Conversations on Competitiveness

Let us read this discourse in mysinchemw.com yesterday. It gives us an idea what competitiveness is, how to be so and what is a competitiveness ranking actually would mean to a nation and its people.

MAY 24 —  Dear Tay, 
 
It is said that Malaysia has been ranked 10th place in a world’s competitiveness report.
I would like to ask how many countries have been included in the list. Are there more than 10 countries? 

Perhaps, it is a conspiracy of foreigners to make us feel “Malaysia Boleh”? 

And what is actually the so-called competitiveness?
Regards, 

Reader Ah Bang

Dear Ah Bang,

First of all, I think you are spoiling the joy!

Malaysia has not been receiving good news for long. Even the 2010 Thomas Cup cheered us for only one day.

But now, we have been ranked among the top 10 most competitive countries in the world. Oh, this is not a corruption, largest rice dumpling or longest sarong ranking. Instead, it is a competitiveness ranking!

And certainly, more than 10 countries have been assessed. In fact, I have checked the data and found a total of 58 countries and regions have been assessed. The ranking is limited to “top students” only!

Malaysia can actually be ranked among the top 10 countries, including Singapore, Hong Kong, the United States, Australia, Switzerland, Canada and Taiwan. Even though we are ranked the bottom in the top 10 list, we are still in the “gifted class”! Have you been in a gifted class before?

Moreover, the ranking was conducted by the International Institute for Management Development (IMD), an internationally-renowned management institution.

I do not think it is a conspiracy either as IMD does not receive money.

Okay, I do agree that I am not sure why Malaysia is competitive and how it can be ranked among the top 10 competitive countries.

However, I have read a book, a very thick book, written by Harvard Business School Professor Michael Porter. He pointed out a few concepts in the book.

1. Do what you know how to do and what you can do well. That is what we called competitive advantage;
2. Open up, so that talents, capital and information will come to you;
3. Innovate, keep reforming and developing to stay ahead;
4. The government, as well as the people must be efficient.

Porter’s competitiveness theory used to be popular in the world. Many countries invited him to be their honoured national advisor by offering him a minimum pay of millions of dollars.

However, he stopped making new arguments later. His market and status dropped and recently, he was paid US$250,000 (RM800,000) to give a talk in Taiwan. It was only an ordinary talk on the co-operation between China and Taiwan.

He himself has actually portrayed the competitiveness concept, namely one will fall behind if he does not move forward. Malaysia is ranked among the top 10 today but how about next year and the year after next?

The initial purpose of the IMD World Competitiveness Yearbook is to help us understand how a country could enhance its social progress by using its overall resources and competitive conditions.
The question is, what kind of progress do we need?

Some countries need to get rid of poverty while some countries that have already gotten rid of poverty are facing the pain of growing gap between rich and poor, as well as unfairness and injustice in the society.
To be honest, I am really happy to see Malaysia being ranked among the top 10.

It shows that we have our merits. However, we must be careful as we may fall from the gifted class to the low-grade class if we excessively indulge in the competitiveness ranking while ignoring and not improving problems that we have been facing for long.

So, are we more enlightened now?

Humanity and the Law

I think we must practice humanity in whatever we do. As such laws, particularly statutory law should reflect such values as it shows truly a society that is civilized, matured and developed.

The Bar Council' request for  witnesses  to be accorded the same rights as the accused is worthy of mention and the MACC's directive that investigations be carried only during office hours is i nth right direction.

Let us read the following news item.

"The Bar Council has called on the Government to give witnesses the same rights as accused persons.
Its chairman Ragunath Kesavan said witnesses who help enforcement agencies in investigations should be given the same protection and rights as the accused.

“Those accused have the right to be allowed adequate rest which is guaranteed by Rule 20 of the Lockup Rules 1953,” he said in a statement yesterday.

Ragunath was commenting on the recent Federal Court decision in the Tan Boon Wah case where it was held that the Malaysian Anti-Corruption Commission (MACC) could continue to interrogate witnesses beyond office hours.

Ragunath said the decision bore testament that the courts had failed in playing their role as the arbiter of disputes between individuals and the state while serving as a checks-and-balance mechanism.

He added that the decision permitted the MACC to compel witnesses to be questioned, including for long periods of time, with no option for them to decline.

He urged the Government to take immediate steps to protect the rights of witnesses and promote transparent and accountable investigations.

Meanwhile, he welcomed MACC chief commissioner Datuk Seri Abu Kassim Mohamed’s statement that MACC officers had been directed to conduct their investigations during office hours."

A big salute to the Bar Council and MACC.

It was also stated that the officers would have to provide justification for “taking evidence after office hours”.

Spain Goes under IMF's Scrutiny

Well it looks like the focus is on Spain next.

According to the IMF,Spain must make far-reaching, comprehensive reforms, including labour market reforms, and its economic recovery remains fragile.

“The challenges are severe: a dysfunctional labor market, the deflating property bubble, a large fiscal deficit, heavy private sector and external indebtedness, anemic productivity growth, weak competitiveness, and a banking sector with pockets of weakness,” the IMF said in a report following a regular review of Spain’s economy.

“This needs to be complemented with growth-enhancing structural reforms, building on the progress made on product markets and the housing sector, especially overhauling the labour market,” it said.

After a weak and fragile recovery the economy would grow by 1.5-2.0 per cent in the medium term, it said.
“Our central scenario is one of continued adjustment of the various imbalances with growth rising gradually to 1.5-2 per cent in the medium term,” the report said.

The report was released as Spain struggles to cut a large budget deficit and convince investors it will face no Greek-style debt crisis.

The IMF said in April it sees Spain’s economy contracting 0.4 per cent in 2010 from a year earlier and growing 0.9 per cent in 2011, more pessimistic than the government’s own forecasts of a 0.3 per cent contraction in 2010 and 1.8 per cent growth in 2011.

Stronger export growth would help offset a slow recovery in domestic demand. It said private demand was weighed down by uncertainty and the need to reduce indebtedness, the IMF said.

Other factors weighing on potential growth and underlining the importance of growth-enhancing structural reforms included slowing population growth, high unemployment and weak investment.

KrissAssets: On a Mall Acquisition Trail

KrissAssets Holdings Bhd, operator of The MidValley Megamall, will set aside up to RM2 billion to acquire foreign retail malls in the UK and the US.

Its group managing director, Robert Tan Chung Meng, said this was necessary as the mall has reached its maximum capacity and the contracts of some anchor tenants would be ending within two years.

"Even though the mall is doing positively year by year, we need to improve our revenue. We cannot increase the size of the mall as it will affect other tenants, that's why we have to resort to acquisitions," he told a media briefing after the company's annual group meeting here today.

Tan said the main attractions would be in New York, Chicago, California or even Florida," he said.
Its pre-tax for financial year ending Dec 31, 2009 rose 56.5 per cent to RM180.5 million from RM115.3 million in the same period last year.

Revenue rose to RM227.9 million from RM216.6 million previously.

Things are definitely looking good for KrissAssets as it goes global.

Subsidising Malaysians

The Government is going back to the people on its plan to cut subsidies, which ballooned to a staggering RM74bil last year.

Malaysians will have a chance to have their say in an open day organised by the Government this Thursday to gather feedback on the inevitable reduction in subsidies on items including sugar and petrol.

The open day on subsidy rationalisation will be held at Hall 4 and 5 of the Kuala Lumpur Convention Centre from 9am to 2pm.

Subsidies - the total of which averages RM12,900 per household every year - will have to be gradually cut beginning this year, which is then expected to affect the prices of petrol, natural gas, food, medication, toll and healthcare.

The huge sum in subsidies has resulted in Malaysia having cheaper cooking oil, flour and sugar than Singa-pore, Indonesia and Thailand.

The open day is similar to the ones held last year for the Government Transformation Plan.

“Cutting subsidies is a foregone conclusion. The question is not about the amount of reduction, but the technique of reducing,” said a high-ranking official.

Recommendations from the Perfor-mance Management and Delivery Unit (Pemandu) subsidy rationalisation lab will be publicly displayed during the open day.

The lab will then re-examine the findings based on the feedback before making a final recommendation to the Prime Minister.

An analysis from the lab, made available to The Star, stated that it was important to act immediately if the country were to reduce the subsidies gradually.

Otherwise, it said, the Government might end up having to remove subsidies in bigger increments as Treasury reserves ran lower. It also argued that the current mechanism of subsidising was no longer sustainable as government debt was at RM362bil last year or 54% of the GDP.

That is much higher than Indonesia's 28%, and is approaching The Philippines' at 62%.

“In five years, we may reach 100% if no changes are implemented,” said a source familiar with the issue.
There is no need to panic, however, as the Government will continue to provide assistance in critical fields such as education, agriculture and fisheries, healthcare and welfare.

The main aim is to reduce wastage or abuse, mainly due to the subsidies being passed on to the wrong beneficiaries or over-consumption.

“Why should the people in Sabah and Sarawak subsidise for toll that is mainly used by people in the Klang Valley? Also, foreigners are enjoying the RM1 consultation fee at government clinics. That has to be addressed,” said the same source.

It is understood that one of the lab's proposals is to raise medical consultation from RM1 to RM3, thus keeping the fee affordable to all.

YTL Power operations in Singapore to Expand

 Singapore's second largest utility firm PowerSeraya Ltd, together with Malaysian parent YTL Power, is seeking to expand its operations, which could include selling utilities, fuel trading, and oil storage, in the region.
”We're looking for expansion opportunities in the utility arena, which could include power, electricity, water, tank management, fuel trading,” chief executive officer John Ng told the Reuters Energy Summit.

”If there are opportunities, we will certainly work together with our parent, YTL Power, within this region, and even outside this region,” he said, adding there were no immediate plans or targets on the company's horizon at this time.

Malaysia's construction to power conglomerate YTL Corp, bought PowerSeraya from Singapore state investor Temasek Holdings in December 2008 for S$3.8bil.

YTL Power International Bhd's businesses include power generation in Malaysia and Indonesia, power transmission in Australia and provision of water and sewage services in the UK.

PowerSeraya, which owns a 10,000 cubicmetre Seawater Reverse Osmosis Desalination Plant and a 3,100megawatt power plant, is in the last stages of commissioning a new S$800mil 800 MW CoGeneration Combined Cycle Plant. The unit, which will come on line by end June, will generate both electricity and steam.

It also operates a 20 tank oil storage farm with a total capacity of about 1 million tonnes, including two new blending tanks that were completed at the end of 2009 for S$20mil.

”The new tanks complement our fuel oil supply and trading business,” Ng said.

PetroSeraya, the company's physical trading arm, employs a handful of fuel oil traders. It more than doubled its net profit to S$12.2mil for the year ended March 31, 2009, despite volatile oil prices. Total traded volumes were 900,000 tonnes, with sales of S$673.6mil.

When asked if the company planned to build more tanks, Ng said: “What we have right now is sufficient for our needs for the next couple of years. We're constantly looking at markets around Singapore, to see whether there's a need for us to invest further.”

PowerSeraya, a market leader in the Singapore electricity generation market with a 28% share, uses piped natural gas to generate power, besides fuel oil and diesel.

It has committed to buy liquefied natural gas (LNG) from BG Group once the S$1.5bil Singapore LNG Terminal is completed in 2013.

”From two feedstock options, we're moving into three,” Ng said.

Asked if PowerSeraya would venture into gas trading, Ng said it was too premature to draw conclusions.
”Asia has no gas trading hub. Will Singapore develop into a gas trading hub? It's early days yet. If there is a market for gas trading, we will not rule out exploring this opportunity,” he added.

”We are constantly exploring what we can do with the underlying commodity that we use.”

For the financial year ended March 31, 2009, PowerSeraya reported a net profit of S$171.9mil, on revenues of S$3.58bil. It had cash and cash equivalents of S$248.4mil at the end of the period. The company is moving to a new financial year that ends on June 30, 2010. - Reuters

So YTL looks like it is doing fine in Singapore.