Recently, much has been talked about Sixth Prime Minister Dato’ Seri Mohd. Najib Tun Razak’s financial and capital liberalization policies. It was supposed to open up Malaysian markets to new opportunities, especially in these stormy global financial recession that many of the matured and saturated Western economies are fighting hard to weather through.
The Reuters has the story:
UPDATE 1-Malaysia sees recovery and ‘gradual’ reform
05.26.09, 01:09 AM EDT
KUALA LUMPUR, May 26 (Reuters) – Malaysia, Asia’s third most export dependent economy, expects growth to return in the third quarter of this year and will gradually open up its economy to boost long-term prospects, a top official said on Tuesday.
Malaysia will release first quarter gross domestic product data on Wednesday and economists in a Reuters poll expect it to show the economy shrank by 4 percent from a year ago, the worst quarter since the 1998 Asian financial crisis.
Official forecasts see the economy shrinking just 1 percent this year, a number that many private sector economists say is over-optimistic.
‘We believe that for the third quarter we will continue in terms of recovery…because in the third and fourth quarters, the stimulus package impact will be felt. Next year we believe will be very positive in terms of growth,’ the country’s Second Finance Minister Ahmad Husni Hanadzlah told journalists on the fringes of an economic conference. Malaysia’s government earlier this year unveiled a 60 billion ringgit ($17.21 billion) package of government spending and loan guarantees over two years to boost domestic demand.
It has also pledged to reform its economy, which is heavily dependent on oil and commodities exports and low-value-added electronics, produced by a low paid immigrant workforce.
Since taking office in April Prime Minister, Najib Razak has unveiled liberalisation measures on the country’s services sector and financial industry, although many of these measures were already planned as was his announcement that he aimed to boost services to 60 percent of the economy.
The Malaysian Insider website (www.themalaysianinsider.com) said on Tuesday that Najib would scrap the country’s foreign investment committee, undertake some reforms of government-linked companies and establish new rules for private finance initiatives.
Husni declined to comment on the report but said that Malaysia was looking at liberalisation to attract investment.
There are obvious positive nodes to these liberalization policies. The opening up of the once ‘protected’ Malaysian market is supposed to improve on the productivity and products. Better processes and system are put in place. However, what is the extend on how this will effect and impair the Malaysian homegrown firms of the same industry and nature. Till now, they are able to provide the same products and services to Malaysian corporations but it seems they have to compete on the economies of scale which these multinational financial services enjoy for their size and network.
The first phase of this liberalisation policy is for service providers in the financial and capital markets. Americans and West European corporations prefer service provider firms who are associated to their own first. Even corporate advisory and consultancy work, goes to ‘preferred’ firms like McKinsey, Hays, Booze, Allen & Hamilton and Boston Consulting. The fact is that, many Malaysian firms, especially new investment banks in the market could do equally good, if not better for their understanding and ‘feel’ of the Malaysian and regional economy. Many Malaysian IP providers find it impossible to serve these ‘tightly controlled’ markets. The decision makers within GLCs are also too blinded by the ‘branding’ game.
A case in point is the recruitment industry. The global financial storm has now affected a lot of MNCs, particularly American and West European firms to downsize their operations. It means that, the Malaysian job market will be flooded with professionals, semi professionals, skilled and semi skilled workers. It is upto the recruitment firms to work hard on getting these displaced workforce, placed at the soonest opportunity available.
Some of the American and Singaporean recruitment firms which have offices here in Malaysia, should look into this. After all, they have enjoyed the accounts of major MNCs, like Intel, IBM, Dell and Western Digital and they have benefitted immensely on these ‘fat and highly lucrative’ accounts. On the other hand, Malaysian recruitment firms were never given the opportunity to penetrate these MNCs recruitment market, especially in the best times, despite 95% of the work force are Malaysians. It is simply because the Americans and Europeans favour their own and fully capitalize to provide all downstream and peripheral industries within themselves, as much as they can.
Now the times are bad and MNCs are downsizing, in fact some are uprooting themselves to a ‘cheaper’ market. These localized foreign recruit,rmy firms are now ‘hunting’ on the grounds where Malaysian indigenous recruitment firms roam and dwell. With their brand, network and economies of scale, Malaysian firms finds the competition all too stiff.
It was strongly rumoured that American recruitment firms like Kelly Services are now focusing on Malaysian GLCs, especially Telekom Malaysia, Celcom and TNB. They have also been said trying to edge themselves into Khazanah Holdings stable. As they are globally hurt by the American and Western European shrinking economy, they are now focused on lucrative and expanding Malaysian job markets. This is coupled with Federal Government induced recruitment programs, designed to stimulate the economy and address the unemployment issues, especially amongst the fresh graduates and recently retrenched workers from MNCs which downsized their operations.
It was said that they play unfairly in their bid to win. A senior Telekom executive was recently said to have been ‘entertained’ in Singapore, in their bid to win highly lucrative contracts. What baffles many is that these firms are known to defy these ‘dirty tactics’ in the past to win. Now, as they say, “Desperate times, people do desperate measures”.
Our contention is that, should we allow this ‘sacrifice’ of Malaysia’s own in favour of the Americans, who change goal posts at their convenience? Does firm like Kelly Services, Manpower, Select and Adecco have a ‘Malaysian agenda’ or better still, a ‘Malay agenda’?
Despite being the laissez faire economy of the world, Americans and Europeans have been very protective with their markets. The non price competition is really mind boggling and more often than not, it has been used strategically as an unended ‘bully tactics’. Malaysians have a moral obligation to look out for our own, especially in these trying times. The Malays have a saying, “Kera di hutan disusukan, anak di riba mati kehausan“. Khazanah and GLCs should favour Malaysian indigenous firms. After all, “Charity begins at home”.