Being Children Again

I did not set out early morning on Merdeka Day to capture this picture. My Merdeka Day shots would have been the typical scene of Merdeka Day parade colours and gleaming faces of people from all walks of life at the parade.

Instead, a beautiful scene was there in front of me as if it had been set up and choreographed for a photo shoot. It was such an illustrative scene and so telling of what every Merdeka Day means to me – living under the strong foundation that our forefathers have built, carefree life in a pristine environment; prospering in freedom to pursue our dreams in a safe and peaceful country. What looms in the far horizon is for us to invent today.

Beyond displaying our Jalur Gemilang, every Merdeka Day is our moment to invent the future, building on the foundation created by those who fought for Merdeka, sacrificed for our freedom and prosperity. Inventing the future today is perhaps a great way of honouring those who fought and sacrificed for us.

How do we invent the future today? My answer is: pay more taxes and go beyond the superficial show of patriotism. Instead of just for nationalistic displays, let the flying Jalur Gemilang be the beacon of our commitment to our nation’s future. For our nation’s future is the future of our children and their children’s children.

What our nation’s future will be, depends to a large extent, on our capacity and capability to pay more tax and on the capacity and capability of our children.

So, Merdeka Day means independence from our own self-imposed limitations to develop our competencies, to gain new insights and to broaden our horizons. Merdeka Day means independence from indulgence in trivia (of which are plenty on the internet). Merdeka Day means independence from tendencies to celebrate mediocrity. Merdeka Day means independence from our selfishness to share knowledge and to contribute as responsible citizens.

Merdeka Day means being children again – being without inhibitions to explore, being free from mental constraints to pursue new dreams, being brave to invent the future.

The Hottest Stimuli For Sarawak's Economy

What's more stimulating than revealing, eye-catching sizes? To citizens of nations today, nothing is more stimulating than the revelation & size of economic stimulus being formulated by their governments to minimize the impact of global recession.

But like the stimulus of revealing sizes, short-term economic stimulus cannot sustain the feel-good moments.

The 12 new dams to be built in Sarawak under SCORE could well be the erectile dysfunction of a 12 inch possession. Sarawakians concerned with the well-being of the future generations to come must seriously think about what is really needed.

I am recommending that the hottest stimuli for Sarawak's future prosperity is investment in innovation, not in another dam. Failure to do so, future Sarawakians will be beggars in their own land despite the wealth of natural resources today. Because besides Korea, Japan and Taiwan, China & India will be important centers of innovation in the coming decades, leaving Sarawakians to live on scraps in the region.

Not only are both China & India producing a rising share of key technological innovations, but they are also pioneering innovations in business models that allow their companies to prosper in low-income markets. These new models tend to be capital light while heavily leveraging technology. The companies employing them produce goods and services at surprisingly low cost and use the vast scale of home markets to create new technology standards. These are practices that companies in neighboring nations will need to watch closely as they attempt to grow their competitiveness and as they meet new competitors from both countries in global markets.

Education levels are rising in both countries. China and India have world-class technical universities and produce a steady flow of talent at the top of the world’s academic pyramid. In addition, both cultures reward entrepreneurial risk taking. Innovators in China and India possess immense drive and desire to succeed. Their commitment and focus on business execution make them notable entrepreneurs on the global stage. It helps that both China and India allow successful people to retain much of the wealth they create, though both governments expect contributions back to broader society from those who become millionaires or even billionaires.

What is the situation in Sarawak? Firstly, our education system is failing us, educating us out of our inherent creativity. As the government builds infrastructure in the rural areas, GDP growth remains in the urban. Indigenous technologies is unheard of, not even in the farming or timber sectors which are the main economic activities in the state. In Sarawak, revenues from natural resources can be allocated to the benefit of seeding innovations rather than being pocketed by a few individuals.

India's flexible local entrepreneurs are creating new models that bake in low-income levels. ICICI Bank is a good example. Making intensive use of technology, it has created a banking model with capital outlays that are one-tenth those of banks in the developed world. ICICI reaches deeply into India’s rural areas using mobile ATMs and simplified Internet banking. It runs a booming and profitable business in remittances at fee levels that undercut Western Union by 70 percent. Health Management Research Institute (HMRI), meanwhile, uses technology to revolutionize medical services. Paramedics rove through rural areas in vans coordinated by GPS. Routine ailments can be efficiently diagnosed with the help of algorithms; more difficult diagnoses can be provided by remote medical experts via a video kiosk in each van. HMRI can already serve over 50 million patients.

China selects and invests in what it believes are next-generation sectors—biotechnology, electric vehicles, and clean energy. These are markets where China’s domestic demand could lead the world. The government’s goal is to accelerate the market’s development and nurture national champions. In telecom, where the Chinese market is already one of the world’s largest, the government is encouraging national standards that it hopes will eventually define the global industry.

Can Sarawak build & sustain China's & India's innovation pace and eventually move to the next level of technological innovation? Absolutely. The talent is there, as are capital and effective new government that encourages it. With stronger protection and rewards for intellectual property — a likely development as international companies begin to license technology from Sarawakian entrepreneurs — the stage will be set for the next step forward.

Sarawak must wake up to the realization that investing in innovation is more critical than the 12 dams. The most innovative countries — which will also be the highest earning in the future — will be those that embrace a model of “innovation economics,” which places technology, innovation, and entrepreneurship at the center of economic policymaking. Successful nations will not be content to wait for innovation to happen or expect it to occur as a byproduct of other activities, such as rural development or dam building.

On the contrary: the new leaders will search out innovation and actively create an environment that nurtures it. That is the job description of Sarawak's new leaders when Pakatan Rakyat takes over from BN.

Sources: Alessi, IDEO, NASSCOM, ADB, Global Institute for Human Capital Development

The Sexy New Normal for Sarawak

It is increasingly clear that the current downturn is fundamentally different from recessions of recent decades. We are experiencing not merely another turn of the business cycle, but a restructuring of the economic order. The structure of the order will be dependent on a fundamentally new leadership and new government in Sarawak.

For some of us and for some organizations, near-term survival is the only agenda item. Others are peering through the fog of uncertainty, thinking about how to position themselves once the crisis has passed and things return to normal. The question is, “What will normal look like?” While no one can say how long the crisis will last, what we find on the other side will not look like the normal of recent years.

The new normal will be shaped by a confluence of powerful forces—some arising directly from the financial crisis and some that were at work long before it began. The most powerful force is the one that each of us can exert to bring about the long overdue and much needed new leadership and new government in Sarawak.

Obviously, there will be significantly less financial leverage in the system. But it is important to realize that the rise in leverage leading up to the crisis had two sources. The first was a legitimate increase in debt due to financial innovation—new instruments and ways of doing business that reduced risk and added value to the economy. The second was a credit bubble fueled by misaligned incentives, irresponsible risk taking, lax oversight, and fraud.

Where the former ends and the latter begins is the multitrillion dollar question, but it is clear that the future will reveal significantly lower levels of leverage (and higher prices for risk) than we had come to expect. Business models that rely on high leverage will suffer reduced returns. Companies that boost returns to equity the old fashioned way—through real productivity gains—will be rewarded. Nations that are governed in a truly transparent manner by the true power of the citizens will flourish and endure.

Another defining feature of the new normal will be an expanded role for government. All signs point to an equally significant regulatory restructuring to come. Some will welcome this, on the grounds that modernization of the regulatory system was clearly overdue. Others will view the changes as unwanted political interference. Either way, the reality is that around the world governments will be calling the shots in sectors (such as debt insurance) that were once only lightly regulated.

They will also be demanding new levels of transparency and disclosure for investment vehicles such as hedge funds and getting involved in decisions that were once the sole province of corporate boards, including executive compensation. Only new and capable leaders can engage at this new level of integrity and transparency.

While the financial-services industry will be most directly affected, the impact of government’s increased role will be widespread: there is a risk of a new era of financial protectionism. A good outcome of the crisis would be greater global financial coordination and transparency. A bad outcome would be protectionist policies that make it harder for companies to move capital to the most productive places and that dampen economic growth, particularly in the developing world. Companies need to prepare for such an eventuality—even as they work to avert it.

These two forces—less leverage and more government—arise directly from the financial crisis, but there are others that were already at work and that have been strengthened by recent events. For example, it was clear before the crisis began that US consumption could not continue to be the engine for global growth. Consumption depends on income growth, and US income growth since 1985 had been boosted by a series of one-time factors—such as the entry of women into the workforce, an increase in the number of college graduates—that have now played themselves out. Moreover, although the peak spending years of the baby boom generation helped boost consumption in the ’80s and ’90s, as boomers age and begin to live off of retirement savings that were too small even before housing and stock market wealth evaporated, consumption levels will fall.

As Sarawak moves into a new era with new leadership and new government, by observing the impact of the two above-mentioned forces on the economies of nations, our new leaders can learn and develop better strategies to develop Sarawak.

Companies seeking high rates of income and consumption growth will increasingly look to Asia. The fundamental drivers of Asian growth—productivity gains, technology adoption, and cultural and institutional changes—did not halt as a result of the 1997 Asian financial crisis. And Asian economies—though they have rapidly deteriorated in recent months—are unlikely to be stopped by this one.

The big unknown is whether the temptation to blame Western-style capitalism for current troubles will lead to backlash and self-destructive policies. If this can be avoided, the world’s economic center of gravity will continue to shift eastward. And for Sarawak, only a new leadership with sharp foresight and passion for the peoples' well-being will be able exploit this new opportunity coming to Asia.

Through it all, technological innovation will continue, and the value of increasing human knowledge will remain undiminished. For talented contrarians and technologists, the next few years may prove especially fruitful as investors looking for high-risk, high-reward opportunities shift their attention from financial engineering to genetic engineering, software, and clean energy.

This much is certain: when we finally enter into the post-crisis period, the business and economic context will not have returned to its pre-crisis state. Leaders and executives preparing their countries and organizations to succeed in the new normal must focus on what has changed and what remains basically the same for their citizens, customers, companies, and industries.

The result will be an environment that, while different from the past, is no less rich in possibilities for those who are prepared. Effectively, Sarawak will not have to bear more of the same for any longer.