GLOBALISATION: CHALLENGES AND IMPACT ON ASIA AND MALAYSIA

Globalisation is a word which seems to describe the coming together of all the countries of the globe into one entity. It is coined by rich countries apparently in response to technological advances and the speed and ease of travel. But the emphasis is on free flows of capital and trade in goods and services. People and other things may not flow so freely.Free means free of Governmental regulations, laws and policies. International institutions would take over, enact rules and enforce them. Looked at from the point of view of weak countries, rules, laws and policies still exist but they would have no say in the determination or enforcement. For most of them globalisation means not more freedom but less freedom from rules, regulations laws and policies. Worse still, these uniform rules etc, disregard their particular weaknesses and problems.

But they are being told that being poor they will benefit from capital flowing into their countries. In fact for many of the East Asian countries capital inflows have brought about unprecedented economic growth. Even their stock markets have benefited from foreign investments. But what they are not told is that the same capital can flow out and when it does their countries can be bankrupted. It is unfortunate that they learnt about this through experience and they now know how terrible the damage is and how difficult it is to recover. The East Asian financial crisis was precipitated by the free exit of capital. It started of course by the manipulative devaluation of the currencies of East Asian countries. Devaluation caused foreign investment to lose value. To avoid losses from further devaluation foreign capital was pulled out. The market collapsed resulting in rapid increase of non-performing loans, deprivation from bank funding of business operations, numerous bankruptcies and failure of the banking system in the end.

With the economy in tatters the Government had to borrow from the IMF. Loans would only be given if the Government surrenders economic management to the IMF and allow foreign white knights to pick up the devalued local banks and businesses. We are seeing many countries floundering about because the money they borrowed from the IMF had to be used to pay off foreign creditors. Nothing is left for the locals. Of course they still have to pay the IMF money they had borrowed. East Asian countries are actually luckier for some have made a fair degree of recovery. But Argentina is not so lucky. Sovereign loans are not so safe after all as countries can go bankrupt when IMF imposes its policies. Is what happened to the East Asian countries a manifestation of Globalisation or not? Clearly it is. Trading in currencies is only possible if Government abdicates as the authority to determine the value of currency and leaves it to so-called international market forces.

The market is interested only in making profits and cares nothing for the well-being of society. The challenge for Asia is not how to manage the present concept of globalisation, to make it work, to benefit from it. The challenge for Asia is to influence the thinking on globalisation, to reshape it, to reduce the chances of it going awry and destroying economies and countries. There is nothing sacred about the present concept of globalisation that it cannot be changed, radically if necessary, so that it will pose less danger to those accepting and practising it. Free trade is not synonymous with globalisation. If we have to regulate trade in order to benefit from globalisation, why not? People who play golf know that there will never come a time when handicaps will be abolished. In business too, fair competition can only be between entities of fairly equal strength. Level playing fields are not enough. The contestants must be evenly matched. If we cannot match them then give them handicaps.

Prior to 1997 the Asian countries were growing miraculously. Malaysia grew at 8% plus per annum for ten consecutive years. Today everyone of the miracle economies are but shadows of their former selves. The impact of globalisation involving the free flow of capital and the straightjacketing of business has been disastrous. For years now the attempts to resuscitate the economies have not been very successful. There will be permanent scars. And the impact will not be any better, for as long as the present interpretation of globalisation is forced upon Asia. In fact the world is likely to fail to recover if, instead of focusing on resuscitating the economy following Sept 11, we continue to force the globalisation of capital flows on the world.

GOVERNANCE FOR A NEW ERA

In the world today there is no trust or little trust and governance, world governance that is, is not good. We have in fact made a mess of the world. Two millennium of experience and mountains of knowledge have not made us much more capable at managing our affairs than stone age people.We now live in fear, every one of us. We fear the terrorists and the terrorists, their supporters or alledged supporters fear us. We fear flying, we fear travelling to certain countries, we fear night-clubs, we fear letters, parcels and cargo containers, we fear white powder, shoes, Muslims, pen knives, metal cutlery, etc etc. They, the other side, fear sanctions, starvation, shortage of medicine. They fear military invasion, being bombed and rocketed, being captured and detained. People who are neutral, not involved, innocent - they too live in fear. They are the collaterals. Just as the Afghans and the Iraqi civilians are collaterals the passengers on the hijacked planes and those people working in the World Trade Towers are also collaterals.

Actually we are in the midst of the Third World War, not the war against terrorists but the war between terrorists and the peace loving anti-terrorists alliance, the war between the Axis of Evil and Satan. Both sides are convinced that they are right, that theirs is the fight against evil. Evil and Satan must be destroyed. Frightened, the world is taking measures to secure and defend at tremendous cost. But the main result is not security or freedom from terror attacks. The main result is to disrupt life, undermine investments and business, and generally to adversely affect economic growth world wide. It is going to be a long war because hatred, anger, bitterness rules our hearts. We both want revenge. We both will retaliate. You kill our people, we will kill your people. And so it will go on and on. Sanity has deserted both sides. The world has become small. It is said to be a village.

But we have not made much progress in the management of our world despite its diminished size. Just as in the stone age the man with the biggest club rules, in our modern and sophisticated global village the country with the biggest killing power rules. When the Cold War ended we thought that the world would see peace and prosperity. After all the people who believe in peace and universal justice won. The evil Empire has been overthrown. But the loss of a counter balance has resulted in the great exponent of justice and fair play to become unbalanced. While the Communists were there the Capitalists curbed their greed and avarice. They showed a friendly face. The exploitation of the world by the greedy, the double standards and the hypocrisy about human rights and respect for human lives, the oppressions of the weak by the strong, the disregard for human sufferings; the expropriation of other peoples' land and the expulsion of the people, all these have been aggravated by the ending of the Cold War and the victory of the righteous over the evil.

The worm finally turned. The weak have now hit back in the only way they can. Groping for the enemy, the strong hits out blindly in every direction, in every part of the world. No one is free. Fear rules the world. With the onset of this third World War, the world is in a state of turmoil. We now live in fear, even the rich are not as prosperous any more, while the poor are actually poorer. We have not made such a good job managing this Global Village of ours. There is no trust and no good governance. So how do we create trust and good governance in the new era? I don't think it can be done by seeking for a military defeat of the enemy and forcing them to submit. The forces against the Axis of Evil are not going to win because the target is wrong. All that can happen if they are defeated is to create more anger and a call for more revenge and retaliation by the people who are incensed by the injustice they believe they are experiencing.

On the other hand the other side are not going to win either. The enemy is just too big and too powerful. The only solution is through compromise. Trust must be built. The initiation must come from the good people. They must recognise that people do not tie bombs to their bodies or crash their planes for the fun of it. They must have a reason for it. We have to remove the reasons. Out terrorising the terrorists will not work. But removing the causes for terrorism will. Good governance is simple if we curb the greedy and forget about self-regulating markets. Governments are not yet anachronistic. They have a role to play. We need a paradigm shift, we need a new mind-set if we are going to put an end to this Third World War. We need victory for both, a victory where both sides will benefit. The world is big enough and rich enough for everyone. There is no need to take everything for ourselves. A win-win solution is possible. If we can overcome our anger and hatred, our craving for revenge, our unlimited greed, we can manage the world and achieve trust and eventually good governance.

MALAYSIA COMPETING IN THE GLOBALISED WORLD:BECOMING A WORLD - CLASS PLAYER

Competition is endemic in human society throughout history. There is the competition between individuals, between societies, between cities and states, between nations and races. The original Olympic Games personifies this competition. It was between the Greek cities as represented by their athletes. But the essence of competition is that the competitors possess certain qualifying qualities. Cities do not compete with villages, nor adult athletes with children. To compete fairly the competitors must belong to distinct categories. In a globalised world we have to compete in order to succeed. But according to present rules of competing, there are no distinct categories. The smallest and poorest nations must compete with the biggest and the richest nations. The smallest local businesses must compete with the multi-national giants. The technologically backward must compete with the technologically advanced.

In the competition, rules and regulations are practically disallowed. The only rule is that there should be no rules, no rules about qualifying categories, no rules about the methods used by the competitors. But this is not completely true. While Governments may not restrict and protect, Governments must uphold the rights of the rich and the powerful to literally strangle the poor and the weak. It does not take a genius to see that the dice is loaded against the weak and the poor. They must rely on whatever little competitive advantage that they may have just to survive. But mostly they would lose the competition and they would go under. In Malaysia unions and workers understand that high pay is meaningless if the cost of living rises with the pay increase. In some developing countries all workers are millionaires but the money they earn cannot give them a decent living because all goods are priced in tens or hundreds of thousand of the currency unit. Higher wages are only worthwhile if there is no resulting inflation.

This can happen when productivity rises higher than wage increases. Besides we are competing against low wage countries with good productivity levels. Any increase in wages without productivity increase will reduce investments, not only by foreign investors but also local investors. With no new jobs being created there will be more unemployment. And a large unemployed population will force wages down. So we must always ensure that wage rises will not make us uncompetitive, raise the cost of living and drive away job-creating investments. Businesses should endeavour to bring down costs. If they examine carefully their cost of production or service they are bound to find cost items which can be reduced. Targeting a definite percentage for reduction of costs is very effective. Technology is a problem. The rich with their greater expenditure on research and development are bound to be ahead.

Buying technology from them would increase costs. But much of the technology is probably non-essential. Motor vehicles of today are over- engineered. We have to find a niche where basic needs are met by our products. In some cases the value can be enhanced without too much increase in costs. This high quality products will fetch prices higher than the cost involved in upgrading quality. The old Asian belief in cheap poor quality products as a way to penetrate markets should be forgotten. Good durable products are more likely to establish a permanent market. World class does not mean top class all the time. There are products which will be so high in quality that they will establish a class by themselves. But they are not for the main market, the big number of average consumers. For the biggest main consumer market competitive pricing for reasonable world class quality would be sufficient. While we try to compete in this unfair trading environment, we must continue to fight for a fairer global trade. It is going to be difficult but that is how life is. We have to resign ourselves to this, work hard and make use of whatever competitive advantage that we may have.

POSITIONING THE CITY OF KUALA LUMPUR IN THE GLOBAL CITY SYSTEM

In the age of globalization, it was argued that major cities in the region should be positioned in the global city system, in order for these cities and their immediate regions are effectively developed. As the urban and regional economic prospects increase reliance on the participation in the fast moving international and global economy, cities that are unable to adapt to these globalchanges and requirements would be marginalized. The marginalisation of major cities from the mainstream of global development will affect their progress and in most cases be determined by exogenous forces. At the same time, the emergence of new global economic and informational societies has created a new form of spatial development, the global cities. Such status was achieved only when a city and its region becomes a major center of international finance, transnational corporate headquarters, related high-level and specialized services, information processing and advanced telecommunications, a city with an international command and control functions (Sassen, 1991). To what extend the above criteria and indicators really described the position of cities in underdeveloped and developing economies? It is the intention of the paper to deal with such a question, with particular reference to the city of Kuala Lumpur. Although Kuala Lumpur has substantially part of the international economy for the past three decades, it was argued that the city exercises little of the global or even regional control functions that world cities proposes. For this reason, the authors argued that Kuala Lumpur and possibly other cities in the rapidly developing economies be positioned in a different setting, and with different criteria and indicators, as compared to the existing global cities.

KUALA LUMPUR TOWARD A COMPETITIVE GLOBALIZING CITY-REGION

Kuala Lumpur is one of the globalizing cities in Asia Pacific region. Competing with Singapore, Seoul, Hong Kong, Sydney, Jakarta and Bangkok, Kuala Lumpur has sought to reposition herself as a potential centre for global capital by implementing various strategies and developments. The repositioning of Kuala Lumpur in this global system of cities has brought about changes and adjustments of her city-region. Prior to the era of globalisation, the Klang Valley as a city region of Kuala Lumpur, has been recognized as a coherent urban planning region, covering four districts of Selangor state; Gombak, Klang, Petaling and Hulu Langat as well as the Federal Territory of Kuala Lumpur. However, from the late 1980s, Kuala Lumpur has strategisted policies what might be understood as a “global shift of development”. Through the development of mega projects, i.e., Kuala Lumpur City Centre (KLCC), Kuala Lumpur International Airport (KLIA) and Multimedia Super Corridor (MSC), the city-region of Kuala Lumpur had been transformed, restructured and now become a high-tech city-region, known as Kuala Lumpur Metropolitan Area (KLMA), incorporating the districts of Sepang and Kuala Langat in addition to the existing Klang Valley region. In this context, the city-region of Kuala Lumpur played a key role to the future economic success of Malaysia within the context of the highly globalized economy, providing Kuala Lumpur a new dynamic and driving force of competitiveness toward achieving a status of global city. However, this has rise a question of, to what extent these forces have been transforming Kuala Lumpur particularly in the process of restructuring the functional landscapes of the city-region, in order to be more competitive and sustainable in the near future.

TRENDS IN LOCAL GOVERNMENT IN MALAYSIA

Local government in Malaysia occupies the third and lowest level after federal and state governments. Under the Malaysian federal constitution (paragraphs 4 and 5 of the Ninth Schedule), local government is the responsibility of the states, but the federal government also exercises considerable power and influence over local government, especially in peninsular Malaysia.1 The dynamic of the Malaysian federal system is such that it has shifted the balance of power to the centre. Local government accounts for only 1% of GDP. There are 144 local authorities divided into cities (major administrative and commercial centres), municipalities (other urban areas), and districts (chiefly rural areas). Executive powers rest with the Mayor (cities) or President, supported and/or overseen by a system of committees. Currently, local councils in Malaysia are not elected: councillors are appointed by the state government for 3-year terms (with the option of re-appointment) and in most cases come from the ruling coalition.

The current situation in Malaysia highlights the traditional top-down approach to local administration (Phang and Ahmad, 2001). However, global influences and growing community awareness are now challenging the practice of centralized administration, and local government leadership is being forced to reappraise its role and contribution in local affairs. The community seeks empowerment and to reinforce its right to be consulted inthe decision making process of its local council. Nonetheless, it seems unlikely that federal and state governments will accede to calls for greater devolution of powers, or to change the current system of appointment of councillors. This lack of political decentralization strains the relationship between citizens and their local councils: implementing administrative decentralization without adequate political reforms will result in formal harmony but informal discord. In the absence of a legitimate transfer of powers and increased accountability to the community, the local leadership may instead become primarily accountable to itself and to local elites (Phang, 2006). The system lacks the necessary link between decentralization and participation through democratic representation (Gaventa, 2004). Under such circumstances, questions arise as to the viability of local government within the federal system and its capacity to sustain challenges from an increasingly aware community. Its weakness in sources of finance, service delivery and community participation have given local government a negative reputation. Without elected councillors, further attempts at local government restructuring to make local government more transparent, accountable and efficient may well fail. It seems likely that decentralization will remain elusive with powers remaining consolidated at the centre.

WILL MALAYSIAN NEW DEVELOPMENT STRATEGIES CAN POSITIONING KUALA LUMPUR IN THE GLOBAL CITIES?

Affirmative action as a policy response to ethnic riots is a fairly unusual, indeed unfashionable, policy response, partly because inequality and conflict have a complex and much debated relationship. General vertical income inequality, measured as the gap between poor and rich, has not been found to have a statistically significant relationship with the onset of civil unrest or conflict (Collier & Hoeffler, 2000; Fearon & Laitin, 2003). And yet, an accumulating body of evidence suggests that horizontal inequality, inequalities between identity or ascriptive groups on the multiple and inter-related planes of the political, the socio-economic, and the cultural, may be politically explosive (Stewart, 2001). The research examines these links between ethnicity, inequality and conflict among ethnic groups using a multidimensional approach, with a view to identifying those policies which might work in other situations of ethnic conflict.

Taking Malaysia as the model it is investigate and measure to what extent inequalities between ascriptive groups have fallen in that country between 1970 and 2000, a period during which various affirmative action policies were applied in fields ranging from education and government employment to business. Horizontal inequality in the key indicator of income is re-assessed, using an innovative group Gini decomposition method that can be applied in a relatively data scarce environment, which allows for the consideration of changes over time in the variance of the income distribution as well as changes in the means - which only provide a partial view of income inequality. In addition, changes in access by ethnic group to educational opportunities; the distribution of employment by sector and by occupation; urbanisation and housing distribuition; ownership of household assets such as houses and cars; and infant, toddler and maternal mortality rates are all considered individually, while a multi-dimensional index of socio-economic inequality is subsequently constructed for comparison purposes.

Regional disparity has long been recognized in Malaysian development scenario, particularly between the more-developed western region and the less-developed eastern and northern regions in Peninsular Malaysia. All the Five Year Malaysia Plans, starting from the Third Malaysia Plan (1976-1980) have placed special emphasis on the objectives and strategies of regional development. However in the decade of nineties, in conjunction with globalisation era, the direction of Malaysian development plans have been changed, towards becoming more competitive in the global economy. To some extend after 30 years, the issue of regional disparity is remains unsolved, and yet new emphasis on global competition has been dominated in development strategies and plans. However, analysing from the current achievement of national development, the position of Kuala Lumpur in the global cities network still unsignificant, reflecting the uneffectiveness of the strategies toward strengthening Malaysian competitivenes in global era.

URBAN MANAGEMENT VS URBAN GOVERNANCE IN GLOBALISATION ERA

We are living in a rapidly urbanizing world. Today half of the world population lives in urban area, yet as recently as 1975 the urban share was just over one third. Within these global averages, however, there are major differences. The urban share of the population in year 2000 in the developing countries for example was 76%, as compared to 40% in the less developed countries. In Africa and Asia the shares were 38% and 37%, whereas in Latin America, Northern America, Europe and Oceania the proportions were between 70%-77%. For the world as a whole, the urban share is expected to rise to 60% by the year 2030 at which time the shares for Africa and Asia are projected to reach 55% and 53% respectively.

Of the additional world population expected between 2000 and 2015, nearly one billion will be added in urban areas compared to only about 125 million in the rural areas. Virtually all of this growth will take place in developing countries. Urbanisation if well managed, is associated with economic growth and development, providing vital opportunities for economic and social advancement; whereas if not managed properly, may result in social disintegration, more poverty among some sectors and environmental degradation.

In the context of Peninsular Malaysia, according to the National Physical Plan, the level of urbanisation has increased from 54.3% to 65A% in the inter-censual period of 1991-2000, and it is expected to increase to 75% by the year 2020. Urbanisation in Peninsular Malaysia is also marked by the increasing primacy of the three main city regions of Kuala Lumpur, George Town, and Johor Bahru. Urbanlsation can be viewed as a positive or a negative force. The difference lies in whether the urbanisation process is planned, controlled and managed in a proper manner, or otherwise.

One of the main challenges of urbanization is to make sure that our urban area is competitive enough in achieving sustainable urban development. The potential between economic growth and environmental sustainability must be realised to its fullest. Ways must be developed to achieve pro-poor economic development and also to reduce the environmental impact of economic growth and urban production, both on the towns and cities themselves, and on the global environment - as urban economic development is often influenced by changes in national and global economic- Even when economic growth occurs, it does not necessarily benefit the poor. Therefore ways must be found to develop urban economic that are diverse, resilient and also provide job opportunities that are accessible to the poor and the disadvantaged.

The urban economy is of supreme importance to the economic development of developing countries in particular. We need to encourage the town and cities to be competitive to attract investors to invest in our urban area. While at the same time, protect the very resources including the environment, that is crucial in developing the urban economy and attracting the investors in the first place. Besides that, urbanisation is also associated with social and political changes, which can undermine traditional social network and result in increased inequity and exclusion. Therefore, ways must also be found to increase equity and ensuring political and social inclusion. Often this means that ways must be found to extend infrastructure provision to keep pace with urban growth, in a way that is financially and environmentally sustainable, while ensuring access of an adequate level of services to the poor and the disadvantaged.

Currently, the capability of governance of the agencies responsible is recognised as being very crucial in achieving sustainable urbanization. Therefore ways must be found to enhance urban governance to deal with the challenges of managing the growing towns and cities. At the same time, economic, environmental and governance tensions make it difficult to realise the benefits of interdependence between rural and urban areas. In this context, ways must be found to develop and implement economic policies, resource allocation, environmental management strategies, and governance arrangements that recognise and enhance the complementary rates of urban and rural areas in sustainable development. Indeed both urban and rural areas are interdependent. Sustainable land resource planning and management is the core of physical environmental management and biodiversity conservation. Concepts of sustainable development that integrate development and natural resource management objectives should be an integral part of a country's planning process and this should be reflected in all land use policies and plans. Such a spatial planning document for Peninsular Malaysia was launched recently.

The National Physical Plan (NPP) contains 36 policies related to land use and development. The successful implementation of the NPP depends on the collaborative efforts among all relevant stakeholders including private, Government agencies, NGO and communities. This Dialogue aims at imparting a better understanding of the policy's objectives and purpose and will among others, address issues related to urbanization. It also hopes to create further awareness and opportunity for participation from civil society in its implementation. This engagement will undoubtedly contribute to better environmental cooperation and collaboration among the NGOs and Government.

The responsibility to ensure a .sustainable development does not fall on the Government entirely. It is important that we all work together, making use of opportunities provided for public participation in the process. We need the involvement of all, in particular the NGOs. The Ministry would like to view MENGO as a partner in managing our environment. We regard NGOs to be a valuable asset since they have the advantage to be in -the midst of things and the ability to be close to the people. Therefore, they have better opportunity to disseminate information and instill the feeling of responsibility to the masses. At the same time the Government would like the NGOs to be our eyes and ears so that we are informed of what is happening on the ground.

In this regards, the Government welcomes positive and constructive criticism so that we can continuously improve our programme and activities in enhancing the quality of the environment. It is therefore fitting that this Dialogue should focus an getting to know the problems or challenges faced by the relevant Government agencies, in developing urban areas and the proposed plans and programme to overcome them. So that together, the Government and the NGOs can collaborate in addressing the gaps.