MALAYSIA

FRANCIS PIRON, Ph.D., 2013

BASIC FACTS• SINCE INDEPENDENCE IN 1957, TRANSITION FROM

AGRICULTURE & MINING TO A DIVERSIFIED, MODERN ECONOMY

• MULTI-ETHNIC, MULTI-RELIGIOUS, MULTI-CULTURAL NATION => PLURALIST APPROACH TO BUSINESS & MANAGEMENT

• QUASI- OR PARTIAL/PSEUDO DEMOCRACY => STRONG GOVERNMENTAL INFLUENCE ON BUSINESS, MEDIA, OPINION-MAKING, ETC.

• ISLAMIZATION MOVEMENT & RACIALLY-BASED DIVISIONS

• ONE-MALAYSIA (2009 -)

LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT

• GEOGRAPHY & HISTORY HAVE PLAYED A KEY ROLE IN SHAPING NATIONAL IDENTITY

FORCES OF HERITAGE: LOCAL & REGIONAL INFLUENCES

• MALAYSIA IS LOCATED ON MAJOR HISTORICAL & INTER-REGIONAL MARITIME TRADING ROUTES

•

• SHAPED BY WAVES OF DIVERSE SOCIO-CULTURAL COMMUNITIES (INDIANS, CHINESE, EUROPEANS, …)

• MASS CONVERSION TO ISLAM BY THE 1400s• PORTUGUESE, THEN DUTCH PRESENCE &

COLONIZATION BY THE BRITISH• AUGUST 1957: FULL INDEPENDENCE OF MALAYA• 1963: FEDERATION OF MALAYSIA• 1965: SINGAPORE IS EXCLUDED

PLURALIST SOCIO-CULTURAL ISSUES

• PLURALIST NATURE OF MALAYSIA => NEED TO UNDERSTAND HOW THE SUB-CULTURAL DIVERSITY IMPACTS THE SHARED VALUES & BEHAVIORS OF INDIVIDUALS & GROUPS

• RACIAL MAKE-UP– MALAYS 54% – CHINESE 26%– INIGENOUS 11%– INDIANS 7%

• RELIGIOUS MAKE-UP– ISLAM 60%– BUDDHISM 19%– CHRISTIANITY 10%– HINDUISM 6%– CONFUCIANISM, TAOISM, OTHERS = 3%

• PREVAILING CULTURAL VALUES ARE GROUNDED IN FLEXIBLE & TOLERANT AUSTRONESIAN HERITAGE

• MORE OPEN APPROACH TO ISLAM, BUT MALAYS ARE AUTOMATICALLY BORN MUSLIMS

• NEED TO STRENGTHEN SOCIO-POLITICAL POSITION OF MALAYS … TRADITIONALLY RICE FARMERS &/OR FISHERMEN … LIFE FOCUSED ON KAMPUNG … RURAL COLLECTIVISM TRANSPORTED TO URBAN SETTINGS

• LOW EDUCATION LEVEL & ECONOMIC STATUS

THE MALAYS - BUMIPUTRA

• MAHATIR BIN MOHD’S 1970 “THE MALAY DILEMMA.”• MAHATIR‘S 2002 “THE NEW MALAY DILEMMA.”

THE MALAYS - BUMIPUTRA

“THE MALAY DILEMMA”• The book analyses Malaysian history and politics in terms of race,

and posits the following basic positions:– The Malay race are the indigenous people (bumiputras) of

Malaysia.– The sole national language is the Malay language and all other

races are to learn it.– The tolerance and non-confrontational nature of the Malays has

allowed them to be subjugated in their own land by the other races with the collusion of the British.

– A program of affirmative action is required to correct Malaysian Chinese hegemony in business.

• The dilemma thus, was whether Malays should accept this governmental aid — and Mahathir's position was that they should.

Mahathir has been rightly criticized for the lack of documentary evidence to butress his many arguments and conclusions. His assertions and assumptions were based on his personal observations and experiences, with no empirical data to support them

“THE NEW MALAY DILEMMA”

• “I HAVE FAILED”

• ALL MALAYSIAN COMPANIES HAVE TO SUBMIT TO KORANIC ORGANIZATION OF ACTIVITIES & EMPLOYEE MANAGEMENT

• PROHIBITION OF ALCOHOL AND KALWAT MAY LIMIT MALAYS’ INVOLVEMENT IN BUSINESS ENTERTAINMENT

• MANDATORY PROVISION OF MALE & FEMALE PRAYER ROOMS

• SHORTER WORK HOURS DURING RAMADAN• IMPORTANCE OF UNDERSTANDING ISLAMIC ISSUES

TO WORK WITH MALAYS

THE MALAYS - BUMIPUTRA

THE ETHNIC CHINESE

• SIGNIFICANT IMPACT SINCE 19th CENTURY• MIGRATED TO WORK IN TIN MINES AND FARMS• BROUGHT IN BUDDHISM AND CONFUCIANISM• CAME TO DOMINATE THE BUSINESS COMMUNITY• ORIGINALLY ORGANIZED AROUND CLANS … USED

TO BUILD GUAN XI • LIMITED POLITICAL INVOLVEMENT … LOCALIZED

CULTURAL COMMUNITY ORIENTATION

THE ETHNIC INDIANS

• RIGID CASTE SYSTEM WAS NOT TRANSFERRED WHEN MIGRATING FROM INDIA

• INDIAN COMMUNITY IS FAST DEVELOPING INTO AN UNDERCLASS

• INDIAN BUSINESS IS OFTEN AT THE FAMILY LEVEL• POOR URBAN INDIANS, UNLIKE POOR MALAY

FARMERS, HAVE TO BUY THEIR OWN FOOD, PAY RENT, TRAVEL TO WORK => CYCLE OF POVERTY

MULTILINGUAL SOCIETY• BAHASA MELAYU IS THE NATIONAL LANGUAGE• ENGLISH IS WIDELY SPOKEN (URBAN AREAS)• CHINESE COMMUNITY: MANDARIN (TIES WITH

CHINA), REGIONAL DIALECTS• TAMIL AND HINDI => GROWING ECONOMIC

STRENGTH OF INDIA• PLURALISM => REGIONAL OPPORTUNITIES,

CROSS-CULTURAL MGMT SAVVY• REALITY IS THAT CHINESE HAVE DEFINITE

LANGUAGE/COMMUNICATION ADVANTAGES

POLITICAL & ECONOMIC MGMT FRAMEWORK

• BRITISH-BASED INSITUTIONAL SYSTEM & POLICIES• ECONOMIC DISPARITIES, AS A RESULT OF ETHNIC

PLURALITY, CONTRIBUTED TO TENSIONS• 13 STATES AND A CONSITUTIONAL MONARCH

ELECTED FOR 5 YEARS• SINCE 1957, BARISAN NASIONAL • 1969: BUMIPUTRA RANGE OF AFFIRMATIVE ACTION

POLICIES IN NEP – NEW ECONOMIC POLICY

THE NEW ECONOMIC POLICY 1971-1985

• AMBITIOUSLY AIMED TO RESTRUCTURE SOCIETY• 2 BASIC GOALS:

– TO REDUCE & EVENTUALLY ERADICATE POVERTY,– TO DISASSOCIATE ECONOMIC FUNCTION & RACE

• ALTOGETHER, POLICIES TO FAVOR THE MALAYS• POVERTY DROPPED FROM 49% (1970) TO 16%

(1990) … AND AS LOW AS 8% IN URBAN AREAS=> ONGOING DISPARITY BETWEEN RURAL & URBAN AREAS

• DECREASE IN FDIs IN 1980s DUE TO GOVT’S INTERVENTIONIST POLICIES

• TO INCREASE LOCAL PRODUCTION SHARE => LOCAL CONTENT (TKD, PKD, …)

NEW DEVELOPMENT PLAN 1986-1995

• ECONOMIC SUCCESS => RURAL MIGRATION TO URBAN CENTERS

• NDP REPLACED NEP• MORE OUTWARD-LOOKING & LIBERALIZATION-

ORIENTED (EXPORT PROMOTION & IMPORT LIBERALIZATION) • BECAME AN ATTRACTIVE COUNTRY FOR FDI,

ESPECIALLY FROM DEVELOPED ASIAN NATIONS• VISION 2020 & BANGSA MALAYSIA

– SOCIAL ENGINEERING– FAILURE TO ADDRESS/RECOGNIZE DEEP DIFFERENCES

STRATEGIC MGMT RESPONSES TO GLOBAL IMPERATIVES

• IN 50 YEARS, SHIFT ECONOMIC DIRECTION INTO SOME DIVERSIFICATION

• 1997 ASIAN FINANCIAL CRISIS … PEG RM TO US$• 1998 NATIONAL ECONOMIC RECOVERY PLAN

REGOGNIZED LOSS OF EFFICIENCY IN ECONOMY• SINCE, STEADY DECELERATION IN FDIs, BUT

DIVERSITY IN FDI SOURCE

• DIVERSITY OF FDI SOURCES => ISSUES OF “FIT” BETWEEN FOREIGN MGMT STYLES & MALAYSIA’S PLURALIST STYLE ? RECENT ISLAMIZATION ISSUES

• SUCCESS IN RETAINING ISLAMIC VALUES & MODERNIZING

• INCREASED GLOBAL COMPETITION FROM CHINA & INDIA … BUT ADVANTAGES FOR LOCAL CHINESE & INDIAN BUSINESSES

• CONTINUED INEQUITY BETWEEN RACES– BANGSA MALAYSIA WIDELY PREMATURE

STRATEGIC MGMT RESPONSES TO GLOBAL IMPERATIVES

THE MGMT OF MALAYSIAN INSTITUTIONAL INFRASTRUCTURE

• KEY MANAGERIAL ROLE & MALAYSIANIZATION OF BUREAUCRACY FOLLOWING INDEPENDENCE– SMOOTH TRANSITION,– BRITISH-OWNED COMPANIES & INVESTORS STAYED– BY 1980, SIZE OF BUREAUCRACY INCREASED BY 9

FOLDS (MOSTLY MALAYS!)– IMPORTANT ECONOMIC INFRASTRUCTURE ESTABLISHED

MOSTLY BY WESTERN COMPANIES– GOVT. INVESTMENT IN SCIENCE, TECHNOLOGY & R&D

• STRUCTURAL TRANSITION: SOEs TO GLCs• NEP => CIVIL SERVICE MGMT & FUNCTIONS

BECAME INCREASINGLY POLITICIZED … – ELITE BUMIPUTRA BECAME MANAGERS OF SOEs => POOR COORDINATION & ACCOUNTABILITY

=> ISSUES OF RENT SEEKING AND POOR GOVERNANCE

• BY 1990 ECONOMIC ACTIVITIES & OCCUPATIONS BROADLY REFLECTED ETHNIC COMMUNITY DEMOGRAPHY + PRO-MALAY POLICIES & ISLAMIC NATION STATE

• UNDER MAHATIR, “MALAYSIANIZATION” REDIRECTED TOWARDS “ASIANIZATION”

» “LOOK EAST POLICY”

THE MGMT OF MALAYSIAN INSTITUTIONAL INFRASTRUCTURE

CRITICAL TRADITIONAL, TRANSTITIONAL & TRANSFORMATIONAL ISSUES IN MALAYSIAN MGMT

• JAPANESE, SOUTH KOREAN & TAIWANESE BUSINESSES BROUGHT ALONG THEIR CULTURES & ORGANIZATIONAL STYLES– JAPANESE => PROCESS TECHNOLOGY,– KOREANS => ECONOMIES OF SCALE,– TAIWANESE => LOW-COST, DOWN-SCALED INNOVATIONS=>LEARNING OPPORTUNITIES BUT NO DEVT OF COHESIVE

MALAYSIAN MGMT MODEL– NERP, VISION 2020, 1997 ECONOMIC CRISIS INCREASED

PRIVATIZATION, EFFICIENCIES & RESPONSE TO COMPETITION … BUT NO SUCCESSFUL MALAY CAPITALIST HAS EMERGED

CRITICAL MGMT CHALLENGES ORGANIZATIONAL CONSTRAINTS & OPPORTUNITIES

• SERIOUS GAP BTW AMBITIOUS VISIONS OF NATION’S LEADERSHIP, ELITE BUSINESS & BUREAUCRATIC CLASS AND ORDINARY MALAYSIANS

• BUMIPUTRA & NON-BUMI DIVISIONS– RACE-BASED POLICIES– EMPHASIS ON RACIAL & RELIGIOUS DIVISIONS– FURTHER DIVISIONS IN TERMS OF EDUCATION,

CUSTOMS, AREAS OF RESIDENCE & OCCUPATION

• HRM STRATEGIES: REFORM & CAPACITY DEVT– INTERTWINE OF CONFUCIAN, ISLAMIC & WESTERN

VALUES– CROSS-CULTURAL NATURE OF COMMUNICATIONS (BM,

ENGLISH, DIALECTS)– TEAM PERFORMANCE (PREFERRED GROUP AFFILIATION)– INTERNATIONAL EDUCATION => INCREASED CROSS-

CULTURAL & COSMOPOLITAN MULTILITERACY CAPACITY

CRITICAL MGMT CHALLENGES ORGANIZATIONAL CONSTRAINTS & OPPORTUNITIES

• TRANSITION TO A KNOWLEDGE SOCIETY (K-ECONOMY) IS NOT HAPPENING

• “FIRST-WORLD INFRASTRUCTURE, THIRD-WORLD MENTALITY” … DEVT MALAISE

• COMPETITIVE CORPORATE LEADERSHIP … SOME INTERNATIONAL SUCCESS STORIES

• BADAWI’S ISLAM HADHARI • MALAYSIA IS A HALF- OR PSEUDO-DEMOCRACY

CRITICAL MGMT CHALLENGES ORGANIZATIONAL CONSTRAINTS & OPPORTUNITIES

CONTEMPORARY PLURALISTIC MICRO-LEVEL MGMT APPROACHES FOR MALAYSIAN NAT’L DEVT & GLOBAL

INTEGRATION

• COMMUNITY PLURALISM => HIGH CONTEXT BEHAVIOR

• “CODE-SWITCH” – ABILITY TO CHANGE BEHAVIOR BTW IDENTITY WITH DIFFERENT CULTURES AND LANGUAGES

• GROWING BODY OF MANAGERS & EMPLOYEES WITH INT’L & LOCAL CORPORATE & WORKPLACE CAPACITIES

• ENGLISH CAN PROMOTE NATIONAL INTEGRATION

• MALAY, CHINESE & INDIAN BUSINESSES SHARE ASIAN CULTURAL VALUES & APPROACHES:– HIERARCHY AND ITS IMPLICATIONS FOR SOCIAL ORDER,– LEADERSHIP – HIERARCHICAL APPROACH TO

LEADERSHIP … UNQUESTIONED, UNCHALLENGED– COLLECTIVISM – MAINTENANCE OF HARMONY, BUILDING

& MAINTENANCE OF RELATIONSHIPS, “FACE-SAVING,” HIGH-CONTEXT COMMUNICATION

– PATERNALISM LEADER BEHAVES AS A “CARING PARENT.”– FAMILY STATUS FAMILY-BASED BUSINESS MODEL,

CONFUCIANIST APPROACH

CONTEMPORARY PLURALISTIC MICRO-LEVEL MGMT APPROACHES FOR MALAYSIAN NAT’L DEVT & GLOBAL

INTEGRATION

• SOME ETHNIC DIFFERENCES– CHINESE PREFER A COMPETENT, TRUSTWORTHY

LEADER,– MALAY PREFER A SOCIALLY-CONSCIOUS LEADER WHO

CAN BE A FRIEND & A BOSS– INDIANS PREFER A FAIR & EQUITABLE BOSS

• MOTIVATION– MALAYS: FAMILY MEMBERSHIP, KAMPUNG, RELIGIOUS

COMMUNITIES, MOTIVATION THROUGH MORE TIME W/ FAMILY, BEING/PASSIVE ORIENTATION

– CHINESE: MONETARY REWARDS, ACTION ORIENTATION,– INDIANS: WELL-BEING & PERSONAL DEVT

CONTEMPORARY PLURALISTIC MICRO-LEVEL MGMT APPROACHES FOR MALAYSIAN NAT’L DEVT & GLOBAL

INTEGRATION

CULTURAL DIMENSIONS & INDICES

HDI:.744 #57 FINLAND (.871 #16);

CHINA (.663 #89); JAPAN (.884 # 11); KOREA (.877 #12)

GINI49. 2 (F 26.9; C 46.9; J 24.9; K 31.6)R/P 10% 22.1 (F 5.6; C 21.6; J 4.5; K 7.8)R/P 20% 12.4 (F 3.8; C 12.2; J 3.4; K 4.7)

DEMOCRACY INDEX6.19 # 71 FLAWED DEMOCRACYF 9.19 # 7; C 3.14 # 136; J 8.08 # 22; K 8.11 # 20

GENDER EMPOWERMENT.542 # 68 F .902 # 3, C .533 # 72; J .567 # 57; K .554 # 61

TRANSPARENCY INT’L4.4 # 56F 9.2 #4; C 3.5 #78; J 7.8 # 17; 5.4 # 39

CULTURAL DIMENSIONS & INDICES

Topic Rankings DB 2011 Rank DB 2010 Rank Change in Rank

Starting a Business 113 116 3

Dealing with Construction Permits

108 109 1

Registering Property

60 85 25

Getting Credit 1 1 No change

Protecting Investors

4 4 No change

Paying Taxes 23 24 1

Trading Across Borders

37 37 No change

Enforcing Contracts 59 59 No change

Closing a Business 55 57 2