Monday, July 13, 2009

Key Result Areas (KRAs) for High-Income Economy

When I was given a time planner in the early 1980s as a young executive, I spent an intense several months figuring how to use it properly, applying such concepts as goals, strategies, and action plans. I discovered I like the Key Result Area (KRA) better than Key Performance Indicator (KPI). It is therefore a pleasant surprise when I hear the government talking about the KRA instead of the KPI.

The problem with the KPI is its pretense to precision and measurement which may be logical but misleading. The KRA may be fuzzy but it can be more realistic because it touches on areas that are intuitively logical but not measurable with any precision (and not entirely unmeasurable).

My objective in this post is to try to put together into a coherent whole the concepts that have been reported in the press so far and see how everything fits:
High-Income Economy
New Economic Model

Vision is an image that we see in our minds of what, in this case, we imagine our nation to be. The first vision was "Independent Malaya" in 1957, expanded into "Independent Malaysia" in 1963. The vision was changed to the "New Economic Policy" in 1970 to last for twenty years. In 1991, "Vision 2020" was mooted but the clarity was clouded by the financial crisis and subsequent policy actions were to salvage what was left of the economy.

Today, the two contending visions seem to be "1Malaysia" and "High-Income Economy." (I think the "New Economic Model" is a stray to try to emulate the "New Economic Policy" but will encompass "1Malaysia" and "High-Income Economy.")

"1Malaysia" seems to be an anti-thesis to the "New Economic Policy." "1Malaysia" is now being touted as the higher vision of the NEP while the old NEP has been degraded as a poor instrument of the higher objective.

The "High-Income Economy" is not new (being nested in "Vision 2020") but works as an anti-thesis to the delapidating policies particularly fiscal, immigration, institutional and financial policies that seem to have worked to corner the whole economy into, theoretically, an equilibrium but not a happy one.

"High-Income Economy" is therefore a higher vision than "1Malaysia", with the latter acting as a crucial unifying force of higher growth.

But the level of one's eventual achievement depends on the height of one's sight. Malaysia can go higher. "Paradise on Earth" seems like a good higher vision that subsumes under it "1Malaysia" and "High-Income Economy."

Most people get the vision mixed up with the mission. Vision is this large image that we are trying to create - and not necessarily, or rather should not be, measurable. Mission deals with the question of the motivation for this vision, so as to mobilise support for the vision.

We concluded above that the vision should be "High-Income Economy" and not "1Malaysia." But "1Malaysia" is an important Key Result Area for the vision of "High-Income Economy."

But what is the mission for the goal of "High-Income Economy." The primary motivation must be "Equal Opportunity For All" rather than "Economic Opportunities For A Select Few." In which case, the manner by which the "High-Income Economy" is achieved becomes important to ensure that growth and distribution are in the right direction.

I cannot over-emphasise the importance of the nature of the implementation of the "High-Income Economy." The previous goal of high-growth economy had worked badly because of the errors in policies being implmented from which we are still reeling.

It has been reported that the foundation for the "1Malaysia" is the principle of justice for all. (The Star, 11 July). But justice can be a difficult word because of its many connotations, one of which implies the justification to resort to violence or unscrupulous means to achieve justice. I would prefer "Fairness For All," as the word "fairness" is more of a plea than a demand. Which all boils down to "Equal Opportunities For All."

The concept of the Key Result Areas is akin to the concept of the Critical Success Factors, being pre-conditions for the success of a goal or vision.

If "High-Income Society" is the Vision, and "Equal Opportunities For All" is the Mission, then the Key Result Areas should be as follows:
KRA1: 1Malaysia - National Unity as the First Underlying Force for Competitive Advantage
KRA2: High Savings and Investment Rates for Domestically-Generated Growth
KRA3: Downsizing the Government
KRA4: World-Class Education System that is relevant to the Global Economy As the Second Underlying Force for Competitive Advantage

KRA1: 1Malaysia
"1Malaysia" is a complex concept, depending on what we see when we look at diversity. If we see in diversity, enemies, then the tendency will be to dominate others to ensure supremacy. If we see strength in diversity, then the tendency will be to embrace the diversity to create new and greater synergistic strength. If Malaysia is to become an enlightened nation, then aiming for high ideals is a key result area that we must see achieved. To achieve KRA1:1Malaysia, the action plans may include:
Action Plan 1.1: No Discrimination for or against in all areas of life in Malaysia, including foreign investors. Actions have been taken to remove barriers to entry into certain areas of the economy. However, we must also be conscious that all rules apply and that foreign investors and foreign workers, however much needed, should also not be given concessions which are given to local investors or local workers.
Action Plan 1.2: Promoting "Malaysia, My Home" to every Malaysian citizens so that they feel at home in this country. This is important economically to retain savings and for those savings to be invested at home to create jobs for the young people at home. We have successfully been promoting "Malaysia, My Second Home" to foreigners and we should therefore put equal effort or more effort to promote Malaysia to Malaysians, even ex-Malaysians, in order to extend our global reach.
Action Plan 1.3: A Common Language to unite the people and this invariably falls onto the Malay Language (but whether it should be the medium of instruction in schools is another matter). This is more of a practical need for people of all walks of life to communicate with each other across different strata.
Action Plan 1.4: The celebration of cultures as a reflection of the way people in Malaysia cope with life in the nation, by preserving old cultures and the traditional way of life as well promoting the performance arts with Malaysian elements. This is not very hard to do, as Malaysians have already embraced key elements of each other's local cultural heritage, short of religious imperatives.

KRA2: High Savings and Investment Rates
No country has not grown as a result of a high savings rate. All countries that do not save have all gone bankrupt.
Action Plan2.1: There should be constant encouragement for the people to save by providing safe savings instruments with guaranteed positive returns.
Action Plan 2.2:There should be constant encouragement for the people to invest in themselves (human capital) and technology (equipment).
Action Plan 2.3:For investments to match savings, financial institutions should be made more efficient where credit officers and managers are knowledge of the evolving structure of the economy and are constantly searching for ways and means to nurture new and growing industries.
Action Plan 2.4:There should be strict controls of financial and business speculation by financial institutions.
Action Plan 2.5: Keep the Ringgit Strong whenever there is a current account surplus, and keep it weak when there is a current account deficit.

KRA3: Downsizing the Government
Action Plan 3.1: There is a need to structure the government machinery properly. There is a tendency to look far afield for expert advice when in fact the experts have been sitting so faithfully right under the noses of the leaders for so long that they have generally been ignored. Office politics have a tendency to kill immediate work rivals to the detriment of the nation; and foreign consultants hired at exorbitant sums to provide advice based on inputs of the poor local loyal workers. In other words, there is a huge mis-match between the job-holder and the job-description in the civil service as a result of past hiring policies. There is a need to discard the ill-qualified workers from their posts and hire properly-trained personnels to fill the posts.
Action Plan 3.2: The government should increase the number of technocrats who can design systems and manned systems and sure that the government system is cyber-safe. The government should be based on systems that are opened to all and there should be minimal tweeking at high levels.
Action Plan 3.3: The government should not crowd the economy. Government-linked companies (GLCs) should be asked to make profits but no more than the savings-deposit rate so that there is no encouragement of natural monopolies to make supernormal profits to enrich their executives by charging high tariffs.

KRA4: World-Class Education System
The education system is an area where a clear analysis of the root cause of the problem should be identified. From the debate in the media, it is clear that the root cause is the poor quality of the teachers that we have - not only in (i) the lack of mastery of speaking and explaining in English but also (ii) the lack of mastery in the teaching of Mathematics and (ii) the lack of mastery in the teaching of Science - factors which could be attributed to be the product of the existing education system. The inability of teachers to teach in the subjects in which they are assigned to teach is the crux of the whole debate.
Action Plan 4.1: As we have recommended for the civil service, teachers should individually be reassessed by credible and objective assessors of their core competence as to (i) their ability to teach Mathematics regardless of language, (ii) their ability to teach Science regardless of language; and (ii) their ability to speak and write English and Bahasa Melayu. Depending on where the demand or vacancies are, the posts should be filled only by competent teachers. Additional teachers can be hired from retirement or Singapore.
Action Plan 4.2: There is also the problem of the competence of the students, especially those in rural schools and those in urban schools. The medium of instruction in rural schools should be Bahasa Melayu, but students must learn an extra language preferably English or Mandarin. The medium of instruction in urban schools should be English, but students must learn an extra language preferably Bahasa Melayu or Mandarin. The medium of instruction in Chinese/Tamil schools should be in Mandarin/Tamil, but students must learn an extra language preferably English or Bahasa Melayu.
Action Plan 4.3: For rural schools, there must be forward planning for teachers for each of the states. As far as possible, teachers should be recruited from the respective rural areas so that, when properly trained, they would be willing be willing to go back to their respective kampongs to serve their communities on a long-term basis.
Action Plan 4.4: There should be emphasis in teaching on principles and methods of thinking rather than raw facts. The syllabus should be simplified by experts who know their subjects well so that the core essence of each subject is taught while exercises are given to encourage the application of ideas.
Action Plan 4.5: There should be a limit placed on the inflation of grades, and the quality of the examination questions assessed as to their level. When the exams are too easy and the grades are all high, there is no basis for proper grading of acumen and competence and flair of students. There has been less emphasis on academic training and more on professional or vocational training which a nation that wants to build its own indigenous industries from the bottom up needs. There should be some correlation between the standards that are produced from public examinations and the availability of local undergraduates positions (e.g. All 10 As students will be guaranteed a place in the local universities in the subject of their choices.)

The above is not the New Economic Model but just some thoughts of an individual who hopes to throw some light in the search for one. When properly done, it can be an elaborate and consistent set of action plans derived from a vision but based on an understanding of the reality.


walla said...


Both can be spun. But one can be spun less than the other. Spinning creates balance between expectations and results. The aims have always been continuity and incremental gains. The results in too many cases have been indifferent. Two steps forward followed by one step backward is still one step too costly. Efficiency in using resources and capital is low and overlooked in the next exercise.

Not enough deep post-mortem done on past failures and successes. All lessons that could have been learned are forgotten or poorly recorded because the human resources have changed or the political focus has shifted.

This continues because there is no transparency principle. If everything from minutes to evaluations are written as faithful records and posted completely on the web which is free, everyone can pick them up and hold them for future accountability. Each new generation of leaders and administrators reinvent wheels with the same enthusiasm of past novices to do the same things all over again but at increasingly higher mark-ups.


1Malaysia can also mean thinking in one mind projecting one composite individual that represents one voice of the whole population. That one mind is made up of conscience. That conscience is formed from knowing what was decided, how it was decided, what was done, how it was done, what went right and what went wrong. If everyone knows all this easily, then no one can spin, hide, change, obfuscate, confuse, deny, deviate or deflect. The runaway train gets stopped in its track. Technology provides inclusive communication which creates engagement which reduces suspicion and increases concentration of force. It also wastes less time and money trying to concoct excuses which if bought will recycle the same wrong.

Transparency is the key principle for anything and everything to happen right in the future of this country. All lights on so that mice can't eat the common rice. Bad will be banished when all the people know. Because those who are religious will use their conscience and those who are educated will use their integrity.

High-income economy

A high-income economy comes from high-value activities. High-value activities come from better content, more functionality, stronger customer pull, and more effective marketing. Better content comes from more ideas generated by better thinking and more facts transformed into deeper insights that deliver greater functionality. All factors must come together to make a high-value activity that is desired so that people will pay a premium for it.

Such as a premium marque. The branding is so strong the name already sells the product. There is trust and confidence the product (or service) will not only not fail but will consistently delight the customer and add new magnitudes to his other intangibles - like comfort, ease of mind, self-esteem, perceived recognition by society, even statistical safety. The high value also pays to replace something in his memory bank - some bad experience in the past with another similar product (or service).

walla said...

Therefore to generate a high-income economy means capability and action to generate all those actualizing and selling factors.

The race of the 21st century is the race to accumulate capital. In a world where ideas are aplenty and production awash but credit is constrained, the banker is king because no money no talk (also no honey).

When money increases and saving becomes a pull factor itself, then the strategic card is held.

High income economy is therefore good...but how can it be achieved in this country?

What IS this country? Rather, what doesn't it have which is needed to start a high income economy?

It doesn't have imagination. But it has dreamers and power-point visionaries.

Imagine the following:

- Malaysia as the leading nation in the growing of giant tomatos (etc);

- Malaysia as the testbed to prototype critical component industries;

- Malaysia as the emerging economy for microfinancing of micro-service industries; and so on.

What must it have as it develops imagination, the fast-start locomotive to pull the other coaches of factors that together actualize high-income activities?

Low-cost production factors like low-cost good quality labor, cheap and fast broadband, tax-free high-tech equipment, cheap and high quality education, cheap and accessible infrastructure including office, plant and metropolis amenities.

How can low-cost support high-income?

It must in our case because everyone which matters has already started high-income but at high-cost. If we are to make a difference which counts and suck in investment capital to kick-start our journey to high income, we must make this country one of the cheapest places in the world to do high income activities.

But there are other places which also do that - low cost and increasing high income, someone whispers.

THAT is why we must command the language height. Through some great wisdom we have given away the only legacy we have that can help us catch up. While at it, we also shooed away half our brains. Marvelous vision, missions and objectives.

The situation worldwide is shifting. Take Australia. It is high cost high income. It needs accountants. Its accountants are well-paid. So, many professionals go there. Now it is in recession. It still needs accountants. But they cannot be paid as highly as before. However it is still high cost. So they go back. The worldwide recessive pressures is swirling a global re-mobility of brains and experts. They only will stay on if they have enough financial stamina and see the prospect changing. Our investment strategy should be to read the market and create unmatchable counterbalancing attractors. It is a global war for talent. Talent sparks ideas. Ideas form imagination. Imagination creates high income activities.

walla said...

Low cost. That same continent has funny connectivity price structure. Its wifi is zoned. Step out of the shop and the pricing is different because inside is served by one provider, outside by another. Go to the supermarket in the morning and then in the afternoon. The same goods are priced differently. Like their gasoline from week to week. Liberalization and globalization have made focus on money and short-term gains the primary concern; they created free market competition which then gnarls the experience of the customer. Even their starbucks don't have free wifi. And you have to buy the tomato or chili sauce for your burger. Their sms cost is prohibitive. And in Austria, taking a leak there will cost you a full lunch here. Well, at least a pack of rojak. Which you can buy by just driving your car right next to the stall and winding down the window.

Why is low-cost high income also important? Because at least ninety percent of the population is not ready for high income activities. All have been buffeted for too long from reality because of politics and easy-going. This country's economics has been killed by this country's politics and cluelessness. The depoliticization of Malaysia and the growth of transparency and awareness are the first imperatives towards creating a low-cost high-income, equal opportunity and fair 1Malaysia. We must know where we are strong but we must know more where we are weak.

Education to get information, facts and ideas to build imagination is a long-term full-chain process. So far malaysians have had to stretch their wits playing one game after another in order to reach nearer to their own material goals. There is no critical mass of excitement that things are moving coherently and cohesively. Children are not learning facts because the teachers and lecturers and imparters of knowledge themselves don't know because they are the product of a system that is anemic to finding out how the world really operates and what are needed to really get ahead in this century. Things have not been moving since the last devastation, like an underground thermonuclear blast hidden from everyone. The children today get stressed out doing their co-cu activities. These are how to decorate the hall, what dance to perform, how much to price shiny buttons and who should hold what post to get mentioned into the testimonial to count for hopeful entry into backwaters local uni. How will those skills compensate for their lack of knowledge when they enter the world of work increasingly populated by others who have already accessed and digested databases, the smallest of which containing two hundred and eighteen thousand electronic books on all subjects, from preventive cardiology to dynamics of complex systems to the latest on econometric modelling? And they also have PE lessons twice a week.

Just as our sports crashed, so too our academic performance. Notice that?

We don't have another ten years to maturize a new direction for education. Constant denials have led to a new criterion of governance - deniability. If you have something that you can later spin to deny, then do it. This has become the norm rather than the exception. It's like not wanting to do the right things in the hope that the wrongs will sort themselves out later.

Those of the vintage year 56 should be banned from writing. They tend to upset all apple carts with too much constructive analysis.

de minimis said...


This post is mind-blowing in its categorical clarity.


Your insightful contribution enhances etheorist's post.

Malaysia has incredible people. The both of you just proved it.

walla said...

de minimis,

you beat me to it; this etheorist post hits the peak of clarity and constructive analysis; it has the logical construction of a Tarrasch attack seeking to go to the heart of the matter.

i just make some noise at the tail end to throw up a sand storm.

hishamh said...

It has always been my impression that KRAs and KPIs are interrelated - the former to state what you want to achieve, and the latter to measure your progress. Action plans are the link between the two.

By extension, KRAs are useless without KPIs, and KPIs are pointless without KRAs. So I'm happy that the government is discussing both.

But beyond that, I like this post very much, even if I disagree with some of it.

Two points immediately come to mind:

1. If GLCs are asked only to achieve a low return, then the better option is to sell or break up the GLCs to the private sector. Anything else is inefficient use of resources.

2. Asking bank officers to altruistically lend on the basis of nurturing industry is like asking the leopard to change its spots. If you are serious about this point, then to my mind the best way to go is to turn the clock back and nationalise the banking industry.


A high income, low cost economy is a contradiction. I've used the Balassa-Samuelson hypothesis to examine the effect of higher incomes on exchange rates, but the hypothesis first came about in the 1960s from the empirical observation that high-income economies also had high domestic price levels - the evidence is statistically robust for advanced economies.

I don't think we can run away from that situation if Malaysia does manage to get into that category.

And your thoughts on the impact on the low-income bracket is spot-on, and ties in with etheorist's previous post on distribution. One thing I've yet to hear from the government is how to manage this distributional problem.

I believe the focus should shift from an absolute poverty paradigm (though efforts should still be made in this direction), to alleviating relative poverty. No good being a high income country if we leave three quarters of the population behind.