the move to Bangalore is not due to the falling ringgit value or oil prices but the decision made several years ago is rather due to the environment and ease to do business from a global perspective.

HAH! Make fun of Bangladesh summore la.

Screenshot from Lowyat forum 3

Someone’s comment on Lowyat forum.

You mean¬†Bangalore isn‚Äôt¬†in Bangladesh??? Stupid CILISOS!¬†But they’re not the only guys taking the brains of their operation away from¬†Malaysia…

MyTeksi is going to Singapore to open an R&D centre, reported Digital News Asia.

“It was the logical choice for us when we first started planning this R&D centre ‚Äď the conducive business environment and strong existing infrastructure is ideal for us to build and develop a global pool of talent,” – MyTeksi¬†Group CEO¬†and founder Anthony Tan.

But why is Shell’s¬†IT service, which started and operated in Cyberjaya for over 13 years, and MyTeksi, an originally Malaysian business, moving¬†out?¬†Are there signs that Malaysia is not optimal for business as before? Let’s take a¬†look at things we might be able to do to get some of it back.

1. Fill the skill gap and plug the brain drain

Image from modernghana.com

Image from modernghana.com

Even with plenty of job vacancies to go around,¬†62%¬†of companies in Malaysia¬†still can’t find employees with¬†the right skills or good¬†English language proficiency, World Bank¬†reported. Nearly half of the managers surveyed, rated¬†employees’ IT¬†skills¬†as ‘poor’¬†or¬†‘very poor’.¬†So that kinda leaves Malaysia with almost¬†HALF our graduates either¬†jobless or stuck in mismatched fields…. and¬†India (a country with higher¬†IT skills) with a¬†Shell contract!

But Malaysia can’t be that bad, right? We have¬†talented people! We just have¬†a brain drain problem.¬†While we’re aspiring to¬†become a high-income nation by 2020,¬†64% of Malaysians¬†are filling high-skill jobs overseas.¬†But you know what makes us¬†even more sakit hati?¬†15% of them are OVERQUALIFIED¬†for their jobs!

Guess where their top destination is……….Singapore!¬†Because of this, our annual net wages, compared to Singapore and other countries, are¬†lower.

Image from Says.com

Image from Says.com

On top of annual net wages, Malaysia has poorer infrastructure compared to Singapore, so…

2. Make our infrastructure BETTER

On studies done by World Bank, Forbes,¬†World Economic Forum, and others, Singapore’s economic rankings are pretty hard to beat. Sorry to compare. Promise last time.

Click to view the full table. Screenshot from guidemesingapore.com)

Click to view the full table. Screenshot from guidemesingapore.com

The biggest areas of differences in business infrastructure point to the process of setting up a company, taxes, employing workers and cross-border trading. For example, in Singapore, it takes only 1 day and 2 steps to form a company, while in Malaysia, it takes 11 days and 9 steps.

3. Make GST a bit clearer can?

GST. Image from Channel Newsasia.

Image from Channel Newsasia.

At this point, it isn’t even just consumers confused with GST. Even businesses don’t know whether costs are going up or down. Unfortunately, this sort of uncertainty makes it difficult for businesses to judge profits – and if you can’t judge profits, how to do business!?

Oh PS: Take the CILISOS iProperty Naikwatch Survey 2015 to track GST affecting spending patterns. #kthxbai

Fortunately,¬†RHB¬†Research expects the dust to settle within 6 to 9 months after the rakyat grows accustomed to GST.¬†In theory, GST’s multi-stage nature is supposed to allow Customs to aggregate pricing more accurately than before, in order to deter unscrupulous businesses,¬†but¬†even government units are conflicted about some of the implementations – to charge or not to charge. Speaking of which…

4. Stop with all the political complications

maslan robin hood 3

Recently our¬†Deputy Finance Minister Datuk Ahmad Maslan told telcos he would haul them to court if they didn’t remove GST on prepaid top-up. But¬†some reliable sources including MCMC itself¬†that before GST, they all had¬†a sit-down with MCMC and Customs…as far as the¬†telcos¬†understood it, it’s ILLEGAL¬†if they don’t charge it.¬†Even up till now, different news outlets report different outcomes for GST on prepaid.

Image via IBTimes

Poor Cadbury. Image via IBTimes

Before that, it was Cadbury that had confused consumers, when¬†Jakim supposedly found¬†pork DNA in its chocolates. Needless to say, it affected poor Cadbury’s¬†sales hugely. Even Indonesia and Saudi Arabia tested¬†their stocks of Cadbury chocolates after the fiasco in Malaysia. After all that hooha, Cadbury was re-certified halal. Poor Cadbury!

NAH, BACA:
Actually... How much space does RM120 million take up?

We¬†kept track of the times the authorities clamped down on random businesses – they include¬†a banana leaf restaurant, a book store, a hotel pub,¬†kek lapis businesses… and¬†a t-shirt shop¬†that keeps getting raided (authorities called UrbanTee¬†a sex shop.. OMG)!

With all this controversy, how to do business!?

 

5. Remove mandatory Bumiputera quota

Bumi quota 30% Image from dinmerican.wordpress.com).

Image from dinmerican.wordpress.com.

So what is this quota and where did it come from?

The quota sets a rule that 30% of business ownership is to be held by bumiputeras. It was put in place under the New Economic Policy (NEP), which stemmed from the May 13 Racial Riots (caused by a sharp division of wealth between the Bumis and non-Bumis). No one really knows how they came to the figure of 30%, but someone said that an economic body, set up to study the wealth problem just tossed around some numbers.

One of the CILISOS team-members can relate:¬†his dad¬†was moved overseas, just so that he can be promoted a few times before being¬†brought back here, because of the quota. ¬†We know that the special position of Bumis are safeguarded under Article 153 of the Constitution and as every loyal Malaysian knows, the Constitution is supreme.¬†However,¬†perhaps the quota isn’t actually making them better?

“In 2006, Singapore Straits Times journalist Mafoot Simon did a study that revealed for the first time that – against popular belief – the Indian and Malay minority races have done better than the majority Chinese population in Singapore, in terms of proportional population mix, educational attainment, and increase in monthly household incomes.” – Malaysiakini

What do the Bumis themselves think of it? Hussein Hamid, a Malay current affairs blogger based in Australia, has this to say:

“Being a bumiputera is an embarrassment to anyone today because it denotes an unfairness within a society that tells you that birth, race and religion entitles you to being someone else other than what you are not ‚Äď a first amongst equal. Today privileges of birth no longer hold any sway over civilized societies – be you a Sultan or the son of a Prime Minister. Everything that you want to be must be earned through hard work and decent labor.” –¬†Hussein Hamid, on his blog

In fact, even our PM agrees with this (!). In 2011, he actually made a statement saying that Bumi quotas would eventually have to end.

LUCKILY РRinggit dropping, so cheaper to do business here!

WARNING - this particular sale might be over

WARNING – this particular sale might be over. Click to check.

GOOD NEWS FINALLY! As you know, our ringgit is now¬†the worst performing currencies in ASIA…. WOOHOO!¬†JUALAN MURAH YO! The¬†net effect of that is that it’s now cheaper for other countries to do business in Malaysia!

“Investors will be more encouraged to purchase from Malaysia – manufacturing, property, setting up an overseas business,” said¬†FXTM Chief Market Analyst Jameel Ahmad.

And hey, whaddaya know, we got a customer here: oil and gas¬†rigging equipment supplier KTL Global is relocating the bulk of its Singapore operations to Johor because we’re price competitive! We even found out from this economic comparison that Malaysia might be cheaper than China!

Image from Asia Briefing

Cheaper than China. Image from Asia Briefing

BUT is this the direction we want to take? Do we want to compete on price – or should we offer high value products and services?¬†In Mahathir’s Vision 2020, he envisioned¬†Malaysia becoming a¬†K-based economy¬†(K is short for Knowledge yo) and achieving¬†high-income status.

Unfortunately, according to TIME Magazine,¬†we’re stuck in the middle-income trap. We can neither offer the cheapest labour, compared to places¬†like India, Sri Lanka, Pakistan and Vietnam,¬†and¬†other countries have leapt past us in¬†technology advancement and skilled sectors. So maybe¬†we shouldn’t care so much about SHELL leaving Malaysia, but MyTeksi searching for talent overseas? That’s one of our own brands looking elsewhere for good people. Aiyo.

“Najib realizes that excessive government interference in the economy is dampening investor sentiment and holding back Malaysian industry. (Malaysia)¬†relies much more on foreign investment to drive industrialization. That‚Äôs not a bad thing ‚Äď multinational companies provide an instant shot of capital, jobs, expertise and technology into a poor country.¬†MNCs, however, aren‚Äôt going to develop Malaysian products; that has to take place in the labs and offices of Malaysia‚Äôs private businesses. But those businessmen have been content to squeeze profits from serving MNCs and maintaining their original, assembly-based business models ” – “Escaping the Middle Income Trap, August 2010,¬†TIME magazine

In other words…¬†JUALAN MURAH might be good for now, but it shouldn’t last forever la.

 

5 Comments

  1. n305er

    20/04/2015 at 11:26 am

    How about, besides all the things above… and this:
    Stop all political OPINIONS and let businesses and experts do their things and have their own opinions.
    Malaysians are Malaysians by nature and we do not need the government to tell us that this or that is not being Malaysian or being ‘certain’ religious or being smart or not.
    This has happened way too often and whenever they are proven wrong over and over again, they LOVE to put the blame on others such as “you guys misquoted me”, “It’s not our responsibility, it’s the responsibility of “.
    A good leader should always be supportive and lead by good example. Be accountable for any actions they have made and be open and objective when making choices.
    Always listen and always respond in a calm and objective way with facts instead of making a scene in Parliament.
    And yes, INFRASTRUCTURE and remove the quota. Done! Let us handle the economy and stop budding into our business then see your Ringgit grow stronger la!
    Sigh…

  2. Ong Phaik Kim

    18/04/2015 at 10:31 pm

    Well, all the petty fighting, hudud and the call to emulate ISIS and be brave like ISIS fighters does not appeal to multinational companies! Foreigners whether come here as tourists or investment, 1st thing is political stability, infrastructure. TO be honest If this is not in place who wants to dump money in a dead pit! Incompetency n impotent policies makes us unattractive to investors.

    After the last elections, nobody seem to govern the country, all are still in election modes – I hantam you, you hantam me! Enough is enough! don’ talk about investors, we, Malaysian also sick with all the fighting n nonsense going on! MH370 expose our ministers level of intelligent! All the bumbliing does not make us look good! Hence the tourists and investors stop coming!

    To all the fighting cock, Taniah! No thanks to all the big mouth who spew out foolishly

  3. shukarmin c

    18/04/2015 at 12:52 pm

    Usa n Euro cos been to China for a few decades already. Are those ctries bad? Bangalore is the IT city…so many around the world incl Shell Msia moved there. Nothing strange or bad about Msia. I m glad that i live here. It is always feeling much beter when you fly home incl fr usa, London or spore.

  4. Paartiban

    18/04/2015 at 12:03 am

    What!!! GST is 17% in China. Now, I am happy to be a Malaysian.

    • Chak Onn Lau

      18/04/2015 at 5:03 pm

      hahaha… to be honest, GST itself isn’t the issue. I personally agree with GST as an appropriate tax method. But the implementation of it is quite horrible

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