M’sia needs to work harder and faster if it does not want to be left
behind: Analyst

William Pesek

Those wondering where Malaysia is headed should keep an eye on Mr Tony
Fernandes.

Perhaps no one personifies the promise of Asia’s 10th-biggest economy
better than the 43-year-old entrepreneur. In 2001, he created a budget
airline, beating the odds in an industry dominated by government-linked
companies. AirAsia has been turning heads ever since.

Airline magnate Aristotle Onassis once said the key to succeeding in
business is knowing something others don’t. Mr Fernandes knew that not
only were Asians ready for no-frills carriers, but so were investors.

Mr Fernandes is often called South-east Asia’s answer to Mr Richard
Branson. It seems highly appropriate, then, that the two men teamed to
launch AirAsia X, a long-haul budget carrier that made its maiden flight
this month. Mr Branson’s Virgin Group is among its key backers.

For all his success, Mr Fernandes is a microcosm of why Malaysia’s economy
isn’t on the upward trajectory it could be.

Politicians’ efforts over the years to protect the turf of Malaysia
Airlines (MAS) backfired, leaving Kuala Lumpur lagging behind in the race
for Asia’s travel hub. Malaysia has tied one hand behind its back to help
national champions at the expense of the bigger picture.

“I’m asking this for national interest, not MAS’ interest or that of
anything else,” said Mr Fernandes of his battle to fly from Kuala Lumpur
to Singapore. “The consumers have suffered enough.”

Politicians continue to dither over another national champion:
State-controlled carmaker Proton Holdings. While talks on an alliance with
Volkswagen AG are progressing, the saga is a reminder that Malaysia’s
leaders are wasting time the nation doesn’t have.

In Proton’s case, the exercise is about finding a partner to help revive
sales and return the 24-year-old company to profit. Yet this, like Mr
Fernandes’ fight to expand his innovative airline, is emblematic of how
politicians often don’t grasp that Malaysia’s place in Asia is rather
tenuous.

Malaysia is a remarkable place with incredible potential. Its economy has
achieved great things in the 50 years since independence from Britain.
Once a tropical backwater, Kuala Lumpur is now a modern, skyscraper-filled
city home to the world’s second-tallest buildings, the twin Petronas
Towers.

Yet, the next 50 years will arguably be harder than the last. It wasn’t
one of the original Asian tigers, but Malaysia became one over the years.

However, “the world is moving ahead at a rapid pace and it won’t wait for
Malaysia”, said Mr Razlan Mohamed, chief executive of Malaysian Rating
Corp. The nation “needs to work harder and work faster”.

Ms Chrisanne Chin from MIMS Business School, Malaysian Institute of
Management and INTI University College, puts it this way: “It’s not so
much what Malaysia is lacking, but that China, India, Vietnam and even
Thailand and Indonesia have improved so much they are capable of
leapfrogging Malaysia in another five years because of specific
comparative advantages, from low costs to human capital to technology.”

Human capital is a particular concern. The government needs to do more to
train the leaders of tomorrow and import the talent that companies need to
thrive. It also has to win more of the foreign direct investment flowing
elsewhere in Asia.

There is much backslapping about how the US$147-billion ($213-billion)
economy may expand 6 per cent this year and 6.5 per cent next year. The
real picture can be found in the World Economic Forum’s latest
competitiveness survey, in which Malaysia slipped two spots to 21st place.

A huge obstacle for Malaysia is something that can barely be discussed: A
37-year-old affirmative-action programme favouring the predominant Malay
community.

It alienates non-Malays, limits foreign investment, stifles competition
and keeps the economy from moving toward a meritocracy. Yet, it is a
third-rail issue. Most Malaysians won’t even discuss it without first
looking around to see who is listening.

A sense of political drift doesn’t help. Four years in office, Prime
Minister Abdullah Ahmad Badawi has spent more time trying to solidify the
influence of his political party – the United Malays National
Organisation – than bringing Malaysia’s economy to the next level.

For a glimpse of the future, one could do worse than ask Mr Ramon
Navaratnam, president of anti-corruption group Transparency International
Malaysia and author of the book, Where to, Malaysia?, who has this to say:
“The future is bright, but only if we are honest with ourselves that we
have a lot of difficult work to do … Otherwise, we will see the rest of
Asia pulling ahead and Malaysia walking in place.”

William Pesek is a Bloomberg News columnist. The opinions expressed are
his own.