Monday, 22 January 2018

The Hawker As An Elemental Capitalist

The Hawker As An Elemental Capitalist
M. Bakri Musa

Consider the simple enterprise of a roadside hawker selling fried bananas, the most elemental business activity. Every Malay villager feels he is competent to undertake that venture as it requires minimal capital, financial and otherwise.
            Yet to succeed at this most basic level of enterprise would still require rudiments of financial, human, and social capital. Meaning, to succeed these would-be hawkers must have some training and familiarization with the business. Yet the government seems to think that giving them cheap loans would be enough. Thus, they are given money and then left floundering when their enterprises fail, as surely they would.
            Imagine if those would-be hawkers had been given some elementary training before giving out those loans. To start with, I would give them cooking classes and teach them elementary health and safety practices as well as sound rudimentary business techniques like simple bookkeeping. I would explore with them the effects of the choice of banana, oil, flour and even cooking temperature on the taste and flavor of their final product. There is a definite difference in taste between fried pisang raja (king banana) versus nangka (jackfruit variety), enough to justify a premium price for the former. Similarly, the type of flour used, whether from wheat, rice, or tapioca would also influence the texture and flavor.
            There is no limit to enhancing your product line and thus its market value by tinkering with the ingredients and other variables. Consider the version of fried bananas served in fancy Western restaurants–bananas flambĂ©–where the fruit is covered in syrup instead of flour and then drizzled with alcohol and served in flames. It sells for around US$12.00 per serving. You could offer a non-alcoholic substitute for Muslim customers. Imagine the value added to your final product and the consequent enhancement of your revenue with such modifications.
            Beyond the preparation and recipe, I would also teach these would-be hawkers personal hygiene and general cleanliness, and the impact these practices would have on their customers. Frame them as a public health issue, and if that does not convince those hawkers, then as a religious imperative or better yet, a marketing tool. Sick customers do not return! I would have these hawkers invest in a clean apron and cap to cover their hair, as well as wear gloves when handling food products, just like the executive chefs at fancy restaurants. Again, those would be good marketing and advertising tools! Look at the hawkers in the Japanese supermarkets in KL as well as in Japan.
            Among the crucial elements to the success of any business are inventory control and cash-flow management. Thus, I would teach these would-be hawkers cost-saving strategies like buying nonperishable items in bulk to get volume discounts. That would require some financial outlay, and that would be the right instance to introduce credit loans. An alternative and also more preferable would be for MARA to use its clout to buy those inventories in bulk to achieve greater savings and then pass them on to the vendors.
            Going further, we should encourage these hawkers to explore other ways to cut down on costs. They may not be able to supply their own flour or cooking oil and gas, but they may have some idle land in the village where they could plant their own bananas and thus incur considerable savings by not having to buy their primary ingredient. They could even sell the excess to their fellow hawkers, producing another revenue source.
            MARA could commission an innovative design of a simple hawker cart on wheels, complete with a roof and separate holding tanks for clean and waste water. Again with MARA’s influence, those carts could be constructed cheaply through the economies of scale.
            After implementing these initiatives, MARA should monitor the progress, tweaking the program as necessary and assessing the results. The whole process is an ongoing series of improvements and innovations, as well as learning from experience.
            Out of every 100 of these would-be hawkers and budding entrepreneurs you take in for the initial training, perhaps only a fraction of them would have the discipline and motivation to complete it. That would leave only the most hardy and motivated applicants to receive your business loans. Consider the cost of training as investment in human capital. Even then, instead of simply handing these would-be hawkers the cash, I would make the checks out directly to the suppliers for the purchase of inventories and other goods.
            These would-be hawkers are not used to having substantial amounts of money at their disposal. Were MARA to simply hand over the cash directly to them, as is the current practice, the first thing they would do is rush to the nearest Chinese store on a buying binge of items not even remotely related to their businesses. Or they would be inundated with relatives each with their own sob stories to justify their getting a portion of the money.
            Yet that was exactly the standard practice of MARA, and before that, RIDA. No surprise that those initiatives would fail. When that happened, the officials invariably blamed the poor hawkers. Worse, they would also be condemned as failures and forever caricatured as the alleged weakness of their race and culture.
            There are plenty of examples of such blunders, with price tags far exceeding the few thousand dollars loaned to the hawkers. I remember in my old village there was the well-connected politician who was given a lucrative timber concession. As if that bounty was not generous enough, he was also given a hefty loan. The first thing he did was buy a brand-new Mercedes sedan to drive around town. He did not think of buying a truck to carry the logs or a tree harvester. Had he bought a four-wheel-drive Land Rover, it would have made some sense. At least he could then visit his lumber camps, but a luxury car on a jungle road?
            In Trengganu there was the project back in the 1970s to supply fishermen with diesel motors and ice makers. Again the same misguided strategy; the officials simply handed the loan money to those poor fishermen. The first thing the engine suppliers in town did was to hike up the price of those engines and then tack on unnecessary service contracts and fees. Had those officials negotiated a package deal with the supplier, they would have secured substantial discounts and then passed them on to the fishermen.
            In Kedah there was the gaffe with the mechanization of Malaysia’s “rice bowl.” Again, the government was generous in providing the major landowners credit to buy tractors and combines to make their rice production more efficient. That part of the initiative was sound but as with any mechanization, many unskilled workers were displaced. As there was no mitigating program to take care of them, those workers ended up actively sabotaging the initiative and its principals. The program succeeded only in dividing the community, pitting the peasants against the landowners. The dynamics of that particular social crisis is well chronicled in James C. Scott’s Weapons of the Weak: Everyday Forms of Peasant Resistance.
            The situation has not changed today except for the obscenely vast sums of money involved. Most recently there was a mega loan in the hundreds of millions given to a minister’s husband to start a cattle feed-lot operation. The first thing he did was buy a top-end Mercedes and two ultra-luxury multimillion-ringgit condominiums in Singapore. Same dynamics, only the price tags vary. While the minister’s husband may have an Ivy League PhD, his mentality and mindset was no different from the simple village entrepreneurs I cited earlier.
            Going back to my pisang goreng hawkers, imagine if only 25 out of the 100 eventually succeeded in having a thriving stall. At first glance that would appear abysmal, a success rate of only one-in-four. However, on the flip side, without the initiative, those 25 would have little chance at gainful employment; with it they are now earning a living and able to feed and clothe their families, quite apart from providing a service to the community.
            The benefits do not end there. Out of the hardy 25, a few would be sufficiently bitten by the capitalist bug and be inspired to venture beyond. One would decide that he could employ a few of his idle cousins to work on his banana plantations to supply bananas to the other hawkers. Apart from having another income source, he would also be providing employment for his cousins.
            Another who had been frugal and thus acquired some savings may decide to install a shade over his stall and add a few tables so he could also serve coffee and tea , as well as ice cream with his fried bananas, enhancing his product line as it were. Yet another could discover a winning concoction of a special variety of banana, a specific brand of cooking oil, and a particular flour to make a pisang goreng to die for. Building a reputation around his particular product and keeping his recipe secret, he could start a franchise operation, a pisang goreng equivalent of Ramly Burger or Starbucks.
            As can be seen the possibilities are endless, even with the humble hawking of pisang goreng. That simple enterprise has all the elements found in the most complex corporations: product (and production), marketing (customers), finance, location, and human resources.
            Instead of pursuing such incremental improvements in each area, we keep going for the spectacular–with billion-ringgit GLCs, and repeating the same mistakes with ever-escalating costs. It cannot be that all Malay leaders and policymakers are corrupt. Many are, but eventually you would get a few honest souls or some whose conscience would disturb them enough to blow the whistle and put an end to the nonsense. These Malay leaders cannot all be dumb even though again many are, for eventually there will be a bright soul or two who would learn from the mistakes.
            Beyond corruption and incompetence, I suggest that Malays have another and far greater problem. As a community we have a closed mind, trapped into believing that those lapses are not acts of incompetence or corruption but noble deeds. It is this blind loyalty to these incompetent and corrupt leaders that would have us honor them when they should be jailed, booted out, or at least looked upon with contempt.
Next: Membajakan Lallang (Fertilizing the Weeds)

Adapted from the author’s book, Liberating The Malay Mind, published by ZI Publications, Petaling Jaya, 2013. The second edition was released in January 2016.