Malay businessmen should look outward

With an emerging Asian middle class it makes sense to tap the higher economic growth rates in Indonesia, India and China

by KARIM RASLAN, The Star

MALAYSIA is facing many economic challenges. The solutions and policies of the past will not save us going forward. The global economy has changed.

Small countries, such as Malaysia with its limited natural resources, small markets and complicated political cultures (and regulations), are becoming less and less attractive to investors.

Nowadays investors are more focused on the BRIC countries – Brazil, Russia, India and China – and others like them. Indonesia is similar, with its big domestic market and abundant natural resources.

At the same time there is a growing sense of uncertainty among the Malaysian business community. This is why the New Economic Model that is being drafted by the Government is so important.

Many Malaysians in search of higher returns are investing abroad. However, for many small businessmen investing outside Malaysia, it is an impossible dream: the costs are just too high.

These are just some of the factors driving the support for the Malay nationalist NGO Perkasa. There is no doubt that many Malay businessmen feel worried about the future.

Too much open competition – especially with the non-Malays – is seen as a zero-sum game. Obviously businessmen and contractors who’ve depended on political connections feel even more worried. Where will our contracts come from in the future? Who will look after us?

However, I would argue that the gloom is overdone. The Malays are not in danger of being sidelined. We remain dominant politically and any economic solution must acknowledge the concerns of the majority.

However, global changes will have an impact on the community. We are too small and insignificant to resist. As Greece is to Europe, we are to Asia-Pacific.

While there are many Malay businessmen who function outside the political arena, it’s very important to free our commercial community from the world of government contracting. We cannot be entirely dependant on government contracts.

Businessmen should focus on upgrading their products and services as well as increasing their understanding of the market.

I disagree with Perkasa in most respects. However, there is one area in particular in which I think they can play an important role.

Let me explain. I would like to recommend to Perkasa that they think more about taking Malaysian and Malay businessmen abroad.

The Malay agenda can be preserved and indeed strengthened by internationalising the community. In the past, Malay traders roamed what is now Indonesia. We must return to a similar paradigm.

For a start, we need to tap the higher economic growth rates in Indonesia, India and China. In order to do so, our Malay businessmen must learn more about these markets and their underlying cultures. For a start, Indonesians aren’t just maids and labourers.

I believe that there are alternative markets beyond Malaysia – markets that Malay businessmen can hope to penetrate, and the International Trade and Industry Ministry can, and should, support such ventures.

Indonesia, for example, is not so much a country as a continent. Therefore our Malay businessmen should focus on the parts of the republic that are nearby.

In this respect, Sumatra is Indonesia’s third largest island with a total population of over 50 million – that is nearly twice Malaysia’s 27 million. Moreover, unlike Java, Malay Malaysians enjoy a very real and strong cultural connection with the island. The Province of Riau is very much tanah Melayu. In short the island of Sumatra is darah-daging kita.

Last week I was in Pekanbaru, the capital of the province of Riau (population 6.3 million) to meet friends. Pekanbaru itself has a population of over 770,000 and it’s a wealthy city by Indonesian standards.

The government buildings are large and well-maintained. The streets are clean and there are many shopping malls, like Plaza SKA and Mal Ciputra.

Riau is a very large province – over 94,000 sq km (the same as peninsular Malaysia without Pahang). It is also the republic’s largest centre of palm oil production with an estimated 2.1 million tonnes a year, approximately 30%-40% of Indonesia’s total.

Separately, Riau has been a long-standing oil production centre – especially near the coast in Dumai and the historic royal town Siak.

Riau’s economy is growing much faster (8.5%) than the rest of Indonesia and the province needs better roads and infrastructure.

Interestingly, Riau’s inhabitants are also big users of Malaysian hospitals, hotels and private schools – especially in Malacca. The ferries from Dumai to Malacca are very popular, as are flights across the straits.

We can benefit in two ways: firstly by investing directly in Riau, though Indonesia is a very difficult market to penetrate.

The second, and perhaps easier, way is to make Malaysia a more attractive place for middle class Indonesians to visit, stay and indeed educate their children.

We should remember that there are an estimated 25 million to 30 million middle class Indonesians. They can have an enormous positive impact on the Malaysian economy if they are encouraged to spend more time and money within our borders.

All of them want to have access to good doctors, private schools (that teach the English language) and banking – things we have in abundance.

We Malaysians are very good at building infrastructure and our multi-lingual workforce is a major asset. At the same time many Indonesians appreciate being able to converse in their own language.

In this way – by opening ourselves to service Indonesia’s growth – we will be able to benefit as well.

Perkasa must focus on how Malaysia and the Malay community can grow with the emerging South-east Asian middle class. We will need to equip and train our businessmen to service this dynamic market.

And, what we can do with Indonesia’s middle class can be repeated with the Vietnamese and Chinese in years to come.

Instead of focusing domestically (and fighting among ourselves), we need to turn our attentions to foreign markets. We can do it. We can compete.

Lobbying the Malaysian government for contracts will not make us rich for long. We need to be open to change. Perkasa needs to lead the Malay community into an international future.