Tough Year for SMEs this 2015

A plate of curry noodle costs RM 3.50 in Penang and that is already considered "expensive" by local standard. Now imagine, in 24 hours, it had gone up to RM 5.00, because that's what just happened.

"SMEs are facing rising costs on several fronts. They include the government's subsidy rationalisation programmes, TNB's tariff hike and even, higher, sugar prices. SMEs have also had to meet minimum wage requirements. All these have contributed to increased costs. We saw the depreciation of the ringgit in 2Q2014." are some of the explanations offered by SME Association of Malaysia National Presient Teh Kee Sin as reported in The Edge, June 8.2015.

Along with other factors are the Goods and Services Tax, which came into force on April 1, and it is expected to be tough on the 650,000 SMEs in Malaysia.

Already large organisations are coming out in numbers to ask the regulators to ease up on SMEs given that over-regulation can kill the goose that lays the golden egg. E-Commerce for example in South East Asia only made up 1% of total retail, unlike 8% in China and over 10% in US and UK economies.

What is also severely lacking include the human capital development that includes retention rate and generation gap trends.

"SMEs are generally reluctant to send their employees for training due to fear of disruption in work activity and staff pinching by other firms. They also face difficulty in attracting and retaining workers due to perceived low remunerations and non-competitive rewards and benefits," says SME Corp Malaysia CEO Datuk Hafsah Hashim.

The good news are our early investigation into Enterprise 50 companies stretching since 1998 to present day revealed that though almost 20% to 33% companies were no longer in existent, those that are still around are making good of their revenues and organisational growth. 

Nevertheless we are keen to study on net profit and positive cash flows to be able to understand more of survival rate in volatile market conditions.

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MIENS is currently assisting with mergers and acquisitions, towards IPO and also following the regularisation of Crowd-fundings.

The Beginning of Religious Man, a new Migrant People?

Of recent I have been receiving questions from friends within the country and in overseas on dealing with multiculturalism. It is a chapter of studies itself at the university level and in many aspects of education.We have to study about other races. (Although I cannot recall whether it is a compulsory study but management studies were compulsory for 1st year)

Since 2008 many nations were economically deprived of their source of income. Some inhabitants chose to change their jobs or migrate to a new land.

There are 232 million migrant workers worldwide and therefore logically we shouldn't have workers or employees shortage.1. That is not the case. What we are short of, are skilled and knowledgeable workers.

To compound business interest on global scale such as China and South Korea, the vast movements from African continents, Middle East and some East Asia basin due to war-torn nations to Australiasia, many of these displaced people brought along their systems of believes. 

Most employers are quite responsible and adaptive towards the changes, but not all are fast enough, and on larger scale, cool-headed to deal with the changes - such as 300-400 employees of two factories clashing over misunderstanding. This then create an atmosphere of distrust among the residences and the factory management.

New Surau just built on extended factory - Kedah

3 Quick Ways to manage new migrant labours.

1. Respect.

Always treat the workers with reasonable respect on the practical side with overall security in mind. For example, would one allow Voodoo-shamans? What about setting up religious halls? Normally there will be the appropriate Government agency to provide advice to setting up community villages.

If the decision is to be setup, then the management will do well to steer away from commenting further, that such a decision- is a business loss. Consider this as an opportunity as part of Corporate Social Responsibility (CSR) and Global Citizenry.

2. Recognise migrant labour rights.

International policies may not work well at local climate. They are for protecting workers rather than employers.

3. Education and Awareness.

Factory managers and supervisors have to recognise the types of leaderships in play. Those granted within the migrant community and that of the employers. One must find a balance to setup a leadership group that reduces chances of mis-communications.

Having some form of leadership and management education and awareness campaign would create a better glue to get people moving in one direction.

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And the  best way to get things started is to first, listen to the new migrants even if a translator is needed to be hired.

Visiting P. F. Drucker

Peter Ferdinand Drucker an Austrian-remade American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of the modern business corporation 1, 

Drucker's credo, "Know Thy Time" are of little use to Generation Y aka "Millenials", that existed three (3) American generations above his; the Silent Generation that had fought in Korea and Vietnam, the Baby Boomers and the Generation X.

Drucker came from the so-called American's "The Greatest Generation" or the G.I. Generation that fought in World World 2, undoubtedly much of the larger contributions went to computer age, mechanization of air-crafts and ships which later on lead to the space exploration age.

He was not around to see or to predict what I would call, "The Beginning of the Religious Man", where migrants around the world would have much the impact on managing industrial-wide of workers.

Drucker rightly recommended, 

"A man should never be appointed to a managerial position if his vision focuses on people's weaknesses rather than on their strengths."

Sweat and soul, were the old Spartan way of life, The Greatest Generation time but not this time where Generation Y flexes their backbone with a yawn; where one need not figure how to change a plug-socket head when you can buy and replace a plug for 99 sen, to figure out how hand-phone works when they came in all shapes, sizes at an affordable price and how the Internet works, it just does!

DOTA, Cybercafe games are the in-thing, Alibaba is a stock giant, not 1,001 Arabian Nights and whether it makes profit or not, is not really the question, its popular (and seemed to be the only one viable to trade in this dour time)! Times have really changed and so are the mindset of the "labour market" where the Generations before trying so hard to protect only for labour to go on individualistic rampage.

But at the end, the World and the Individuals must recognise what Drucker had written and talked widely on:

Managing By Results.

All talks, no action, makes Jack and Jill - are over-excess necessity that any organisations should cut down on and getting the goal realized.

The World, Money and Racism

When Thomas Friedman wrote, The World Is Flat, he could've been predicting 2008 to 2014 onwards to 2016... that more of the upper middle level income are suddenly compressed to be middle or lower middle income.

What happens when a layer of middle - like middle managers had been removed.

What was originally, 60: 35: 5 became, 80:15:5? Transmigration of many people all over the world. It is no longer immigration but a social context issue where races and religions are no longer at their original base.

In much of the confusion, tolerance and acceptance, money is hard to come by and people are pushing for space and recognition. This then will lead to social disorder.

Every other day, authorities across the world, had to come up with clever solutions to pump into the communities; be good, be kind and take care, with the base understanding that people who are religious would have aided their causes by practising what they preach.

Is the world that fragmented? Are we a contributor of it? Or are we doing something about this?

https://www.youtube.com/watch?v=dfccrwUlROU

MIEN and Its Programs

MIEN has been coming up with its own programs to answer specific management issues.

Besides attracting interests for angel investors and companies that are seeking to join venture in projects, we have been looking into the specific needs in the area of food and beverages, retails, property developing, mobile apps and technology, energy-related and manufacturing.

The indulgence into thinking of the methodologies and first-time use ideas can only be assisted by knowing what others had done and doing it successfully.

For example, we have Membership Programs  created for particular industries. Memberships in truest sense, are no longer limited to certain industries such as Multi-level-Marketing or supermarkets. It has gone on to be applied in almost anything and everything that can be purchased in life.


The technique and the solutions of today and tomorrow are no longer simple.

How does one justify a RM 6 billion "investment" to be pumped into a newco which derived from an old track record and hope to make from it? Of course, there are ways to turnaround the organisation. There has to be a workable program that everyone huddle around it and make things work.

Cross-referencing Materials

Written down ideas vs. unconventional ideas

I am very into unconventional ideas. I won't call it Blue Ocean Strategy (BOS) or Thinking Outside the Box (TOB).

Unconventional ideas require 3 things (see, it is always about 3 things and you got to think what they are)

1. The understanding of basic fundamental of all things.

Like engineering and medicine, there needs to be cross-references, researches, recognition of risk management, the Upper and Lower Limits that needs to be identified, the human resources, the capital outlay and many other things that can turn the world upside down.

2. Observation and thinking.

BOS, TOB, MYOB (mind your own business) and jargons are good folder-names, where you can put all the things you are doing, into the coloured boxes.

The things I love about my MIEN Ultimatum crews are they are very much observant and into thinking. Sometimes, the solutions are right in front of us and other times, it is unexpected.

Just like the discovery of Penicillin and the vaccine to cure smallpox.

3. Trust and determination

There is always a movement to disregard ideas because they do not come from people who want to own them when they are not capable.

Ego, could be part of the answer. I would place, the intention to survive.

By adopting an idea or program, one runs the risk of promoting a mechanism, that will take away their jobs.

For example, would a doctor asked about a new Expert Systems that not only diagnose but can carry out micro-surgery? There is a chance he/she might not for fear of being replaced by automation (no, we haven't reach that stage yet).

Elsewhere, machines and procedures are replacing people - and the only way that these can be contested is either through the Labour Law office or to kill off the ideas before it can even take place.

There were cases, where middle management were removed from the decision-making but these are usually in family managed businesses. For better or worse of things.

The people of businesses must place trust into the change that it will take care of them had they in the first place, took care of the business.

Today, this has been what I have been up to and looking forward to doing things positively together with you.

Kind regards,
Erasmus

Hystory be Damned ... and we allow it

For the past one year, scores of Malaysians remained hysterically and emotionally gripped by events relating to people, policies and communal differences. We failed to see the woods out of the trees. The longer this goes on unchecked, Malaysians are selling themselves shorter and shorter over time.

For a fact, recently I wrote a 4-page letter to the MD of a veteran German car group besides offering my consulting services, chronic problems associating with his veteran and famous car brand, 4 hours kept waiting with no other main customers, on a simple oil and filter change for a car bought 9 months ago. Not only that my first 15,000km was invalidated by the brought-in at 10,000 km.

Casting that aside, I am invited to contribute a historical article for an institute in Penang. It bemuses me that in the wider context of discussions, historical means what is widely accepted by the community without having to charge emotions of what is in the total truth, but what is in the selected facts to share.Nevertheless I do agree that my article will lend support or finale to other eleven articles written before me of a common theme.

Finally, in the recent write-up and worldwide circulation of a Mamak Malaysian-born who set to open a restaurant in Twitter's HQ. Kudos to her when I read the headlines with a smile and sense of "Good on you, girl". Until I read the full article published by our local media and as well as foreign news. I am terribly shocked, to know my neighbours - the Mamak, as this fifth generation claimed to be the lower of caste in Malaysia and treated badly to the point that she was not accepted for higher studies with good results. She had also felt largely insulted that shes still being treated an Indian in her own country. Her story then went on to illustrate due to the lack of opportunities she left Malaysia at the age of 15, leaving behind her OrangUtan and a blind chicken and what-not of wonderful memories as she took on the bigger and better world bravely.

The Americans bought her enterprising story by the hook. But what failed to impress me, was our local media and general population who had read the same news, very happy for achievement - failed to challenge and authenticate her claims. Where in Penang or parts of Malaysia, can a poor person keep an endangered species at home? Therefore from here, I ask you, what kind of role-model are we allowing to permeate the minds of our children to understand and follow as life history?

I sincerely hope the source of information, the principal behind stories and the media will play their roles to ensure good value stories are properly researched, managed and ran before it hits to international circles and give us a red bleeding nose when facts come charging back at us, one day.

Thank you.

The End of Industrialisation for Penang?

In 2008, Penang ushered in its State Government made up of parties from Pakatan Rakyat. They had also successfully defended the State in 2013 to continue governing the Penang state.

Then comes the time for reporting on the sustainable growth in Penang and whether the economic outlook fared well since 2008.

Overall, for the majority of Penangites, they enjoy a time of professional governance.  Like advertised, competency, accountability and transparency had occurred at above the crust where the ordinary people can feel the changes.

But what about what is in the mantle of the State economy?

In the publication of Pilot Studies for a New Penang, circa 2009, there is a chapter 10 on Position Penang for Sustainable Growth by Nungsari A. Radhi and Hamdan A Majeed, where it claimed 50% of the world’s microprocessors are being produced by Penang. In their article, it questioned whether Penang is prepared for the next phase of change? This is backed by a survey conducted by Khazanah from a year (before their publication) that Penang firm’s activities have dramatically changed and no longer just manufacturing based. To conclude their short article as much as the opening and ending suggested, the change simply is not happening as quickly as it should and in fact has decelerated over the years compared to (new) growth cities. Therefore the learned ones, suggested to wing it and see what happens next.

Today July 2014, Datuk Redza Rafiq had reported the Northern Corridor Implementation Authority (NCIA) has attracted RM 6.7billion in foreign direct investments (FDIs) by the first half of 2014 with some 9,800 jobs created. He said, "We are confident of achieving the investment target of RM10bil this year with contributions coming from manufacturing, tourism, agriculture and logistics sectors.”. Reda went on to add in his report prepared for the NCIA 12th Council Meeting chaired by Prime Minister Datuk Seri Najib Tun Razak. NCIA has been looking at designing a completely new manufacturing ecosystem by venturing into new growth sectors like medical devices.

To be very honest, medical devices is not a new growth sector and in fact, it’s one of the areas that we are not capitalising fast enough and we also do not have the quality assurance means to do so at the industrial level in Penang.

Indeed, there are calls for the resignation of the Chief Minister, Lim Guan Eng on what is said as abysmal results as Penang dropped to 6^th place in terms of FDIs in the country.

The background of this statement was against National FDI the Economic Transformation Program (ETP) by Najib which reported a highest ever record for foreign direct investment of RM38.7bil last year, a 24% increase over 2012 and 3.9% higher than the last record of RM37.3bil achieved in 2011. I can only suppose that the detractors did not read much into International Trade and Industry (MITI) minister Datuk Seri Mustapa Mohamed’s claim on the contributions, “….all sectors of the economy registered increases in FDI inflows in 2013.” What detractors also failed to comment was the movement of RM over USD that contribute to the record in 2013.

So what is happening to Penang Industry and FDI?

It is the quiet change.

The world industries are now shifting, again. No longer has Business Processing Outsourcing (BPO) automatically gone to India when they have Romania and The Philippines (according to Dr Vinod Devanthas at an American IT MNC) as English-speaking countries. And despite all the human resources hiccups from 2010 until today, Intel insisted on filling up their biggest plant located in Vietnam and slowly closing off their plants elsewhere in the world. Penang and Malaysia industrial leaders, Government researchers are fully aware of these changes. At minimum, information technology research and advisory firms continue to provide positive indicators with the usual, read between the fine-lines.

So where does Penang future economic outline seemed to be heading? One proponent of economic ideas said that Penang being the largest UNESCO historical and heritage city should fully concentrate on its heritage development and creation of very liveable state and shift away from industries. Others had said that Penang will have to move higher up the value chain to create a new ecosystem management for value-chain in the business processing outsourcing.

                                       

Whichever the path is, it is definite that we are seeing to the end of industrialisation for Penang by 2015. It is noteworthy that GST came in at a same time, to latch onto most sectors but for those with the income of RM 500,000 or less.

In any case, evidently both the State and Federal Governments as has been since 2008, must cooperate now and not rivalling each other for the worse in preparation for the next General Election.

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http://www.mole.my/content/penang%E2%80%99s-fdi-free-fall-guan-eng-must-resign-gracefully-0
http://www.thestar.com.my/Business/Business-News/2014/02/14/Malaysia-receives-record-FDI-of-RM39bil-By-DAVID-TAN/
http://www.thanhniennews.com/business/intel-opens-biggest-ever-chip-plant-in-vietnam-14495.html

http://whc.unesco.org/en/list/1223