Tuesday, October 02, 2007

Oil & Gas Windfall: Malaysia's Boon or Bane? (II)

I wrote in Part 1 of this article published in Aliran Monthly, on how economies blessed with ample amounts of natural resources tend to under-perform their potentials, particularly those afflicted by the Dutch disease. Malaysia might in fact be suffering from what is academically termed as the political Dutch disease. Our apparently healthy macroeconomic numbers such as growth rates above 5% masks the fact that the fundamentals of the economy are shifting negatively. How do we overcome this?

We fear that with Malaysia becoming a net oil importer very soon, and with oil reserves lasting only for the next 2 decades, these leakages left unchecked will soon have a major impact on the country's economy. This impact will be aggravated by the fact that the other productive sectors of the economy reliant on human capital such as the high-tech manufacturing, information and biotechnology remains stagnant and insufficiently developed to replace the economic contribution from our oil and gas sector due to complacency or neglect.

Faced with such a possibility, it is imperative that Malaysia re-think its strategy on enhancing human capital. The two ministries of education must be applauded for their efforts to fine-tune our educational institutions to achieve the human capital goals such as the setting up of “cluster schools” as centres of excellence. The Minister of Education, Datuk Seri Hishammuddin Tun Hussein has also recently announced that some 27% of the education related infrastructure projects under the 9th Malaysia Plan have either been completed or are under implementation.

However, our efforts on physical infrastructure must be matched equally, if not more, with soft infrastructure such as the quality of teachers, the rigour in our course syllabus as well as the examination standards. No cost must be spared for example, in bringing the best teachers and lecturers from around the world to teach in our local schools and universities populated with our cream of the crop.

Misguided nationalistic philosophy must be cast aside in favour of a pragmatic policy in areas such as attracting the world's top academics to head our institutions of higher learning. Within our educational institutions, performing teachers and academics must be granted their due reward, financial and otherwise, as further incentives for themselves and others to continue to excel. It is of great irony that even Malaysian academics who were never in contention for top positions in Malaysian universities are head-hunted as vice-chancellors or faculty deans at the world's top universities.

In our quest to develop and retain our human capital, no stone must be left unturned and no sacred cows must be left untouched. Then and only then, will Malaysia be able to diminish its reliance on natural resources and depend instead on her people's creativity, resourcefulness, intelligence and productivity to drive the country's continued development. While oil wells may one day run dry, our population will only continue to grow and renew itself.

Therefore it is critical that the Government sets aside or even legislate that a substantive portion of our windfall from oil and gas is kept under lock and key, with the sole purpose for investment in human capital, over and beyond our typical expenditure on education and training. This way, the funds will be prevented from being expensed to a unproductive and wasteful rent-driven economy. To quote Economics Nobel Prize winner, Joseph Stiglitz, “abundant natural resources can and should be a blessing, not a curse. We know what must be done. What is missing is the political will to make it so.”


Anonymous said...

Good observation. I reinforce this with looking at Dubai or rather UAE. They have attracted a lot of foreigners with high pay, but in the process, made the foreigners teach their own people the skills. Even oil rich UAE has moved in the direction of knowledge based economy, and is no viaing with Singapore on various investment fronts, ironically with UAE firms headed or staffed by Singaporeans whom their own Government thought not talented enough over the scholar class. Doesn't this sound like one of our own policies of selecting talent class based on 1 factor? For Singapore is 1 interview after A levels, for us, is skin colour.

I sent an enquiry to NUS last year, when my child was choosing Universities to study. They have students from more than 36 countries (and not Yemen, Somalia, Euthiopia kind). Their Academia (Dr, Assoc Prof, Prof) consists like 25-30% Singaporeans and the rest foreigners. They want quality, not quantity.

When will our own Malaysian nationalism start having lines drawn on where we should hire foreigners to improve our standards?

Unknown said...

Both lower and higher Education Ministries must not only rectify its shortcomings by emphasizing on the creation of cluster schools or privatization of tertiary education for the benefit of future generations.

The decline in competitiveness in this borderless world must be arrested immediately. Importance must be weighted on raising the standards of our workforce if we want our current society to survive.

Continuing education and training for working adults should be given prime concern here since the current workforce was the product of previous policy when tertiary education was designed without refering to the flat world.

It will be of great help if the Higher Education Ministry instead of focusing on making Malaysia as a centre of education excellence for the benefit of overseas students to instead look at our own backyard first. Financial aid or reimbursement shall be given to woking adults as an encouragement to pursue continuing education and training through designated evening education or part time courses.

To achieve a knowledge based economy, our curent education policy should be overhaul in transforming an over emphasized academic education to a vocational based education.

A growing list of vocational courses and trainings like insurance services, corporate governance for SMEs, banking products and services, fund management, food logistics & supply chain management, international trade, eco-tourism, airline inflight service, interpersonal & intrapersonal skills at workplace etc....are some of the things we face in our daily life but lacking in our education system to promote a knowledge society .

Anonymous said...

Wasting resources is a character of our country whether you want to admit it or not.

As anyone who really knows the economic statistic of our country and they will tell you that we have achieved zero on productivity over the last 50 years, a period marked with many many great technological, social and other changes - changes that the likes of HK, Singapore, Taiwan, Korea and Japan took advantage.

We have developed by pure resources - oil, labour, money etc. and wasted it because those should have contributed more than zero in productivity. So the fact our productivity over long periods have been zero speaks volume of our waste not just our failure to act. In fact, I put you that waste is greater than we think because we have a productive minority that is being abused and exploited.

Yes, oil as a bail-out tool is not going to be enough in the near future but there is the other bail-out tool - the money and productivity of the minorities in this country which will keep the apathy going for decades to come...

Anonymous said...

The hopeless Barisan Nasional (Nazi) party 是掉到井裡的那隻蛙,見識短淺,卻又妄自尊大!!

Anonymous said...

NEP (Never Ending Policy) 嚇走外資