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The Knowledge-Based Economy: Malaysian Response

The currency attacks of mid-1997 and the financial turmoil that followed have seriously undermined Malaysia’s economic situation.

The ‘tiger economy’ was badly wounded but by introducing capital and currency controls to shield its battered economy, Malaysia took a brave and unorthodox decision which earned the ire and scorn of the big powers. In the words of Tan Sri Ramon Navaratham,


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“We should have leamt the bitter lessons of rapid liberalisation. We should only liberalise our financial structures in tandem with the strengthening of our financial institutions, which arc still not strong enough. We should also insist on the need for a new international financial architecture that is transparent. Thus we have to prepare to resist undue pressure from the United States and other APKC countries that will want us to liberalise rapidly to suit their own agenda for globalization or what I call the ‘gobble-ization’ of our institutions and assets.”

A few years before the Asian financial crisis hit the Malaysian economy, the Prime Minister of Malaysia announced the establishment of the Multimedia Super Corridor (MSC) to assist in the economic transformation of the country from a production-based economy (P-economy) to a knowledge-based economy (K-economy). Knowledge, in addition to labor, land and capital, is now accepted as one of the key factors of production that drive the economy. New technologies and innovations are created through the application of knowledge to facilitate economic growth. Acquiring knowledge about customer behavior, markets, economics, technology and other resources not only opens new ways of wealth creation but also ensures the competitiveness of a country’s economy. The shift that Malaysia is making towards a knowledge-based economy has a direct implication on the education system.

Education, being the single most important factor in contributing to the transformation of a knowledge-based economy, took up in 2000 20.68% of the operating expenditure and more than 15% of the capital expenditure (see Table 1).

Table 1 – Allocation for Education

 

1999

Opex

Capex

2000

Opex

Capex

2001

Opex

Capex

Education

11,458

3,865

12,036

3,907

13,751

5,925

Total

46,699

22,618

58,206

25,286

60,710

26,836

Budqet%

24.53

17.08

20.68

15.45

22.65

22.08

 

 

 

 

 

 

 

 

Higher education, involving the public institutions of higher learning, is now gearing to produce more scientists, engineers, professionals and technologists to provide the requisite human resource to manage the challenges of ICT and the K-economy (see Table 2 on ICT Indicators).

Table 2 – ICT Indicators

Country

News

papers

1996

Radios

11996

TV

1997

Fix

Phones

1999

Mobile

1999

PC

1999

Hosts

1999

Argentina

123

677

289

213.8

109.70

59.9

3.08

Honq Konq

800

695

412

559.6

551.02

360.2

66.40

Indonesia

23

155

134

29.1

9.83

13.4

0.18

Ireland

153

703

455

472.4

360.59

352.6

15.95

Korea

394

1037

341

449.7

499.04

181.3

6.03

Malaysia

163

432

166

219.3

145.05

94.5

2.8

Singapore

324

739

354

484.1

381.45

390.9

22.19

South

Africa

30

316

125

126.9

 

54.1

4.21

Some of the major challenges facing the public universities in Malaysia are:

To provide quality higher education to at least 40% of the university-going age group [17-24 years] inclusive of the deployment of ICT;

  1. To ensure that the educational programs offered are at the cutting age of knowledge and arc of international standards;
  2. To emphasize on enhancing the creative and innovative abilities of students in the respective discipline and to prepare them to be continuous learners;
  3. To become truly knowledge organizations that actively create, disseminate, adopt and harness new knowledge;
  4. To excel in R & D activities through involvement in:
  1. Developing products, services and technologies through harnessing Malaysian experiences in manufacturing and the other sectors; and
  2. Spearheading breakthroughs in the conversion of Malaysian commodities into high value finished products.

I would add a sixth major challenge, namely to strike the right balance between the urgency for professional education and the necessity of character education so that professionals will be people with moral integrity and future leaders will not succumb to the temptations of material pleasures of wealth, power and status.

With the right skills and knowledge, our graduates should be able to contribute positively to the efforts of making the Malaysian economy more resilient and more competitive through technological innovations, creative exploitation of new markets and the development of new products and services.33 Despite the government initiatives and efforts, Malaysia is still Tagging behind in some major developments, such as computer infrastructure, research and development as well as technology and in technical and knowledge skills as mentioned in the Economic Report 2000/2001,

According to the Information Society Index (ISI), Malaysia is ranked in the third group as STROLLERS with a position of 35 out of 55 countries in the year 2000 (See Table 3).

Table 3 – Information Society Index Ranking

Category

Country

Rank in year 2000

Scores in year 2000

 

Sweden

1

5,062

SKATERS

United States

2

5,041

 

Finland

3

4,577

 

Singapore

11

4,014

 

Japan

10

4,093

 

Taiwan

18

3,177

STRIDERS

Korea

22

2,931

 

France

21

3,140

 

Malaysia

35

1,583

SPRINTERS

Philippines

47

1,012

 

Thailand

48

1,010

 

China

51

915

STROLLERS

Indonesia

52

888

 

Pakistan

55

719

Malaysia’s allocation to R & D activity, 0.3% of total GDP in 2000 is low compared to Japan (2.8%), Korea (2.8% and Finland (2.6) (see Table 4).

Table 4 – Workforce and Investment Comparison

Countries

(1997)

Services/

GDP

(%)

K-Skills Workforce (°/o of total workforce)

Investment

in

R & D/GDP (%)

K-Skills in R & D (per million population)

Finland

65

22.9

2.6

3,675

Korea

50

26.4

2.8

2,636

Taiwan

61

15.1

1.9

3,340

Singapore

64

15.5

1.4

2,512

Japan

60

50.0

2.8

5,677

Malaysia

45

17.5

0.3

87

The table also shows that only 17.5% of total workforce in Malaysia is knowledge-skills (k-skills) workforce as compared to Japan where half of the total workforce are in the k-skills category. It is obvious that if Malaysia is to succeed in the global knowledge- based economy, her population has to overcome the shortage of domestic knowledge workers and acquire the ability to quickly adapt to changing environments. Dato’ Mustapa Mohamcd, Executive Director, National Economic Action Council summed up the challenges of the ‘new economy’ thus:

“As a country, one critical challenge for Malaysia is globalization. The name of the game is competition and efficiency, but the underlying factors are technological advancement and systems. The challenge before us is to be as competitive as we can in this new knowledge-based global economy. What this means is that we have to be able to respond effectively, efficiently and quickly to challenges from both inside and outside the country, because what is considered the latest in the market today can be obsolete within such a short space of time.”

Dato’ Mustapa also echoes the views of many Muslim intellectuals when he says:

“Personally, I think the biggest challenge to the Muslim involvement and excellence in science and technology is to have the right mental framework, attitude and approach.”

M. Kamal Hassan

 

Source: Essays on Muslims and the Challenges of Globalisation, Institute of Policy Studies, Islamabad. Republished with permission.