[kictanet] Malaysia/Policy Clarifications

Fri Oct 10 14:26:41 EAT 2008

Dear Dr. Ndemo,

Thanks for a good detailing and i totally agree with you on the  
growth in Malaysia. I made a trip there last year because i was  
curious about what i had read and seen about the same country that  
attained independence as Ghana with three times less our GDP in 1957.  
However in celebrating our 50th anniversary in 2007, Ghana compares  
no where near Malaysia.

As a matter of fact Malaysia learnt palm plantation from Ghana and  
yet they have out grown us in the palm production, process and  
distribution and that is the basis of their "wealth" creation a  
nation. Two things i found very stricking and most of my friends  
there confirmed was sound leadership and a national (closed their  
tribal and political ranks) commitment to 5 and 10 years development  
plans which have being consistent till now. Ghana on the other hand  
"assassinated" our founding President and since then had a  
consistency of civil unrest so could not commit as a nation to 5 or  
10 year development plans though we had them on paper. Most people  
argue that African has had bad leadership but i say, we killed the  
"amazing" founding leaders God gave us whiles the Asians allowed  
thier to lead them. In many ways than not one could ascribe all kinds  
of tendancies to Mahatia Mohammed but Malaysia hails him because they  
allowed him to lead - there is no perfect leader.

Now, let me jump to the subject of FDIs. We should not let the  
opportunity slip us by but we must be careful not to be exploited.  
The World Economic Forum has consistently reported Africa to be the  
most profitable market, yet it is the least developed so the issue is  
"capital flight" and in other cases a few "wealth redistribution".  
The billion dollar question is, in formulating a strategic policy,  
how do you ensure that the foreign investors invest in the country or  
continent so all the profit does not get repatraited? Okay, the  
profit would always be repatraited but how do you ensure the  
investment creates room for your private entrepreneur and investors.

When you look at the Telecom industry, only the ISP sector in most  
countries has local indegenous participation and the examples you  
mention below are clear but how do you ensure much more local  
ownership. Point is if you empower the local private sector to create  
wealth, there is a much likely possibility that most of it would be  
in the country and make impact. The Malaysians found a way of  
empowering their local private sector, whiles there you would see how  
much of the great stuff is owned by locals.

So for me, the question is not about being nationalistic but rather a  
"strategic policy intervention which ensures foreign participation in  
a way that empowers the local investors or entrepreneur"?

Have a good weekend.

On 10 Oct 2008, at 09:59, Bill Kagai wrote:

> Daktari,
> This response is a clear sign of top notch leadership.
> Thx for clarifying for those of us who were in the dark.
>
>
> On Thu, Oct 9, 2008 at 8:07 PM, <bitange at jambo.co.ke> wrote:
> Dear All,
> I am in Malaysia.  This country's development is awesome.  Their
> e-applications are indeed something we all aught to learn from.   
> You can
> see the positive energy to move their country out of poverty in their
> eyes.  We must find ways to emulate these people and move away from  
> self
> interest that is tearing our country apart.
>
> Prior to my travel here, I made some statements regarding local  
> ownership
> of ICT investments with the aim of reviewing our policy.  This is  
> what I
> am employed to do and I am still consulting with stakeholders to  
> see how
> to advance the policy change.   Specifically, I argued as follows:
> •       The drop in Foreign Direct Investment (FDI) in our sector  
> is as a result
> of rigid policy on ownership of investments;
> •       We must work toward attracting FDI if we have to sort out  
> unemployment
> of our youth which has reached crisis levels;
> •       Large ICT multinationals have requested exemptions to this  
> policy and
> would rather have the local ownership through the stock market;
> •       That those who have in the past purported to have the  
> capacity to raise
> sufficient local capital have failed and cannot raise new capital thus
> compromising the competitiveness of these firms;
> •       Protectionism leads to poor service and uncompetitive  
> environment;
> •       The problem of local equity participation can be summarized  
> by the
> experience we went through during the search for the SNO – promises of
> non-existent funds and extortionism;
> •       The absence of local equity participation in some foreign  
> banks did not
> stop Equity Bank from growing phenomenally;
> •       There is no threat to domination from foreigners since  
> local firms have
> made great strides to eventually partner with multinationals from  
> points
> of strength (read KDN/Altech; Safaricom/Onecom partnerships) and it is
> encouraging to see other local firms such as Access, Jamii,  
> Wananchi etc
> coming up strongly that we don't need to require multinationals to  
> seek
> for partners up front at the expense of our unemployed youths; and
> •       My liberalist economic approach is what in my view would  
> make our
> country considering that some decisions we made along the same  
> lines have
> greatly impacted all our lives.
> Take for example the liberalization of International Gateways.   
> There were
> threats to our lives that we could not survive to see the  
> benefits.  These
> were threats made by those who benefited from illegal terminations of
> calls through Telkom Network leading to losses in excess of one  
> billion
> shillings per year.  I am surprised that this move pains some  
> people to
> date when we are enjoying lower tariffs with a more efficient  
> Telkom.  I
> have no regrets on Telkom reforms at all and I am sure you all know  
> that I
> never run from any responsibility.
>
> The Libyan matter has never been an issue before considering the  
> fact that
> this are standard MOUs that we sign regularly whenever we market  
> Kenya out
> there as an investment destination.  Yes I signed the MOU and the  
> two ICT
> items in the MOU, that is, Telkom Kenya and Teams never went to  
> Libyans
> since they lost in the bid process and rejected by local investors
> respectively.  In the same MOU were Energy items and of course Grand
> Regency but MOUs are not sale agreements.  We sign lots of these  
> MOUs and
> even today here in Malaysia I have had to sign two.  These are public
> documents accessible to any Kenyan and there is nothing to hide in the
> course of serving our country.
>
> I have never in my life met Moi and as far as I am concerned I have  
> never
> crossed his path either in his business or himself as a person.  The
> decision to extricate the Government from the Econet saga in my  
> view saved
> the tax payers a great deal of money.  I was not there when this  
> matter
> started and I still do not understand the whole transaction but it  
> makes
> great sense to remove the Government from any liability.  If such a
> decision did not favour anybody, then the courts can settle and in any
> case, this matter is still sub judice.
>
> Back to policy.  If you have noted, we are launching an average of  
> two ICT
> firms per a week.  Large BPO multinationals have told me to my face  
> that
> until we sort out the local ownership issue, they are going elsewhere.
> These are firms that employ in excess of 30,000 BPO agents.   
> Investment in
> the sector runs into billions of shillings which people like myself  
> cannot
> even dream of raising even 1% (and this is true for many of us in  
> Kenya).
> Do we let such opportunities slip by because we want to be  
> nationalists?
>
> Regards
>
>
> Ndemo.
>
>
>
>
>
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Eric M.K Osiakwan
ICT Integrator
Internet Research
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