Malaysia in Globalization: What Market Reform?

It does not come as a surprise when the recently announced Malaysia’s economic stimulus plan is strewn with more nationalization and protectionism elements. In an expected manner, Wall Street Journal roundly criticized it and labeled the country as not being supportive of market reform. But which country is not doing whatever it takes to protect local economy at this moment? It is really a matter of threading carefully along protectionist measures without blocking global effort in recovery or violating free market practices that benefit all. Malaysian government, without a question, has introduced some controversial provisions that include raising tax on foreign labor recruitment and revoking working visas for Bangladeshi labor. ‘Locals come first’ mentality prevails under public pressure without any feasible study or tangible proof that jobs for foreigners can be efficiently filled up by the locals.

Looming economic slowdown can yield opportunities for reform, but Malaysian government chose to yield greater control and the safest routes which never seem favorable to recovery. Some of the most popular and unsubstantiated rhetoric include:

Buy Made in Malaysia
Support local products. Local companies happily join in the chorus with politicians to show nationalist sentiment. Simplistic as it sounds, will it improve local economy? Malaysian government does not consider the simple fact that the country exists along side with other international trading partners in interconnected global economy. When their export revenue suffers, they will reduce import volume from Malaysia. Do not forget local importers, franchise partners as well as companies that export parts and import final products will also suffer. Unbelievably as it may sound, the reverse of trade is called upon at domestic level instead of urging local companies to be more competitive and efficient in offering better values to consumers at optimized costs.

Do not be selective about jobs
It is hard to believe the highest leadership in the country urged people to do whatever comes their way at this moment, disregard that inefficient allocation of manpower will backfire when economy gradually recovers. Disappointingly, there is no highlight on diversifying and moving quick enough to create high-value and service based economy, which will generate better long-term job options and stability. Short term measures like re-skilling or training retrenched manufacturing workers can only provide temporary relief. They are still stuck in low-end manual jobs.

Dismiss foreigners first
This is directive from Malaysian government along with doubling the tax of foreign labor recruitment. It is a step too far in meddling operational efficiency and a short sighted approach which does not achieve much positive except pleasing local constituents. Who will bear the additional costs? Local companies and consumers when demand is already slowing.

So what market reform? I can not help but to wonder if all these measures reflect political cynicism or make economic sense. As far as I can tell, individuals, please brace for drastic changes. Companies, please confine to new regulations. Government? Please do not expect anything transformational for now.

Social Business to Resolve Talent Woes

The struggle of non-profit sector in talent acquisition is a common fact, even though current economic climate has sort of easing this problem with mass availability of laid-off professionals to offer or volunteer their expertise. But as soon as the economy gradually rebounds, majority of them are not expected to stay in non- profit sector. The permanent solution still seems elusive.

The inherent difficulties lie in the fact that most non-profit organizations depend on cyclical public donation that is heavily influenced by economic conditions. A great deal of resources is also channeled toward marketing and promotion services, hence resulting restricted career options without financial incentives. Those who choose non-profit sector are mostly individuals making mid career transition to contribute more to social issues after securing financial stability and professional status, while very few individuals choose this path as personal life’s calling.

I think the most realistic solution at this moment to tackle the lack of talent in non-profit sector is provided through social business model. It works in parallel and competes with for-profit business with diverse operation functions to sell products and services, so it does provide a wide range of challenging career options. Revenue has also become a priority as required for sustainable operation and re-investment, even though it will be less substantial because social business serves poor and underprivileged community but it could be compensated through achieving greater and more sustainable social impact. Hence I think social business model provides better incentives and encourages talents to stay in non-profit sector, allows it to become a viable career option for aspiring individuals to begin a new career with.