In 2005, I first found out what a mosh pit was. During my freshman year at college, I attended a concert by Taking Back Sunday, one of my favourite bands at that time. Taking Back Sunday’s music was perfect for my angst-ridden 18-year-old self, with the genre being described by Wikipedia as, among others, “alternative rock”, “emo”, “post-hardcore” and “emo pop”.
As someone who was never really the best, even today, at expressing emotions, I found song lyrics far better at expressing my emotions than I was. For example, a Blink 182 song best expressed what it was like to be in a long-distance relationship — “And she said it could never survive / with such differing lives / One home, one out on tour again / We may never come back / The strike of a match / The candle’s burning at both ends”.
Taking Back Sunday, with its various permutations of emo, was therefore one of those bands in whose songs I found some particularly resonant lyrics, especially as an 18-year-old. In particular, there is a song called, Number Five with a Bullet. In the first verse, the song goes, “Spent the night [late] listening to Miles Davis / Said it makes you want to fall in love / Or be smart enough to keep your distance / You can’t decide, you can’t decide”.
At that time, I thought that was a bit strange. What do they mean by “…fall in love OR be smart enough to keep your distance”? Can’t it be an “and” instead of an “or”? Can’t you fall in love and be smart enough to keep your distance? In time, I grew to understand the deeper wisdom of that lyric, not least the sentiment that spending a late night listening to Miles Davis would give you greater insight into love. I learnt that when it came to something like falling in love, you really cannot both “fall in love” but also be “smart enough to keep your distance”. You have to choose.
The reasoning is straightforward. If you want to be “smart enough to keep your distance”, then you may be protecting yourself from vulnerability and future hurt, but that also means you are closing yourself off to falling in love. The flipside is also true — if you want to open yourself to falling in love, you have to be open to vulnerability and future hurt. There may be many spectrum-y non-binary things in life, but I think this wisdom espoused by Taking Back Sunday is not one of those things.
So, what does all this have to do with industrial policy? Well, late last month, Prime Minister Tun Dr Mahathir Mohamad said that Malaysia should emulate South Korea in applying global thinking to further develop the export industry, and not merely depend on the domestic market. In the same media briefing he stressed the importance of domestic players giving greater attention to the manufacturing of goods with high export value. Mahathir also said, “South Korea has a different strategy. We merely focused on the domestic market. On the other hand, they had from the very start focused on the world market. We should actually be making goods that can be exported.”
I have written several times on industrial policy and I could not agree more with Mahathir. For the Malaysian economy to continue to grow in a sustainable way, we need to pursue export-driven industrialisation. This means, among other things, making more complex and sophisticated goods and services, as well as providing the necessary whole-of-government policy support to the making of those complex and sophisticated goods and services.
But, much like falling in love, you cannot choose to “fall in love” AND “be smart enough to keep your distance” when it comes to industrial policy. Taking the path of South Korea means recognising the dedication that South Korea had for its industrialisation and the steps it took in doing so, while figuring out how best to apply those necessary steps to suit the Malaysian context.
We may not need to copy everything one-for-one — after all, South Korea’s industrialisation came from a dictatorship; we certainly do not want such a political system here in Malaysia — but we must acknowledge and execute difficult steps and difficult decisions accordingly.
This means plenty of ongoing industry consolidation to weed out non-competitive players. This is how companies like Hyundai and Samsung came to be. Naturally, such industry consolidation means an openness to change and creative destruction, whether in terms of political, business or cultural attitudes.
This also means allowing zombie companies that fail to meet export performance indicators to die, rather than continuing to feed them to turn them around. This may also mean taking a long-term approach to finance, building up companies for the long term despite taking hits in the short term, as in the case of South Korean listed companies in the 1990s that were consistently making negative economic value-added.
As such, much like falling in love, industrial policy cannot and should not be done in a half-hearted, marginal way. Either fall in love and embrace a whole-of-government-policy approach to industrial policy or don’t get hurt and just quit wasting public funds and effort on a low-commitment approach to industrial policy. To be clear, being “smart enough to keep your distance” here does not mean that keeping one’s distance is necessarily the more beneficial, “smarter” move. It means it is the less risky, but also less rewarding move.
All this is important as we embark on the new wave of economic policymaking from the Shared Prosperity Vision 2030 to the 12th Malaysia Plan to the New Industrial Master Plan. Either go big or stay home. Incrementalism may seem like a prudent choice, but it is not clear if prudence is called for in this case.
A failure to undertake a whole-of-government-policy approach to industrial policy may be something we will come to regret 10 to 15 years down the road when our economy has run out of growth drivers. We may have played it safe and not rocked the boat in order to avoid some necessary reforms, but the longer we go incremental, the deeper the mediocrity of our economy. Therefore, much like falling in love, when it comes to industrial policy, we must decide if we want to “fall in love” or “be smart enough to keep our distance”. I know which one tends to be more rewarding.
Nicholas Khaw is an economist with the Research division at Khazanah Nasional Bhd