Monday, April 13, 2009
Invest In Innovation, Not 12 Dams
More important than spending money on 12 new dams in Sarawak is really the need to invest in innovation. Sarawakians concerned with the well-being of the future generations to come must seriously think about what is really needed. Otherwise, we continue to become a liability to the future generations.
I am recommending that the hottest stimuli for Sarawak's future prosperity is investment in innovation, not in another dam. Failure to do so, future Sarawakians will be beggars in their own land despite the wealth of natural resources today. Because besides Korea, Japan and Taiwan, China & India will be important centers of innovation in the coming decades, leaving Sarawakians to live on scraps in the region.
Not only are both China & India producing a rising share of key technological innovations, but they are also pioneering innovations in business models that allow their companies to prosper in low-income markets. These new models tend to be capital light while heavily leveraging technology. The companies employing them produce goods and services at surprisingly low cost and use the vast scale of home markets to create new technology standards. These are practices that companies in neighboring nations will need to watch closely as they attempt to grow their competitiveness and as they meet new competitors from both countries in global markets.
Education levels are rising in both countries. China and India have world-class technical universities and produce a steady flow of talent at the top of the world’s academic pyramid. In addition, both cultures reward entrepreneurial risk taking. Innovators in China and India possess immense drive and desire to succeed. Their commitment and focus on business execution make them notable entrepreneurs on the global stage. It helps that both China and India allow successful people to retain much of the wealth they create, though both governments expect contributions back to broader society from those who become millionaires or even billionaires.
What is the situation in Sarawak? Firstly, our education system is failing us, educating us out of our inherent creativity. As the government builds infrastructure in the rural areas, GDP growth remains in the urban. Indigenous technologies is unheard of, not even in the farming or timber sectors which are the main economic activities in the state. In Sarawak, revenues from natural resources can be allocated to the benefit of seeding innovations rather than being pocketed by a few individuals.
India's flexible local entrepreneurs are creating new models that bake in low-income levels. ICICI Bank is a good example. Making intensive use of technology, it has created a banking model with capital outlays that are one-tenth those of banks in the developed world. ICICI reaches deeply into India’s rural areas using mobile ATMs and simplified Internet banking. It runs a booming and profitable business in remittances at fee levels that undercut Western Union by 70 percent. Health Management Research Institute (HMRI), meanwhile, uses technology to revolutionize medical services. Paramedics rove through rural areas in vans coordinated by GPS. Routine ailments can be efficiently diagnosed with the help of algorithms; more difficult diagnoses can be provided by remote medical experts via a video kiosk in each van. HMRI can already serve over 50 million patients.
China selects and invests in what it believes are next-generation sectors—biotechnology, electric vehicles, and clean energy. These are markets where China’s domestic demand could lead the world. The government’s goal is to accelerate the market’s development and nurture national champions. In telecom, where the Chinese market is already one of the world’s largest, the government is encouraging national standards that it hopes will eventually define the global industry.
Can Sarawak build & sustain China's & India's innovation pace and eventually move to the next level of technological innovation? Absolutely. The talent is there, as are capital and effective new government that encourages it. With stronger protection and rewards for intellectual property — a likely development as international companies begin to license technology from Sarawakian entrepreneurs — the stage will be set for the next step forward.
Sarawak must wake up to the realization that investing in innovation is more critical than the 12 dams. The most innovative countries — which will also be the highest earning in the future — will be those that embrace a model of “innovation economics,” which places technology, innovation, and entrepreneurship at the center of economic policymaking. Successful nations will not be content to wait for innovation to happen or expect it to occur as a byproduct of other activities, such as rural development or dam building.
On the contrary: the new leaders will search out innovation and actively create an environment that nurtures it. That is the job description of Sarawak's new leaders when Pakatan Rakyat takes over from BN.
Sources: Alessi, IDEO, NASSCOM, ADB, Global Institute for Human Capital Development