Book: The Malay Dilemma

I would like to recommend a book by Dr Mahathir Mohammad's The Malay Dilemma for those of you who are interested to think more. The issue of 'mind-set' I wrote in the last post, somehow is related to the many issues raised in that book. Don't just buy it, READ it! It's a thought-provoking book and I think every Malay should read.

Brunei Dilemma

In my earlier post 'Unemployment, is it really a Problem?' I wrote that 'Brunei is facing a larger problem and that is the 'mind-set' problem.'

You see, Brunei is unique. I have a strong feeling that the general definition of unemployment in Brunei is 'those who don't work in the government sector or BSP or big banks'. You maybe disaggree but don't you always hear these statements:

"Anakku keraja di company, iatah mun dapat keraja d kerajaan, bisai.."; and
" I am applying to so and so department, in the mean time I'm working in company x"; and
" I would like to work in this company, unfortunately my parents don't let me and want me to work in the government" (this is a real line made by 1 of my husband's x-local staff; and
How many times have you read in the Brudirect Have Your Say, people are accusing certain government departments as being 'croynism' and 'nepotism' because they are being turned down;
And so on and on and on....

It seems that, people don't consider they have a 'proper job' whenever they work in the private sector. Why? Isn't brick-laying or serving in a restaurant or being a receptionist in a company, a job? I am sure a great many of you will answer "It's not the same....and it's not fair..people who are working in the government have high pay, have lots of benefits etc etc".
Fair enough I said. BUT my question is, is it still not a job? Won't it put food on the table?

This is precisely the mind-set problem that Brunei is currently facing. Nothing new to many of us but to me the number 1 cuplrit in the issue of Brunei so-called 'unemployment'.

On the other hand, there are of course thousands out there who really are looking for jobs but don't find one. Yet, we see thousands of foreign workers working as cashiers, sales persons, waiters etc. A large blame has also been put on the employers for doing this. Now, my question is should we really blame them?

You see, I believe the 'mind-set' problem's perfect partner in crime is the 'attitude' problem. And this attitude problem is actually an even a larger problem to solve. While the 'mind-set problem' will be instantly solved once the person finds a job in the government sector, the 'attitude' problem might not (and sometime would get even worse). [Anyway, this post is about mind-set so, a whole new post should be dedicated to the 'attitude' problem of the locals]

WHAT SHOULD WE DO then? You ask.

Now, I've thought of a number of ways to answer this question. (I've even listed a number of strategies hahaha) But I ask myself, WHO am I? Plus it could (probably) put me into trouble.
Well, to me there is no easy and straight-forward answer to this. The strategies should be multi-level for different groups of people. Education, for example, can be the main strategy to change the mind-set of the future generation. National campaigns, perhaps can be launched to change the mind-set of the older generation(the parents who think that there is no job, but government job) and the current job-seekers.

By now, I'm sure you are still going to ask 'What about the remuneration GAP between the public and private sector?'
My answer would be this: The gap for now will still exist. You can't just simply cut down people's salary in the public sector. On the other hand, you can't just simply ask the private sector to increase their salary. As an economist, I would also say that your earning would eventually depend on your productivity i.e. the more productive you are, the more you will earn. And I have seen many examples where people who have lower starting earning (mostly in the private sector) have now out-performed (and earn more) their peers (mostly in the government sector) in terms of productivity and wealth (i.e. in terms of borrowing less).

I would however also like to add that I think it is high time that somebody takes up the 'remuneration gap' issue seriously. Maybe not the difference in salary 'per se' because as I said you can't just simply adjust the salary. But in terms of other 'equal' opportunities. I don't know, but at the top of my head now is the opportunity to upgrade one's qualification, especially in the university and graduate level. For instance, there should be a mean/ public agency where locals who work in the private sector could get the (financial) assisstance to upgrade him/herself (OTHER THAN BANKS of course!). While government employees have the JPA in-service scheme, where can the private employees go to? Yes, the MOE does offer a scholarship scheme to locals but it only caters to young people (up to the age of 30). And what about other skills? So, where can the rest go? (I am thinking of something in the line of interest-free education loan or maybe subsidy to private employers etc.). It is afterall, human investment and will be highly related to higher labour productivity! And I think it is also equally important that Brunei should create local expertise not only in the public sector, but also in the private sector, especially so if we want the private sector to be the 'engine of growth'.

Oh! there goes my afternoon... To end, I think the mind-set problem is the cause of a real dilemma for Brunei unemployment problem. On the one hand, you want to solve just simply by creating as many jobs (in the government sector) as you can but it means the locals won't learn and won't recognize that there is a problem i.e. they won't change. On the other hand, you can't just leave the matter and hope that people will 'eventually' change. Afterall, unemployment is still a problem and needs to be properly addressed. And it is complicated! And that is why I believe everyone should work together to solve this dilemma. Policies and efforts must be syncronized with one another. Public and private must work hand in hand.

Oh Dear! What do I know? I'm just a mommy of 2. Enough thoughts for today!

Salaam.

ps. You can be sure that my husband and I are grooming our children to enter the private sector, which we believe have A LOT MORE to offer : ).

Why not Entrepreneur Challenge for Brunei?

The UK's Bank of Scotland and the Sunday Times have launched a 25 million pound 'Entrepreneur Challenge', in search for UK's Bill Gates. In a nutshell, 5 entreprenuers will be selected to share the winning prize. Each winner can win up to 5 million pounds funding (interest free loan) depending on the business.

Now, here's an idea for Brunei! Why not launch a similar but in a smaller scale entrepreneur competition? Maybe of up to $250k per winner for those budding entreprenurs who have the vision and ambition to drive their businesses to the top but lack of the financial means.

Of course, there should also be mentoring from Brunei's prominent entrepreneurs just as the UK ,where Sir Philip Green owner of BHS, would be mentoring their winner.

However, it would be silly to let just any Tom, Dick and Harry to enter the competition, this is after all, not Brunei Idol!, there will be criteria to be met. Eg. an indication that the participant is already in business (not merely of having a business registration of course), perhaps an already existing product/service to sell, a turnover of some money and so on. For the UK's Challenge Criteria click here. I suppose, Brunei should have a lesser stringent criteria to ensure good response.

K. Hope somebody will take up on this and thrash it out in the next meeting ; )

Salaam!

ps. Melinda Doolitle should have won the American Idol!

Want to be Rich?

Do you want to be rich? According to some research by a Prof Jay Zagorsky from Ohio State University, these are the things you need to do:

1. Quit smoking:

"Regression results show lower net worth is associated with smoking. ...heavy
smokers are associated with a reduction in net worth of over $8300 while light
smokers are $2000 poorer compared to non-smokers. Beyond this reduction, each
adult year of smoking is associated with a decrease in net worth of $410 or
almost 4%."

2. Reduce your weight:

"..the results showed that a one unit increase in a young person's BMI was
associated with a $1,300 or 8 percent reduction in wealth."

But of course from our economics lesson we are taught that:

"The neoclassical theory of distribution teaches us that a person's earnings
depend on his or her productivity. But earnings are not the same as wealth. The
accumulation of wealth is mostly about the ability to exert self-control."

Quotation from Prof Mankiw (yes. that Macroeconomics professor whose textbook we use). Note his last sentence! This implies that smokers and 'big and heavy' people (don't want to use the word 'obese' or 'fat' for sensitivity) are those who do not have the ability to control themselves. Well the economics behind this is quite simple. It's all about savings! Smokers spend (what they could have save and/or invest) on ciggies while the second group spends on (too much) fatty, yummy food.

Enough said. Salaam!

ps. I'm officially a year older today...hehee

Congrats darling

I would like to congratulate my darling husband for getting the highest grade in his final project. I'm very proud of you, darling!

I believe I'm one of his biggest admirers (though I don't think he knows that!). I'm not saying this just because he's my husband but he has these qualities that I don't often see in many others, including myself. Let me tell you his story.

We graduated in the year when Brunei's economy was really badly hit by the Asian economic crisis and the Amedeo crisis. There were very limited job openings and I was one of the lucky few who got a job immediately, for many others it was bad news, including my then-boy friend (my husband lerr).

Like other unemployeds, his pride and self-esteem were affected by the day, especially during the times when my dad asked him whether he had found a job (although I am pretty sure my dad was sincerely asking that question, but knowing men, I know his ego was a bit bruised).

After like 8 months, there was an opening to be a teacher/instructor at the technical college. My husband flatly shot down the idea because he said he didn't deserve it. He was not trained to be a teacher so let someone who had the right qualification get that job. He said he didn't want to 'makan gaji buta'.

After like 1 year of waiting for the 'right job' he gave up. He said God gave him a brain and 2 well-functioned hands, so why not use them? He then started his own business. He didn't have any capital. He's a very proud person. He didn't want to ask any help from his family because he said he knew they would ridicule him before they helped him. I then lent him some money to buy a computer and a printer. And that was it. He worked really hard trying to get his business going(well at that time we wouldn't even call it a 'business). I guess he was trying to earn a living. I still remember how proud I was when he had his first project. (I guess we are indebted to a few people who had faith in locals, and especially had faith in my husband).

Alhamdulillah...at the times when many Bruneians were crazily borrowing money from the banks to have the grandest car, the grandest 'hantaran', the grandest wedding, my husband managed to save some money for our wedding and totally be debt-free. We wedded after 3 years of him opening his business.

Fast forward to today, he has a couple of businesses rolling. He employs 8 people and 6 of them are locals (locals are his priority, unfortunately we have had bad experiences with local staff, from stealing to shirking to poor discipline and so on. I will blog on this some time. However, he still believes in giving the locals the first chance). He is now earning a lot MORE than what I'm earning and totally debt-free (not even a credit card debt!) What makes me even proud is that he looks after his employees very well. His motto is 'Pay your employees first!'.

Now, he's doing his post graduate study in one of the UK's good institutions of his field, SELF-SPONSORED. He works really hard in every assignments and projects. And today, again he has made me proud for getting the highest grade in his end of year project (and I suspect he's the best student in his year).

Sometimes, I think to myself, Brunei just needs 100 like him in order to make a big difference especially in the private sector. He has the right ingredients to be a good successful person: honest, diligent, pride and modest as in 'ukur baju di badan sendiri'. (I tell you, he is so honest that I have never seen him lie to even a stranger!)

I also declare him as THE most understanding husband in the world (to me, of course!), as he always support me in whatever I'm doing even if it means having to make some sacrifices.

Anyway, this is not meant to be a lovey-dovey post. I am writing as a person who admires someone ,who (thankfully) happens to be my husband. The moral of the story is NEVER GIVE UP! No matter what you do, albeit studying or starting a business or even working as a government employee, the road to success is HARD WORK. Insya Allah, Usaha, Niat, Tawakkal, you will be rewarded!

Salaam.

Academic Writing

This afternoon I spent like 1 hour trying to compose 2 sentences for the abstract of my economic paper that I'm thinking of sending to a journal. I tell you, it's not an easy writing. Then I asked my officemate (he's from Guyana and he speaks and writes good english!) to help me. In the end we spent like another half an hour thinking of the right 2 sentences that could capture the message that I want to send across.

For those of you who are not familiar with academic papers, an abstract is a piece of writing that you put at the beginning of your paper that tells the gist of the paper i.e. the objective, the methodology and the result, in usually not more than 2 paragraphs. So, it is I would say like the 'heart' of the paper.

Needless to say, these 2 sentences are still playing in my head. I think I'm going to sleep on them and hopefully with a clearer head tomorrow, I might just compose 2 most meaningful sentences ever in my life hahaha.

Small state, BIG problems.

I used to think just how difficult can it be to manage a small state of roughly 360,000 people. Plus we have oil!

2 years ago, when I started my economics course, I researched on the problems of small states. Here, the definition of small state is a country with a population of less than 1 million. And, guess what, apparently small states have BIG problems. These are some of the findings (see for example papers by Armstrong and Read, 2003; Commonwealth/World Bank paper, 2002):

1. Small domestic market: Nothing new here. This has implications for the development of large-scale industries, no critical mass to absorb costs of productions etc. etc. As a result, there will exist some oligipolistic/monopolistic organisations. [True, right?]
2. Limited Diversification: Small state has limited natural resources. Even if we have rich resources, small states may not have the financial ability to exploit those resources and therefore need capital inflow i.e. foreign investment [I am not sure if this argument still applies and also if it also applies to Brunei! Will talk about this later.]
3. Economic Vulnerability: Because of the lack of diversified domestic products, we tend to resort and be highly dependent on imports. This means we are quite vulnerable to external shocks. [Just imagine if anything happens to Thailand, I guess we all have to resort to eating 'ambulung' and 'ubi kayu'..but Hey! have we got that??]
4. Limited Labour Capacity: There are 2 implications. Firstly, research shows that Brunei is dependent on foreign workers particularly in both ends of the skill spectrum i.e. manual workers on one end and professionals on the other hand (see Tan and Hashim, 1999) i.e. to put it bluntly there are so many 'qualified' keranis (clerks) but lack of brick-layers and chartered accountants/architects/engineers etc. Secondly, it poses the problems of selecting experienced and efficient administrators i.e. high quality leaders are SCARCE. (Hmm, no comment!)
5. Poor administrative characteristics: Small staff, multiply portfolio (hey! there's so much 1 person can do.. However, this only applies to few good people :)), lack of training which result in low levels of innovation, lack of alternative opportunities outside the public sector and so on.

Now, you might be wondering why I'm enumerating all these problems. Some of you might think, OK if these are the natures of small states then, so be it..accept the fate!

The reason why I've digged my almost-long- forgotten file just to extract this piece of information is actually to change the perceptions of some people (like me a few years ago) who think that managing a small state can't be THAT difficult!. AND, now that we know our weaknesses, we all SHOULD work on improving them. Let's do something different from the others. Let's prove the reasearchers wrong. What??! How??!! You ask. I say....we all should start from EDUCATION and the change of MIND-SET.

To me, education is super very important. Will talk about this in another post.

The change of Mind-Set (this is not quite the same mind-set I referred to in my previous post) on the other hand, is easier said then done! To begin with, we must remove the N.A.T.O (No Action Talk Only) trait that seems to exist in a number of many Bruneians (including me, sometimes!) ASAP and let's instill in ourselves that 'Nothing is impossible, except matters related to God'. If Brunei was once-upon-a-time a Malaysia-cup champion, why isn't it now?? If Brunei was a-very-long-once-upon-a-time an Empire, why aren't we now?(well...maybe not becoming a large empire, but an equally kick-ass country..y'know what I mean!). Being SMALL does not mean that we can't think BIG!

We should be thankful that Brunei is endowed with oil and gas (mind you, there is a problem of a 'Resource-Curse thesis' which is related to oil-producing country and no, I don't think Brunei suffers from Dutch Disease! I think I'll blog on this some time later), we could afford to shrug our shoulders and sing 'Que Sera Sera'. But oil and gas are depletable and non-renewable, which are predicted to run out within 20-40 years from now. Hey! that's NOT a very long time. Plus we have the urgent need to have some viable economic substitutes in place before that happens. It is now high time for us to pinch ourselves and think real hard. To me, this is not something that can be taken lightly and it shouldn't be the problem to think of for just economists and a small number of people. It involves the whole nation and as we are a SMALL nation, EVERYONE should contribute.

Well, enough of my rambling for today.

Salaam!

ps. if anyone is interested in any of the research papers, let me know and I'll give you the full reference.

Unemployment: Is it really a problem?

I think the main socio-economic issue Brunei is currently facing is the problem of unemployment, defined as the number of people who are actively seeking for jobs. But is it really a problem? Latest statistics from JPKE show that in 2005 and 2006 there were more than 7000 unemployed each year with unemployment rates of 4.3% and 4% respectively. If we compare this figure with the number of live births in Brunei, which in 2005 was roughly 7,000, the numbers tally! Now, I'm not saying that for every birth of a new baby another person is unemployed, what I'm trying to say is that IDEALLY each year, at least 7,000 jobs need to be created if you want zero unemployment because that is the number that you would expect to enter into the job market in 15 years from now.

Now, in economics, there is no such thing as zero unemployment, there is a term that we call the 'natural rate' of unemployment or the 'full employment' unemployment rate. This is basically the equilibrium unemployment rate. OK, plainly, it is the rate that you would normally expect to occur in a country, which will not put an upward pressure on inflation. There are many views regarding the rate of this full employment rate? For many countries including the US, it is around 4.5%. Now, if we look at Brunei's unemployment rate now, hey! we are safe.

And it has always been that case for many years. In 1991 and 1995 for example, Brunei's unemployment rates were 4.7% and 4.9% respectively, which were a lot higher than the rate today (4%). The highest ever recorded was in 2001 when the unemployment rate soared at 5.6% and about 8,600 were unemployed. So what's all the fuss about?

I think we get nervous when we look at our neighbouring countries. In 2006, Singapore, for example, had an unemployment rate of only 3.1%, while Malaysia had 3.5% (CIA World fact book). But my question is, is it really fair to compare Brunei with these 2 countries?

I am not sure whether the problem of unemployment in Brunei is actually being slightly 'over-exaggerated'. Based on the data, which 'don't lie' according to Levitt and Dubner (2oo5), this might be the case.

My personal feeling is that Brunei is actually facing a MUCH larger problem, for now I would call it a 'mind-set' problem, which won't get solved even by the world's greatest economist. What do I mean? Well, I guess you'll have to wait for my next post!

Salaam!

Freakonomics: the Origin

The word Freakonomicsis currently not in the dictionary. It is actually a title of a book by Steven Levitt and Steven Dubner. This is an excerp from their book which explains the concept of freakonomics:

"Which is more dangerous, a gun or a swimming pool? What do schoolteachers and sumo wrestlers have in common? Why do drug dealers still live with their moms? How much do parents really matter? What kind of impact did Roe v. Wade have on violent crime?

These may not sound like typical questions for an economist to ask. But Steven D. Levitt is not a typical economist. He is a much-heralded young scholar who studies the riddles of everyday life-from cheating and crime to sports and child-rearing — and whose conclusions regularly turn the conventional wisdom on its head. He usually begins with a mountain of data and a simple, unasked question. Some of these questions concern life-and-death issues; others have an admittedly freakish quality. Thus the new field of study contained in this book: Freakonomics.

In Freakonomics, they set out to explore the hidden side of — well, everything. The inner workings of a crack gang. The truth about real-estate agents. The myths of campaign finance. The telltale marks of a cheating schoolteacher. The secrets of the Ku Klux Klan.
What unites all these stories is a belief that the modern world, despite a surfeit of obfuscation, complication, and downright deceit, is not impenetrable, is not unknowable, and - if the right questions are asked - is even more intriguing than we think. All it takes is a new way of looking.

Freakonomics establishes this unconventional premise: if morality represents how we would like the world to work, then economics represents how it actually does work. "

http://www.freakonomics.com/thebook.php

My intention for this Blog is to try to explore the unique Brunei economy in a 'freakonomicsish' (or conventional) way.

I maybe right, but often I am sure I will be wrong! I don't claim to be a 'good' economist, Hey! I'm not sure if I am even one. Therefore, I'm not writing as an economist, rather as a curious person in Brunei Darussalam.

Whenever I can, I will try to support my views with research, facts and figures. Nevertheless, as you often see in any journal papers: "All remaining errors are the author's responsibility"

I welcome comments from anyone.

Salaam!