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, MULTICULTURAL 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
CHINESE
INIGENOUS
INDIANS
54%
26%
11%
7%
• RELIGIOUS MAKE-UP
–
–
–
–
–
ISLAM
60%
BUDDHISM
19%
CHRISTIANITY 10%
HINDUISM
6%
CONFUCIANISM, TAOISM, OTHERS = 3%
THE MALAYS - BUMIPUTRA
• 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 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”
THE MALAYS - BUMIPUTRA
• 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 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 & LIBERALIZATIONORIENTED (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
STRATEGIC MGMT RESPONSES TO GLOBAL
IMPERATIVES
• 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
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
THE MGMT OF MALAYSIAN INSTITUTIONAL
INFRASTRUCTURE
• 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”
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
CRITICAL MGMT CHALLENGES
ORGANIZATIONAL CONSTRAINTS & OPPORTUNITIES
• 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 CROSSCULTURAL & COSMOPOLITAN MULTILITERACY CAPACITY
CRITICAL MGMT CHALLENGES
ORGANIZATIONAL CONSTRAINTS & OPPORTUNITIES
• TRANSITION TO A KNOWLEDGE SOCIETY (KECONOMY) 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
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
CONTEMPORARY PLURALISTIC MICRO-LEVEL MGMT
APPROACHES FOR MALAYSIAN NAT’L DEVT & GLOBAL
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
CULTURAL DIMENSIONS & INDICES
HDI:
.744 #57
FINLAND (.871 #16);
CHINA (.663 #89); JAPAN (.884 # 11); KOREA (.877 #12)
GINI
49. 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 INDEX
6.19 # 71 FLAWED DEMOCRACY
F 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’L
4.4 # 56
F 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