Infernal Ramblings
A Malaysian Perspective on Politics, Society and Economics

The Death of the Malay Entrepreneur

Written by johnleemk on 1:51:34 pm Jul 9, 2007.
Categories: ,

A lot of ink has been spilled and a lot of breath wasted on the question of why it is so difficult to encourage the Malays to take up business and compete with other Malaysians.

Before turning to the nasty racial issues of this problem, it's worth pointing out that a major factor in this may be the fact that not many Malaysians are successful in entrepreneurship.

Oh, yes, you see a lot of entrepreneurship amongst Malaysians. You see Chinese DVD sellers, Indian mamak restaurants, and Malay Ramly burger vendors — but hardly any of the millions of entrepreneurs in Malaysia have been able to grow their business.

If there aren't many (any?) Malaysian businessmen out there who could make it without help from the government, why are we so surprised that there aren't many Malay businessmen who can make it without government aid?

Okay, now we can start thinking in ethnic terms (but hopefully without treading anywhere near the cesspool of racist stereotyping). The Malays have so much government aid, but even then, the number of Malays who truly make it big without government help are not as great compared with those from other Malaysian communities.

Who runs the largest communications companies in Malaysia? A Malaysian Indian — Ananda Krishnan. Who ran the largest Malaysian steel company (into the ground)? A Malaysian Chinese — Eric Chia.

Why couldn't a Malay entrepreneur, with all that government aid behind him, compete with these men? If a Malay had come up to the government with some idea about opening a new telecommunications company or satellite television provider, you can bet he'd have gotten approval to compete with Ananda Krishnan in a jiffy. Or would he?

When I recently looked at the problem of Malaysian businesses being unable to expand, I noted that one major problem was corruption — Malaysians have to invest significant capital in the bureaucratic process, cutting into their returns and making all but the most profitable enterprises unfeasible.

I think a similar issue arises here. Do you think a Malay Bill Gates would have won government approval to open a company competing with Ananda Krishnan unless he was extremely well-connected, and/or willing to grease a lot of palms?

The free market system is designed to reward entrepreneurs who are able to manage their businesses the best, and serve the community the greatest. But when you have a bastardised and distorted market, the result is a system with priorities gone completely out of whack.

Our existing system does not reward true entrepreneurs. It rewards apple-polishers and boot-lickers. Because the government determines who gets assistance — and thus who gets rewarded — it imposes its own priorities over that of the community (whether you are talking about the Malay community or the Malaysian community), and thus the losers are both the Malays and Malaysians.

It is of course tempting to blame the current situation on government policies meant to assist the Malays economically. But to deny that the Malays need some leveling of the playing field is to expose one's hypocrisy.

The problem with these aid policies is that they have focused more on equality of results rather than equality of opportunity — something beautifully illustrated in the Maybank debacle. Because the government determines the results (rewards) instead of realigning the opportunities to claim rewards (so as to level the playing field), we end up with a very distorted market that harms the true Malaysian and Malay entrepreneurs while rewarding those Malaysians who would not be able to stand in a competitive market.

If we want to know why Malay entrepreneurship is dying, the answer is simple — we need to purge this system of government-determined rewards, and instead create more opportunities for Malay and Malaysian entrepreneurs to demonstrate and prove themselves.

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Infernal Ramblings is a Malaysian website focusing on current events and sociopolitical issues. Its articles run the gamut from economics to society to education.

Infernal Ramblings is run by John Lee. For more, see the About section. If you have any questions or comments, do drop him a line.

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