Posted by: Financial Sith Lord | January 2, 2011

Malaysia’s Fixed Assets – MSC, NBI & CBU Cars??

I’ve noticed off late, there are many advertisements in the local dailies, of used and re-conditioned car dealers stocking their yards with an abundance of CBU (Completely Built Up) luxurious cars, awaiting for prospective buyers. I made a rough calculation, the estimated value for all the cars advertised is a staggering over  RM 50 million.. And this is just 1 car dealer. According to statistics, there are approximately 100 active Malaysian AP owners, importing cars from countries like Japan, UK, Germany and the US. Assuming that each dealer brings in RM 50 million in value of cars, there’s approximately RM 5 billion worth of cars stuck in its form.

Let’s further assume that these cars are selling at the rate of 5% per month (which is very unlikely), it would take approximately 20 months to liquidate such assets, and for the time being, these cash (which only benefits foreign enterprises) does not in any way contribute to the economy.

With the introduction of authorized resellers in Malaysia, which adapts and encourages participation of local economies (be it in local assemblies, or OEM parts manufacturing) , there seems to be little advantages left for these dealers to continue importing these cars (you can even find an Audi R8 at Audi Malaysia!).. It’ll be worthwhile to focus on car makes not available in Malaysia, such as the Hummer…. (I can’t think of anything else.. Seems all the major and popular car makers are represented in Malaysia!)..

I say, the RM 5 billion should be placed into the local economy, and indirectly support the government’s efforts in rationalizing the distribution of wealth amongst Malaysians. Car dealerships, especially those in the re-conditioned business, does not actually contribute in reducing the unemployment rate of Malaysia. Since the Malaysian government has been encouraging local IT businesses to spur (with the Multimedia Super Corridor & the National Broadband Initiatives), these wonderful infrastructure should be fully exploited. One can only imagine the vast opportunities and wealth that awaits aspiring Malaysian technopreneurs, the massive global market size and the flexibility & cost effectiveness of the IT industry (not including those financial scam sites). I can gather the reluctance of Malaysians, especially the natives, in venturing into this new economy (except for the financial scams, widely accepted by them!!).. The lack of understanding and mastering of the English language.

Let me get this straight, I have no qualms with Bahasa Malaysia. The fight of Malay language supremacy is a struggling one, and its conclusion, be it positive or negative, is far reached from where we stand now. Thus, if we were to wait for such day, Hang Tuah (for his ‘Tak kan Melayu hilang di dunia’ [Malays will never vanish from this world!] and Tun Mahathir (Father of modern Malaysia, known for his undying fight for a modernised and dynamic Malays) would either turn in their graves or die in anguish..

I’m a Malay myself. After having witnessed the mentality of Malays today, I’d opt for being a Muslim instead.. As a Muslim, we still have room for modernisation and dynamism as Islam is not only embraced by Malays, but also Chinese, Indians, Caucasian, Japanese, Russians, French, Italian, Hispanic.. You name it, there are Muslims in every part of the world. These diverse array of multi-culture and intellectual thoughts can benefit me in many more ways compared to just a single race. Such exposure would and will transform my mentality to be of a more matured and rational human being.. Off course, there are the extremist, blowing off public properties and humans alike.. That is off the radar for me..

Getting back to the main subject, abundance of IT infrastructure in Malaysia is a fact and the under-utilisation rate is alarming. I do see Malaysians coming up with software, games and other IT related programs, but most I find them to be of mediocre standards, merely replicating or enhancing existing programs. Why can’t we create something totally new and revolutionary? Yes, the major stumbling block is financing.

Banks has never believed in supporting start-ups. They’d rather give money to people who has money (duh!!).. Next option, the Venture Capitalist.. Now, let’s talk about them for a while. The Malaysian VCs are unlike their American or European counterparts. In their evaluation process, commercialisation of locally produced programs or software are beyond their understanding. They simply cannot believe that Malaysians can actually produce or create a global class software or product. I had an experience dealing with Malaysian VCs way back in the 90s, where I submitted a proposal to create an internet-based regional stocks and financial exchange. The idea was shot down so many times that the proposal paper was filled with bullet holes and was beyond recognition.

Approximately 8 years after that, Dubai launched the Dubai international financial exchange, which today generates approximately USD 100 billion in daily trade revenue!!.. Now imagine that if it was in Labuan.. I rest my case.

Malaysia’s IT master plan must be supported by solid financial houses and VCs, so as to make financing readily available to aspiring start-up companies. It’s the passion that drives the project to success, and usually passionate technopreneurs develops wonderful products. You shoot them down at a tender starting stage, and you’ll see them lose their soul. When that happens, there’s no guarantee that you’d find them in the next generation.

What VCs and banks should do is to . An advise to Malaysian bankers and VCs – Guide and educate these start-up companies towards success. Hold their hand if you have to. Once they’re successful, they’ll be so grateful that repetitive business is very likely to happen. By giving out a RM 1 million loan now, you may get RM 100 million in 5-10 years!! You do that, you’ll be rewarded accordingly.. Trust me. I’ve experienced both ends of the line.

What say you?

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Responses

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