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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18 May 2017

Malaysia and its Venture Capital and Private Equity Movement


Malaysia has the highest Government backed capital injection portion for VC and PE for the country when compared to other Asean countries

VENTURE CAPITAL (VC) AND PRIVATE EQUITY (PE) are not new investment methods in Malaysia. Practitioners of those methods have been around more than 2 decades ago. In fact, we (Malaysians) are quite active in this field, only 2nd to Singapore in the South East Asia (SEA) region in terms of monetary magnitude as well as volume of deals.

Yesterday (17 May 2017), the Malaysian Venture Capital and Private Equity Association (MVCA) held its signature annual event, the SEA VC and PE Conference (SEAVCPE) involving almost 100 attendees from VC and PE practitioners pool from SEA. They came to discuss amongst them the various aspects of their industry (VC and PE industry) in the current "uncertain" time - making reference to the economic turmoil that the World economies are facing.

To many entrepreneurs, VC and PE are alternatives for fund raising, particularly for start ups and growing companies, respectively. They are one step above the funds from angels and one step below public listing or strategic investments by public funds like pension funds.

Whilst banks may provide cheaper source of funds; or issuance of bonds may be a cheaper alternative as well, no everybody can get them (or achieve a good subscription rate). This is because the due diligence on such entrepreneurs (by banks) does not go beyond credit assessment.

VC and PE companies looks at many aspects paying great attention to potential for growth. They look at the capabilities of the entrepreneurs, the adequacy of knowledge, work force and infrastructure in the company, the attractiveness of the future cash flows (within an acceptable time frame) and the unique selling proposition for such company to have potential stronghold in the market or consumer base.

Many believe that VC and PE investors are only interested in making quick money from capital gains arising from the valuation of the investees. Whilst there may be practitioners who took it that way, the appropriate approach should be to grow the companies first by working together with the entrepreneurs.

Just a week ago a panel of speakers from the industry met to discuss the matter of growing the companies. One of the panelists, Johan Ishak, the Chief Executive Officer of MyCreative Ventures, who is also one of the Executive Committee members of MVCA said, "We cannot be 100% cockroaches as investors will not come in. They want to see potential for capital gains. On the other hand, we cannot be 100% unicorns as this seldom neglect efforts to grow the companies. Perhaps, for start ups, we should become 2 thirds coackroach and 1 third unicorn"

A "cockroach" and a "unicorn", in the VC and PE world, means, a resilient sustainable model for a company and a high valuation company based on potential future; respectively. These terms were used by the industry as cockroaches can survive a nucklear bomb and a unicorn is a state of fantasy esctacy. A unicorn is said to be companies valued more than USD1 billion. In Malaysia, we have Grab and iFlix.

When viewed from cash owners who wants to invest their funds, VC and PE are attractive alternatives to the listed share market, bonds, money market, properties, unit trusts or any other conventional methods. It is attractive because the returns are higher than any of the other methods. In a capital market sluggish economy, these monies may make its way out from those conventional methods and starts filling up the VC and PE bucket. However, 1 big demotivating factor is that, they (investors) must be willing to lock their monies in those VC and PE investments for 5 to 10 years before profits can be realised.

Coming back to the SEAVCPE Conference, and to close our understanding of the industry, it is good to know what our strengths are as a country with respect to VC and PE activities - some of the good points on Malaysia in the VC and PE industry in Asean that was revealed at the conference were as follows:

1. Malaysia is the first in Asean to implement Equity Crowd Funding.

2. Malaysia is the first in Asean to implement Islamic Financing.

3. Malaysia will joint force with other countries in Asean to establish Asean VC Council.

4. Malaysia is 2nd next to Singapore for Limited Partner, (i.e. investors to the VC and PE funds) (LP) sourcing in Asean.

5. There are only 2 Asean LPs in the top 10 list of LPs in Asean as USA LPs dominate the list. Those 2 are Philippines and Malaysia. Malaysia is represented by Government backed MAVCAP that is led by Malaysian manager, Jamaludin Bujang.

6. Malaysia has the highest Government backed capital injection portion for VC and PE for the country when compared to other Asean countries.

(Source: South East Asia Venture Capital and Private Equity (SEAVCPE) Conference 2017 organised by Malaysian Venture Capital and Private Equity Association (MVCA) led by a Malaysian, Shahril Anwar Mohd Yunos)

* kopihangtuah

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10 March 2017

Belaskah Kita?


Apabila kesinambungan pewarisan Belas ini putus, bala akan menimpa kita semua. Adakah ini yang kita mahu sebagai pengakhiran hidup sebelum kita berangkat untuk menikmati Belas dari Tuhan? Terserahlah

BELASKAH KITA? Di dalam hidup ini ada satu fenomena yang menyambungkan sesama kita insan, hidup atau mati; dan juga dengan alam, warisan, haiwan dan Tuhan akhirnya. Fenomena ini adalah perasan Belas. Ini adalah satu kaedah yang menyatukan kita tanpa perlunya kita berinteraksi samaada melalui sentuhan fizikal, internet, suara, lisan atau lukisan. Ia cuma perlu diwujudkan di sanubari.

Sememangnya sudah ada bukti biologi bahawa apabila perasaan Belas itu dirasai oleh seseorang, badannya akan menghasilkan hormon-hormon yang membangunkan kesihatan. Sebaliknya, apabila kita sedih dan muram, hormon-hormon yang durjana akan dihasilkan (oleh tubuh kita). Sudah banyak juga cerita-cerita ajaib dimana pesakit barah pulih melalui penghasilan elemen-elemen kegembiraan di dalam hidup mereka.

Apabila perasaan Belas itu diradiatkan kepada alam, maka wujudlah sikap mahu menjaga kebersihan sungai, laut dan sebagainya. Dari mana datangnya polisi Hijau? Sudah tentu dari kesedaran untuk membersihkan Bumi kita. Dari mana datangnya kesedaran ini? Sudah tentu dari keinginan untuk menjaga Bumi yang kita sayang. Ini adalah Belas.

Apabila disalurkan perasaan Belas itu kepada haiwan, terjagalah kebajikan mereka. Manusia kebanyakannya suka menyimpan haiwan peliharaan seperti kucing, anjing, hamster dan sebagainya. Apabila haiwan-haiwan ini menyedari Belas yang kita sampaikan kepada mereka, maka berlembut dan manjalah haiwan tersebut kepada manusia. Ini adalah Belas balasan dari haiwan.

Apabila dinostalgiakan Belas itu kepada zaman lampau, teringatlah kita kepada insan-insan yang telah pergi dan berkembanglah sikap pembelajaran dari sejarah. Ini menjadi pemangkin untuk penerapan dan juga konservasi elemen-elemen warisan dan jati bangsa. Kita selalu berkata "Belajarlah dari sejarah". Sebabnya ialah untuk bersatu semula dengan masa lampau.

Belas sesama insanlah yang menjadi sumber kekeluargaan, persahabatan dan pencintaan sesama manusia. Maka tidak hairanlah mengapa kita memanggil anak-anak kita Belasan apabila mereka memerlukan kasih sayang yang kritikal sebelum menjadi dewasa. Belas sesama insan lah menjadi faktor mewujudkan NGO-NGO seperti National Cancer Society, Kitchen Soup, Unicef, WWF dan banyak lagi. Dengan Belas inilah kita menaruh harapan.

Konsep Belas ini juga sudah menjadi berkurangan dewasa ini. Semakin ramai insan yang bercanggah dengan fenomena murni ini. Mereka sering memaki sesama sendiri terutamanya di media sosial. Mereka membenci sesama sendiri. Mereka berperang sesama sendiri. Mereka membunuh sesama sendiri. Kita seharusnya kesal.

Apabila tidak ada usaha untuk mengembalikan Belas, maka makin pudarlah harapan untuk kemanusiaan untuk terus hidup. Apabila kesinambungan pewarisan Belas ini putus, bala akan menimpa kita semua. Adakah ini yang kita mahu sebagai pengakhiran hidup sebelum kita berangkat untuk menikmati Belas dari Tuhan? Terserahlah.

* kopihangtuah

| mcmlxxv:viii:xxix |

08 March 2017

The Uncertainty of the Malaysian Economy 2017


Behind the international politics, there is always the economic substance. Why else would it be for (for Malaysia)? So my fellow Malaysians, please understand the undercurrent movements of the economy before blaming left, right and centre.

THE MALAYSIAN economy has undergone recessions many times. 1989 and 1998 saw contractions of 2% and above. Now, based on the recent 2016 statistics, we closed at 4% of Gross Domestic Product growth. It is expected that 2017 will show 4.2% with budget deficit of 3%. Considering that times are bad, such achievement is quite commendable. Despite all these, people are still making noises. Yes, true that we are experiencing some form of recession, but this can be managed. The Malaysian economy is basically mainly contributed by Services industry at 54%, Manufacturing at 23%, Agriculture at 9% and Oil and Gas at 9%. Oil & Gas seems pretty small at 9%. So why is the Government blaming that sector as heavily contributing to the sluggish economy that we are facing?

The answer is because a huge chunk of Government revenues come from Oil and Gas. To be exact, RM66 billion out of the total revenue of RM220 billion if based on 2014 statistics. That is approximately 30%. When the oil price fell from USD110 per barrel to USD50, that RM66 billion fell by half giving only RM30 billion. So our economy was short by RM36 billion. Luckily we had GST revenues to fill up the gap by approximately RM20 billion, coupled by reduction in Government subsidies to the tune of RM16 billion. Although the Governmemt has been able to fill in this gap, its operational expenditure remains high and increasing. The top sectorial allocations are Education (RM40 billion) and Health (RM20 billion). The cost of paying salaries to civil servants alone has reached RM77 billion. Not to mention the Government Debt and Pension costs of RM5 billion each in 2003 that have now arisen to RM20 billion each in 2016.

Then there was the Trump effect from the US. Donald Trump's policies practically promised American investors comparable returns if they are to withdraw their investments out from Asia and back into the US. This is via his reduced tax promise from 35% to something as low as 15% (yet to be determined) as well as increasein interest rates well above 4% (also yet to be determined). This makes American money market more attractive than the Asian market. For a start, Malaysian bond market only gives a return of 4%. He also invested domestically (US) and open up more job opportunities in the US. Malaysia suffered from this as foreign investments fled reducing our foreign reserves from USD120 billion down to USD90 billion. To make things worse, China also had policies that gave the same impact.

Today we have to produce RM4.50 to get 1 USD. This is the effect Trump and Oil proce has to our (Malaysian) currency. Now, at this point, even when the oil price recovers, the strength for our Ringgit could not pick up as the demand for Ringgit could not be recovered given the US and China policies. The former accounts for 10% of our international trade and the latter 16.2%. In addition, ASEAN's 27% contribution to Malaysian international trade will also be dampened as they (the other 9 ASEAN countries) too have significant international trade with China and the US. To top up, our 10% international trade with Europe (28 countries) is also dampened by the Brexit uncertainty. With that kind of numbers, you'd be like a car missing all 4 wheels.

So, fellow Malaysians, the only way now is to excite the economy domestically. We have to increase consumption expenditure in order to increase the Gross Domestic Product. Having said that, we ought to not buy imported goods because that will only dampen what we want to achieve. We also need not take up more loans such as housing loans and car loans, or even excessive use of credit cards. What we really need to do is create internal transactions to stimulate the economy while waiting for how the US and China are going to end up. The hightened relationship with Middle East could not have come at a better time. They can potentially be the replacement to the Americans and the Chinese as a significant international trade partner. Behind the international politics, there is always the economic substance. Why else would it be for (for Malaysia)? So my fellow Malaysians, please understand the undercurrent movements of the economy before blaming left, right and centre.

(Source of info: Dato' Johari Ghani's late night speech to Directors of GLCs on 7 March 2017).

* kopihangtuah

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19 January 2017

Creativity Needs Soul (Chapter 2 of Fuelling the Kreativ Malaysia)


THE ECOSYSTEM of the Creative Industry needs to be analysed critically. If not, we will forever prescribe the wrong medicine that will never heal the disease. It would be a shame if all of our efforts are channelled to address the symptoms rather than the causes of the problems. Earlier we have had some discussions on ‘Grants’ and whether it is the right approach to assist entrepreneurs (of the Creative Industry). Perhaps we should park this question aside first as it is still premature to conclude without understanding the components of our Creative Industry’s ecosystem.

So what can we say about our (Malaysian) Creative Industry’s ecosystem? There are many components to an ecosystem. The first is the source of creativity. True that everybody kept on saying that education is the key. However, we must remember that creativity, or art, for that matter, is not a structured deal. It is the right brain – the chaotic and abstract interchange of pulses between the neurons that occupy the right side of the brain. Therefore creativity comes from experience as well as collective memory of what the soul accepts as beauty. Each individual defines his or her own beauty. It is a unique deal from each one of us. As they say, “Beauty is in the Eye of the Beholder.”

In the earlier Chapter we made some comparisons to Korea. Now we should look at our neighbour, Indonesia. We (Malaysia and Indonesia) share the same genetic origin, hence the common reference to the Nusantara region. The Nusantara is a term often used to group the Malay race be it from the Peninsula, Borneo, Sumatra, Jawa, Sulawesi or any islands from the Indonesian borders as well as the Southern Philippines. When extended to include our slightly non-Malay neighbours such as Thailand and Vietnam and such, a Chinese reference of Nanyang is used – that means, South East Asia. So how are we in comparison to our Malay neighbours?

Indonesia has a very liberal openness to their creative acceptance. They seem to have been able to absorb many parts of foreign culture but morphed it into something very much their own. If we listen to Indonesian Jazz and R&B, it is miles ahead, quality-wise. Malaysia on the other hand, is dampened by the concerns over Islamic values being tarnished. We (Malaysians) have caused our creative evolution to be stagnated by ceasing to infuse new elements into the art. As quoted by the Chief Executive Officer of Cradle, Mr Nazrin, “To remain truly local in only one mould would hurt the appreciation of local arts and culture.”

The society (Malaysia) has evolved so much differently from those in Indonesia when it comes to creativity and culture. Perhaps God has a plan for Malaysia but we cannot help to notice that Indonesians have reached a far higher level of culture evolution from all aspects such as diversity, inclusivity, societal appreciation, education, pride, globalisation, talent pool and of course, economically. Have we (Malaysians) destroyed our potential to evolve (culturally) simply because we want to be purists? Our interpretation of what are acceptable forms of art and culture may have hindered us from infusing external ideas and hence, shrunk our openness for new things. In other words, we simply refuse to go against what we perceive to be cultural norms. We continue to follow traditions passed down by previous generations and that saga continues without avenues to blossom but instead, crumpled within.

Why is this observation true? Let us go back to Indonesia. In 2016, a team of observers from a Government agency called MyCreative Ventures was sent to Jakarta. Their task was simple. Observe and compare to Malaysia. To their astonishment, their observations did nothing other than to confirm that Indonesia has evolved tremendously when it comes to their creative industry. When in Jakarta, drop by any night clubs with live bands and you will see a local Indonesian band performing. Do that in Malaysia, half of the time you will either end up getting Indonesian or Philippino bands. Whatever happened to our local bands? The local bands are struggling to express their creativity because the market is limited. They are forced to go underground. Somehow the underground culture is preferred by our youth. They (Malaysian musicians) are lucky that they have Jennifer Thompson to bring them around on live band circuits.

A few years ago, Tan Sri Rais Yatim encouraged Malaysians to wear Malaysian Batik on Thursdays. Many citizens (of Malaysia) made fun of this. They are not proud of the Malaysian Batik. The move was viewed as a protectionism measure rather than an appreciation undertaking. Why is that so? Guess what the MyCreative Ventures’ observers noticed? On Fridays, the entire Jakarta was in their Indonesia Batik. Both male and female, old and young, across all ethnic groups, not matter whether you are working or you are just a Pecal seller by the road side. It is a fantastic feeling to see the citizens of a nation expressing their pride and joy of their local culture. This astonishment reaches its zenith when the team entered into a huge mall called Thamrin City Mall in Jakarta. Thamrin City Mall is a gigantic multilevel Indonesian Batik retail store that showcases diverse and contemporarised Indonesian batik.

Next was the culinary arts. How many times have you tasted Nasi Lemak that tastes like normal white rice (in Kuala Lumpur)? You would probably score eight out of ten. Let us take traditional cakes for a test. Anyone from Penang would curse the ‘kuehs’ (traditional Malay cakes) in Kuala Lumpur. For example, the Cucur Badak, that originated from the Northern Malaysia, is supposed to have its filling made of grated juicy coconut. Only then will the Cucur Badak tastes divinely delicious. Somehow, the urge to cut cost has resulted in the Cucur Badak (in Kuala Lumpur) tasting very dry with no juice. The hawkers had extracted the juice for other purposes. This never happen in Indonesia. Go to any food stall or hawkers in Jakarta and you will be promised a delicious treat no matter what the price is. A simple ‘ayam kampung’ (free range chicken) with rice flanked by five different types of Indonesia ‘sambals’ (chili sauce) will epitomise food from the heavens. Enough said.

Let us talk about performing arts and content creation. We are indeed proud of Tuan Haji Burhanuddin’s Upin and Ipin that had gone viral amongst Indonesian kids. The nation is very much gratified with this success. Then we have Boboiboy that is emulating such success. So we are not always faced with negativity. Somehow we do have success stories to shout about. That is great. However, we need a more pervasive success. An achievement that creeps deep into the society and survives the change of era and progressively adapting to the changing environment.

It is interesting that more than half a century later, P. Ramlee’s work is still a benchmark. If we look at P. Ramlee’s stories ranging from Ibu Mertuaku to Bujang Lapok, he had always infused in foreign elements that made it international. With him making fun of whatever is in our lives (social commentaries), it immortalises his work beyond 2 generations, at least. In 1960’s, P. Ramlee’s work was showing on the national television of Egypt. Now that is a pervasive success. The old folks in Cairo who sits and drink that sweet black coffee on the streets of Khan Al-Khalilee still mention P. Ramlee to shoppers who they can identify as Malaysians. This is a fact. Not a made up story. But why? Well, don’t we all ever wondered that perhaps the Egyptians are entertained by the fact that Abdul Wahub from Tiga Abdul wears a tarbush? What about the adaptation of Ali Baba and the Forty Thieves into Ali Baba Bujang Lapok? This is what we need to revive our creative society. Not necessarily the dark red tarbush, but the soul that creativity needs.

In any progressive society, at least the urbanites celebrate local arts, culture and music. That is lacking in Malaysia. We have rich Dato’s and Tan Sri’s buying art in Bali instead of from Malaysian artists. When asked, they will say, “It is cheaper.” Art is not about expensive or cheap. Art is about appreciating creativity, although we all like that to be extended to be ‘economically appreciated’. These people (not all) are proud that they spent thousands of Ringgit on their Italian chairs but boast that they bought cheap art from Bali. Would it not be more meaningful if the money is spent on great Malaysian art but small budget provided for Ikea furniture instead?

The students of the Faculty of Film, Theatre and Animation (FiTA) of Universiti Teknologi Mara (UiTM) attend a course in their final semester that exposes them to what is out there in the real world of Creative Industry. Many of them expressed their surprise when they had learnt that Malaysians have increased their contribution to cinema collections over the years but when dissected, the contribution from local movies has declined. This means that we (Malaysians) prefer Hollywood movies rather than local. This conclusion is also confirmed by a study done by the Film Directors Association of Malaysia (FDAM).

We should not blame the Malaysian society alone. We should blame both, the Malaysian society, as well as the film makers. The former is guilty for arrogance and the latter for ignorance. We if give a fair chance to the local movies, we will find that there are really good ones. Some examples worth mentioning are Songlap, Bunohan, Setem, Sepet, Talentime, Ola Bola and many more. Let us not have the attitude of “Filem Malaysia kampung” (Malaysian films are low class). Let us not be arrogant. For the film makers, they ought to strike a balance. A balance between making money as well as producing quality films. It seems that achieving this balance is a big issue and has resulted in two different types of movie makers in Malaysia. They are the ‘Hantus and Gangsters’ group (reference to mass market taste) and the ‘Artsy Fartsy Nobody Can Understand’ group.

What is this balance we ought to achieve? The Hantus and Gangsters actually makes a lot of money. People love a simple minded movie. They like comedy like Anak Mami. They like love stories like Ombak Rindu. They like action movies like KL Gangster. They like horror movies such as Khurafat. These types of movies can make money. On the other hand, we have the artistic work of the late Yasmin Ahmad that achieved so many awards but did not make money. It is either something is not right with the production or something is not right with the people. Either or, we need to balance this. This is a balancing act that requires sacrifices. The production houses may have to sacrifice from being a purist in order to make money. Then, from that money, produce the award winning ones.

Independent movie makers may not have the stamina to do both. The ones who want to remain artistically purists, will get the awards but not the money. The ones who wants to make a living, practically, will forego the awards but get the profits. Big studios like Astro’s Tayangan Unggul and Media Prima’s Primework Studios can afford to do both. They do a few of the ‘Hantus and Gangsters’ to make money, and then they take part of that money to produce the award winning movies. This is the balance that will ensure both the development of quality movies as well as sustaining the industry economically. Somehow, the independent producers must emulate this method. If the stamina is a concern, then perhaps it is best to produce the money making movies first before going for the awards. As you can see, it is quite tough to assimilate business acumen into Creativity.

Earlier we made reference to how the right brain works – the chaotic and abstract interchange of pulses between the neurons that occupy the right side of the brain. Well, the left brain behaves differently - the structured and calculated interchange of pulses between the neurons that occupy the left side of the brain. We have now instantly explained why it is tough to assimilate business acumen into the creative mind. However, we must not blame biology forever for such blaming action would mean we are blaming God for who we are. There is a way to contain chaos and abstract thinking within the boundaries of structured framework. This can be done. This has been done.

We shall remind ourselves the term ‘grantrepreneurs’. It is the Malaysian way of describing entrepreneurs who rely heavily on grants. The idea of grants is a noble one. It is to kick start a business. Naturally, it relates to the stage where research and development is conducted and study is done to address technical aspects of a particular product or service in order for it to be suitable for commercialisation stage. Even at commercialisation stage, a grant is logical for items such as marketing, distribution and promotional costs. However, grants are only meant to kick start the business. Once the products hit the market and it is accepted by the market, you are meant to ‘graduate’ from the grant seeking stage and start looking for investors who can push the business to the next level. Sadly, many Malaysian companies continue to apply for grants even when they have operated their businesses for more than a decade and many with profits accumulated. What is worse, some companies survived all these years not because of profits from commercialisation, but from being fuelled by grants continuously. Is this efficient and effective?

A briefing done by the Malaysian Venture Capital and Private Equity Association (MVCA) in their training courses for the investment fraternity revealed that the capital framework for entrepreneurship is akin to a valley. They call it the Valley of Death. Whilst this may be elementary to those who are educated with investment analytical knowledge, this is not what most of the entrepreneurs (in Malaysia) understand. The deepest part of the Valley of Death is when grants are given. With the grant money, they develop prototypes. Then they are supposed to find Early Investors, or Angels, who can pull them out of the valley and climb upwards. If they cannot achieve this, they will slide into the valley and the idea will just die away. Hence, the Valley of Death.

Subsequent to the Angels phase, the business should be ready to embark on commercialisation. That is when a Venture Capitalist comes in. They pump in money with the view of the product achieving significant growth in its market share. At this stage, the business may not even start making profits yet. The Venture Capitalists will work with the entrepreneurs to grow the business into a promising one. This ‘promise’ is what the Venture Capitalists will sell to subsequent investors.

We have to be fair when linking the types of funding to the stage of the businesses. Many citizens are upset when the Government spend millions of Ringgit channelling funds in the form of grants to entrepreneurs. What they do not understand is that grants have the same function as other infrastructure. When the Government builds the roads, or railways, they do not generate profits (or at least not in the initial years). It is the ripple effect of those infrastructure has to the economy is what matters. Similarly, when grants are invested in many entrepreneurs, it is with the intention of creating growth to the economy. Entrepreneurs make up majority portion of what we termed as Small and Medium Enterprises (SME’s). SME’s make up more than half of the source of the nation’s GDP. Fuelling entrepreneurs will therefore fuel the economy. Of course, not all will succeed. Just like the gang of sperms swimming up the stream. Only one will make it (or two if they are meant to be non-identical twins).

So, what has all this got to do with the Creative Industry? It has everything to do with the Creative Industry. That is why many grants are channelled to Creative entrepreneurs via agencies such as Cradle, FINAS, MDeC, MCMC and many more. The entrepreneurs must have a road map where they should plan for ‘graduating’ the ‘grant’ stage and grow into the ‘investors’ stage. An interview by My Intellectual Property Organisation (MyIPO) with Vision Animation’s CEO, Mr Low Huoi Seong, revealed that he used such plan. Vision Animation had already incorporated plans for investors to come in for more than one season of their animation series inspired by Gwen Stefani, Kuu Kuu Harajuku, when they were applying for their first investor, MyCreative Ventures, to come in.

Today, they have investors from Malaysia, Philippines and Australia. They have/are producing three seasons of the show and the first season is already showing on Nickelodeon in America and on other channels across the globe. They secured a licensing and merchandising deal early with Mattel, the maker of Barbie dolls, who is making this a major product launch in 2017. All this did not happen by chance. It was planned, well ahead of time. This is what the entrepreneurs should do. By the time the business has investors who are willing to put the chips on the Roulette table, grants will become irrelevant.

In this case, a few key points ought to be extracted. First, the plan to progress (funding wise or product progression wise) must be in place. Second, avoid being trapped in a limited market by going beyond borders. Third, capitalise on unique selling propositions. Fourth, convince the investors. Fifth, perhaps pray for a bit of luck. In most cases, the entrepreneurs in Malaysia do not do this. They pursue grants for a season but no consideration for continuous development for future content – i.e. project based rather than business based. They just produce what will be consumed by the thirty million Malaysian population (at most) and do not produce what the market is craving for (‘syiok sendiri’). They certainly refuse to educate investors and behave as if the investors' generosity is their right.

Many entrepreneurs will say that it is a chicken and egg situation. If we do not pump in money, we can never develop. If we do not develop (content), we will never know whether the market will accept it. In order to know whether monies can be invested, monies need to be invested in the first place. Therefore, investors should trust that it will succeed instead of being calculative for profits. This do not go well with the investors. In an investor’s mind, he is saying that he will achieve certainty in a Nasi Lemak restaurant rather than investing in the movie. So the investor will do just that – i.e. invest in a Nasi Lemak restaurant. This is why the Creative Industry is lacking the funding from traditional sources of funds. This is why grants are important to build the entrepreneurs to a level where they are on par, or slightly below the comfort level given by the Nasi Lemak entrepreneurs.

Climbing out from the Valley of Death is a tall order for Creative businesses. The traditional Bankers work in a myopic manner. They start their Chapter 1 with assets. Their first question would be, “What is the value of the assets?” This is different from a Venture Capitalist who asks, “What is the product?”, or “Is there a market?”, or “Who is in the management team?” A Banker would first establish a value in accordance with their acceptable methods such as discounted cash flows or comparable market price model. Then they would apply a limit, say, eighty per cent of the value of the assets. This is the figure they are willing to give out as loans. This is on the back of that asset being collateralised. No asset means no loan.

Everything about that concept is not working well with the Creative Industry. First of all, the Bankers will not accept the type of assets a Creative business can offer, i.e. intangible asset called Intellectual Properties (IP). Second, the value of IP’s, as determined by the discounting of future potential net profits to be generated by the IP’s are often astronomical. Third, even if the Bankers accept the IP’s, there is no systematic market to liquidate those IP’s (in Malaysia). For this, the Bankers are reluctant to fund Creative businesses. For this as well, the Government, via MyIPO and the Ministry of Finance (MoF), are developing a local acceptable IP valuation methods, training a pool of valuation professionals as well as establishing a market place for those IP’s. Efforts are still on-going but far from perfection.

We started the thinking process in this article with the word ‘Ecosystem’. This article alone is not sufficient to address all of the ecosystem components. We have so far only touched two important areas. They are: Source of Creativity and source of funds - but merely on the surface. A more in-depth discussion will happen in the future articles but what we have so far will suffice to build the momentum of our thought process. Just to give the readers a flavour of what more could be lacking, reference is made to a study group that was sent to Hollywood in 2013 to observe the matured film financing industry. The group consists of representatives from MDeC, FINAS, PEMANDU, MoF, BSN, MCMC, MAVCAP and MyCreative Ventures. Their observation uncovered how primitive our film financing ecosystem is.

First of all, a film producer in Hollywood will not commence the production activity until seventy per cent of the funds for the movie have been secured. They may start their pre-production activities but, even that is subject to the seeding funds from the early investors. What is more compelling is that, most of the time, the investors include the distribution players. In other words, they already have parties who will be distributing the content and this often comes with a minimum guarantee – a sale if you may – prior to the commencement of the production. The seventy per cent investors are normally made up of the original producers, perhaps some of the directors or actors, Venture Capitalists or Private Equity funds, Angels, distributors and rebates from various Governments. To close the thirty per cent gap, Hollywood has two industry players called the Bankers and the Bond dealers.

The Banks in Hollywood have dedicated divisions that only deal with film financing. Given that the Banks come in late into the deal, and they demand to be the earlier ones to recover their investments, they naturally charge the lower Return on Investments (ROI), or interests. This is generally around 12% per annum. The Distributor Financiers may take a cut from the sales value because it is akin to sales commission. This will definitely be higher than 12%. In most markets, sales commission range between 15% to 30%.

The Bond holders get paid next. This is because they fill up whatever last gaps remaining. Hence the name ‘Completion Bond’. They are like an insurance to ensure that the movie gets completed whether or not full funding requirements have been met. Completion Bonds cost higher than what the bankers charge but may be lower than what the Distributor Financiers take. After satisfying the Bankers, the Completion Bonds as well as the Distributor Financiers, the sales collection flows down the water fall to start filling up the cups for the Limited Partners such as Venture Capitalists and Private Equity funds. Finally, the early investors get paid. After all that, whatever remains get accumulated into a lake and is divided to all those parties again based on a predetermined ratio.

The financing mechanism in Hollywood does sound complicated. But who cares? As long as it brings money into the equation, let it be as complicated as hell. This method do not exist in Malaysia. We do not practice such water fall regime. Why? Because we do not have Completion Bonds. We do not have Venture Capitalists and Private Equity funds who are willing to take the risk of film production. We do not have production houses who can invest their own money as they have been relying on grants all this while. We do not have film financing divisions in our banks. We do not have enough distributors who are willing to invest in the content. We do not have lawyers and accountants who can manage the entire process. What we do have is the Film in Malaysia Incentive (FIMI) that is a film rebate system for those who produce in Malaysia. However, only RM50 million has been identified for FIMI in the 2017 Malaysia Budget. Most importantly, our creativity needs soul.

* kopihangtuah

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15 January 2017

To Begin With (Chapter 1 of Fuelling the Kreativ Malaysia)


TO BEGIN WITH, Malaysia was neither there nor here when it comes to its Creative Industry. Of course, this observation was made earlier in 2011 when the Creative Industry had only contributed 1.27% to Malaysia’s Gross Domestic Product (GDP). This may not be a positive statement to start an article such as this, but it is that bitter truth that needed to be dealt with that had led us to a realisation. A realisation that ignited thinking. A catalyst so to speak. A take stock of a condition that would later bring changes. Changes that matter.

To begin with, we must analyse the profile of our country. Malaysia is relatively a young country when compared to some other nations that we often compare with when it comes to Creative Industry. In 2011, some of our neighbours, such as Singapore, Thailand and Indonesia, have already recorded GDP contribution of 5% to 7% when it comes to their Creative Industry. No use comparing to Japan or Canada or the United States of America (USA) for that matter. You would already guessed the results. Korea however, would be a very interesting country to compare with.

To begin with, Korea was not that great anyway in their Creative Industry three decades ago. With a lot of realisation and a lot of changes, Korea transformed its nation from agriculture based to knowledge based economy particularly the Creative Industry. Thirty years ago they (Koreans) had already formulated a framework that provided the progressive blueprint for its Creative Industry. Today, they are a great nation. Their electronics have overtaken the Japanese, if not on par, and the automobile industry is just following closely behind Japanese waiting for that sweet moment to kick Honda, Toyota and Nissan.

To begin with, the Korean Government, via its KOCCA initiative, did provide the necessary seed for the Korean Creative Industry to bloom and take a progressive direction. Rain (the singer), wasn’t born that way. Rain was identified at an early stage and undergone many transformation. They trained him. They groomed him. From vocal classes to fashion. From dancing steps to charismatic appearance. He is the product of KOCCA. Korean private sector also played an instrumental role in this transformation. Samsung had certainly invested a lot. This is what Malaysia needs.

Malaysia needs some changes like the Koreans. Do we blame ourselves for not changing earlier? Probably not. As mentioned earlier, Malaysia is a young nation. Perhaps our current realisation (to change) came at the right time when it is supposed to be and when Malaysia is ready to make changes. In 1997/1998 we (Malaysians) have already realised the need to embrace technology. We initiated the Malaysian Multimedia Super Corridor (MSC) and along with it came Malaysia Digital Economy Corporation, or MDeC (previously known as Multimedia Development Corporation). This had certainly shaped how our nation had progressed in the past two decades. Thanks to that realisation, we are now a savvy nation – being the number one ranking social media freak in the World.

The point here (linking back to the Koreans) is that, we can make changes. We have done so in the past. We are doing it as we speak. We can certainly replicate success and change further. Like many nations, we need to have that realisation first before any meaningful actions can happen. Do we have that realisation now? Are we too late in fixing the Creative Industry? Luckily, the answer to that is, no, we are not too late and we certainly have what it takes to make the necessary changes. The Government has pumped in so much money to fuel the economy and the Creative Industry is not forgotten (perhaps slightly when ranked against the other industries).

How have we Malaysians progressed since independence in 1957? When we try to answer this question, we will forgive ourselves more (from the context of making necessary changes to our Creative Industry). Our great leader, Tunku Abdul Rahman Putra Al-Haj, had his special role, and he executed it well. Of course achieving independence is one, but what Tunku had to prioritise is our nation’s sovereignty in the eyes of the World. There were so many ‘fill in the blanks’ required in order for the World to recognise Semenanjung Tanah Melayu (prior to the inclusion of Singapore, Sabah and Sarawak). We were faced with communism threats and hence, we were also pressured to take a position in declaring war against the communists. Tunku had to also convince the nation that we are against Apartheid in South Africa. There were many aspects that required Tunku’s attention and what had been mentioned are just the tip of an iceberg.

The fact that Creative Industry was no where in Tunku’s brain shows that our nation had many other matters to deal with. Meanwhile, the Creative Industry was just nicely brewing in Malaysia with names such as P. Ramlee and Saloma. In any way, we can forgive Tunku. Next is Tun Razak, our second Prime Minister. Tun Razak is a visionary man. He had great visions for Malaysia. He was an epitome leader of the region (Nusantara – the Malay Archipelago). He knew that we needed so many changes in order to move forward as a significant nation in the eyes of the World. He was brave in his policies and he meant business.

However, Tun Razak had one issue he cannot ignore, that is, poverty. To fix poverty, he needed to fix the income disparity amongst the citizens. That was (still is), a sensitive matter as it was (still is) very much linked to the different significant ethnic groups we have in Malaysia. The ethnic disharmony situation towards the end of Tunku Abdul Rahman’s reign needed to be addressed. Tun Razak was the man for it.

Thanks to Tun Razak, his methods to tackle the disparity in income distribution is a fixed policy that forms the foundation of Malaysian economic framework for years to come until now as evident in Malaysia Plan 1 to 11. At that point, Creative Industry was still not in any priority list. To be honest, perhaps it was never in our neighbours’ list either. In any case, we now move further in the history continuum of era. Tun Hussein was a transition Prime Minister and everybody knows this. He was a good administrator of course. What we needed was the third phase after Tunku’s Sovereignty Era and Tun Razak’s Economic Adjustment Era. And there was Tun Dr. Mahathir.

The third phase was the transformation of Malaysia from a primarily agriculture based nation to a neo-industrialised country (NIC). We were to move away from being the largest tin mining country in the World. We were to move away from being the largest rubber exporter nation in the World. We were to emulate the Japanese (post war). We were to emulate the Koreans. We were to emulate the Germans (post war). We were dipping our toes in so many modernisation initiatives. Fortunately for us, we had the money from our petroleum revenues. This was the Modernisation phase. This is when we started exporting semiconductors from Penang, cars from Shah Alam, petrochemicals from Kerteh and many more factory based products.

Tun further started the ball rolling on K-economy (Knowledge Economy). It was the era of universities growing like mushrooms. It was when the earlier mentioned MSC was made into existence. Along with this the Creative Industry started to see the light at the end of the tunnel for Creative Industry is very much a subset of K-economy. A significant portion of the Creative Industry is the Content Industry. The Content Industry was and still is, very much human capital intensive in its nature. A lot of investments needed to train people as they are the sole largest and most important asset in the Content Industry. Later in this thesis we will touch base with Fashion, Performing Arts, Visual Arts, Music and Literature, but for now, the Content Industry takes a front seat.

So there it was, the beginning of an era where Creative Industry starts appearing in Governmental policies. Tun Mahathir left shortly after the commencement of the MSC and after a short governance under Tun Abdullah, Dato’ Sri Najib Razak became the Prime Minister. Unlike his father (Tun Razak), Dato’ Sri Najib inherited a country with relatively more stabilised income disparity condition, a well established country that is accepted by the World and a country that has the ripe platform for a transformation from a Developing Nation to a Developed Nation status. This is when Creative Industry will emerge as a significant force to be reckoned with when politicians are talking about national economy and the employment market.

At this stage, it is still nothing to shout about. What we need to understand is what it means to be a Developed Nation? A Developed Nation no longer struggle to make statements for World sovereignty security. A Developed Nation no longer struggle to address poverty. A Developed Nation no longer does soul searching on what the sources of economy should be. A Developed Nation starts talking about identity.

What is an identity? That is the question. This is where the Creative Industry will be noticed. When we ask about Malaysia’s identity, we will think about our culture for culture is the one variable that differentiates us from the other countries. Culture is the umbrella for many creativity elements. Under culture we embrace art. Under culture we embrace our traditional music and plays. Under culture we identify our culinary uniqueness. Under culture we say who we are to the rest of the World. This is what the fourth phase should be, that is, the age of Identity. We are to shout to the World that we are beautiful just like how the Japanese did with their animation. Just like how the Americans did with their Hollywood. Just like how the French did with their culinary arts. Just like how the British did with their theatres. Just like how the Koreans did with their K-Pop.

This is what the Najib (Dato’ Sri) administration should be about. It is an era of identity. It is an era of culture. It is an era of knowledge. It is an era of human capital. It is an era of the Creative Industry. We have thousands of years of evolved culture and along with it we inherited immense creativity. Our youth no longer talks about being accountants, lawyers, engineers, doctors and the like. Our youth is talking about information technology, gaming industry, digital content, social media, internet of things, virtual reality, augmented reality, sustainable development and many more phenomenon that only suggest that creativity is a necessity rather than complementary.

Looking back at the Malaysian budget for the past decade, we can identify billions of money being invested for the Creative Industry. The preparation of the infrastructure to open Malaysia to the internet world itself is already a huge thing. MDeC had, on many levels, facilitated this by partnering with many international companies who opened their offices in Cyberjaya. The telecommunication industry saw a paradigm shift when its consumers switched from fixed lines to mobile lines and started to consume data rather than voice. And there was the huge investment in High Speed Broadband by Telekom Malaysia.

There were also many funds being made available to help grow the Creative Industry. Grants were transmitted from agencies like MDeC, FINAS, MCMC and Cradle providing the financial means for Research and Development and product design. We started to see more technology companies mushrooming and many of them were/are indeed fuelling the Creative Industry. From the basic Keluang Man cartoons, we now have the more complicated BoboiBoy and the infamous Upin dan Ipin that had spread their wings into the Indonesian market.

The gaming industry now praise the awesome new games such as Street Fighter V and Final Fantasy XV. Guess where were these games developed? Here (Malaysia) in Bangsar South by a company called Streamline that employs eighty percent of their workforce from the Malaysian youth. Who did most of the computer generated images (CGI) for the movies Snow White and the Huntsman and Life of Pi? As you may have guessed, Malaysians who formed majority of the work force at Rhythm and Hues in Cyberjaya back in 2011. The point here is that, we (Malaysians), have what it takes. We just need to launch it off into the sky. But, why have we not done so yet? Sure we have some successes. Great. What we really need is pervasive success.

What is pervasive success? Pervasive success is a state of affair where all initiatives, whether structured or unstructured, are based on a dedicated foundation with the view of sustainable existence, provided that that particular existence, is indeed a success that is acknowledged. For example, teaching students is an initiative. Teaching comes in many forms. It can be class room based. It can be practical exercises like what an intern experience. It can be training sessions like in the boxing ring. When we take all of these initiatives and arrange it into agendas, we will get a syllabus, an educational syllabus.

Syllabus are then cascaded into an institutionalised system that we all love so much, i.e. schools. The establishment of schools survived decades of generation until such point where more than one generations can find common grounds. This is true because the kids in school today learn the same thing that we learn one hundred years ago – i.e. mathematics, geography, history, science, biology, physics, chemistry and language. True that the content and methods may differ from one generation to another but the basic premise of those subjects remains the same.

For the Creative Industry to achieve this pervasive success, we must first define what is success. Earlier it was mentioned that in 2011, the Creative Industry only contributed 1.27% of the Malaysian GDP. In 2013 this figure increased to 1.34% and the latest statistics (Source: MDeC) revealed that 2015 achieved 1.60%. This is a fantastic improvement. A lot of this was contributed by Government initiatives to boost the Creative Industry.

With the continued grant financing via agencies mentioned earlier and business loans being made available through Bank Simpanan Nasional and MyCreative Ventures (a Government investment arm), the last half decade has shown a more than gradual increment. Is this the success we are talking about? It can be, but it need not be the only one or the most important one. There are other indicators worth pursuing such as employment in the Creative Industry, number of entrepreneurs in the Creative Industry and recognitions achieved.

We can define success all we want but we have not yet established the parameters of what we can agree as a pervasive nature of the success. Let us take employment in the Creative Industry as an example. Success is defined as jobs being created for youth in the Creative Industry. However, when we take a ’pervasive’ view on this, not only should we have jobs being made available, we must ensure that the youth is educated to match the job requirement.

Do we have enough academic institutions to give our youth the qualification required? Are the qualification too philosophical instead of practical? Perhaps students for the Creative Industry need not go through the usual university myopia and instead, a more vocational and technical approach taken? If we have a system that matches our youth’s skills to the jobs being generated by the industry, and that system is maintained, then we have indeed achieved pervasive success. For now, Malaysia is still taking baby steps. So, when we struggle to fuel the Creative Industry and hope that it can blossom, we must ask the right questions. Are we doing it the correct way? The typical “Give a Man a Fish versus Teach a Man How to Fish” thing.

Which of our initiatives are ‘Fish’ and which ones are ‘Teach How to Fish’? Millions of money have been injected into the Creative Industry in the form of grants. This is to help reduce the financial burden of film makers, game developers and animation studios. Grants are great. It certainly help new entrepreneurs to kick start their businesses. However, those companies must grow. They must graduate onto the next level. Instead of talking about “How do I fund this project?’”, they should be asking “How do I fund my Company for the next five years?”. When grants have become their ‘Ganja’, then that is when grants are ‘Fish’ instead of ‘Teach How to Fish’. At this juncture, we shall stop talking about this as there will be plenty of opportunities in future articles where such matter can be deliberated on.

What about our society? Is our (Malaysian) society susceptible to embracing culture the way it is supposed to be embraced if we are to grow the Creative Industry? How many times have you heard your friends asking for free tickets for theatre or musical shows? How many times have you seen your friends buying pirated DVDs or surfed on a pirate site instead of buying the legal content? How many times have you seen your friends reading junk on the social media rather than reading proper novel written by professional writers? How many times have you seen your friends buying cheap art from Bali instead of supporting local artists? How many times have you seen your friends wearing Indonesian Batik rather than Malaysian Batik? You can bet your bottom Dollars that the answers for those questions are not favourable (to the local industry) and what is worse, you apply those questions to yourself instead of your friends.

Many of us (the so called consumers of our Creative Industry) do not realise how we have forsaken our culture, and along with it, forgotten our creative offerings. Our lives are somewhat influenced by civilisation, historical or contemporary, both with significant impact. No doubt ancient civilisations extinct, but they leave behind elements of culture, a legacy that survives throughout time. One important element of culture is Creativity. Creativity and human evolution is inseparable. Unfortunately, many people do take things for granted by ignoring the importance of Creativity. Why do we accept arrogance and ignorance that led Creativity to a forgotten phenomenon in our very life? Even the God and prophets of human civilisation shone through art. Will it not appear awkward if we deny Creativity as part of our existence?

By now, most of us would have already concluded that we need to do a lot more. Some of us may have also forgiven ourselves and reassured ourselves that we did not start late given the natural progression of our nation establishing itself in this World. Now is the time when we strive to convert Malaysia from a Developing Nation to a Developed Nation and with this, we ought to pull the Creative Industry into the projection. Many efforts need to be put in place. The Government has an important role to play when setting policies and budgets. The players in the industry certainly have crucial roles to be carried out for they are the building blocks of the Creative Industry. The general society (assuming the society as a whole is the universe of consumers relevant for the Creative Industry) must embrace the Creative Industry. Or else, how else can the Creative Industry ensure its going concern?

* kopihangtuah

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12 January 2017

Entering 2017 with a Well Prepared Malaysia


Taxes (GST) are not popularly accepted by the citizens but taxes are the very reasons why we have managed to stay alive when faced with a shocking decline in the oil prices. Malaysia has managed to reduce its income dependency on oil from 40%++ to 14%++. This reduced reliance on oil, coupled with the extra revenues from taxes helped dampen the sad story and provide the light at the end of the tunnel. 

THE FINANCE MINISTER 2, Dato' Johari Ghani, gave a reassuring speech today at the Securities Commission (SC) when opening the International Fund Forum 2017 as well as launching Malaysia's Islamic Fund and Wealth Management Blueprint. Johari happily shared that with the Malaysian Gross Domestic Product (GDP) growth forecasted at 4% for 2017, we are set to experience the second part of the hockey stick curve. 

This is supported by various other indicators such as the low inflation rate of 1% as well as the low unemployment rate of 1% that will boost consumption expenditure resulting in an upward spiral of the economy. This was further reinforced by the uplifting of a huge portion of the population from the poverty level of B40 into the M40 category as minimum wages are hightened. Whilst the Ringgit is weak, it is conducive for expansionary mode for our export markets. This will also contribute to the upward spiral.

Taxes are not popularly accepted by the citizens but taxes are the very reasons why we have managed to stay alive when faced with a shocking decline in the oil prices. Malaysia has managed to reduce its income dependency on oil from 40%++ to 14%++. This reduced reliance on oil, coupled with the extra revenues from taxes helped dampen the sad story and provide the light at the end of the tunnel. Lest we forget, the taxes referred to here is very much a function of the newly consumer and broadbased tax, the GST. 

Looking back at the 2017 Budget that was announced by Prime Minister Dato' Sri Najib Razak late last year, the Government has provided various initiatives to boost the economy particularly in encouraging more skilled based workforce for the nation as well as inviting the private sectors to inject investments into the equation. The Government had also put aside their share of investments via the commitment for continued infrastructure developments such as the Mass Rail Transport (MRT), roads, schools, rails and hospitals. 

The SC had reported that Malaysia saw RM100 billion worth of capital raised for 2016 and expects the same for 2017. This is on the back of our leading profile as the primary Sukuk issuer in the World. With this capital market position, we are balancing our cashflows even when it takes a while for foreign investors to re-enter Malaysia. The one factor that, perhaps, needs to be looked at would be the positive attitude from market sentiment perspective.

Whilst many feel good factors can be initiated, the attitude of fellow citizens do require a restructuring emotionally in order to move the herd into a positive direction. After all, the World Bank has given good comments on our Economic Transformation Programmes (ETP) that started in 2010. In fact, many countries are consulting our experts to emulate the ETP. To add on, we are included in the Emerging Markets group, i.e. the more preferred group nowadays as Europe and other Developed Nations experience low growth. 

Notwithstanding Trump's dislike for international trade cooperations via the proposed Trans Pacific Partnership Agreement (TPPA), we are set to move globally when we made new trade collaborations with the biggest economy, China. In any case, the United States of America (USA) has more foreign investments in China than China has in the USA. Like it or not, the capital owners in the USA will not ignore China despite the contrary view by their President. After all, China has increased their contribution to the World export market from 5% to a massive 15% recently. For that, Malaysia has put its bet on the favourable side of the Roulette table.

So, with all this, we hope for a prosperous 2017. Happy Living everyone.

* kopihangtuah

| mcmlxxv:viii:xxix |

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