四个经济三角（下）资本系统比上不足
Just
like car needs fuel to move, human and science-technology (ST) need funds (capital)
to develop. All these three factors are integrated through various systems and
national policies. Economic progress needs all the four foundations to be
strong.
(3) Capital
In
economic, “fund” usually refers to money invested and called “capital”. Capital
formation can be generated internally through saving, raise from stock market
or through foreign direct investment (FDI) but depleted by debt servicing. In a
two-ways relationship, quality of human factor and science and technology factor
determine effectiveness of capital utilization and generation. Table 3 compares
strength of capital factors for selected countries.
Table 3: Capital Factor Comparison
|
Country
|
FDI inflow
(2013)
|
FDI outflow*
(2012)
|
Market capitalization
(2012)
|
Gross saving
(2012)
|
Gross capital formation
(2013)
|
External Debt
(2013)
|
|
Selected Asian countries
|
|
|
|
|||
|
Malaysia
|
3.71
|
5.53
|
156.16
|
31.87
|
26.15
|
35.52
|
|
Thailand
|
3.27
|
3.45
|
104.65
|
30.23
|
29.24
|
38.20
|
|
Indonesia
|
2.12
|
0.61
|
45.26
|
30.69
|
33.64
|
29.90
|
|
Philippines
|
1.42
|
0.74
|
105.58
|
42.29
|
19.67
|
24.62
|
|
Vietnam
|
5.19
|
0.77
|
21.14
|
31.61
|
26.59
|
44.08
|
|
Singapore
|
21.40
|
8.04
|
144.34
|
48.08
|
29.05
|
N.A.
|
|
Japan
|
0.08
|
2.07
|
61.99
|
21.75
|
20.79
|
N.A.
|
|
South Korea
|
0.94
|
1.93
|
96.54
|
34.60
|
28.99
|
N.A.
|
|
BRICS countries
|
|
|
||||
|
Brazil
|
3.60
|
0.36
|
54.69
|
14.64
|
17.89
|
19.86
|
|
Russia
|
3.37
|
2.42
|
43.35
|
28.12
|
22.59
|
N.A.
|
|
India
|
1.50
|
0.46
|
67.97
|
30.32
|
30.02
|
20.78
|
|
China
|
3.76
|
1.42
|
44.93
|
51.01
|
49.29
|
9.19
|
|
South Africa
|
2.32
|
0.76
|
160.15
|
12.62
|
19.36
|
36.59
|
|
Selected developed countries
|
|
|
|
|||
|
Germany
|
0.90
|
2.56
|
43.38
|
24.19
|
17.00
|
N.A.
|
|
France
|
0.24
|
1.52
|
69.83
|
17.52
|
19.57
|
N.A.
|
|
Australia
|
3.17
|
0.41
|
83.95
|
25.33
|
28.57
|
N.A.
|
|
United Kingdom
|
1.92
|
2.89
|
122.65
|
10.86
|
14.60
|
N.A.
|
|
United States
|
1.40
|
2.62
|
114.92
|
16.54
|
19.05
|
N.A.
|
|
Spain
|
3.31
|
0.36
|
75.24
|
18.93
|
18.25
|
N.A.
|
|
Netherlands
|
4.01
|
(0.14)
|
84.54
|
24.78
|
16.21
|
N.A.
|
Note:
All data are in percentage of GDP. “*” negative value (Netherland) implies
“disinvestment” that caused by unfavorable changes in assets versus liability. Gross
capital formation data for both Japan and United States are dated 2012. For
external debt, “N.A” implies no external or data not available.
Source:
All data from World Bank.
Since
year 2007, Malaysia’s FDI outflow is higher than inflow. This trend is expected
for already developed countries like Japan and South Korea but not developing
countries like Malaysia. Malaysia need extra capital to push growth, thus
higher FDI outflow is not helping capital formation. Table 3 shows that
Malaysia seems rely on stock market and domestic saving as their source of
investment capital. For 2012, Malaysia’s stock market capitalization is second highest
among selected countries. Is saving rate of about 32% of GDP is also among the
highest. Overall analysis indicates sustainability concern for Malaysia,
Thailand, Philippines and Singapore as they have very high market
capitalization and saving rate. Thus, room for further boost in capital
formation is restricted to increasing FDI inflow.
On
one hand, Singapore is remarkable that it has achieved double digit FDI inflow
per GDP since 1994 except two years in between. If Malaysia can achieve such
record, its economic growth could be much higher. On the other hand, any global
economy crisis will give severe impact to Singapore.
Malaysia
gross capita formation for 2013 is 26.15%, which is much lower than Indonesia
(33.64%) and China (49.29%); slightly lower than Thailand and India (all developing
countries); and also lower than Singapore, South Korea and Australia (developed
countries). Capital formation is expected to be much higher in developing
nations as compare to developed nations. Thus, statistics in Table 3 imply that
Malaysia is moderately strong in capital factor.
The
only obvious drawback is high debt. Malaysian central government debt has moved
past 50% of GDP since 2009. World Bank data (not shown in Table 3) revealed
this debt stands at 53.3% as at 2012, which almost touching legalized debt
ceiling of 55%. Reaching the limit may cause government shutdown like the
United States. In addition, Malaysia’s external debt at 35.52% of GDP (or 37%
to Gross National Income, GNI) is also a concern and may likely give negative
effect to future capital formation.
(3) System
“System”
in economic has been over-directly link with resources flow and production.
Thus, in this framework, “system” is better viewed as catalyst from scientific (chemistry)
perspective. As catalyst, systems speed up inter and intra reactions between
and within “human”, “science-technology” and “capital”. Figure 1 is reproduced
below to facilitate further explanation.
Border
“ab” represents financial system. It has been commonly known as platform to
allocate internal saving and foreign funds (money) between saver (contributor)
and borrower (user of funds). These monies are used in either pure consumption
or investment into science and technology. Border “ac” is management system
that help human governs capital and utilize science-technology (ST). Border
“bc” is education system that provides knowledge on how human and capital input
can maximize utilization of ST. Ethic or morality (point “a”) is needed to
government relationship between human and capital. Combination of capital and
ST will determine production capability (point “b”). Human and ST create
knowledge-based economy (point “c”). Besides financial, management and
education systems, public service and juridical system are of equal important.
Thus, the strength of “system triangle” is measured from these five systems of
financial, management, education, public service and juridical.
Figure
1: The Four Economic Triangles
|
“ab” =
financial system
“ac” =
management system
“bc” =
education system
Within “abc”
= public
service system
= juridical
system
|
Financial
system
Based
on Table 4, Malaysia’s financial sector reach to its population is better than
Indonesia, Philippines, Vietnam, India and China. Malaysia has higher Automated
teller machines (ATMs) and more bank branches (both per 100,000 adults). Yet,
it is very obvious that all selected developed countries (except Netherland) have
higher financial reach than Malaysia.
Malaysia
financial sector has relatively lower risk, measured in term of higher
Capital-to-Asset ratio (CAR) and lower non-performing loan (NPL), as compared
to countries like Japan, Brazil, India, South Africa, Germany, France,
Australia, UK, Spain and Netherland. Surprisingly, Spain NPL has been
increasing rapidly from just 0.7% in 2006 to 8.2% in 2013. High NPL but low CAR
in all the selected developed European countries as well as Australia and three
BRICS countries indicate alarming sign of a new global financial crisis. Thus,
developing countries like Malaysia needs to prepare well ahead and continue
strengthen its financial sector.
Education
system
Based
on Table 4, Malaysia’s literacy rate is few percentage points less than most
selected countries. Nonetheless, it is still proudly high at 93.1%. Malaysia’s
total public spending (PS) in term of percentage of GDP is also comparable
standard with developed nations. Indeed, Malaysia’s PS is much higher than
Singapore, Japan, Indonesia, Philippines and India. Malaysia’s “secondary
pupil-teacher ratio (P/T)” is either comparable or better (lower ratio) than
majority of selected countries.
Table 4: System Factor Comparison
|
Country
|
Financial Strength*
|
Education Strength
|
Public service
|
||||||
|
ATM
(2012)
|
Branch
(2012)
|
C.A.R (2013)
|
NPL (2013)
|
Literacy (Average 2008 - 2012)
|
PS (Average 2008 - 2012)
|
P/T (Average 2009 - 2013)
|
Real GDP / Compensation
(Average 2008 - 2012)
|
||
|
Selected Asian countries
|
|
|
|
|
|
||||
|
Malaysia
|
52.9
|
19.9
|
9.6
|
1.8
|
93.1
|
5.2
|
13.7
|
14.2
|
|
|
Thailand
|
84.2
|
11.8
|
10.9
|
2.3
|
96.4
|
5.0
|
19.9
|
6.2
|
|
|
Indonesia
|
36.5
|
9.6
|
12.5
|
1.7
|
99.2
|
3.2
|
16.8
|
19.4
|
|
|
Philippines
|
19.3
|
8.1
|
10.8
|
3.0
|
95.4
|
2.7
|
34.8
|
12.3
|
|
|
Vietnam
|
21.2
|
3.2
|
9.9
|
N.A
|
93.5
|
5.6
|
N.A
|
N.A.
|
|
|
Singapore
|
58.1
|
9.8
|
8.2
|
0.9
|
96.1
|
3.1
|
14.9
|
26.6
|
|
|
Japan
|
127.8
|
33.9
|
5.5
|
2.3
|
N.A.
|
3.7
|
11.8
|
84.6
|
|
|
South Korea
|
282.5
|
18.4
|
8.1
|
0.7
|
N.A.
|
5.0
|
16.9
|
52.5
|
|
|
BRICS countries
|
|
|
|
|
|||||
|
Brazil
|
118.6
|
47.3
|
9.3
|
2.9
|
90.7
|
5.6
|
16.5
|
10.2
|
|
|
Russia
|
182.0
|
38.2
|
11.5
|
6.0
|
99.7
|
4.1
|
8.6
|
5.6
|
|
|
India
|
11.2
|
11.4
|
6.9
|
3.8
|
N.A.
|
3.3
|
25.5
|
46.6
|
|
|
China
|
37.5
|
7.7
|
6.3
|
1.0
|
95.1
|
N.A
|
15.2
|
N.A.
|
|
|
South Africa
|
59.9
|
10.4
|
7.7
|
3.6
|
93.2
|
5.9
|
25.0
|
15.2
|
|
|
Selected developed countries
|
|
|
|
|
|
||||
|
Germany
|
118.8
|
13.9
|
5.5
|
2.9
|
N.A.
|
4.9
|
12.9
|
56.7
|
|
|
France
|
109.0
|
38.8
|
5.4
|
4.3
|
N.A.
|
5.8
|
12.7
|
9.4
|
|
|
Australia
|
165.9
|
31.8
|
5.6
|
1.4
|
N.A.
|
5.1
|
N.A.
|
39.5
|
|
|
United Kingdom
(UK)
|
124.3
|
24.2
|
5.0
|
3.7
|
N.A.
|
5.7
|
N.A.
|
14.4
|
|
|
United States
(US)
|
173.4
|
35.3
|
11.8
|
3.2
|
N.A.
|
5.3
|
14.2
|
36.0
|
|
|
Spain
|
138.1
|
85.1
|
6.3
|
8.2
|
97.7
|
4.9
|
10.9
|
35.7
|
|
|
Netherlands
|
55.1
|
19.6
|
4.8
|
3.2
|
N.A.
|
5.8
|
13.6
|
28.4
|
|
Note:
“*” Year is as stated except for Korea (for ATM is 2011), Germany (both ATM
& Branches 2011, NPL 2013), UK (ATM 2011, C.A.R. 2012, NPL 2012), US (ATM 2009),
Vietnam (C.A.R 2012), China (C.A.R. 2012). For “P/T”, year for Philippines,
Singapore, Russia & South Africa is 2009. Gross capital formation data for
both Japan and United States are dated 2012. “N.A” implies data not available.
Source:
All data from World Bank.
Thus,
why Malaysia’s education standard is ranked so miserably in international
assessments? In Programme for International
Student Assessment’s (PISA) test in 2012, Malaysia was ranked 39th
out of 44 countries on “creative problem-solving”. Singapore ranked top. The
test also showed only one out of 100 Malaysian students, aged 15 is able to
solve the most complex problems, compared with one in five in Singapore, Korea
and Japan. Malaysia scored 421 in Mathematics (lower as compared to global
average score of 494), 398 in Reading (496) and 420 in Science (501)
respectively.
Universiti Malaya is ranked 151th in QS World
University Ranking 2014 as compared to other Asian universities like National
University of Singapore (NUS) (globally ranked 22nd), University of
Tokyo (joint 31st), Seoul National University (joint 31st)
and Kyoto University (36th). In Times Higher Education (THE) World
University Ranking 2014, no Malaysian university makes into Asian Top 100 that
dominated by universities from Japan, Singapore, South Korea, Hong Kong and
China. India, Thailand, Iran, Israel, Lebanon,
Saudi Arabia and Turkey all have their university among Asian Top 100 list.
Recently,
former finance minister and politician veteran, Tengku Razaleigh Hamza has
voice his disappointment. He lamented the big government spending on educating
sector that failed to improved education quality.
Public
service
Ratio
of real GDP per compensation to public sector employees is presented in the
last column in Table 4. Ratio for Malaysia is 14.2, implying every domestic
currency (Ringgit) spent yield 14.2 Ringgit worth of real GDP. Thus, the higher
this ratio means the more productive (effective) the employees’ in public
sector. From Table 4, Malaysia’s public sector is much more productive than
countries like Thailand, Brazil, Russia and France. However, Japan is almost 6
times higher than Malaysia. Malaysia public sector’s efficiency is also very
far behind South Korea, India and Germany. Even Indonesia has higher ratio than
Malaysia while Singapore is almost double Malaysia’s ratio.
Conclusion
One
of the most important teachings of Sun Tzu in his Art of War is “know ourselves
– both strength and weaknesses”. Thus, it is important to know Malaysia’s
strength and weaknesses. A “four economic foundations” framework comprising
aspects of “human”, “capital”, “science & technology” and “system” is
proposed.
Malaysia
is better than mostly all developing countries in term of “human factor” and
“science and technology factor” but still far behind selected developed
countries. Malaysia has moderate strength in “capital” foundation. Malaysia
seems rely on stock market and domestic saving as their source of investment
capital. Yet, most critical concern is high level of debt. In term of “system”,
Malaysia’s foundation in “financial system” and “education system” is good.
Yet, in various international standard comparisons, we failed badly in
education quality while the competitiveness of domestic financial institutions
still remains a doubt. Perhaps, there are other qualitative factors that cannot
be captured by merely quantitative data. Among the most important qualitative
factors may be corruption and ineffective over-protectionism.
To
progress into developed nation as in Vision 2020 and Economic Transformation
Program (ETP), we need to immediately strengthen all the four economic
fundamentals without fear and prejudice.
[Chinese version published at Nanyang Press, 1st December 2014. Available online at http://www.nanyang.com/node/667497. This English version may be slightly different from the Chinese online/printed newspaper version]
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