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‘Creation of job creators’ a bumiputera ‘SME’ conversation

June 18, 2012

FMT LETTER: From Zakay A Rehman, via e-mail

According to a media report recently, Bumiputera Small & Medium Enterprises (SME)s  voiced their skepticism about their benefiting from the Pemandu-led Economic Transformation Programme (ETP).

Bumiputera businesses are quoted having said to be missing out on the ETPs despite the incentives and impressive growth figures over the past few years and years moving forward.

To be fair with Bumiputera businesses especially the small and medium sized enterprises (SME) , all they want are to be is part of nation building and they are lamenting because of fears about missing out in taking part in the vision 2020.

Their fears nevertheless can be easily be muddled by accusation of greed and selfishness, with holding on the  crutches of  the yesteryear model of bumiputera affirmative action waiting for government handouts; but these presumptions are stereotypical and can be far from the truths.

To be fair also to the Minister Idris Jala, he admitted that the complaints were among the many problems facing the economic blueprint, but said the bumiputera businesses must also do their part to bolster their own abilities to compete at a global level.

The fears amongst bumiputera SMEs  are that the ETP programmes are structured to nurture the proven and strong enterprises, to facilitate them in achieving global competitiveness with emphasis on size being synonymous with globalism.

These perceptions differ from the early days of the Malaysian industralisation story  where the waves of privatisation and infrastructure developments was met with thunderous applause from the fledgling SMEs.

Those days were marked by the newly pseudo wealthy bumiputera entrepreneurs, littered with unsustainable enterprises with few lasting memorable success stories..

Today however, the current crop of bumiputera  entrepreneurs are constantly reminded that the good old days of their fore bearers are no more, that the government being the biggest contributor to the GDP will no longer be ‘hand-holding’ them to success.

Under such clouds of doom and gloom compounded by the sheer competitive environment of globalisation at their very door steps, its a wonder that the Bumi SMEs are gripped by that fear and demand for concrete assurances that the ETP will not fore sake them, even worse possibly being relegated to the sorts of mum and dad enterprises, at the expense  of ETP advocates pursuing their grand development goals.

The conversation in entrepreneurs investing and developing their enterprises aside, the main reason behind the SMEs engagement with the government…sic the ETP, is looking at specific government policies or programmes that are meant to allow them to participate in the nations economy, that is why we keep on returning to the topic of getting projects from government!

Furthermore, the Bumiputra SMEs doesn’t see non Bumi SMEs as a threat, to the contrary, they welcome more non Bumi SME participation, its the biasness towards MNCs that monopolises or oligopolises which concerns them.

The paradigm of government, their agencies or GLCs dishing out jobs or contracts has to be relooked at as the sustainability of products of these practises has been proven wanting.

The main problem being the axiom that businesses are sustainable by virtue of the benefits they provide, it cannot be the other way around whereby the customer (government) instead  consume for the benefit of businesses; the usual psychology behind the government helping Bumi businesses!

Any business ecology succeeds in general by virtue of their sustainably providing net benefits and this is also true with the Bumi enterprises of the go go days. So let’s not think in terms of projects, let’s think in terms of facilitating opportunities for private sector SME investments.

As to the complaints being dished out towards the Bumi agenda administrators, are the complex and complicated nature of engagements that harks back to the days of the creation of layers that promotes rent seekers.

So before the government talks about Bumi SMEs being global ready, they in turn need to be brave enough to adopt global practises that might involve political will towards emancipating policies.

It’s true that Pemandu, TERAJU, on top of the plethora existing agencies like UKAS (PPP), EPU etc will provide the necessary mechanisms for bringing Malaysia to developed nation status, creating jobs and pushing per capita income; however, the Bumi SME agenda is about the ‘creation of jobs creators’, something that the government has to do a bit of thinking through.

The weakness in the SME industry as job creators limited  investing and management capabilities, calls for a willingness to risk it by the government, lest job creation will be left to the bastion of  giant MNC enterprises and there will be no signification SMEs to talk about.

Bottom line is that the government must will itself not to compete or allow competing policies against the ‘creation of job creators’.

Going down memory lane to the glorious 80s and 90s, the psyche of positivity is due in great part to the government decision to take the privatisation path, a policy never heard of before then. Even though privatisation then did not necessarily commensurate with liberalism, the point is irrelevant in so far as the environment created a surge in Bumi entrepreneurship.

However, instead of a lesson in righteous policies, its the failures that gets touted instead. Cronyism, favouritism aside, it cannot be denied that this very  privatisation period, i.e. the relinquishment of government services and investment to the private sector works, because the private sector, even fledgling SMEs are believed to be better than the public sector at business.

Today, the nature of private public partnership has evolved into greater potentialities like out sourcing, PFIs, and disposals by the government. There are so many opportunities in areas such as security industry, public works, education, trade facilitation, natural resource and agriculture facilitation, to name a few, all currently the ambit of government services can and should be privatised along developed nation models.

We may take it for granted but there are a number of successful businesses today originated from the government. Telecommunication for instance was the pure bastion of Jabatan Telekom Negara, and power was purely supplied by Lembaga Letrik Negara; why can’t correctional facilities be run by private facilities or the police out sourcing their road traffic enforcement.

Why can’t public schools be run by local enterprises or treasury revenue management be outsources in various parts? Its this model of  the entire government service based ecosystem up for rethinking, that the government should embrace that would add to a new age of private public engagement, the caveat as sought by Bumi SMEs being focus on the creation of 1,000 enterprise that creates 100 jobs each  instead of supporting 10 local MNCs in creating 10,000 jobs each.

Zakay A Rehman is a supporter of the Malaysian Association of Bumiputera ICT Industry & Entrepreneurs (NEF) agenda


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