When looking east means China


  • Business
  • Saturday, 06 Apr 2019

A trip to watch cherry blossoms in Japan requires precision planning with loads of good luck. The unpredictability as to when the cherry tree will blossom in spring has made planning for the trip much more difficult, as the cherry blossom lasts for only two weeks in a year.

The other unpredictable factor is the weather. When we landed on Sunday night, it was 6؛C. It was the end of the previous week’s temperature of 6؛C to 17؛C. In the last few days, the temperature plunged to 2؛C-8؛C. My daughter told me that the temperature for the following week would be 6؛C-17؛C. Just my luck, as I did not sign up for a winter trip.

With the cold weather, having a bowl of hot ramen is a must and the average cost is about 1,000 yen (RM40) a bowl. So, using the noodle/ramen index, a bowl of noodles in Kyoto costs four times as much as in KL. Rental of property would be six to 10 times more, depending on the city you are in vis-a-vis Kuala Lumpur. Generally, salaries in Japan are three to four times higher than in Malaysia, so I believe middle-class Malaysians (excluding the B40’s) have better purchasing power parity compared with middle-class Japanese.

After getting the samurai bonds guaranteed by the Japanese government, Prime Minister Tun Dr Mahathir Mohamad is encouraging a Look East policy again. He feels that Malaysians should learn about adopting the work ethics and value system of the Japanese. Back in 1982, six months after becoming Prime Minister, Dr Mahathir launched his Look East Policy, an initiative to learn from the experience of Japan in the nation-building of Malaysia. He wanted to send young Malaysians to Japan to pursue undergraduate programmes and train in technical skills/technologies.

Japan had become the manufacturing centre for cheap electronics, household appliances and cars in the 1960s and 70s. Since then, it has moved up the value chain, with Toyota occupying the No 1 position by selling over 10 million vehicles.

Only Volkswagen plus a host of other merged brands sell more. The latest big player is the merged Renault/Nissan/Mitsubishi conglomerate.

But the Japanese have conceded leadership on electronics, household appliances and television sets to Samsung and LG and also to Haier of China. The same goes for the microchip industry, etc. The domestic market has been well protected all these years by numerous trade barriers. Now, Japan’s international image is being upheld by investment visionary Masayoshi Son, the SoftBank CEO who first invested in Alibaba almost 20 years ago. Son has also invested in Uber, Didi and Grab, to name a few of his continuous mega-investments. Now, they have started Alibaba Japan with a 65%:35% JV with alibaba.com.Japan has four million SMEs, almost 10 times the number of SMEs in Malaysia. SMEs account for 25% of the country’s export value and 63% of its import value, but it is an ageing society. Japan’s growth has been driven by local consumption for many years now. Many legacies from its manufacturing past have not been transformed fast enough to counter the growth of South Korea and China. I do not believe Dr Mahathir is making the right call now to Look East-Japan. He should adopt a Look East-China policy. The sale of 49% of Proton to Geely China is bearing fruit now, as it has garnered 25,000 bookings for the X70 SUV within a few months of its launch. This must be the biggest success of Proton in the last 10 years.

China can help us rebuild KTM’s national railway line at a fraction of the cost as compared with Japanese or French technology. We can build a fast-train network from Thailand to Johor Baru, assuming that Dr Mahathir still cannot agree to work with Singapore on the JB-Singapore segment. Huawei can help install 5G network in Malaysia ahead of other Asean countries or even earlier than the United States.

On a bilateral exchange arrangement, China will absorb all our palm oil production that Europe threatens not to buy. Alibaba can set up a regional Asean HQ with an R&D team in Malaysia, and fund digital schools to train Malaysians on e-commerce and e-wallets besides its earlier promise of using Malaysia as its launchpad into other Asean countries. Besides the white coffee and Musang King durian, I am sure we can launch authentic Malaysian products in the world’s biggest market, including halal products for their 21 million Muslims. Malaysia has only 18 million Muslims.

On Dr Mahathir’s fear of the rich Chinese moving into Malaysia after buying our high-end condos, this phenomenon has happened in all the major cities of the world. The Chinese have been buying property in Singapore, Australia, the United Kingdom, Canada and the United States. They have been the biggest investors in global property in the last 10 years.

There is no fear of an influx of China nationals into our country. Our immigration department already has a strict anti-China policy in place. We should encourage the Chinese investors instead, as we have a huge surplus of high-end condos that is killing our property developers. A short-term solution to solve a major problem in the property sector.The Look East-China policy can be profitably managed for the next 10 years while we transform our education programme for our national schools. The rise of Japan, South Korea, Singapore and China in the world economy is mainly due to their high-level education system which starts from primary school. Their focus has always been on Maths, Science and Technology, so they have been building a talent pool to sustain their advancement in building their economy.

Just looking east at China is but a short-term solution. As Tun Daim Zainuddin said in his recent speech on the “National Narrative: Malays within the national context” at a local university, excerpts from his speech included that for Malaysia to get the four sectors of politics, economy, culture and religion right, we must first change our education system. Malaysia’s future depends on giving our children the right type of education that will allow them to be confident to face the best in the world. Expose our children to the world, then they will want to excel and they will protect the best of our culture.

Dr Mahathir and Daim are gravely concerned about the declining standards of our national schools which have a 80%-90% Malay student population. Too many religious classes compared with Maths, Science and Technology. Students are thinking emotionally rather than critically. As Malays form 60% of our population, there is a tremendous shortage of a talent pool which has adequate knowledge of Maths, Science, Technology and English.

How are we then as a nation to compete with Singapore, Japan, South Korea and China without a continuous supply of relevant talent? Or are we happy to strike some short-term deals with Japan and China just to tide through difficult economic times?

Short-term economic success for a nation is like a cherry tree blossoming for two weeks in a year. I would prefer to grow the hibiscus that will flower throughout the year. We should predict our own destiny and not rely on unpredictable trade partners, no matter how profitable it may seem.

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