“Ethical Markets recommends these commentaries by our colleague Chandran Nair, a member of our illustrious global Advisory Board on the stunning change in Malaysia with the re-election of former President Mahathir and his release of Anwar Ibrahim and promise to hand over leadership to him after two years. I was invited by Anwar Ibrahim, then Education Minister, to Kuala Lumpur in the 1980’s to appear on a TV series, with our London-based colleague Ziauddin Sardar, editor of Elsevier’s scientific journal FUTURES, on the subject of bringing conventional economic textbooks into recognition of 21st century conditions and issues beyond their formula of GDP measured “progress”.
We will be watching these encouraging signs of change in Malaysia .
~Hazel Henderson, Editor”
The Financial Times, Chandran Nair
A first ever opposition victory signals voters’ disgust with corruption
Millions of Malaysians woke up on Thursday to a new reality.
With the unexpected victory of Pakatan Harapan (Alliance of Hope), Malaysians have overcome their fear of change and voted out the Barisan Nasional (National Front), after more than 60 years in power. The people have seized an opportunity to reshape their country after years of underachieving and feelings of shame.
Malaysia may have elected the world’s oldest prime minister in Mahathir Mohamad, aged 92, but it has also elected its youngest ever MP at 22 years old, and chosen its first ever female deputy prime minister.
For the first time since independence, power will be transferred between political parties. Only Singapore has remained under single party control for longer: its People’s Action party has governed since 1959, before the country was independent.
This recent election should restore faith in democracy, at least a little, at a time when it is now common to talk about “democracy in retreat”. The truth is that many Malaysian reformers worked tirelessly and peacefully for years with little reward until now. It is also important to note that power is changing hands without incident, a testament to the endurance of state institutions despite allegations of corruption and legal manoeuvres aimed at keeping the ruling party in power.
Malaysia is perhaps the most culturally diverse country in its region, with a mix of Malays, Chinese, Indians and other ethnicities. Four of the world’s major religions have a vibrant presence: Islam, Christianity, Buddhism and Hinduism. There is also a thriving Sikh community.
It is also wealthy, behind only Singapore in south-east Asia. It is well-educated, with a sizeable middle-class workforce proficient in English. The country really should be much more of a player on the world stage, but it has not capitalised on its competitive advantages. In addition, pride in the country has been hammered hard in recent years and many professionals have left.
Much of the credit for this change goes to Mr Mahathir, perhaps Malaysia’s most well-respected and revered politician. In Malaysia, the deck is heavily stacked against the opposition. Opposition parties are denied coverage in the press and television. Leaders are often harassed, if not arrested, by the government. Mr Mahathir’s decision to come out of retirement to stand as the head of the opposition gave Pakatan Harapan the strength to go toe-to-toe with the government. He was not someone who could be threatened or thrown into jail.
Mr Mahathir is not perfect, of course: he also harassed the opposition during his previous tenure as prime minister. But he has apologised for his past mistakes and has promised to give up his prime ministerial position to his former nemesis and current ally Anwar Ibrahim within two years.
But this result is also about outgoing prime minister Najib Razak, who pushed his luck and ultimately went too far.
Corruption has always been a problem in Malaysia, but the 1MDB scandal is the worst the country has ever seen. Lurid stories about bribery and money laundering have embarrassed Malaysia on the world stage. Malaysians were used to poor business practices and dirty money in politics, but this brought shame to the nation.
Perhaps Malaysians needed to face the stark choice between someone as discredited as Mr Najib and as revered as Mr Mahathir before they would vote for change. But at least it has now happened.
This election saw voters reject politics based on ethnic, racial and religious divisions. Mr Najib’s campaign tried to capitalise on the old division between the Malays — the bumiputra — and ethnic minorities. He routinely tried to instil fear in the majority by arguing that Pakatan Harapan would be far more sympathetic to the Chinese and Indian minorities. Pakatan Harapan inherits a country with many problems, including stagnating wages, a bloated civil service, unethical business practices and declining education standards. But, several immediate steps come to mind.
First, Pakatan Harapan needs to clean up the 1MDB scandal. If Malaysia resolves this problem within the rule of law, which Mr Mahathir has stated he is committed to, it would restore international confidence in the country and allay fears about the state of the public coffers.
Pakatan Harapan should work to create a new system of politics that does not distinguish between races, ethnicities and religions. It needs to restore meritocracy in the civil service and it needs to start reforming the country’s national development policy so that it serves all disadvantaged Malaysians equally.
A Malaysian society and economy structured along these lines would give any economy in south-east Asia, if not the entire continent, a run for its money.
Making technology socially responsible
The Financial Times, Chandran Nair
Asian governments need new ‘licence to operate’ for local and foreign tech companies
On April 19, Alibaba announced an investment of Rmb4.5bn ($700m) in a rural e-commerce company. It was the latest step in a rural expansion strategy that goes from building rural e-commerce platforms to developing ways that Ant Financial, Alibaba’s financial arm, can contribute to rural development and poverty alleviation.
This is not altruism: as the South China Morning Post notes, “Rural areas have become a battlefield for China’s e-commerce giants as online sales growth slows in urban centres where the market has become saturated.” Yet Alibaba’s rural expansion matches the government’s goal of increasing investment in rural areas “left behind” by China’s massive growth.
Just over a week earlier, the government made its objectives clear when it moved against up-and-coming tech company Bytedance, whose popular news app Jinri Toutiao was suspended for sharing “vulgar and banal” content. The company’s founder later admitted that he did not understand that “technology must be led by socialist core values”.
The government’s action was criticised outside China as extreme, especially given the wider conversation about the Communist party’s tougher line on cultural issues. But tough action against a technology company is not something that could only happen in China.
Elsewhere in Asia, most companies still seem to defer to the views of the state. Perhaps, when it comes to tech companies, this is not all bad.
Though the term is probably understood differently, many westerners might agree that their technology companies share “vulgar and banal” content. The UK government recently expressed concern to social media companies that they were exposing children to “harmful side effects”.
Others have raised issues with tech companies’ anti-competitive behaviour, unfair labour practices, use of personal data and neglect of political interference.
Yet it sometimes seems that the US has no appetite to regulate. For example, Facebook’s business model clearly has harmful effects. In the west, it has decimated media organisations, facilitated the dissemination of low-quality if not untrue information, and exploits personal data to attract advertisers.
Such behaviour is worse in developing countries: BuzzFeed, the New York Times and the UN have all recently examined how Facebook provokes political and ethnic tensions in Cambodia, Sri Lanka and Myanmar. Despite such costs, hardly anyone expects Washington to take a hard line, even in a more limited sense such as a privacy “bill of rights”. This is partly because of political gridlock but there is also deeply-held unease about regulating companies such as Facebook.
Technology companies, like all companies, are granted a “social license to operate”. Companies agree to follow a set of rules, and produce goods and services of value for society. In exchange, companies and those that run them are allowed to profit. The terms of such licenses vary from country to country, but companies are expected to work within them.
Chinese technology companies know that lines exist, and that Beijing would take action should they cross them. This encourages them to fulfil their “social license to operate”, perhaps by aligning their business strategies with government plans, as Alibaba tries to do. But the “line” is often unclear, and Beijing’s actions can be aggressive.
In contrast, the US seems to have great difficulty in defining its lines, especially for technology companies. If anything, a “red line” for Silicon Valley is less of a guideline and more of a barrier to be broken. Is there anywhere in between China and the US? Where a government sets clear lines for its tech companies and guides them towards socially-beneficial outcomes, but perhaps does not go as far as China’s aggressive suspensions and takedowns?
The developing world should take the responsibility of defining this middle ground. When it comes to social responsibility and tech in Asia, it is not enough to make things cheaper, more convenient, or more efficient. Companies need to innovate to deliver actual improvements in living standards, reducing drudgery and meeting basic needs, as well as sustainable resource usage.
In the west, companies are under huge pressure to maximise short-term profits, often at the expense of long-term objectives. Western markets and investors consistently punish companies that decrease revenue or increase costs in pursuit of some other objective, leaving little room for companies to fully exercise their social responsibility.
In contrast, Asian companies have greater on-the-ground knowledge about what the developing world needs and, therefore, about opportunities to contribute to tackling social issues. Western companies, even those with a global presence, view things through a rich-world framing, and thus miss how things work elsewhere. From eBay losing to Alibaba to Uber losing to Didi Chuxing and Grab, western companies’ assumptions about Asia have often ended up being wrong.
More importantly, developing countries are where the biggest issues are. These societies still have a long way to go to ensure a high standard of living, yet are doing so in a more resource-constrained world. In addition, such countries have fewer institutions to “push back” against disruption caused by foreign technology companies.
Asian governments must create a new “license to operate” for both domestic and foreign technology companies. These companies, if they want to play a positive role, will find a partner actively looking for opportunities for social outcomes for their poor majorities. And maybe, for once, regulators will set the pace rather than running behind.
http://www.global-inst.com/ideas-for-tomorrow/article/2018/making-technology-socially-responsible
Chandran Nair | Founder & CEO | Global Institute For Tomorrow
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