Published August 31, 2009

MALAYSIA INSIGHT
Some lessons M'sia can learn from Fernandes

AirAsia's success as a regional budget carrier holds big lessons for Malaysia's ruling coalition

By PAULINE NG
KL CORRESPONDENT
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THE weaker growth wrought by the global financial crisis means that Malaysia's economy will need to expand at a frenetic 8 per cent per year over the next decade if the country is to achieve its vision of being a developed nation by 2020, Prime Minister Najib Razak revealed last week.

Given that in the past decade only twice has gross domestic product (GDP) growth breached 6 per cent, this is going to be well-nigh impossible.

Although committed to the vision mooted by former premier Mahathir Mohamad in the early 1990s, Mr Najib has observed a need to 'redefine, recalibrate the timeline' of how to 'get there'.

Malaysia's gross national income per capita is about US$7,000 - some US$5,000 short of an advanced economy - and US$10,000 less than the projected growth of US$17,000 per capita these economies would enjoy by 2020. With rival developing economies already proving to be tougher and hungrier competitors, 'getting there' will be challenging - a fact Mr Najib acknowledged in a keynote address at the inaugural meeting of the National Economic Advisory Council (NEAC) last week.

'Economically, Malaysia is under pressure on all fronts. Our rules remain overly cumbersome and, in certain sectors, restrictive.' It was not Malaysia's choice to change, he said, but it had 'no choice but to change'.

NEAC is the latest think-tank comprising foreign and local personalities to advise the government on how to effect Malaysia's transition into a high-income economy.



Mr Najib has, of course, made some brave changes, earlier this year liberalising 27 sub-sectors and instituting more market-friendly measures.

Even so, bolder out-of-the box reforms are needed to convince investors that its domestic economy warrants a second look when neighbouring ones are so much larger and more vibrant.

As many have observed, better integrating the local economy with Asean as well as China and India would provide stronger growth, given the combined 3.5-billion-strong market for Malaysian goods and services. Why else would Australia and New Zealand want into the regional trading bloc?

Locally and perhaps regionally, no one has better latched on to the integration concept or capitalised on it as craftily as Tony Fernandes. In seven short years, Asia's budget travel pioneer has transformed AirAsia into arguably the country's best- known brand. Given its increasing brand recognition in the region, it could conceivably be true of Asean as well. Even in the emerging super-economies of China and India, the brand is not an unknown entity.

In expanding his company, Mr Fernandes leveraged on two inherent strengths to great advantage: Malaysia's geographical position on the global map, and a multi-racial and relatively cosmopolitan workforce, which helped when it came to getting a toehold in new markets.

The country hasn't availed itself of these distinct advantages as adroitly. Culturally, Malaysia's three main races - Malays, Chinese and Indians - have a distinct advantage when it comes to dealing with their counterparts in the Middle East, China and India.

In Asia, where relationships are prized, this could spell the difference between success and failure.

By phasing itself out of the markets so as not to crowd out the private sector and small businesses, the government would afford savvy businessmen and entrepreneurs more room to manoeuvre. Undoubtedly, some of these entrepreneurs could teach it a thing or two about economic integration.

They might also be able to offer pointers on racial integration. AirAsia's crew, for example, are as diverse as they come, comprising Asean citizens, Koreans, Japanese, Chinese, Iranians, Iraqis, South Americans and Europeans.

Their differences notwithstanding, the company has managed to instill in them a sense of pride, unity and commitment.

Still grappling with unnecessary racial and religious tensions more than half a century after independence, Malaysia could do worse than to listen to some of its corporate chieftains on how to extract the best out of their workforce and to forge a consensus so that everyone wins.