Wednesday, March 19, 2008

An interesting view..

My friend wrote a long article on the current state of the economy. I would like to share the article here. Please visit his blog for more interesting articles.


So, what exactly is wrong with our country's economy?

I won't pretend to be an economist and say that my words are conclusive and all-inclusive; I'm only trying to discuss here one of the many factors that has contributed to that.

Case in point: Two years ago, my wife decided to take over the failing kindergarten of our church, feeling that it was necessary to continue to provide low-cost preschool learning (if you are a parent of preschool children, you will know what kind of expenses are involved in sending kids to kindergartens) to poorer families in the area.

We operated the place at a constant loss, partly because of the low fee, and mostly because of the various repairs that still needed to be done to the place to improve the children's safety. One of the more immediate concern was the lack of fences around the classrooms. We did not want the kids to run too far away from the classrooms (there is a huge field beside the classrooms, and behind it is a 10-acre palm oil estate; on the other side is a residential area), so having a fence was vital.

Our church consists of a small congregation of middle to lower income people, so we decided to look elsewhere first for help.

We wrote to our state assemblyman (to be fair, let me make it clear that it was a BN assemblyman) asking for a grant for building the fence, pointing out the charitable nature of the kindergarten and the need to ensure the children's safety.

Not very long afterward, we were informed that we had been granted RM5,000 for building the fence. We were overjoyed, and very thankful towards that kind and helpful state assemblyman.

(Here I'll skip that part about the 3-month wait from the time we were informed about the grant and the time we actually received it. The impossibility of red-tape! *Sigh*)

We were told that we would not receive the grant directly in cash, but rather, the state would appoint a contractor to build the fence. Well, that was understandable; otherwise, any Tom, Dick and Harry can apply for a grant for some phantom cause and just spend the cash on personal indulgences. So we contacted the appointed contractor to have him survey the place.

Now, there are 6 classrooms built in a row, with doors on both sides (4 doors for each classroom), and we wanted fences on both sides (we realized that the grant might not be enough to cover an extended perimeter around the six classrooms).

But after looking around, the contractor - a very nice Malay chap, let's call him Contractor B - pointed out that with the given money, he could only build a stretch of fence for one side of the classroom. "Just keep the doors on the other side closed." Material costs (cement, steel, etc.) were impossibly high, he pointed out.

We were dumbfounded. RM5,000 just to build a stretch of fence the length of 6 classrooms plus a small office at the fron)?

The contractor explained with some difficulty. It was not really RM5,000 that he had at his disposal. He was not the state-appointed contractor. The state-appointed contractor - another Bumi contractor, the difference being this one is well-connected, no doubt; let's call him Contractor A - had appointed him sub-contractor and given him RM4,500 to work with. "Other than material costs, I'll have to cover my workers' pay."

"OK, fine. But we know a supplier of building materials quite well, how about we find you the necessary materials at reduced costs? Can you, then, build two stretches, one on each side?"

After thinking for a while, he said, "How about RM4,200?"


"You find your own contractor. I'll take RM300 commission, and give you RM4,200."

Oh, I see...

And that's where Contractor C came into the picture. He wasn't even a fellow Christian, but he offered to help at no profit. "Just pay for the materials and my workers' wages." And he threw in quite a lot of his own old materials, at no charge.

Eventually, we got our two stretches of fence hemming in both sides of the classrooms, with RM700 to spare (which we put into other later developmental works).


Now, assuming that Contractor C accepted the RM700 profit, we may say that the fences were built with RM4,200. But the apparent cost was RM5,000. An unnecessary additional cost of RM800 was paid to two other contractors who ended up doing nothing.

RM800 is 16% out of RM5,000. That means 16% additional cost for nothing in return. That, to me, is an indication of where our inflation comes from. No wonder everything is so expensive nowadays.

Now, don't get me wrong, I have absolutely nothing against the Malay community, in general. Some of the friends I treasure most are Malays.

To me, Contractor A and Contractor B and others like them do not represent the entire Malay community, much less the poor among the Malay community.

To me, they are the few well-connected people who are the only ones benefiting from a policy that was meant to help the poor find their footing in the business world. Another classic case of the rich getting richer, while the poor continued to be marginalized.

Come to think of it, my contempt is towards Contractor A (and others like him) alone. For Contractor B, at least he started out trying to do an honest work (it wasn't wrong for him to try to get the most profit out of a job - that's what every businessman is out to do).

Nevertheless, he inadvertently contributed to the failure of our economy by giving up too easily. He settled for a small, quick profit of RM300 from doing nothing. By doing so, he gave up the opportunity to gain more experience from the job; by doing so, he gave up the opportunity to learn to be more competitive (how to achieve more with less); by doing so, he allowed his competitor, Contractor C (and others like him, not limited to just Chinese; there are many good Malay contractors out there; I've come to know several), to become more experienced and competitive.

Just think: with RM4,500, Contractor B was only able to build one stretch of fence (though I do not know what amount of profit he was looking at); with RM4,200, Contractor C was able to build two stretches of fence, and got a comfortable profit of RM700 (which he gave up for a charitable cause). Now, if these two were thrown into the increasingly globalized market, who will lose out?

Contractor B did not think he needed to be competitive, because there will always be people like Contractor A to hire him as sub-contractor. That means he will forever need to depend on the Government to give jobs to Contractor A (and the likes) so he could get what trickles downstream. I sincerely hope this does not represent the majority of Government projects.

A devastating side effect of the situation discussed above is corruption. With the most lucrative projects reserved for the few well-connected people, what are the others to do except to bribe their way in to become (or be associated with) one of the well-connected?


Another case: some time ago, we met, to our surprise, a cousin of my wife here in Penang (he's from Sarawak). He told us he was recently hired to work for a company in KL that had obtained a contract to work on some Government project around the Butterworth area. We were very pleased to see him, and had hoped to have many more merry meetings with him before the project was over.

However, two months later, he informed us that he was flying home. Permanently.

"Did you quit? Why?"

"I didn't quit, but the job no longer exists. The company decided to pull out of the project because they have worked on the thing for many months without having received a single cent of payment, and they are not sure they would ever get any payment at all."


"Well, you see, the company is actually the sixth sub-contractor down the line. The first contractor must have telan all the money, because the other sub-contractors above us haven't received anything either."


That explains the quality of work that we, the rakyat, get from these Government projects. Cracks in various highway flyovers; burst pipes in government buildings; the collapse of an entire new building! What next?

I rest my case.


And those well-connected, privileged few had the gall to incite the people into staging a demonstration on 14th March around Komtar.

Looking at the scene, I had the feeling of watching a late 19th century Chinese opium addict crying out to someone who took away his opium to help him quit, "Please, give it back to me! I need it! I cannot survive without it!"

Well, if you know your world history, you know what happened to the Qing Dynasty because of such people.

SMS says: Spoken like a true patriot. Well, I am a Malay, just in case any of you do not know. Its not a person that support DAP that betrays the Malays, but a person who says they are helping Malays but really helping their OWN pockets, doing a crappy job and giving Malays everywhere a bad reputation.


TheHornyGuy said...

that's a very truthful article. say thanks to your friends sir. i really enjoy reading it!
(of course, chinese can be more corrupted if they want to)

Dumbo said...

"If they want to"?

Believe me, they are already doing that! :-)

When I used the term "well-connected", I meant to include non-Malays who are politically well-connected as well. "Connections" don't necessarily have to be "direct".

In another word, what lends more sadness to the situation is that, the execution of the policy in question has become so corrupted that you don't even have to be a rich and well-connected Malay to benefit from it; if you are a rich Chinese or Indian, and you are well-connected, or are well-connected to well-connected Malays, well, anything is possible!

Sad uh?