Monday, March 15, 2010

Slow and steady wins the day in Kedah

It is tempting to compare the growth of Kedah’s economy with what it is best known for, agriculture.

Still, it is not that wrong a comparison. Whether it is oil palm, livestock, fruits or padi, farming is something where the fruits of one’s labour cannot be rushed.

It must be slowly and affectionately cultivated.

Properly managed and notwithstanding unseasonal rains and droughts, the yields gradually increase year upon year.

There is none of the tempestuous cycles of sectors like property, manufacturing and information-technology.

Yet the growth trajectory has neither highs nor lows or booms and busts.

Ch’ng Chuwn Leong, secretary of the Central Kedah Chinese Chambers of Commerce and Industry (CKCCCI), says, “Growth in Kedah has always been steady. We have never had fast growth … that’s why Kedah always experiences growth although it may be slow. I feel that it’s the type of growth that Kedahans prefer as well.”

It partly explains why almost all of the little factories in the Sungai Petani and Kulim area are still chugging along and retrenchments and pay cuts are uncommon. Orders may be lower than usual, Ch’ng says, but the plants themselves are not going under.

The padi industry and support services it depends on such as mills and machinery operators are also optimistic despite a bad harvest season this February.

Though yields are down due to hot weather and pests, the price of padi is still high at RM1,100 per tonne.

Unlike Penang, where all the headline-grabbing multi-national companies (MNCs) go to set up shop, Kedah’s factories are mostly started by and owned by locals.

Some notable exceptions are the Sharp Roxy and Philips factories in Sungai Petani. Almost all set up operations between 1986 and 1997, a period which Ch’ng says was Sungai Petani’s boom years.

“Many of the MNCs in the northern region have moved off their assembly operations to Vietnam, China and Thailand. But they still keep their facilities in Malaysia to do R&D (research and development) and D&D (design and development).

“Because most of the factories are not MNCs, we’ve not been directly hit by the recession unlike other states. We have been affected but not as badly,” says Ch’ng.

And since the price of commodities have been somewhat stable, says Lim Keng Thean of the Kedah Hawkers Association, other businesses haven’t been adversely affected.

“Business for my members have gone down by 20-30 per cent but ‘boleh cari makan lagi’ (can make enough to survive). Some of my friends in logistics have also said business is down.

“Generally, the cost of doing business in Kedah in terms of materials, labour is not so high so we can generally survive,” says Lim, the association’s chairman.

Revenue from padi farming, which is the main crop in the state’s agricultural sector, is down for the first half of this year as many farmers say their yields were badly affected by a plague of brown plant hoppers (bena perang) — a pest that sucks fluids from the plants.

Agriculture officials, however, say that the drop in yields is mainly due to abnormally hot weather during the growing season of December to January. One official claims that lower-than-expected yields are normal during the off-season.

Muda Agricultural Development Authority official Fouzi Ali explains that the dry spell shortened the flowering period of the plants, turning them into dry husks.

“Pest infestations can be controlled. The bena perang can be eliminated if farmers closely watch their crops and spray pesticides early enough. Problem is many farmers don’t monitor their plots.”

Rice mills that buy and turn padi into rice also report a loss in profits, says Lim who owns a mill in Alor Star.

“This season a mill would probably only get half the rice it usually extracts from a tonne of padi. So the cost has outweighed profits,” says Lim.

Yet it is all not doom and gloom for padi as commonly perceived by those outside the industry.

Kedah Farmer’s Associations Board director Abdul Nasir Hassan says that off-season yields are usually lower than the main season, which is usually in the third quarter of the year.

The view that padi farming is about back-breaking toil for uncertain returns is a common myth, encouraged perhaps by the romantic notion of the village. Also unfounded is the Klang-Valley-centric view that rural areas are depressed in the recession.

Tilling a padi field used to take two months and a family of workers in the old days, says Lim.

Today, there are machines that do it in a day.

This mechanisation has partly fuelled the rise of the professionally-minded estate farmer.

The fact that it is a staple food for a majority of Malaysians means that demand will always out-strip supply. This makes it a strategic crop and industry that will continue to receive government aid, says Abdul Nasir.

“I have a friend who works 1,000 relung (267 ha). He is on the look out for more but there is just no more padi land for sale,” says Lim the rice mill owner.

“If today there is one farmer who wants to sell his field, there will be five people lining up to buy it. There is money in padi.”

It’s not difficult to get a sense of what Ch’ng means when he describes Kedahans as preferring to go slow instead of riding the roller-coaster of hot money, financial bubbles and too-good-to-be-true mega projects.

The state has had its share of the latter in the form of the Kerpan Tiger Prawn project, the Perwaja Steel plant in Gurun, the new Kuala Kedah marina and the (Padang Terap) safari.

Even with the hydrocarbon hub in Sungai Limau (SULIH), which is the next big thing, many are not holding their breaths.

Though the funds may be pouring in, political observers note that its fate is still uncertain because the Federal and State governments are from different parties.

In Malaysia’s feudal political landscape, funds and project approvals have been given and denied to state administrations based on calculations of political mileage.

Then there is also the trepidation felt about the changes in lifestyle that Sungai Limau residents need to make when and if SULIH is ready.

According to an Alor Star-based businessman familiar with past Kedah government projects, any benefits from development coming into the state will depend on the wisdom of state administrators.

“It’s about whether it will largely only benefit a small group of people linked to those in power or whether the gains will be more evenly spread.

“An administration that brings in little money but manages it well is better than one that brings in a lot but squanders it or gives it to special group of people,” says the businessman.

However, Ch’ng of CKCCCI believes that there is still money in Kedah and that investment and business has not left the state because of the recession or its remoteness.

“I think the recession just teaches us to manage our money better. I feel that it has it blessings because if growth was too high and fast, food and necessities would sky-rocket. Coffee would probably be RM5 and I don’t think Kedahans would like that.”

Ironically the things Kedah’s residents like about it — the laid-back atmosphere, its low cost of living, its beauty and its quaintness — would disappear if its growth rate were to soar.

“There’s always opportunity in Kedah. It’s just that we are not like scheme ‘cepat kaya’ where you make lots of money really fast and lose it even faster,” says Ch’ng.

courtesy of Malaysian Insider

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