STRATEGY FOR GROWTH: TOWARDS A MORE COMPETITIVE ECONOMY

Over the past year, many conferences, seminars, dialogues and panel discussions have been organised to extract ideas and views from across a wide cross-section of the population on what is needed to put the Malaysian economy back on track. In an increasingly unstable international trading environment, fresh ideas and new approaches have not been easy to come by. For a commodity- dependent country, like Malaysia, how should we respond when writers like Peter Drucker see no future for raw material producing countries because they have come "uncoupled" from the industrial economies? Likewise, since we are looking towards industrialisation to help solve our unemployment problem, the same message is repeated - namely, industrial production has also come "uncoupled" from employment, the argument being that the more competitive industries today are those that are technology and knowledge-driven, such as electronics, genetic engineering, pharmaceuticals and telecommunications.

And, of course, the impact of recent events in the world`s stock exchanges bear testimony to the sad observation that economic performance these days is becoming less dependent on underlying macro-economic fundamentals, and more on financial transactions based on rapid and massive capital movements, which are strongly linked to the vicissitudes of market sentiments. So far, the Government`s strategy for the private sector had been directed mainly at the provision of adequate incentives, including reducing the rates on corporate tax, electricity and communication charges, liberalising the guidelines governing equity participation in export-oriented industries, and deregulation to reduce cumbersome rules and procedures. If the economy is allowed simply to grow on its own momentum over the medium term, depending mainly on the fortunes of the international trading environment.

The present sitution calls for daring, innovative and imaginative entrepreneurs. The lessons of history tell us that the take-off to sustained growth in any society requires the existence, initiative and reasonable skill of some group which is prepared to take risks and venture into new enterprises. Indeed, the real remedies lie deep in human attitudes and behaviour. Granted, it cannot change overnight. But, as the current values and behaviour must have developed from a more primitive beginning, so can the process of value changes take of from the present ones. It remains for us to cultivate the right kind of changes. Our nation is blessed with abundant natural resources, which need either to be exploited raw or with varying degree of added value in order to yield handsome returns. Businessmen have been turning more and more to the financial markets with its promise of quick and substantial returns.

A financial market is only real and viable if it is backed by sound economic activity with growth of assets and dividends. Capital gains without real economic growth is like a growing skyscraper without foundation. Sooner or later it is going to crash down. As we are aware it has crashed on a worldwide unprecedented scale. Instead of waiting for the market to recover, businessmen should go back to doing business, to producing goods and services and marketing them at a profit. The stock market should be used to raise capital for these enterprises. If you must speculate, do so on a reasonable scale. There must be some relationship between prices and the performance of the enterprises. Computers should not totally displace humans in the buying and selling of shares. The old study and probe into the basic foundations of the companies must return as the basis for decisions to sell or buy. If there must be speculation, it should be sane and healthy.

Workers wages in this country are relatively higher than among our major competitors in the region. Since it is neither wise nor possible for wages to be reduced in order to bring down unit cost, the only thing that can be done is to increase productivity. While hard conscientious work by workers can definitely improve productivity, managers must also look into the system of working and the use of aids in order to improve productivity. Unnecessary and careless spending is another cause of high unit cost. In other words while workers play a role in determining the level of productivity, managers and other executives cannot be completely excused for poor productivity in any enterprise. It is imperative that Malaysian managers look critically at themselves as much as at their workers.