Monday, March 01, 2010

No waiting for a new economic mantra

THE long wait for the New Economic Model (NEM) will be over when the blueprint is unveiled, after several postponements, next month. However, it would be naive to expect the new plan to work like a magic bullet on the country's economic dilemma — namely, being caught in the middle-income trap — as the structural problems that are at the root of our development conundrum will naturally need medium- to long-term solutions.

Take the key issue of human capital development, which is the cornerstone of a high-income economy. It is self-evident that building quality into our human resource pool will take decades, even if we assume that we have got our directions right.

That's a big "if", but let's accept that for a moment and turn to what's happening on the ground. Thanks to globalisation, we know what our weaknesses are in the race for investment capital: an inability to match the low-wage regimes of newer emerging economies on the one hand, and on the other, a lack of technological expertise, dearth of innovation and lack of soft skills among the workforce — the classic double whammy.

As policy analysts, opinion leaders and industry players have endlessly pointed out, the country has a severe deficit of engineers, accountants, researchers, managers and various other professionals to drive its ambitions to become a developed economy. The problem is dual — there is a shortfall in numbers as well as in quality, as recruiters are wont to remind us.

Today, it is a patent fact that the incubators for these skilled human resources — the public universities and technical institutions, primarily — are seriously challenged to produce graduates who measure up to the quality standards required by globally competitive businesses.

An economist with a development authority that is hampered by this constraint on its human resources is refreshingly frank about the problem. The quality issue is rooted, he says, in a school system which rewards rote learning rather than fostering thinking skills. This gives the universities little scope for providing remedial instruction at the end of the education assembly line. In his forthright assessment, it is a "lost cause". Taking note of this, the NEM's work must begin in tandem with an overhaul of the school curriculum to de-emphasise rote learning and prioritise analytical thinking.

That, however, is easier said than done. As the economist acknowledges, the situation has been made clear to the decision makers, but the logical solutions have not been implemented, for reasons best known to them, until now.

A former academic adds: "Even in the effort to encourage excellence among the universities, the focus has been on the infrastructure rather than substance."

This mentality must change before we can talk about innovation, and then creativity. That's how much we have to catch up on. For the statistics, we just need reminding that our expenditure on R&D as a ratio of gross domestic product (GDP) is a relatively low 0.64% (2008). That would partly explain why only 9% of patents granted in Malaysia in 2008 were from Malaysia.

The situation has been aggravated by the rapid deterioration in the command of English — the essential global language — among our young of all races. The government continues to be reluctant to take the bull by the horns to ensure that the workforce is enabled to participate fully in international business developments. Instead it is giving in to misguided political considerations that put us at a disadvantage in the global marketplace. No economic blueprint can work if the people — the human capital — do not have the language skills necessary to function efficiently in the technical, commercial, creative and interpersonal spheres.

For more insight into the systemic issues that are plaguing tertiary education, an anecdotal evidence provided by a writer on human capital issues is revealing. Decrying the culture of mediocrity in tertiary institutions, he tells this paper that students pursuing advanced degrees have been discouraged by their lecturers from pursuing qualitative research because of the lack of qualified academics to supervise their work. In this stultifying environment, they struggle to sustain their interest in the course, plodding through just to reach the finishing line. Small wonder we aren't getting anywhere in a hurry.

Moreover, our options are being narrowed by market forces as investment capital is increasingly passing us by. To turn from an assembly line to a value-added economy, some short-term measures have to be taken sooner rather than later, the economist points out.

First off, we must go on a global talent hunt to bring the expertise needed to turn Malaysia into a knowledge hub. That may require us to swallow our pride, if necessary, to source personnel from countries with large pools of technical expertise.

Second, bridging programmes have to be rolled out to address the skills gap between university graduates and industry needs. Current programmes that have been well received by small- and medium-sized employers that do not have the resources for training need to be upscaled.

And third, the SME sector, a key economic multiplier, must be incentivised to provide higher value components and services to global manufacturers, in order to break out of the OEM mould that they currently occupy.

The 64-dollar question is not whether we can do it, but whether we have a choice.

news courtesy of the Edge

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