Friday, November 10, 2000

Archive: Today, Too Late?

Article discussing impact of Today, a new Singapore tabloid, on the Singapore media market. Edited version published in Business Times on 10 November, 2000.



If you've been walking down a number of MRT stations these last few days, you can't miss the bright yellow bins which await the arrival of Today, the new free newspaper launched by Mediacorp,Singtel Yellow Pages and SMRT. Mediacorp's publicity machine has rolled into full swing, courtesy of its subsidiaries TCS and RCS. But more telling is the comparative silence of the newspapers owned by their media rivals, Singapore Press Holdings. The battle of the media giants has begun, or has it?



To SPH, the launch of Today must seem less a battle than a skirmish. This is definitely not Normandy for them, more like a small outpost in the sub-Saharan desert. Even the venerable Goldman Sachs seems to think so, judging by their bullish comments on SPH on Wednesday.



Credit to SPH: They moved quickly to isolate the assault by Today. Immediately upon digesting the announcement of a rival free newspaper, the SPH team moved swiftly to pre-empt Today's launch by itself launching two new newspapers, Streats and Project Eyeball. The former, a free newspaper too, was probably a direct reaction to Today; Project Eyeball however, was probably already in the skunkworks. Net result? Today has now to contend with not just one but three other rivals chasing the same advertising dollars: The New Paper, Streats and Project Eyeball.



From an advertising pie of $x, Today's potential share fell from $x/2 to $x/4 overnight (the advertising pie destined to be shared between The New Paper and Today only is now shared between The New Paper, Today, Streats and Project Eyeball). I recall from my O Level economics days, this being called the brand proliferation strategy, practised by the Unilevers and Procter & Gambles of this world, to limit the assault of independent brands. The idea is for the incumbent to flood the market with different brands, so that new entrants will be limited to a smaller market share. Classic strategy stuff.



But there is yet another reason why it's crucial for SPH to contain the fighting ground at the The New Paper type level. In the same way that an aircraft carrier is flanked by cruisers and destroyers, The New Paper, Streats and Project Eyeball are flanking the mothership, none other than the cash cow of The Straits Times itself. Let's keep the enemy busy fighting our flankers, and move the fighting ground as far away from the mothership as possible. Kinda like our national air defence strategy.



I would venture a guess that more than 80% of the profit of all the SPH newspapers combined is derived from just two papers – The Straits Times and the The Business Times (together with their week-end editions). The New Paper probably at best makes a marginal profit. So when Today launches an assault on The New Paper market, it’s missing the point. And for good measure, SPH has also deployed the flankers, Streats and Project Eyeball, to contain it.



So Today will have a tough job on its hands. It enters a segment which is already only marginally profitable for the incumbent, and not only that, it now has to fight for share for that segment against not just one, but three other opponents. I’d always root for the underdog (particularly if their opponent is a former monopolist), but this time, I have to admit I’m not optimistic. I guess it’s left to someone else to figure out SPH’s vulnerable nerve. So, who’s going to assault Normandy?



Post-script: 9 months later, Today appears to have made a successful entry into the newspaper marketplace. Its short news summaries, tabloid format and freeness has enabled it to garner a good amount of advertising. Project Eyeball is now defunct whilst Streats and Today are still battling in the MRTs.

Saturday, October 14, 2000

Beggar thy neighbour!

Article written from the perspective of a Malaysian, published in Malaysia's The Sun, in connection with Senior Minister's Lee Kuan Yew's visit to Kuala Lumpur on Oct 2000. Note that estimates of potential economic value will not pass muster with my ex-BCG colleagues - they were finger-in-the-sky numbers for purposes of drawing attention to the magnitude of potential gains.

In our dealings with trade and economic issues with our ASEAN neighbours, our official response towards questions about potential intra-ASEAN competition has been "prosper, not beggar, thy neighbour". The theory is that the economic advancement of a particular country would benefit the economy of its neighbours as increased economic activity translates into higher demand for goods and services from neighbouring countries.

Indeed, this phrase at a basic level forms the underpinnings of the World Trade Organisation and the free trade movement. And judging by the number of times Prime Minister Dr. Mahathir has used this phrase in the media, it appears to be a central tenet of our official trade policy.

Except of course when it comes to Singapore and Malaysia's trade relations. In many aspects of the trade relations between the two countries, the converse seems to be at work - "beggar, not prosper, thy neighbour". So in many spheres, Malaysia and Singapore apparently compete head on. Both Malaysia and Singapore profess to being the Asia's leading centre for shipping, finance, education, air transport, shopping, tourism… the list goes on.

So we have comparisons made between KLIA vs Changi Airport, Westport and Tanjung Pelepas vs Tanjung Pagar Port Terminal, KLCC vs Raffles Place, MSC vs Suntec City, MAS vs SIA, Mesdaq vs Sesdaq, and for the shoppers among us, Bukit Bintang vs Orchard Road.

Why do we not apply the same prosper thy neighbour policy to Singapore? Historical baggage (and being reminded of it by Lee Kuan Yew in The Singapore Story) does not help. Maybe envy too, after all, didn't Malaysia have all the resources whilst Singapore had none, yet Singapore has already achieved developed nation status, whereas we're still wondering whether we'll make it by 2020? Add to this the need to appeal to domestic voters, the other turns out to be a great bogeyman. And it's easy isn't it to mask our own weaknesses by attributing Singapore's success to its alleged kiasuness (good heavens, we're not like that at all). So no wonder we get ensnared into issues such as the CIQ facilities for Malaysian customs, impasse over renewal of water supply agreements, delay of privatisation of Malayan Railway because of impasse on status of its land bank in Singapore.

More than we care to admit, however, Malaysia and Singapore's economies are highly interdependent. Singaporean companies are one of our largest foreign direct investors, our stockmarket feels the non-participation of Singapore's retail investors, our land prices are dependent on demand from Singapore.

But more importantly, by not cooperating, both countries leave untapped a tremendous amount of potential economic value, value that can only be generated through cooperation (at first cut, we are foregoing at least RM 250 billion in potential economic value, maybe more - see table)

Let's take an example. It's fairly undisputed that Singapore has the world's busiest port. It has the world's most advanced cargo handling and port management facilities, where goods are cleared even before they arrive at the port. It's positioning itself to become the Asia's logistics hub.

A beggar thy neighbour trade policy will provoke the following knee-jerk reaction " Dammit, they're becoming the leader in shipping. All our cargo is going through their ports, and we're losing valuable foreign exchange. We must build new ports to counter this threat, and we must force Malaysian shippers to use Malaysian ports to make them economically viable"

You will notice that this reaction pervades our transport policy, and therein lies the rationale for the existence of Tanjung Pelepas and Westport.

A smarter way to approach this issue is to say. "OK, granted. Singapore is the world leader in shipping and port management. We could try to compete with them but it's not easy to beat them at their own game. But you know what? We could position ourselves to benefit from their leadership in shipping and port management. They lack land for warehousing facilities, as land in Singapore is scarce. What if we were to provide warehousing facilities for Singapore ports? After all we have plentiful land in just across the border in Gelang Patah." Potential economic gain: RM20 billion.

"Hmmmm. Why stick at warehousing? Let's be really creative with this. Oh yeah, there's a railway track that goes all the way from Thailand to just 100 meters away from Singapore's Tanjong Pagar Port Terminal. Let's take advantage of Singapore's leading position as the transhipment hub of Asia to transport goods to and from Tanjong Pagar all the way up to Thailand. If it makes economic sense for Thai shippers, then we will have a great business charging for use of our railway services ". Potential economic gain: RM 20 billion

" Why stop at railways and warehousing? Let's develop a special free trade zone in Gelang Patah where goods are free to move between Gelang Patah in Johor and Tuas in Singapore without any customs, and people are free to move without any passports (do this by relocating current Second Link immigration checkpoints 5 miles further North on the highway) Why? So that goods can be warehoused in Gelang Patah without any worries about custom or immigration delays. Oh, whilst we're at it, there's a whole bunch of multinational electronics factories based in Tuas near the Singapore border that would love to take advantage of our vast land area and large labour pool to build new factories there. Especially if there were no border controls. More jobs, more foreign investment, more economic growth." Potential economic gain: RM20 billion.

These are not the only areas where Malaysia and Singapore together can create tremendous economic value where previously there were none. The development of high speed commuter railways from Malaysia to Singapore will enable Malaysia to attract many foreign professionals currently working in Singapore (they number 1 million people) to reside in Malaysia, increasing demand for residential properties and goods and services here. The increase of direct flights from Singapore to popular recreational destinations in Malaysia will enable the expatriate population in Singapore to spend week-end tourism dollars in Malaysia, boosting our tourism industry and foreign exchange. The list goes on (please see accompanying table http://www.geocities.com/malek_ali/beggar2.html).

If one were to hazard a guess as to the economic value of a prosper thy neighbour policy, this could amount to well in excess of RM250 billion to be shared between Singapore and Malaysia. Not a bad sum just for being good neighbours.

Monday, August 14, 2000

Damn the commuters!

Article posted on a KL environmental watchgroup online forum sometime in the fall of 2000, in response to a plea for ideas and solutions to KL traffic woes

Our current approach to resolving the traffic congestion problems in KL is driven by 2 elements:1. Attack the symptoms (hey, if there's a lot more cars on the road, we should build a lot more roads right?) 2. Let's make some money doing it (If Renong can do it with the North South highway, why can't we?)

Hence the flurry of toll highway projects, and the creation of a business culture based on a toll-gate mentality (water, sewage, LRT projects are all also built on this business culture - get the concession first and then charge consumers an arm and a leg for it).

Lest I sound like just a whinger, let me propose an action plan: Attack the root cause, not the symptom.

The root cause of traffic congestion, I contend, is the lack of alternative transport. Hey, I used to live in Ulu Klang, and I wanna get to Bukit Bintang. Sorry friend, LRT does not serve Bukit Bintang (yet its the most popular shopping area!). We don't need more roads, we need more LRT stops at the relevant places. C'mon, it does not require Einstein to figure out we need an LRT stop at Bukit Bintang, unless we're trying to change decades old pattern of KL residents behaviour. So the net result: streams of cars containing only one passenger i.e. the driver heading in and out of KL, day in, day out.

The problem is a comprehensive MRT/LRT network costs a lot of money. So if you notice, we took the cheap way out and built along ex-railway land. Cheap methods yield cheap results (all you architects out there will agree). And Star-LRT has the temerity to wonder aloud why passenger traffic levels are not what they forecasted! (Kawan, your routes do not go anywhere useful, duh!).

So, Action Step 1 : Build a comprehensive MRT/LRT network

Let's lay down one inalienable fact. Passenger transport systems are NOT profitable. Whether its Japanese bullet trains or London Underground, other countries' experience tells us that the private sector ain't gonna make money out of this. (So why is Putra, Star-LRT, PLRT in this business in the first place? - well, as I said, it's a concession driven business culture, therefore, get the concession first, spend some arm-twisted banker's money on lucrative procurement contracts second, and then worry about the operations last).

So whaddawe do? Hate to say this folks, but we gotta spend some taxpayer's money. We've got to give Putra and Star a subsidy to operate the existing network. They're both head over heels in the red, and eventhough the systems ain't ideal, we have to save it. Either taxpayers pay off their construction loans so that they can at least maintain a profitable operation (the Singapore MRT approach), or we have to give them a subsidy every year to operate those lines (the UK British Rail approach). In return, taxpayers should get full disclosure of operational finances. So:

Action Step 2: Save Putra and Star-LRT

What about PLRT monorail? Well figure out the passenger traffic capacity of those things. If they are as I suspect unable to carry high passenger levels, scrap the whole damn shebang. Right now it's still possible to stop that project, obliterate all those gargantuan landscape blighters (you know those concrete pillar monstrosities in the middle of town which do nothing but advertise Digi phones), and let PLRT figure out how to sort their loans with their bankers. Sorry, no taxpayers money for this one as the usefulness of the project is not proven.

So, Action step 3: Scrap PLRT

So no PLRT means no access to BUkit Bintang and Raja Chulan/Sultan Ismail right? Wrong. Next we need to get a true blue transport specialist to study commuter patterns in the Klang valley area and propose an ideal case (i.e. if we had all the money in the world, this would be the rail routes). Then let's sit down and decide the trade-offs that we will have to make. It will have to involve a lot of tunnelling, which means that a lot of prep work would have to be done beforehand e.g. redirection of sewage tunnels, power lines, telecom lines, etc. Yes, this is the kind of project that separates the men from the boys. And all those urban/city planners will have to get off their comfortable armchairs and get their hands dirty. Let's not kid ourselves - it will cost a lot of $$$$$$$ - but so long as this does not go to private pockets, it's money well worth spending.

And to speed up the process, maybe us concerned citizens can do one thing. Let's get a quotation from several of these transportation specialists as to how much would a comprehensive transportation planning study cost. Then let's approach Petronas to sponsor this plan (or HSBC since their corporate theme is saving the environment) . We then nominate one of our best private sector urban planners to lead the planning process with the chosen transportation specialists.

Once we've got the blueprint, then let's say to the federal government "hiya folks, here's a solution, signed off and approved by us, the Klang valley residents. You wanna one of your cronies to implement it? Fine. We don't mind you spending our taxpayer's money on this, but we know the costings so don't mess around."

So, Action step no. 4 : Get sponsorship of a comprehensive transportation study for the Klang valley.

Then, Just Do It.

Thursday, June 01, 2000

5 years after graduating from Harvard Business School, the class of 95 was due to meet for its 5th reunion in June 2000. We were asked to pen a note on what we've been doing since graduation.

Has it been five years? Time just flies in the tropics, with no seasons to remind you of the pace of time. And the tropics is where Steph and I have been all this time, first in Malaysia , now in Singapore. Yes Malaysia was a little bit of a homecoming, having been living and working abroad since leaving home at the tender age of 16. The settling in process in Kuala Lumpur was made smoother by being with BCG at the time - it was great to work in a familiar work environment whilst getting acclimatized to how things work in Malaysia. But there was one teething problem. Steph and I had to get married again. Let me explain.

Steph and I were married in England prior to HBS, but this was not recognized under Malaysian law as we did not go through a "proper" Muslim ceremony. And there were tough penalties for not going legit (time in jail was a possibility). So on a BCG recruiting trip to London, Steph and I took the opportunity of getting married again before an Egyptian cleric and two witnesses roped in from the adjoining Regent's Park mosque. "Where did you go?" asked some BCG colleagues afterwards. "Oh, I just got married", was the reply. That was February 14, 1997.

Confident from this new marriage, I moonlighted in the evenings writing up a business plan for a classifieds-only paper. The newspaper classifieds market was great at the time, and the idea was to start with the first all-classifieds paper in Malaysia, then take it to Singapore, then use the offline publications to enter the Internet classifieds marketspace.

By August 1997, funding was concluded, and I left BCG and we began buying equipment, leasing office space and recruiting people. There was one small thing. In July, Thailand's currency had buckled. Isolated incident, we thought. Then it came smack bang at our doorstep. Malaysia's currency was now under attack and the stock market swooned - first by 30%, then 50% and by the end of year, by almost 80%. What we thought to be just a financial problem turned out to be a much more protracted one, and the classifieds market went silent. Whoops.

After persevering for one year, I threw my lot in with a group MIT guys who had built the leading jobs portal in Malaysia, JobStreet.com. The mandate was to raise funds and regionalize Jobstreet.com. To date, we have raised two rounds of financing and opened 3 offices (Singapore, Philippines and India) and Steph and I are now based in Singapore.

So it's been a mixed 5 years. Baptism by fire comes close to describing the experience of starting a start-up business during tumultous times. On the other hand, Steph and I had a great experience working together (a situation which, I must confess, I was very wary about initially). I also got known in town as Mr. Batman due to some publicity stunts that required me to dress up as the hooded hero (Didi and Malcolm, thank you very much for the Batman cufflinks). This put me in good stead with venture capitalists whom I was to meet later ("So you're the Batman I read about!"), which then sets the right tone for ensuing discussions.

That's where we are, look forward to seeing everyone at the Reunion!

Monday, May 01, 2000

The Way Forward - An Action Plan for Malaysian Primary Schools

A response to the editor of the Edge requesting feedback on a commentary on the sad state of Malaysian primary schools. Published in the Edge in May 2000. Article dedicated to John Lim, my Standard 5 teacher and school prefect master at St John's School I, KL.

Agree on most points. However, as with a lot of commentaries, it's short on an action plan, though there were hints at 2 elements - raising rewards for primary school teachers and raising entry standards. Here is an attempt to follow through your article with an concrete action plan:

1. Decide on the objective of our primary education system.
I propose that the objective is a good general base of the 3Rs (reading, 'riting, 'rithmetic), and a solid basic conversational and written skills in at 2 languages - English and Bahasa Malaysia. A third language is an option e.g. Mandarin or Tamil.The secondary school will be able to build on this when it comes to more functional subjects at the secondary level.

2. Design a national curriculum for the national schools incorporating these objectives.
It's not difficult. Look back at the national curriculum of say 25 years ago - they had these basic 3R objectives in mind.

3. Keeping in mind that English is the lingua franca of commerce and technology, for the present and in the forseeable future, incorporate English not as a subject, but as a medium of instruction in mathematics and science-based subjects.
Bahasa Malaysia can remain the medium of instruction for History, Geography and other arts-based subjects. Mandarin and Tamil will be options at national schools.

4. Do not implement the national school curriculum immediately.
Select 1-2 urban national schools in each of Kuala Lumpur, Pulau Pinang and Johor Bahru to pilot this new national curriculum. Call them vision schools if you like. Devote high quality teaching resources to this schools. Select the most motivated and high quality teachers among the disillusioned group we have now. Give them new pay scales (so that they do not have to peddle Amway products). Give them performance criteria upfront, including surveys by parents in terms of their child development, in addition to things like exam results of their class. If they beat the criteria, give them a bonus. If they don't, fire them. As a carrot, this core group of talented, motivated teachers, if they succeed, should be offered the role of trainers of teachers of future schools.

5. Hire expert primary school educationists, from abroad if necessary, to train the pilot school teachers.
Recognise that money is not the only motivating factor for people to join a particular profesion - it is also the ability to develop oneself in terms of skills and careers. Investing in training for these pilot teachers is critical. A one year course training course including a spell in a benchmark primary school overseas is the minimum. (they don't have to go far, you can find many of these south of the border)

6. Let the process begin.
Attract students and win support of their parents by demonstrating the amount of investment in terms of teacher training into these pilot schools. (Persuading parents from the alternative national schools will not be hard - it will be harder to persuade parents from Chinese schools).

7. Document and publicise the early successes of students of these pilot schools.
Actively involve parents in gauging their children's development. If they see successes, you can bet your bottom dollar they will be the strongest advocates of the new schools and curriculum8. After the pilot, which should last at least 2 or 3 years, prepare the roll out of this new national curriculum together with attendant teacher resources to 2-3 more urban schools in each major city in Malaysia, and major towns.

Also select selected rural schools that are receptive to such schools. Focus on existing national schools. Teachers from the original pilot schools should be stationed in each of these schools, to help the transition from the old curriculum to the new curriculum. again, upgrade pay scales in return for a new performnance based contracts.

9. After 5-6 years, the first results of a full complete primary education system based on new curriculum will be available. If this is a success, we then have proof that the new curriculum supported by adequate teaching resources has worked. Publicise and propagate the success - implement wider roll-out.

10. Invite, don't coerce, the Chinese and Tamil language schools to adopt the new national curriculum.
If they refuse, fine, it's their loss. If they coopt in, support them with the same resources as with national schools. The whole reason that they are resisting vision schools today is that there is no demonstrable proof that the new vision schools will improve educational and teaching standards. Would you buy an untested product from someone whose current product does not work, just based on his promises? Certainly not.

11. In terms of teacher resources, there are plenty of teacher training schools in UK for example who would dearly love to send their teacher trainees to work for a year in a foreign country. Offer one year temporary positions to these teachers to work in Malaysian primary schools - get them to teach the English curriculum - i.e. the science and mathematics-based subjects. You don;t need to pay them very much - food and lodging plus a small living allownace is fine - it;s the experience they want not the money.

12. Don't just limit reforms to the primary education system. Set up pilot secondary schools based on the same formula - developing medium of instruction in english for science and maths based subjects and Bahasa Malaysia for arts based subjects. Use the same pilot and roll-out techniques outlined above.

It's a 20 year plan. But our children are worth it.