Malaysia: Where ‘disruption’ is an empty buzzword
By Khoo Hsu Chuang September 15, 2016
- From banking to agriculture, Big Government has hand in every industry
- Private sector competes with a well-funded, monopolistic foe
DEPENDING on who you talk to, Malaysians are either suffering through the worst of times, or basking in the glow of a Fourth Industrial Revolution, exaltant in a raft of disruptive technologies that are improving every aspect of how we work, live and play.
For optimism’s sake, let’s just say our current reality is the second one.
Lots to back it up though: Grab is a legitimate competitor to Uber in Southeast Asia. And its legion of smart, strategic advisors have anointed Anthony Tan’s young company Unicorn status as it enters the biggie in this neck of the woods: Indonesia.
With this, Grab and a raft of other up-and-coming local startups, means we Malaysians -- Hooray!! -- have front-row seats to the Digital Revolution, Part Two.
Or are we in Part three already?
No matter, for these are unmistakably halcyon days we are living through.
One day, when we are gap-toothed and balancing our grandchildren on our laps, we will be able to say to them, ‘we were there. We lived through the worst of times, and the best of times’.
And we will be justified in saying so, for unlike our fledgling forays on the World Wide Web and the inevitable flameouts late in the twentieth century, this edition is replete with success stories.
Malaysia’s best startups, nothing but bit players?
As I speak, the progress of ride-hailing services in the country has been nothing short of outstanding.
Its legitimisation by the government and the ensuing reform of public taxi services will act as a framework on which an ecosystem of mutual benefit will spring up for all stakeholders, whether they be riders, drivers or the public.
Meanwhile, other local services like KFit (health and fitness), IFlix, (entertainment), iMoney (personal finance) and Kaodim (service marketplaces) are ripping through the tech ecosystem, jostling for funding and attention in an expectant, international marketplace for customers and investors.
No doubt, their founders will be hoping to emulate the example of Jobstreet and iProperty in cashing out, albeit at even more eye-watering valuations.
However -- and there is always a however -- one can’t help but notice that Malaysia’s best startups are nothing but bit players in the country’s most lucrative industries, if at all.
Whether it be defense, media, financial services, property, construction, oil and gas, commodities/agriculture, automotive manufacturing or telecommunications, large government corporations rule the roost.
Start a company intending to disrupt any of these sectors and you come up, head-first, against a GLC.
A well-funded, well-staffed rival that while slow and ponderous, has nonetheless sewn up most of the value chain, all the way from upstream supply to downstream markets.
Ironically, most if not all of these industries are ripe for disruption.
In financial services, for example, every single one of the nation’s banking groups continue to feed a large branch network and physical presence that not only drive up financing costs, but fend off innovation.
And when it does innovate, it prefers to call the shots, giving it names like ‘Fintech’ and ring-fencing it in a controlled space it ironically but accurately describes as a ‘sandbox’.
While the regulators and government might rightly (in some aspects) defend this on grounds of consumer protection, others might say it does so for its own benefit, from a revenue-collection but also ‘national security’ perspective.
In other areas such as defense, transport and oil and gas, it’s tough too.
While the Internet and its ability to capture and analyse data, usage patterns, output and productivity will improve these industries no end, the outmoded and multi-layered systems that blight these industries sap value and enrich personal networks like malignant cancers, adding little to the nation in real economic terms.
And even in the ride-sharing space -- my apologies in advance for being such a cynic -- some might say that the only reason behind the government’s speed in legitimising the service was so that its gargantuan potential could be captured in a soon-to-be introduced tax on the digital economy.
And that a new set of warlords would be able to control an industry that has already given its chief protagonist, Uber, a pre-IPO valuation of $65 billion.
It’s never nice to rain on a parade, and perhaps this is too much of a reality check. But innovation in this neck of the woods appears to be an inconvenience that only serves to threaten the comfy cabals that dominate business and politics.
And that it only happens when it is-
a) small and containable (like a poky little radio station that serves just one city) or
b) it can be controlled and monetised on the government’s own terms.
There’s a reason why government is so big in the business world, and it’s not because of the public good.
So until and unless Big Government and Big Business are forever vaporised like so many mosquitoes in a cloud of Ridsect, Malaysia will continue to play a bit part in the Digital Revolution.
Grab may be an anomaly with its billion-dollar valuation, but lest we forget, Anthony Tan’s ascendance was much less a result of his labours in a basement, and much, much more about his privileged upbringing and Harvard B-School learnings and networks.
Until that day comes -- and it may never, judging from the Zeitgeist -- it’s little wonder that Malaysia’s best and brightest continue to ply their trade and seed their ideas abroad.
Away from a nation that says it has Digital Ambitions.
But does little to see it through after the headlines end and the cameras stop clicking.
The only journalist in Malaysia to have a TV and Radio show and a weekly print column, Khoo Hsu Chuang is also a contributing editor with DNA