How Can Malaysia Be A Top 20 Nation By 2050?

Photo courtesy of the author.

Keeping up with the fast-paced global landscape

On May 31, 2017, Prime Minister Datuk Seri Najib Tun Razak held a TN50 (2050 National Transformation) dialogue with over 1,000 civil servants. At the event, he emphasised how the world was fast changing and that the government – particularly civil servants – would need to embrace change, and transform.

The Prime Minister stressed that the civil service’s core purpose is to best serve the needs of its customer – the rakyat. As the world and Malaysia changes, so will the rakyat’s needs and thus, services should also evolve to meet this need.

While we cannot claim to be able to accurately predict the world in 2050, there are already clear megatrends shaping the world going forward, presenting both challenges and opportunities for Malaysia and in turn, having implications for the civil service of the future.

There is a risk in describing the above as “megatrends” as it would suggest gradual change over a long period. In actual fact, they are happening at an unusually fast pace.

In the book, No Ordinary Disruption the authors from McKinsey’s Global Institute argue that the world is in the middle of a dramatic transition, with the above trends gaining strength and feeding upon each other to produce monumental change. They conclude on the urgent need to develop new approaches and be more agile to respond to this changing world.

But the question is, what are the likely changes in approach required by the government and civil service here in Malaysia?

1. Customer centricity

Urbanisation and an ageing population will change the demographics of Malaysia, transforming the customer that the civil service serves. At independence, Malaysia’s population was predominantly poor and rural with the economy anchored in tin and rubber.

Today, Malaysia is already 70% urban and will become more so, with some projecting 90% by 2050. Malaysia’s economy has transitioned from low value-added commodity-based to an upper middle income economy with wide-ranging economic activities.

To succeed by 2050, Malaysia will need to emerge as a developed nation focused on innovation-led activities and high-income jobs based on niches in which Malaysia can be a global leader.

There are no successful companies which have not transformed to meet the needs of their customer. And with the changes of demographics and economic structure upon us, the government too will need to evolve to meet the changing needs of the rakyat.

At the TN50 dialogue, a Finance Ministry officer pointed out that, over the years, the Government had created many new agencies without fully consolidating the existing functions of ministries, leading to potential duplication of functions and inefficient use of resources.

On one hand, the Government has responded to emerging demands, and developed priorities of the nation by creating new agencies to meet these needs, such as MDEC, MaGIC, Aviation Commission, and others.

On the other hand, with each new agency, the government grows, without necessarily making the corresponding downsizing or closing the low priority functions.

In the corporate world, General Electric (GE) can trace its over 100-year history back to Thomas Edison and selling light bulbs to households.

In June, GE announced its intent to sell its lighting division – its last remaining consumer division.

It is a striking example of a corporation willing to reinvent itself to keep pace with the changing global economy.

To become more customer or rakyat-centric in the future, the government can potentially emulate the corporate sector by restructuring and streamlining the roles of the government in line with the changing demographics of its customer.

This consciously rebalances resources from rural to urban infrastructure; from youth to social protection and healthcare of older generations. More drastically, some governments such as Vietnam have taken a “regulatory guillotine” approach which, as its name suggests, have looked not just to reduce or simplify functions but sometimes, eliminate them altogether.

Another approach would be to emulate financial institutions towards customer centricity. Historically, banks were more product-centric, structuring their main departments along product lines, such as credit cards, loans and investment.

Over time, banks became more customer-centric, whereby customer segment departments became more prominent, such as consumer banking, private banking, SMEs and corporate banking.

Governments today are typically organised by “product” e.g. the Health Ministry, Human Resources Ministry and others. Each department has their own budgets and typically deals with citizens separately. This is potentially less than optimal, where each department does not have a holistic appreciation of a customer’s needs and provide services piecemeal.

An example of a more customer-centric approach was the UK’s Troubled Families Program, where assigned family workers would work with especially poor families on issues such as assisting the adults back to work, addressing child delinquency, rehabilitation for disabilities or addictions.

While the programme was not without its implementation challenges, this approach corresponds with the banking industry’s customer-centric approach.

A customer-centric approach has been undertaken here with respect to TN50 engagement with the youth.

The Youth and Sports Ministry has conducted engagements with youths across different segments and across all issues towards better understanding the aspirations of youth holistically for the future. A challenge for the future is whether we can go from engagement to a more holistic delivery of services.

2. Whole of government partnership

The above point on customer centricity is about changing organisational structure, particularly in enabling public services to be better tailored to the different needs of the rakyat. However, to support such a “customer interface”, it requires more seamless “back end processes” – i.e. different government functions coordinating without silos and finding the best model for service delivery.

As part of its transformation for the future, the government has adopted the National Blue Ocean Strategy (NBOS). The aim is to deliver high impact with speed at a low cost. Government agencies that work together towards a common objective for national interest is a key enabler for this.
A successful example of NBOS is the Urban Transformation Centres (UTCs).

These centres bring together services for passports, identification cards, driving licenses and income tax all in an integrated centre operating seven days a week and open until 10pm.

Another good example of NBOS is the close collaboration between the armed forces and the police, which includes not just joint patrols but also the Community Rehabilitation Programme, where petty offenders are rehabilitated and trained in army camps to undertake productive work such as farming – to better facilitate their release back into community.

Such partnerships are important as part of taking a “whole of government” approach to addressing public service delivery priorities. This approach is particularly needed going forward especially when many of the emerging megatrends have cross-cutting implications.

As an example, an ageing nation alone raises multiple issues. Slower growth of the labour force raises, for example, the issue of how then to supplement workforce requirements through active immigration policies and to focus on accelerating automation to reduce labour demand.

A World Economic Forum report published in May, revealed how half the babies born now in Organisation for Economic Co-operation and Development member countries will live beyond 100 years, which raises questions on the ideal retirement age going forward, sufficiency of pension savings and the demands on public healthcare.

With people living longer, the risk of insufficient post-retirement savings follows. On one hand, the government may wish to raise the retirement age to reduce the pension savings gap.

On the other hand, raising retirement ages too quickly may reduce employment opportunities for school leavers and graduates.

Traditionally, civil service talent develop specific perspectives. For example, those in the Finance Ministry and the International Trade and Industry Ministry focus more on facilitating economic growth, whereas those in the Defence Ministry and Home Affairs Ministry take a more security-centric perspective.

As we move forward, having a “whole of government” approach would potentially necessitate government agencies and their officers to adopt a holistic perspective and potentially wear multiple hats simultaneously.

With the megatrend of ageing combined with the rise of Asia, regional demand for healthcare will surely rise, and Malaysia is well placed to be a regional hub for healthcare tourism and also, manufacturer of medical devices.

Hence, the Health Ministry will not only find itself having to be custodian of the public healthcare system, but also promote the growth of the private healthcare industry, regulate standards on healthcare services and products, and promote export of healthcare tourism and use of Malaysian made products.

As we look towards 2050, civil servants are likely to be increasingly T-shaped talents, an idea popularised by IDEO, which is widely recognised as one among the world’s most innovative companies.

T-shaped skills refer to first, the vertical bar in relation to having deep technical expertise (such as a healthcare expert in the Health Ministry), while having the horizontal bar that represents a broad perspective (e.g. looking beyond technical, to appreciate the economics of healthcare) and being able to collaborate with other disciplines.

This is a key part of having a high-performing government as there is no substitute for deep technical knowledge in an increasingly complex and specialised world.

At the same time, having broad perspectives to enable a broad appreciation and perspective in the context of acting for the whole of government in the national interest.

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3. Competitive & innovative

The point on customer centricity is focused more on organisational structure whereas the point on “whole of government” focuses on skills – for civil servants to be collaborative and T-shaped talents. Another key ingredient for civil service for the future relates to culture.

At the May 31 dialogue, the Prime Minister highlighted how Malaysia should aspire to be a global leader in a fast changing and dynamic world, adding that civil servants need to be competitive, responsive and innovative.

He had said that by 2050, Malaysia should emerge among the world’s top 20 nations. In PwC ’s The World In 2050 report, Malaysia is projected to move up to 24th largest economy measured in terms of purchasing power parity.

This may sound good but, at the same time, it projects that Philippines and Vietnam will overtake Malaysia, and Thailand at par with us. Ours is a very competitive region.

Traditionally, the government is structured on planning. Development expenditure is allocated to ministries based on five-year plans and civil servants posted to roles based on central resource planning.

Given an increasingly competitive and globalised world, a potential approach for the future would be to inject competition into government. For example, in Australia, public vocational colleges compete based on educational outcomes for the government to “buy their services”, where parts of government are instead subject to “quasi markets” where they act as profit centres and “internal vendors competing for business”.

This is intended to promote incentives to become more competitive.

Competition can also work for talent sourcing. The Securities Commission already practices open sourcing, whereby if senior roles become available, there is an internal advertisement, allowing talents to apply and compete for such roles.

Responsiveness is about speed, and the government has made strides in this aspect. Passports can be issued in a matter of hours and many services, such as filling in your tax returns, can be done online.

While technology has helped speed up public services, disruptive technologies also pose challenges on the policy front. Many governments in the world continue to face challenges in regulating new business models like Uber and Airbnb.

Malaysia has been relatively fast, and ride sharing has since been legalised in Malaysia. How do we build policy responsiveness into today’s fast changing world?

More of a challenge is needed for the government to regulate and facilitate new forms of business while driving Malaysia’s digital transformation.

One hindrance is that governments are culturally risk-averse. At the same time, Malaysia needs to embrace the digital transformation or risk getting left behind. Bank Negara has introduced a regulatory sandbox for fintech where boundaries are created within which fintech players are able to innovate and experiment without excessive regulation.

We typically associate Singapore with its strong planning and execution. However, at a World Bank Malaysia conference on service delivery in January, a UNDP presentation suggested that the strength of Singapore’s approach was in four Ds:

• DO (willing to try without analysis paralysis)
• DETOUR (open to change course from original plan based on realities on the ground)
• DISMANTLE (having a public-sector environment that accepts failure and cuts loss)
• DISRUPT (being open to new innovations)

This offers an interesting approach which enables speed and innovativeness by allowing for failure even within the confines of the public sector. We often speak about encouraging failure to promote the entrepreneurial culture in Malaysia.

Perhaps for the future, we may also need to allow for failure in the public sector to promote innovative solutions and responsiveness to today’s fast changing world.

4. Civil service as the career of choice

The civil service is ultimately made up of its civil servants and, to ensure the service is customer centric, it operates as one unit and remains continually competitive. To innovate, it is imperative to attract the best and the brightest in the civil service.

This is not only reflective of a candidate’s intellectual capability, but more importantly the candidates’ values and belief system. The late President Theodore Roosevelt once said: “Nobody cares how much you know until they know how much you care”.

Being a civil servant is a calling; one where the need to strive for the betterment of the country is primary. The future of the civil service should therefore be one which reflects Malaysia’s diversity, embodies a culture of performance and meritocracy as well as a transparency.

2050 & Government

The world in 2050 will be a very different place and probably beyond what we can imagine. With the pace of change as reflected by today’s megatrends, we cannot expect to succeed based on business as usual. This applies not just to the private sector in Malaysia, but also the public sector.

We need to examine various approaches to be more future relevant – customer centricity, whole of government and competitiveness – and ensure we have the best and brightest talents to ensure the service continues to remain relevant and competitive.

These may not be the complete answer but it certainly focuses on what the PM calls for – to better serve the changing needs of the rakyat and nation.

Johan Merican is deputy director general at the Economic Planning Unit and his responsibilities include assisting in the formulation of TN50. He was previously CEO of TalentCorp. To connect with Johan, e-mail editor@leaderonomics.com