MORE TO MOVING UP THE VALUE CHAIN THAN ICT AND BIOTECHNOLOGY

In my over 25 years of writing about the computing, information and communications technology (ICT) industry in Malaysia and abroad, I've heard no end about Malaysia having to develop a domestic ICT, multimedia content, bio-technology, nanotechnology and other gee-whiz emerging technologies in order toe be able to move up the skills and value chain to increase our competitiveness, productivity in order to become a knowledge-based, information-rich, high-income economy by the year 2020, which was recently postponed to 2024 and now to 2030.

Malaysia's government ministers and officials downplayed Malaysia's existing agricultural and natural resources industries as "First Wave" and Malaysia's manufacturing industries as "Second Wave" as "sunset industries", whilst they touted ICT and multimedia, bio-technology, nano-technology and other sexy emerging technologies as "Third Wave", "sunrise industries" which would move Malaysia up that much touted value-chain.

Whilst, such national aspirations are not wrong in principle, however our neighbours in the region have been moving up the skills and value chain in terms of creating higher value-added agricultural and manufactured products, rather than undergo premature de-industrialisation, or in short, grow Malaysia's degree or economic complexity and diversity.

In his OutSyed the Box blog post reproduced below, Syed Akbar Ali explains economic complexity simply as the extent to which a country's productive, innovative and inventive capabilities have moved up the skills and technological chain to move beyond being a mere commodity raw materials producer to a downstream producer of higher-value products, which can fetch higher prices in world markets and earn the country more foreign exchange, which should enable the country's workers to earn higher incomes.

Syed also explains Thailand's strengthening Baht versus the Malaysian Ringgit as being due to the growth in Thailand's economic complexity.

Back in the 1960s and 1970s, one Malaysian Ringgit would buy 11 Thai Baht and in the late 1990s and throughout the 2000s, the exchange rate was about one Ringgit to 10 Baht. 

However, in the past few years, the Baht has strengthened to one Ringgit to around 7.21 Baht, which has got Thailand's central bank worried about about how to keep the Baht's rise under control for fear that it will adversely affect Thailand's exports, according to a Bloomberg article carried by The Star below.

In his blog post, Syed also referred to a report in March 2018 -  Complexity and Growth: Malaysia’s Position and Policy Implications, by Brenda Cheah Wenn Jinn and Mohd Shazwan Shuhaimen of the Economics Department or Malaysia's central bank - Bank Negara Malaysia, which shows a direct correlation between a country's  degree of economic complexity and national income levels in Gross Domestic Product (GDP) per capita, and also compares growth in Malaysia's Economic Complexity Index (ECI) with ECI growth in our neighbouring Asia-Pacific countries, including Japan, South Korea and Singapore.     

Syed's OutSyed the Box blog post follows below, highlighted in blue:-

syedsoutsidethebox.blogspot.com

Thai Baht, Economy Surges - Their Economic Complexity Is Increasing

Here is The Star and Bloomberg.

CLICK HERE TO READ ARTICLE

• tough to stop baht from surging
• baht advanced 0.3% on Friday to 30.187 per dollar
• strongest level since May 2013
• gain 7.8% this year, more than peers except Russia’s ruble
• Why is baht so strong? 
• Several factors attracting investors to Thailand
• haven for foreign money
• healthy current account tops them all
• IMF forecasts surplus of 6% of GDP this year, double Japan
• Thailand’s reserves, negligible inflation also provide investors comfort
• foreign reserves stands at US$220 billion
• equivalent of 12 months imports
• inflation 0.3%, below target of 1% - 4% since June
• getting boost from gold
• Thailand hub for bullion trading
• benefited from 17% gain in gold price this year
• How much more can baht appreciate?
• whether baht will breach 30 per dollar

- Bloomberg

My comments :  

The Thai Baht has now appreciated to almost 7:1 against the Ringgit (Oops previously I mentioned 6:1, not true).

Over the past year the Thai Baht has appreciated over 7% against the Ringgit.  You can see the chart here :

Locals say shopping in Danok or Golok is not attractive anymore.  

• Thailand is becoming unaffordable for Malaysians
• Macam dulu orang JB seronok pi shopping di Orchard Road (Like before, Johor Baru (JB) people were comfortable to shop at Orchard Road (Singapore))
• Now with the Singapore Dollar worth RM3.07 orang JB cannot even afford to  window shop in Singapore.

Very soon Thais will come to Malaysia to buy things that Malaysians will not be able to afford to buy here. Just wait and see.

There are many things good about Thailand. The Army Junta that runs the country seems to understand that just letting the economy fix itself and move forward is a good thing to do. The government stays out of too much interference in the economy.

The previous Shinawatra business dynasty which ran the country was  too big into cronyism and lining their own pockets - typical for a Third World country with lax institutions and controls. (Hence the importance of having strong and independent institutions in any country).

There is no guarantee that the military Junta now is any cleaner but perhaps they are less sophisticated in white collar shenanigans (compared to the previous bunch). Lets hope they stay that way.

There are other factors. The Thai Chinese business community - which basically runs the Thai economy - is obviously investing more of their money in manufacturing. They seem to have more faith in the future.  This is critical for Thailand. The business people must not be hindered from doing what they know how to do best.

Ok now I would like to thank the reader (obviously an economist or in some related field) who months ago sent me an excerpt of a research paper by Bank Negara Malaysia about some comparative analysis of  Asian and ASEAN economies, including Thailand. I will be referring to some of that research now. 

This paper is by two Bank Negara researchers Brenda Cheah and Mohd Shazwan. It is about what is called 'Economic Complexity'. Here is a snapshot about economic complexity.

Simply put this is talking about value added and linkages (or leveraging on that value added).

Lets take our oil palm and palm oil economy. There is very little technology (on a comparison basis with Singapore, Vietnam and even Thailand.) Just clear the land, plant the oil palms and six or seven years later harvest the fruit.  Press the oil, put it into tanks and ship it out.

What are the supporting industries or industry sokongan? Lorry drivers, grass cutters, weedkillers, plantation workers (Banglas, Indons), Java Man's brother with Slave Labour Permits to import 1.5 million Banglas etc. Those are the industry sokongan.  Almost no value added (from 50 years ago) and few or no new linkages. So the palm oil industry lacks any real complexity.

The foreign worker permits business still is the biggest useless ripoff that our economy has to face. It still costs RM8,000 to bring in ONE foreign worker. Kula Thengga, LTTE aah? 

Each new level of complexity means new value added in that sector.  

Each new level of complexity means new wealth creation.

Each new level of complexity means newer, higher paying jobs.

So the more levels of complexity in the economy the more value added and the more advanced economy. If we can downstream process our palm oil to greater levels of complexities we may earn much higher incomes.

Instead of exporting tons of raw palm oil, why not process the oil and extract all those highly concentrated stuff that goes into so many higher value products like medicines, cosmetics, food etc? Who knows a kilo of the downstream products may cost as much as a ton of raw palm oil.

Anyway here is a comparison of the Economic Complexity of various countries.

Malaysia is now only one step ahead of Thailand. The Thais are fast catching up. The complexity of the Thai economy is improving. Their economy is having more complex linkages within industry sectors.

I can tell you about their auto industry. Thailand is now the Detroit of South East Asia. Producing over ONE MILLION trucks per annum the Thais are the largest manufacturers of 1 ton pick up trucks in the world. They also manufacture a huge range of automobiles for major world car brands. And now the Thai auto industry has really moved up the value chain where design is also being done fully in Thailand.

Many foreign car manufacturers have design bureaus located inside Thailand. There is therefore a complete car industry ecosystem - from design to manufacturing - in Thailand.

This is what is meant by complexity. 

Two points to note - the Thais started their car industry AFTER Malaysia and they DO NOT HAVE a Proton Saga.

While the Economic Complexity of Thailand, Vietnam, Bangladesh and other countries is rapidly increasing our economy is stuck or moving much less slowly.

That is why the Ringgit is now at 7.21 Baht.  The Baht will likely strengthen.

CLICK HERE TO READ SYED AKBAR ALI'S BLOG POST (AND HURRY, AS IT USUALLY WILL NOT BE UP FOR LONG)

BTW. Besides being a blogger, Syed has served on the Advisory Panel - Malaysian Anti Corruption Commission, a businessman, property developer, author (three books to date), company director, newspaper columnist, NEAC economic consultant and a banker.

To add on my part, the Bank Negara Malaysia report referred to includes a chart which shows slower growth in Malaysia's Economic Complexity Index (ECI) that the Philippines'

CLICK HERE READ OR DOWNLOAD THE BANK NEGARA MALAYSIA REPORT

In addition to Malaysian's developing our skills, technologies, technical capabilities and expanding the range of higher value-added products our industries produce, firstly our industries, especially our small-to-medium industries and enterprises must commit to a culture of producing high-quality, innovative, lasting and reliable products which can be sold at higher prices to more discerning customers both domestic and overseas, and not selling cheap, low quality  products sourced in bulk from original equipment manufacturers (OEMs) overseas, which are domestically rebranded with some cosmetic embellishments and sell them to competed on the lowest price, as some domestic Malaysian rebranders of home appliances and other such items currently do.

For instance, cheap products such a this electric oven from a Malaysian small-to-medium sized company which rebranded it with with an impressive-sounding western name, in which the two heating elements warped upward and touched the metal roof of the oven cavity, causing a short which tripped the mains circuit breaker.

This is the third time it developed a fault. The first was that two of its heating elements failed shortly after the one-year warranty expired and it was sent back to the company for repair for a fee.

The next time, its timer switch stopped turning just before it would cut off resulting in the food inside being burnt and it took about a month for the company's workshop to replace the timer switch.

When it failed for the third time I threw it away and got a comparable replacement from a more reputable Malaysian small-to-medium sized manufacturer and that one has had no problem after over two years or so, though I believe that it too was obtained from a foreign OEM and rebranded with this other other company's brand name.

In order for Malaysian manufacturers to achieve greater economic complexity, they will have to be able to conduct their own research, design, development and manufacture of such products of high quality and reliability.

Otherwise, they can forget about adopting Industry 4.0 production facilities and technologies, artificial intelligence, Internet-of-Things, digitalisation and so forth, since all they will achieve is to produce the same scheiss more quickly and efficiently at lower cost, since Industry 4.0 won't design products for manufacturers.

Yours truly

IT.Scheiss

YOUR STREAMING VIDEO IS SLOW? WELL PAY US A PREMIUM FOR FULL SPEED.

Cyberutopians in the days of dialup Internet, way back in the mid 1990s, told us that "the Internet belongs to nobody", "cannot be controlled by governments or censors", "will enable us ordinary people to challenge government and the big corporations" and so forth but today, many content creators are whining and moaning about their content hosted for free on social media sites being either denied advertising, hence advertising revenue or booted off entirely, their sites being listed way down in searches and so forth.

On 8 February 1996, John Perry Barlow published A Declaration of the Independence of Cyberspace, whilst hobnobbing with the capitalist world's elites at a World Economic Forum in Davos, Switzerland, in response to the Telecommunications Act of 1996 in the United States.

Below, highlighted in blue, is his declaration, telling government to butt out of the "realm of minds" - i.e. Cyberspace, as is published on the website of the Electronic Frontier Foundation:-

A Declaration of the Independence of Cyberspace

by John Perry Barlow 

Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.

We have no elected government, nor are we likely to have one, so I address you with no greater authority than that with which liberty itself always speaks. I declare the global social space we are building to be naturally independent of the tyrannies you seek to impose on us. You have no moral right to rule us nor do you possess any methods of enforcement we have true reason to fear.

Governments derive their just powers from the consent of the governed. You have neither solicited nor received ours. We did not invite you. You do not know us, nor do you know our world. Cyberspace does not lie within your borders. Do not think that you can build it, as though it were a public construction project. You cannot. It is an act of nature and it grows itself through our collective actions.

You have not engaged in our great and gathering conversation, nor did you create the wealth of our marketplaces. You do not know our culture, our ethics, or the unwritten codes that already provide our society more order than could be obtained by any of your impositions.

You claim there are problems among us that you need to solve. You use this claim as an excuse to invade our precincts. Many of these problems don't exist. Where there are real conflicts, where there are wrongs, we will identify them and address them by our means. We are forming our own Social Contract. This governance will arise according to the conditions of our world, not yours. Our world is different.

Cyberspace consists of transactions, relationships, and thought itself, arrayed like a standing wave in the web of our communications. Ours is a world that is both everywhere and nowhere, but it is not where bodies live.

We are creating a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth.

We are creating a world where anyone, anywhere may express his or her beliefs, no matter how singular, without fear of being coerced into silence or conformity.

Your legal concepts of property, expression, identity, movement, and context do not apply to us. They are all based on matter, and there is no matter here.

Our identities have no bodies, so, unlike you, we cannot obtain order by physical coercion. We believe that from ethics, enlightened self-interest, and the commonweal, our governance will emerge. Our identities may be distributed across many of your jurisdictions. The only law that all our constituent cultures would generally recognize is the Golden Rule. We hope we will be able to build our particular solutions on that basis. But we cannot accept the solutions you are attempting to impose.

In the United States, you have today created a law, the Telecommunications Reform Act, which repudiates your own Constitution and insults the dreams of Jefferson, Washington, Mill, Madison, DeToqueville, and Brandeis. These dreams must now be born anew in us.

You are terrified of your own children, since they are natives in a world where you will always be immigrants. Because you fear them, you entrust your bureaucracies with the parental responsibilities you are too cowardly to confront yourselves. In our world, all the sentiments and expressions of humanity, from the debasing to the angelic, are parts of a seamless whole, the global conversation of bits. We cannot separate the air that chokes from the air upon which wings beat.

In China, Germany, France, Russia, Singapore, Italy and the United States, you are trying to ward off the virus of liberty by erecting guard posts at the frontiers of Cyberspace. These may keep out the contagion for a small time, but they will not work in a world that will soon be blanketed in bit-bearing media.

Your increasingly obsolete information industries would perpetuate themselves by proposing laws, in America and elsewhere, that claim to own speech itself throughout the world. These laws would declare ideas to be another industrial product, no more noble than pig iron. In our world, whatever the human mind may create can be reproduced and distributed infinitely at no cost. The global conveyance of thought no longer requires your factories to accomplish.

These increasingly hostile and colonial measures place us in the same position as those previous lovers of freedom and self-determination who had to reject the authorities of distant, uninformed powers. We must declare our virtual selves immune to your sovereignty, even as we continue to consent to your rule over our bodies. We will spread ourselves across the Planet so that no one can arrest our thoughts.

We will create a civilization of the Mind in Cyberspace. May it be more humane and fair than the world your governments have made before.

Davos, Switzerland

February 8, 1996

https://www.eff.org/cyberspace-independence

So Cyber-libertarians like Barlow appear to regard Cyberspace as some kind of "new wild west" - a realm where the rule of law is unenforceable or non-existent, and where the one who draws his revolver and shoots first wins, like in those once-popular films called "westerns".

Fast forward to 2017, the Federal Communications Commission (FCC), the U.S. communications industry regulator and a counterpart to our Malaysian Communications and Multimedia Commission (MCMC), attempted to repeal net neutrality rules, which prevented Internet service providers and telecommunication network operators to provide equal treatment to all their customers, and the repeal of net neutrality, allows Internet service providers and telecommunication network operators to provide preferential treatments to some over others.

For example, without net neutrality rules, an Internet service provider or a telecommunication network operator can limit the speed of streaming video content, such as a You Tube video, over their network, unless customers pay a premium to upgrade to full speed.

Former U.S. President Obama opposed the FCC's decision to repeal net neutrality but more recently, a Federal Appeals Court in the U.S. backed the FCC's decision to end net neutrality and current U.S. President Donald Trump applauded the court's decision, as Russia Today of 7 October 2019 reports.

Trump celebrates ‘win’ against net neutrality – and it’s anything but a victory for open internet

7 Oct, 2019 18:30

 A federal appeals court has backed the decision to ditch net neutrality, and President Donald Trump is touting the victory; others warn net neutrality is key to an open internet. Now, does anyone remember what net neutrality was?

President Donald Trump hailed the DC appeals court’s decision to uphold the Federal Communications Commission’s 2017 move to axe net neutrality as “a great win for the future and speed of the internet” that will “lead to many big things, including 5G” in a tweet on Monday. But what is net neutrality, exactly, and why does anyone care?

The FCC, led by a former Verizon lawyer, dropped Obama-era net neutrality rules in 2017, deregulating companies like Verizon and Comcast that provide broadband internet service. Net neutrality rules barred these companies from speeding up access for sites and customers they liked and throttling or even blocking access to sites and customers they didn’t. Providers were legally blocked from manipulating internet traffic based on whether a customer or site had paid for ‘better’ service. Internet providers were held to the same rules as telephone service providers.

Net neutrality’s backers worried that without the rules, providers would create a two-tiered system that gave those who could pay quick and unrestricted access, while those who couldn’t would be limited to sluggish internet ghettos. The rules force carriers to treat all internet traffic equally – a crucial safeguard in an industry in which many broadband providers have a monopoly or near-monopoly on customers in a certain region. Opponents of net neutrality insist that providers that act badly will merely drive their customers to competitors – forgetting that in many areas, there are no competitors.

The process of repealing net neutrality rules in 2017 was tainted by malfeasance. A New York state probe found that nearly half of the public comments submitted to the FCC while they were considering rolling back net neutrality were fake – and a Stanford University study found the vast majority of the real comments were in favor of keeping net neutrality. Even the House, despite hefty donations from telecom companies, has come out in favor of net neutrality, passing a bill in April to restore the Obama-era rules.

There is a bright spot in last week’s ruling, however. It allows states to pass their own net neutrality laws and prevents the FCC from interfering. California has already passed its own net neutrality law, which the Justice Department immediately pounced on and which it will be allowed to keep if the appeals court ruling remains in effect.

Think your friends would be interested? Share this story!

https://www.rt.com/usa/470391-net-neutrality-repeal-upheld-what/

So Cyberspace belongs to someone after all, and they usually are a handful of very large corporations.

If Cyberspace "belongs to nobody", as these deluded Cyberutopians claim, we would not have to pay our broadband service provider for broadband access.

This goes to show that Barlow's A Declaration of Independence of Cyberspace was a load of IT scheiss all along.

These Ayn Rand, Chicago School, von Hayekist, von Misesist Cyber-libertarians (right wing anarchists) never learn or must have been smoking something besides tobacco to be able to come up with such nonsense.

Netizens have gotten to used to being able to get most items and services for free on the Internet from capitalist content hosting providers, until they have developed an entitlement mentality, whereby they expect it's their right to get everything for free on the Internet.

However, what these idealistic idiots don't realise is that such sites may initially host content creators for free in order to build up traffic to their sites and attract sufficient advertising revenue revenue, after which they can dump those content creators who are not bringing them enough advertising revenue, much like a sales and marketing company dismisses sales representatives who do not meet their monthly quota.

Also, online advertisers want to have a say in which websites or videos their advertisements appear on, since they don't want their products and services advertised to be associated with websites and videos which their potential customers may regard as controversial or offensive.

For instance, You Tube, owned by Google, used to place advertisements on any video and shared the advertising revenue with the respective content creators.

However, some major advertisers were not happy that their advertisements were appearing on videos featuring controversial political opinions, including expressions of prejudice, racism, sexism, radical politics to the far right or far left, generally objectionable content such as pornography and so forth, so You Tube redesigned its algorithm's to be more selective of videos and creators' video channels where advertisements appeared and many of the more radical or objectionable video creators saw a huge reduction in their earnings from their their You Tube videos, which they have termed as "demonetisation".

All this happened even whilst net-neutrality was in force, since the rule did not cover content hosting sites such as You Tube, which retained the right to decide on what content they wanted to host, just as landlords have the right to decide on which tenants they want to rent to, or hotels may reserve the right to deny accepting certain troublesome guests, even though that rarely happens.

Way back in 2007, Kuching, Sarawak-based blogger Kenny Sia, whose blog was signed up with blog advertising placement company Nuffnang, told me that he avoids overtly political content on his blog posts, since it would drive away advertisers, and back then, he was earning around RM15,000 per month from advertising on his blog.

This is why, you hardly find advertisements on politically-inclined alternative news portals, since advertisers don't want their especially mass-market products or services to be associated with a particularly politically inclined view, since they could alienate a major portion of customers who object to those views.

Similarly, advertisers are very selective about which print newspapers their advertisements appear on, so they generally avoid placing their advertisements on political party publications.

So look Cyberutopians! Only within a socialist society, where the means of production, distribution and exchange are owned by workers, not capitalists, will it be possible to provide free broadband access and net neutrality to all, though most likely, anti-socialist, pro-capitalist, anti-worker, anti-social, racist, sexist and bourgeois-decadent content such as pornography would be banned online under socialism.

Also, we also very likely won't have annoying advertisements popping up online under socialism.

Yours truly

IT.Scheiss