Opportunity knocks
Tan Sri Azman Mokhtar, managing director of Khazanah Nasional Bhd, talks about the emerging paradox of our times, Khazanah's approach to the New Economic Model and what the current trends mean for Malaysia in 2011.
IN cyclical terms, 2010 will likely be consigned into the footnotes of economic history as a year when the economy and the markets surprised on the upside but did little to fundamentally change the post-crisis world.
While global and Malaysian output grew by approximately 5 per cent and 7 per cent respectively, it has petered out quite quickly by the second half of 2010 on the back of slowing growth and multiple structural constraints in the West, coupled with both asset and price inflation pressures in the East.
Far more interesting are the structural footprints of 2010. At the global level, being the "year after (a post-financial apocalypse) tomorrow", by all accounts, we seem to have wasted what was a first-rate crisis.
The relative success of the "war-time" crisis management of 2009 has given way to a more predictable drudgery of low equilibrium outcomes at both national and multi-lateral levels. Pick any of the global common issues of trade, capital flows, financial stability, banking reforms, development, and indeed, climate change. They all fell short, often significantly of the bold and collective leadership the world was crying out for.An
emerging paradox of our times is how the phenomenon of the democratisation of information and ideas, is simultaneously enriching us with better ideas and better accountability, but yet, is also far too often and too frequently paralysing communities, nations and indeed the global village itself through too much, not too little debate.
Still, in the age of leaks and ubiquitous and continuous connectivity, the genie of information freedom has irreversibly gotten out of the bottle. As such, the only constructive option is to collectively build a more rational and responsible dialogue.
To my mind, there are two significant consequences of these trends for Malaysia in 2011. First, we can't rely too much on others, on global demand and investment nor of global governance for the solutions. That means greater self reliance yet remaining firmly plugged into global supply chains and global markets.
On balance, our natural and adduced endowments mean that we are well placed to benefit from the acceleration of the economic shift from West to East, from the financial to the real economy, and from a more narrow growth focus to a more inclusive and sustainable stakeholder economy.
And second, with the mapping out of a clear national transformation programme consisting of the Government Transformation Programme, the New Economic Model and the Economic Transformation Programme, we have a clear opportunity in 2011 to truly seize the moment for a significant remake.
To do this, like all national transformation programmes, it critically needs a strong national compact if not quite a full national consensus. The task of building a more responsible and relatively non-partisan compact will be a task that is rooted in political and social transformations.
In this regard, the sequencing has been orderly, in starting the critical public goods and economic transformation programme first and in the process building momentum.
While the big macro plans are of critical necessity, they are also clearly insufficient on its own. Value will always be created, or indeed lost, at the firm or micro-economic level. At Khazanah, in March 2010, we outlined a five-point approach to playing our part in executing the New Economic Model. It is worth reiterating:
* First, for the 10-year government-linked companies (GLC) Transformation Programme, to diligently stay the course as we enter the seventh year of the programme.
* Second, to continue with the gradual regionalisation programme of our key companies so as to benchmark and integrate our national champions to compete to become regional champions and beyond.
* Third, to contribute significantly to private sector investments in new areas of growth for the new economy, especially in targeted sectors including, inter alia, leisure & tourism, healthcare, education services, Islamic finance, information and communication technology (ICT) and creative industries.
* Fourth, to intensify the collaboration and co-investments between Khazanah and GLCs and non-GLCs private sector, both at home and abroad.
* Fifth, to diligently focus on core competencies. This means continuing with the orderly exit of non-core and non-competitive assets at the appropriate time. A corollary of this is for a better, more level playing field and better regulatory management to emerge, working with the government and other industry players in the process.
Thankfully, the financial and strategic results of 2010 and the years preceding that from 2004 have been encouraging. The programme is, in aggregate, well on track and on schedule.
Entering the home stretch to 2020, we are embracing a new 2011 against a backdrop of a fundamentally unstable world. In that turmoil, there is, nonetheless, much opportunity that knocks.
Armed with a clear plan, we must now rally around our commonalities rather than our narrow differences to carry the common interests. The prize is indeed great and if we can do that, we would be able to seize the moment for a once-in-a-generation opportunity to execute meaningful change.
IN cyclical terms, 2010 will likely be consigned into the footnotes of economic history as a year when the economy and the markets surprised on the upside but did little to fundamentally change the post-crisis world.
Far more interesting are the structural footprints of 2010. At the global level, being the "year after (a post-financial apocalypse) tomorrow", by all accounts, we seem to have wasted what was a first-rate crisis.
The relative success of the "war-time" crisis management of 2009 has given way to a more predictable drudgery of low equilibrium outcomes at both national and multi-lateral levels. Pick any of the global common issues of trade, capital flows, financial stability, banking reforms, development, and indeed, climate change. They all fell short, often significantly of the bold and collective leadership the world was crying out for.An
emerging paradox of our times is how the phenomenon of the democratisation of information and ideas, is simultaneously enriching us with better ideas and better accountability, but yet, is also far too often and too frequently paralysing communities, nations and indeed the global village itself through too much, not too little debate.
Still, in the age of leaks and ubiquitous and continuous connectivity, the genie of information freedom has irreversibly gotten out of the bottle. As such, the only constructive option is to collectively build a more rational and responsible dialogue.
To my mind, there are two significant consequences of these trends for Malaysia in 2011. First, we can't rely too much on others, on global demand and investment nor of global governance for the solutions. That means greater self reliance yet remaining firmly plugged into global supply chains and global markets.
On balance, our natural and adduced endowments mean that we are well placed to benefit from the acceleration of the economic shift from West to East, from the financial to the real economy, and from a more narrow growth focus to a more inclusive and sustainable stakeholder economy.
And second, with the mapping out of a clear national transformation programme consisting of the Government Transformation Programme, the New Economic Model and the Economic Transformation Programme, we have a clear opportunity in 2011 to truly seize the moment for a significant remake.
To do this, like all national transformation programmes, it critically needs a strong national compact if not quite a full national consensus. The task of building a more responsible and relatively non-partisan compact will be a task that is rooted in political and social transformations.
In this regard, the sequencing has been orderly, in starting the critical public goods and economic transformation programme first and in the process building momentum.
While the big macro plans are of critical necessity, they are also clearly insufficient on its own. Value will always be created, or indeed lost, at the firm or micro-economic level. At Khazanah, in March 2010, we outlined a five-point approach to playing our part in executing the New Economic Model. It is worth reiterating:
* First, for the 10-year government-linked companies (GLC) Transformation Programme, to diligently stay the course as we enter the seventh year of the programme.
* Second, to continue with the gradual regionalisation programme of our key companies so as to benchmark and integrate our national champions to compete to become regional champions and beyond.
* Third, to contribute significantly to private sector investments in new areas of growth for the new economy, especially in targeted sectors including, inter alia, leisure & tourism, healthcare, education services, Islamic finance, information and communication technology (ICT) and creative industries.
* Fourth, to intensify the collaboration and co-investments between Khazanah and GLCs and non-GLCs private sector, both at home and abroad.
* Fifth, to diligently focus on core competencies. This means continuing with the orderly exit of non-core and non-competitive assets at the appropriate time. A corollary of this is for a better, more level playing field and better regulatory management to emerge, working with the government and other industry players in the process.
Thankfully, the financial and strategic results of 2010 and the years preceding that from 2004 have been encouraging. The programme is, in aggregate, well on track and on schedule.
Entering the home stretch to 2020, we are embracing a new 2011 against a backdrop of a fundamentally unstable world. In that turmoil, there is, nonetheless, much opportunity that knocks.
Armed with a clear plan, we must now rally around our commonalities rather than our narrow differences to carry the common interests. The prize is indeed great and if we can do that, we would be able to seize the moment for a once-in-a-generation opportunity to execute meaningful change.
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