Khairy: Malays need to make up for lost time

(NST) FOR all the thousands of words written about him, not a lot is known about Mr Khairy Jamaluddin. There are hundreds of tales, myths and gossip but few facts. And he keeps it that way by rarely giving personal interviews.

Despite this, he is one of the most recognised personalities in Malaysia. He is famously aloof but that's more likely a natural reserve when it comes to strangers. It's not difficult to see why he does not want to talk about himself.

Mr Khairy, the son-in-law of Prime Minister Abdullah Badawi, has been the favourite whipping boy of everyone in the past few years. He has been accused of having a domineering influence on government policy, excessive ambition and haste in his political career, meddling, and more recently, of being an overbearing champion of Malay rights. These accusations spring mostly from gossip - and some are pretty outlandish - but the last one started when he tabled the motion on the economy at the Umno general assembly two years ago.

His speech was seen as the start of a renewed push for greater Malay economic rights which provoked a rise in rhetoric on all sides. His donning the mantle of a Malay champion puzzled many. He is the son of a diplomat, schooled in Singapore and then, Oxford University followed by University College London. At a young age, he was writing for The Economist, hosting a TV talk show, and doing the things that very few Malaysians can aspire to.

Now a mere 31, he is highly articulate, and is frequently in glittering company with his wife, Nori Abdullah, the only daughter of PM Abdullah. They have been married for more than five years, and are expecting their first child in October. He is also the deputy head of Umno Youth, and now a full-time politician after he sold his stake in an investment bank last year. He plays golf and polo. His office in upscale Damansara Heights reveals an eclectic taste for elegant furniture with a colonial-style leather wingback chair paired with a gleaming Mac computer.

He does not appear to be what some would call a Malay radical. Yet critics say he is. But Mr Khairy's stand is more complex than his detractors will admit as it makes for a less exciting story when nuance comes in to complicate things.

He told The Straits Times that consciousness of Malay rights began with the realisation that there were only 13 years to 2020 when Malaysia hopes to become a developed nation. The Malays cannot be left behind. 'We realise its (the Malay agenda's) weaknesses and excesses. We are not saying, give us everything. We are saying, give us the proper opportunity and we will make sure this time, it is not squandered,' he said.

Umno, he said, was trying to motivate the Malays to finish the race but the renewed battle cry alarmed the other races. Mr Khairy acknowledged that it did sometimes sound like it was exhorting the Malays to see the other communities as rivals. 'When you want to try to motivate the political ground, your rhetoric always tends to sound a little bit like that, no matter who is saying it, whether it's Umno, MCA or MIC,' he said.

This premise explains why he and his Umno Youth colleagues can seem so unrelenting in their demands on the one hand, and support the rollback of Malay privileges in certain areas on the other. For instance, Mr Khairy supports the government's incentives for investors to south Johor's Iskandar Development Region. The government was criticised for offering foreigners a waiver of the requirements for at least 30 per cent bumiputera equity, and a certain level of Malay employment.

He argued that similar incentives had been given to the manufacturing sector and information technology companies located in the Multimedia Super Corridor. 'Other than the fact that this is being given to newer industries, it is not something that we have not given before elsewhere,' he said.

Critics have noted that the earlier measures were for specific industries where there was little Malaysian capability, while the IDR incentives extend to industries like tourism. But Mr Khairy pointed out the earlier incentives were also given to IT companies that developed content, not just software. He argued that Malaysia needed investments in the IDR, and thousands of jobs will be created, most of which would be for Malaysians.

'Of course, the feeling on the ground is still fragile,' he said. The strong feelings have already caused political pressure to build. Umno Youth Johor was among those expressing concern in private meetings. But Mr Khairy said this should not be read as a rejection of the IDR incentives. Rather, it was a call to ensure bumiputera participation.

'We don't want to be in a situation, especially Umno, where we accept the incentives which are tailor-made for foreign investors, and we don't put up a fight anymore,' he said. To investors, however, this could simply sound like mixed messages.

Says Mr Khairy: 'Political language is difficult for outsiders to understand.' That could perhaps apply to people's perception of him as well. His political language versus his personal philosophy. Personally, he thinks that affirmative action will have to end someday. And if his career trajectory goes where his ambition aims, it'll be his generation of politicians who will have to deal with the issue.

He knows that, and he also realises the difficulties. But somehow he seems optimistic. 'It's going to be politically difficult to wean the Malays off but once they realise that it will mean so much more that they can do without these quotas... the sweet taste of success will mean so much more,' he said. The goal, he said, is to 'solve this Malay problem once and for all'.

Out of the Cage: Iskandar not a sell-out to foreigners

(NST) WHEN Malaysians were told that southern Johor was being positioned as a new centre for economic growth, there was tremendous excitement at the compelling logic and sheer potential of the proposition.

It made perfect sense for investors looking to arbitrage between two destinations separated by a narrow sliver of water with significantly different cost structures as far as land and labour are concerned. The size of the proposed area would also create the sort of scale that Singapore could only wish for.

For a while the excitement was based on the government’s‘big think’ about the area with not much flesh on the bones. But it was enough to breathe life into moribund stock prices of companies with development plans in the region and also attract strategic interest, especially from oil-rich investors looking for a good story.

The prime minister articulated the vision well, making southern Johor arguably the centrepiece of his corridor development approach which will also see special but differently themed zones in the northern states, the east coast and in East Malaysia.

But for people ready to park their investments, they wanted comfort that the incentives they would get would be as competitive as anywhere else in the region or even globally.

So when the prime minister recently announced the package of incentives for zones within the Iskandar Development Region (Iskandar), investors used it as a barometer to gauge if the government could get the pitch right in an already crowded space of economies throwing themselves open to foreign capital.

As it turns out, the government pretty much got it spot on. The foreign investment community liked the incentives and got the message that the government was dead serious about Iskandar.

In particular, apart from the tax holidays they would get, the big-ticket item was definitely the exemptions from the “Bumiputera thing”.

Specifically, this meant being unencumbered by Foreign Investment Committee (FIC) rules which requires a certain percentage of Bumiputera equity participation and employment in businesses set up by foreign investors.

The Iskandar perks also allows for capital to be sourced globally and the unrestricted employment of foreigners in the approved zones.

Clearly these exemptions are designed to remove one of the principal bugbears that foreign investors have had with Malaysia. Surrendering 30 per cent of your equity even before the business is under way makes you think twice about investing, especially when the recipient of the stake often brings little or nothing to the table. Although the FIC rules were designed to help meet the Bumiputera equity target set in the New Economic Policy (NEP), it is debatable whether it has succeeded in creating productive capital or merely economic rents.

The thinking for Iskandar, presumably, was that in order for the region to be truly world class, it could not beweighed down by policies with questionable efficacy. Simply put, why risk the future of Iskandar for policies that haven’t really succeeded in meeting their objectives? Surprisingly, the incentives have not generated too much debate on the Malay ground, yet. But it will come. And before it does, it is important that Khazanah, as the custodian of Iskandar, explains what the exemptions are and what is being done to promote the “Bumiputera thing”in Iskandar in lieu of these conventional requirements.

Khazanah has been notorious for their inability to connect and communicate with the Malay ground and this issue sets up a potential minefield which needs to be cleared for fear of any political backlash that can lead to policy reversals which will guarantee the still birth of Iskandar.

Among the things that will no doubt be said (and apparently has already been said) of the incentive package is that it is a sell out to foreigners, that Johor is losing its independence and that the Malays are going to be slaves and servants once again. The argument will paint a picture of Singaporeans and other “undesirables” building skyscrapers in Johor and employing Malaysians (especially Malays) as servants. We wouldn ’t want that would we? But before we become emo, lets put the incentives in its proper context and see if the above argument of Malay(sian) enslavement holds water.

First of all, the prime minister’s announcement was clear that the incentive package would be offered within certain ‘zones’ of Iskandar.

This means that its not applicable for the entire Iskandar.

How big these zones are must be clarified quickly but if it is less than two per cent of the entire region as has been widely speculated, then there’s surely no reason to think that southern Johor will be flogged off.

Secondly, only certain targeted sectors can benefit from the incentives from within the zones namely creative industries, educational services, financial advisory and consulting, healthcare, logistics and tourism.

Third (this is the point that critics and potential critics will want to ignore), for companies to qualify for these incentives they must only conduct their business activities within the zones or outside Malaysia. What this means is that companies that set up in these zones will not compete with Malaysian companies for domestic business.

If they set up in these zones to capture the Malaysian market, they will not enjoy the incentives. This is designed to attract regional businesses which want to set up their hub in Malaysia and not to allow foreign companies a leg up into the Malaysian market.

By providing these incentives we are actually taking the fight to places like Singapore which has been a favourite pick as a base for regional operations for many multinational companies which like Malaysia’s infrastructure and cost structure but were put off by things like FIC requirements.

Fourth, while companies are exempt from FIC rules, they will be asked to contribute to a fund for social development. This would be used to roll out programmes that can help low income families in Iskandar with housing and education to ensure all stakeholders of the region are given quality opportunities rather than creating widespread inequity via silos of divergent economic growth.

Fifth (this point is often forgotten because, umm, Melayu mudah lupa), these incentives have actually been offered before in one form or another.

The manufacturing sector has been enjoying fiscal incentives in Free Trade Zones since the 1980s similar to that offered in IDR.

Not only that, in 1986 the government went further than merely offering tax breaks by actually allowing foreigners to own 100 per cent equity in manufacturing companies with certain conditions like they have to export 50 per cent of their production (these conditions were abolished in 1998). These incentives given to the manufacturing sector were instrumental in transforming Malaysia into an export-driven economy.

It helped us post excellent GDP figures.

Yet no one said we were selling out our economy or enslaving our people. But the reality is that while manufacturing did contribute significantly to economic growth, it was not all that it was cracked up to be.

A crude but not entirely inaccurate way of looking at it would be to say that we’ve given tax breaks and local equity exemptions to foreign manufacturers who employ foreign managers and workers, use our subsidised electricity and export their goods and profits overseas.

Sure they create jobs on the assembly line for Malaysians but very rarely are the high-tech value-added processes, which would help drive innovation and facilitate technology transfer, done in Malaysia. An example would be Intel which manufactures its wafer technology elsewhere and packages it in countries like Malaysia.

The difference in Iskandar is that the sectors targeted are value-added services which will mean that more of the creative and lucrative parts of the supply chain are located in Malaysia unlike the lower-end positioning of much of the early investments in manufacturing.

Apart from the manufacturing sector, similar incentives were given for companies setting up in the Multimedia Super Corridor (MSC).

MSC companies enjoy pioneer status with 10 years tax exemption on income, no Bumiputera equity requirement, unrestricted employment of foreign knowledge workers and the freedom to source capital globally.

These are all very similar to Iskandar benefits and are applicable in a bigger physical area (KLIA-Cyberjaya- KLCC vs less than two per cent of Iskandar). Yet, nobody has said that the MSC is a foreign intrusion into our sovereignty or that the thousands of Malaysians manning call centres for global companies in Cyberjaya are bonded serfs.

So the assertion that Iskandar is the thin end of the wedge for foreign economic neo-colonialists is intellectually unsound. This doesn’t mean, of course, that the “Bumiputera thing” is completely irrelevant.

While on one hand, some have tried to twist the Iskandar incentives to say that this is a sell-out of the Bumiputera Agenda, there are others on the other end of the spectrumwho are cheering this along by saying that it must be the precursor to dismantling the entire Bumiputera agenda and NEP-inspired policies.

Specifically, they extrapolate from the Iskandar package the urgent need for a nation-wide roll back of quotas that have benefited only a slice of the Bumiputera community at the expense of those who deserve the assistance.

Iskandar offers Bumis an opportunity to benchmark There is no doubt that there have been severe weaknesses in the implementation of the NEP and NEP-inspired policies that were formulated after the actual NEP period.

This led to excesses and leakages, both acknowledged by the prime minister at no less a Malay-centric gathering than the Umno General Assembly.

Yet, to throw the baby out of the bathwater at this stage would be wrong.

By any measure of economic achievement (including corporate equity notwithstanding Asli’s simplistic assertion), the Bumiputera community lags far behind.

While some NEP requirements may be antiquated today (like FIC approval for foreign ownership of property), the spirit and ethos of the Bumiputera agenda must continue.

It is absurd to say that the NEP has only benefited the political elites.

Thousands of Bumiputera professionals and entrepreneurs with no political affiliation have been created precisely because of these policies and programmes.

The only difference now is that the execution of these policies must be better targeted and the results closely monitored to correct past deficiencies.

If you were to take a close look at the Iskandar incentive package, it shows you that the government has carefully designed a test bed in which the Bumiputera agenda can thrive without sacrificing the concerns of foreign investors who do not want to be constrained by local affirmative action. Iskandar will be a global hub, without cannibalising the Malaysian business universe yet offer, especially the Bumiputera community, an opportunity to benchmark their talents and skills with the best in the world.

The Entrepreneurial and Co-operative Development Minister has already said that key agencies under his ministry like Mara and UDA will be deployed to ensure meaningful Bumiputera participation in Iskandar.

By training Bumiputera workers and providing Bumiputera- owned businesses with the capital and premises to set up shop in Iskandar, the government is abandoning the rent-creating FIC approach and empowering the Bumiputera community in ways that can create value and productive capital in zones where innovation is a key driver of growth. As long as this type of value-creating Bumiputera agenda is in place, there is nothing to fear from the Iskandar incentives.

The noise from the margins — one crying bondage, the other calling for an end to affirmative action — both miss the mark intellectually and morally, respectively.

No elections anytime soon, says Khairy

(NST) The government is unlikely to call for a general election anytime soon, said Deputy Umno Youth chief Khairy Jamaluddin.

He said various factors had to be taken into account, not just the current strong economic situation.

"Other factors such as politics, the country’s development and issues outside the party have also to be considered," Khairy said yesterday after flagging off the Taman Rembau Utama National Park Expedition convoy.

"Certain parties may think that the time is now right for a general election because of the current economic situation.

"However, others may think why call for an election when Barisan Nasional is only into its third year of its five-year term."

Malaysian Institute of Economic Research director Prof Emeritus Dr Mohamed Ariff Abdul Karim had recently said that the time was suitable in view of the strong and stable economic situation with all domestic economic fundamentals pointing towards recovery.

Khairy, the Rembau Umno Youth chief, said another factor that should be taken into account was the smooth implementation of projects under the Ninth Malaysia Plan.

"The projects were only just announced and the effects have yet to be felt at the grassroots level. The government must fulfil its promises made during the last election. I think the government should be given time to fulfil the promises."

Khairy said Umno Youth was ready to face a general election and was focusing on efforts to get members to register as voters.

He urged Umno members to take seriously party deputy president Datuk Seri Najib Razak’s reminder that Umno leaders and members must always be close to the people and to set aside internal differences in preparation of a general election.

"We need to enhance solidarity in the party and reduce problems, not just within Umno but also within BN," said Khairy.

There are limits to freedom, warns Khairy

(NST) KUALA LUMPUR: Malaysians should not abuse the freedom they have to openly debate and criticise issues.

Deputy Umno Youth head Khairy Jamaluddin said he was all for the open atmosphere, where government policies and leaders could be criticised by the media and where issues could be discussed, but warned that there were certain limits that needed to be adhered to.

"This openness is good for today’s political climate but we have to approach it ethically and wisely.

"We cannot push it too far, too soon, as we are still a maturing democracy.

"Racial sensitivities still exist and we should respect these boundaries," he said after opening the People’s Progressive Party Youth wing convention at the Putra World Trade Centre yesterday.

Khairy said the government could revert to a more controlled atmosphere if certain people chose to abuse this freedom.

He hoped the few people who were bent on testing the limits would not be too extreme, as this would prompt restrictions.

"I feel they should not sacrifice the positive atmosphere we have now just for the sake of fulfilling their own agendas.

"That is why Umno Youth will come down hard on those who breach the limits and ignore the boundaries of the law and racial sensitivities."

Earlier in his speech, Khairy said it had been an especially challenging year for Umno as many racial and religious controversies had sprung up during the past 12 months.

However, he said, he was impressed with the way the government had dealt with such charged issues, such as the Interfaith Commission, the findings by the Asian Strategic Leadership Institute on Bumiputera equity ownership, and the SMS which claimed a mass baptism for Muslims was being held in a church in Ipoh.

He said the BN leadership had shown rationality, wisdom and moderation when tackling the issues without detracting from the main focus of unity among Malaysians.

PPP Youth chief T. Murugiah said the wing’s resolutions this year included asking the BN leadership for four parliamentary seats and 12 state assembly seats in the next elections.

Murugiah said the party, which had grown to 500,000 members, should be given the opportunity to prove itself.

Barisan Nasional Wanita chief Datuk Seri Rafidah Aziz, who opened the convention for the women’s wing, said there was a need to change the approaches taken to solve issues.

"Irrelevant and outdated approaches should be discarded and new and more effective ways have to be adopted," she said.

Rafidah said women should have a wider view of issues and be aware of what was important to society.

"They should also bear in mind global and regional perspectives in solving issues."

The delegates later touched on various issues, including the Ah Long problem, difficulty in getting bank loans, unity and Mat Rempit.

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Get Grassroot Opinion On Utusan-NSTP Merger, Says Khairy

KUALA TERENGGANU, Dec 10 (Bernama) -- Any form of a merger between Kumpulan Utusan Melayu and the New Straits Times Press (NSTP) will have to get the opinion of the grassroots because the two mainstream newspapers have their own history and identity.

Umno Youth Vice Chief Khairy Jamaluddin said the movement had discussed the issue before the party's Supreme Council meeting recently.

"At the last Youth exco meeting, the pros and cons on the proposed merger were raised and because of that, the government, Kumpulan Utusan Melayu and Media Prima have to study the opinion of the grassroots before making a decision," he told reporters when met at a function at Dataran Syahbandar here Saturday.

He said although the merger would be good in strengthening the commercial aspects of the two companies, it could lead to the newspapers, especially Utusan Melayu to lose its identity.

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