The Official Opening of the National Conference on Entrepreneurship, Kuala Lumpur, 11 October 1993
I would like to wish selamat datang, a very warm welcome to Mr. Larry Farrel. We all would like to benefit from his vast knowledge and worldwide experience on the nature of entrepreneurship and the ways to enhance the spirit of enterprise in our society. Thus we congratulate the organisers, namely the Institute of Management Consultants, the Institute of Mind Development (Minda), the Asian Strategy and Leadership Institute (ASLI) and Sunway College, for organizing this conference.
In the middle of last century Karl Marx initiated one of the greatest debates in the history of ideas. According to him the system of free enterprise contain within itself the seeds of its own destruction. While admitting that capitalism has generated more wealth than is ever known in human history, he prophesied that the system is doomed for destruction, for, according to him, wealth is generated by impoverishing the masses. It is therefore a matter of time before the impoverished will rebel against the system, resulting in its final collapse.
Now we all know that he was dead wrong. Far from impoverishing the masses, free enterprise continues to create wealth and liberate millions from poverty and destitution. On the other hand, it was the economic system built upon the ideas of Marx which had finally to be overthrown by the impoverished masses.
There was initially plenty of euphoria for the victory of capitalism, until the societies of matured capitalism became mired, deeper and deeper, in recession, resulting in a large number of bankruptcies and millions of the unemployed surviving on the dole. The failure of socialism is that it wanted to crush the spirit of enterprise and left economic decisions to the bureaucrats, while the current malaise of capitalism is precisely the decline of the spirit of enterprise in society as a result of complacency and contentment. The present-day symbol of the free enterprise system is no longer the ever alert and agile entrepreneur, always ready to serve the needs of the consumer. Instead, it is symbolized by the giant corporations which have grown flabby and unwieldy, too slow to respond to changing environments or consumer needs. They are no longer able to withstand fair and open competition. To survive, they have to employ lobbyists to influence their respective governments to give them protection.
The declining competitiveness of industrialized countries in the West provides useful lessons for us. Whatever name you choose to describe your country's economic system, it all boils down to the responsiveness of the elements within the society to cope with change, to see opportunity in every new situation. Unless an organization renew itself, it is always in danger of becoming complacent and, sooner or later, irrelevant to the consumers.
It is that spirit of enterprise which holds the key to the continuing dynamism of an organization. A giant that has lost that vital spirit will be helpless in the face of aggressive assaults from even tiny but innovative entrepreneurs.
Entrepreneurship is not confined to business. What is true for business entities is also applicable to non-economic organizations including governments. Here in Malaysia we are nurturing the spirit of enterprise to help the hard core poor to improve their livelihoods and leave poverty behind them. The basic idea behind the Skim Amanah Ikhtiar and similar projects is to instill among the poor the need for them to endeavour to free themselves from the chains of poverty. They are in no way destined or fated, as many of them tended to believe, to dwell their entire earthly lives forever in poverty and destitution. The program helps the participants to discover the entrepreneurship within themselves, and assists them by way of loans and counselling to start small businesses of their own choice.
Many poverty eradication programmes in developing countries have been fruitless because of the failure to realize the fact, perceived by John Kenneth Galbraith, that mass poverty in itself is a powerful stabilizing force, preventing necessary change. It is only when the entire culture of mass poverty is destabilized, after the vicious circle of poverty has been broken, that the society can successfully take off towards sustained development and growth. It is the spirit of enterprise which can provide, among other things, the positive destabilizing force required. Yet, far from releasing the entrepreneurship of the people, many developing countries have inadvertently stifled it, by embarking on massive exercises of governmental assistance. It is this sort of ill-conceived poverty eradication programmes that have given government intervention to help the poor a bad name, thus the cynicism towards affirmative action among certain circles, particularly in the United States.
Admittedly our policies in the early days of independence also laid emphasis on governmental efforts. But they were never intended nor have they resulted in any way to stifle entrepreneurship. It is for this reason that Malaysia has always had a growing pool of entrepreneurs who continue to create wealth for the nation. Our development programmes are directed to provide the best possible physical infrasturcture as well as incentives for entrepreneurs to start and expand their business. Due to the evident ingenuity of our businessmen, our products have been able to penetrate even the most competitive of markets.
Innovation and entrepreneurship must permeate the entire society and culture. It is as much a necessity in public service institutions as well as in commercial entities. It is not the case that the private is the priori efficient, and the public sector by nature slow and inefficient. In fact, the word bureaucracy, when it was used by Max Weber, the great German sociologist, almost a century ago, signified something positive, a rational, efficient method of organization superior to the arbitrary exercise of power by authoritarian regimes. According to Weber: "The decisive reason for the advance of bureaucratic organization has always been its purely technical superiority over any form of organization....Precision, speed, unambiguity, ...reduction of friction and of material and personal costs -- these are raised to the optimum point in the strictly bureaucratic administration." Bureaucracies brought the same logic to government work that the assembly line brought to the factory. What makes bureaucracies fail is therefore not their nature as such but their refusal to adapt to change. In a time of rapid changes, it is not sufficient merely to adapt. They must learn also to anticipate the changes that are coming in order to serve the needs of their clients, the public.
Given the dictates of Vision 2020, Malaysia is following a futuristic policy for its economic growth. This means that entrepreneurship in Malaysia must remain dynamic and resilient. It must not only meet the challenges of the present but be fully prepared to face the future. This can only be done if long-range risk is taken into account and appropriate strategies adopted. Apart from strategic reasons, there is an ethical element involved: the sacrifice of short-term gains for long-range benefits.
No business is immune from the phenomenon of cycles. It has been demonstrated that business cycles are due to random "technology shock" and not to monetary, fiscal or other government policies. With rapid advances in technology, entrepreneurship is under increasing demands for technological literacy. Gone are the days when entrepreneurship was the pastime of a single inspired individual. It has now grown to complex structural limits, of which technology is perhaps the most important. There is a visible shift from corporate bureaucracy to corporate technocracy. Thus, combining human resource development with technological literacy can provide a useful starting point for promising enterprises in Malaysia. High value-added industry, for instance, is an area that needs our urgent attention. Malaysian businessmen and corporations need to emphasize research and development as an integral part of entrepreneurship.
Business, as with everything else, has become globalized. We cannot remain oblivious to strategic challenges and trends in the international arena. We are exceedingly hopeful that the Uruguay Round of multilateral trade negotiations will be concluded by the end of this year. But whatever the outcome of those talks, Malaysian entrepreneurs, be they small businesses or corporate giants, must seek to prevail in all circumstances.
Finally, entrepreneurship is not synonymous with greed. The Malaysian spirit of enterprise must remain a caring one. Corporations must fulfill their obligations towards society by showing an attitude of care. What we need above all is an entrepreneurial society and nation, in which innovation and the enterprise spirit are normal, steady and continuous. In order to sustain our growth and the vitality of society, not only in commerce and industry, but in public service, societal care, and culture and the arts, the spirit of innovation and enterprise must become an integral part of the fabric of life.