29 May 2017

The Digital Dilemma: We Should Avoid the Repeat of the Kodak Moments

DIGITAL methods are now invading our lives, our businesses and our culture. During the modernisation of Europe where the imperial measurements were slowly being replaced by the metric system, many hailed it (digitalisation) to be demonic.

It (digitalisation) was said that it will affect our lives to the core of existence. Well, guess what? Digital system has now made its way into many aspects of our lives, which includes, but not limited to: Education, Medical, Manufacturing, Agriculture, Documentation, Communication, Entertainment; Religion and most dangerously, the Military.

Mark Zuckerberg and Bill Gates recently warned the World to be prepared for the age of robots and Artificial Intelligence (AI). The next disruption wave may be as soon as within 5 to 10 years. Imagine the implications of such revolution to digitally exposed operations.

For example, we have media companies that employ thousands of staff. With the significant, dynamic and inevitable technological advancement, those media companies can easily embark on a pervasive digital strategy and just overnight, those thousands of staff can lose their jobs. In the name of efficiency, that should happen; but with the humanitarian consideration (avoiding people loosing jobs), it may take a delay.

Meanwhile the leaner media companies may just go ahead. The inersia of thousands of staff is too strong for the ship to sail an alternative route. On the flip side, the inersia of a lean staffed structure is agile to adapt changes. In this age of internet of all things, we need to be agile, flexible and not waste any more time.

Hence the digital dilemma. Do we or do we not make sacrifices to embrace digitalisation of everything that we do? We have learned from the past that such changes are inevitable. We should avoid the repeat of the Kodak moment. Kodak invented digital photography. In fact the first photo of the planet Earth was taken by Kodak's digital technology. They, however, were too scared to lose their conventional film sales that contibuted almost 90% of their sales. At last, they went bankrupt as digital cameras swamped the World photography behaviour.

There are many other examples. We have Uber for instance. The traditional taxi drivers are facing a severe threat of obsolescence. Netflix, Apple TV, Amazon TV and iFlix are now major contenders to disrupt the TV and cinema kings across the globe. Online news portals are basically digging the graves of newpaper companies. E-commerce for retailing such as Amazon, Lazada, Zalora and many others are keeping the high streets slow. What more examples do we want?

We can see that the way to do business has gone through so many evolution phases that includes Production Specialisation during the European Industrial Revolution; Diversification of Skills of the post war Germany and Japan; Marketing Intensive Branding as led by the Americans of Madison Avenue; and finally, the Demonic Digitalisation we face today. The fact is, it is happening whether we like it or not.

What we have discussed so far sounds pretty global and we may think that it will take sometime before it will reach our shores (Malaysia). Wrong! It has reached. Long time ago - waiting to devour our conventional and traditional ways of doing things.

Perhaps, in an effort to convince ourselves, we ought to scan for some empirical evidence? Sure, why not? Let us see. Malaysia has 30 million population and the number of mobile devices is 60 million. Malaysia has, on average, 5 debit/credit cards per household that facilitates internet based commerce. Malaysia is ranked as one of the top countries in the World for social media usage. Malaysian Government has made a conscious effort to boost digitalisation via various initatives such as the Multimedia Super Corridor, High Speed Broad Band and most pervasively, computer science education as early as primary school.

So as you can see, what Zuckerberg and Gates predicted will come true. What we see in Star Wars, Star Trek, Back to the Future, Terminator and the Matrix will happen. We are in the age of total chaos as every minute of denial will make us lost even more by the day - unless we ride the wave and hope to reach the beach in one piece.

28 May 2017

Are We Ready to Embark on TN50 Economically?


This (TN50) is now the Najib (Dato' Seri) administration's philosophy which has rendered its predecesor's (Tun Mahathir) Wawasan 2020 as a mere precursor to a bigger agenda, the TN50

TN50 or Transformasi Nasional 2050 (National Transformation 2050), is the new buzz word under the current Malaysian administration. TN50 is sought to replace the almost completed Wawasan 2020 (2020 Vision). From polical perspective, it is a mark of territory. A mark of political era. A change of skin. This (TN50) is now the Najib (Dato' Seri) administration's philosophy which has rendered its predecesor's (Tun Mahathir) Wawasan 2020 as a mere precursor to a bigger agenda, the TN50.

Before we can start TN50, we must first take stock of the state of affairs of our beloved country, Malaysia. Since we are no longer trying to measure whether Wawasan 2020 has been achieved, given its obsolescence, we should ensure that we are on the right footing to embark on TN50. However, let us put that aside first and reset our minds phychologically. We should not cramp our minds with the idea of Wawasan 2020 anymore because there is no point in doing so. It would be a myopia indeed. Why? Because the Government of the day has abandoned it and is putting all, all!, its efforts into TN50. Regardless of which politicians we support, and whether we like it or not, we can only embrace what will be laid out for the future of our country. As they say, "If You Cannot Fight Them, You Join Them"

So what is the state of our country? Recently, the Prime Minister (PM), Y.A.B. Dato' Seri Najib Razak, gave a speech on TN50 at Universiti Teknologi Mara (UiTM) sharing statistics on the country's economic status. Like many economists, the PM started of with the Gross Domestic Product (GDP) growth. Whilst GDP is not always the best measurement for the success of an economy, it is, by far, the best indicator. GDP is the yardstick to indicate how much economic activities have been transacted. This is a representation of both business transactions as well as consumption expenditure by the citizens. Both act as the primary movers for the economy. For the first quarter of 2017, the Malaysian economy closed at a GDP growth of 5.6%. This is a favourable unexpected result considering the average for 2010 to 2016 hovering at 5.1%. So, for a start, with such rates that are double the World GDP growth rate, we are indeed on the right track.

How did we achieve this? Thanks to the Government policies over the past few Federal Budgets, we have managed to reduce the impact of key World economic variables such as oil prices and foreign currency translation rates. With the low oil prices as well as the weak Ringgit, our revenues have plunged significantly in the region of RM40 billion or so. Learning from this mistake, we have now reduced our dependency on oil revenues from 41% in 2009 to 14.7% in 2016. Luckily, the shortfall was fortunately addressed by new revenue streams. For s start, in 2013/2014, the Government introduced the Goods and Services Tax (GST) at 6%. This had also helped reduce the Federal Budget deficits from 6.7% in 2009 to 3.1% in 2016.

Then there was the subsidy rationalisation. Tax payers' monies are no longer used to subsidise oil prices, sugar prices and many more subsidies as well as grants. The most efficient subsidy rationalisation would be for the oil price. Previously, significant portion of the subsidy (oil) was benefited by industrial users such as the Independent Power Producers (IPP) instead of the citizens. Now, that benefit has been redistributed by other means that can reach the citizen more effectively such as the BR1M, a financial support scheme for low income earners. It is also worthy of acknowledgement that the Government's burden to bear capital expenditure has been reduced due to the recovery in Foreign Investments (FI). Forbes had reported that Malaysia is the best country in Asia for raising FI. Thanks to the capital inflow from China and the Middle East, we do not need to rely heavily on the United States of America. A bet well taken by Malaysia (in respect of America vs China trade negotiations).

Very much like his father's (Tun Razak) efforts, PM Najib has managed to work these numbers to reduce poverty. The improved GDP as well as targeted Government expenditure in the Federal Budgets have reduced Malaysian poverty level from 3.8% in 2009 to 0.6% in 2014. We are expecting to see a Nil for 2016 as promised by Dato' Seri Najib. In any case, the Extreme Poverty rate has already been confirmed at Nil. In addition, Malaysians will also be introduced to 3.3 million new jobs by 2020 and to date, we have achieved 69% of that (2.26 million). The job opportunities as well as income per capita that has increased from USD8,232 in 2010 to USD10,010 in 2016 has reduced the Middle Income Trap from 33% to 18%. We are indeed hopeful to reach the World income per capita of USD12,275 soon.

So, if we ask ourselves, are we ready to embark on TN50 economically? I think, Yes. Indeed what we have taken stock earlier shows an excellent start to an odyssey towards 2050. Our hope is that the Government (whoever the leader may be in the next 33 years) will continue the efforts in enriching the country's economic well being. They can label it with whatever name they want as long as they have the Rakyat (citizens) at heart. For this, it is only logical to have continuity and stability politically, for a change in regime would only throw all efforts out of momentum and worsen the economy back to square one. We would not want to move backwards, do we?

* kopihangtuah

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