Rashidah Shuib, who had just returned home with her doctorate in instructional design, at the time of the staff demonstrations in 1985, was quite disappointed with my decision to leave USM. To her question why, I had said that “Only martyrs stay behind when you are loosing a battle!”. She then understood my reason for leaving.
The fall-out from my departure from USM was to take a slow burn for a number of years from that precipitous moment in 1985. Aliran had proposed that an independent commission be established by the government to conduct a comprehensive inquiry into the state of universities in the country, especially their academic standards and values. Hashim Yaacob for his part was charged for staff indiscipline and bringing disrepute to the university, and lost his appeal to the court against the University Council’s decision to demote him three notches down the salary scale as punishment. He would himself resign from USM and academia entirely a few years later. In the years that follow, a few more academics would resign their posts in USM; Chandra Muzaffar, Lim Teck Ghee, Mei Ling Young and Wan Zawawi. Sharom Ahmat would go on to become advisor to the Vice Chancellor of the newly formed University of Brunei Darussalam. And KJ Ratnam would succeed him as DVC for research and development at USM, the position Musa had offered to me, which implied that Sharom was not going to be reappointed. My own position as DVC for academic affairs was earmarked for Ishak Tamby Chik, who returned for a second term to USM after the first secondment from UKM as the dean of the school of biological sciences when I was serving as social science dean. He later would succeed Musa as the fourth USM vice chancellor. Oh, what a tangled web we weaved in academia!
A few years after I was settled into my MIER years, I got feedback that Musa had acknowledged in Senate that the expansion plan that he was implementing in USM was in fact based on the ten-year plan I had introduced. I was gratified to hear that, for it meant that my effort in USM was not wasted after all.
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| Tun Ismail Ali (1918-1996) |
At the start of 1985, my working group in the Economic Panel was getting more and more frustrated at our lack of access to economic data and doing real analysis, relying on secondary sources and consensus to be of much use to our task of providing a second opinion to government on economic issues. The need to understand the causes and impact of economic slowdown and subsequent recession of 1985 convinced us that we need to establish an independent research body to support our work for the Panel, so that we could better engage with the government sources of advice from the Treasury, EPU and Bank Negara. So, Khadijah Ahmad and I developed a proposal to establish such an economic research institute, and lobbied Raja Tun Mohar Badiozaman, then special economic advisor to the Malaysian government, to obtain government support and funding. With the concurrence of the Prime Minister, it was decided by the Economic Panel that the proposed institute, to be called the Malaysian Institute of Economic Research (MIER), be established under the auspices of the government’s Committee on Malaysian Invisibles Trade (COMIT), chaired by Tun Ismail Ali, who had left his job as Governor of Bank Negara and taken up the chairman’s post of Permodalan Nasional Berhad (PNB), the national investment company, which was a major pillar of the implementation of the NEP. Jaffar Hussein, chairman of Pricewaterhouse Malaysia and also a member of the Economic Panel, was appointed Bank Negara governor to replace Ismail Ali. It turned out that Bank Negara as secretariat to COMIT had already set aside an endowment of RM1.0 million to initiate research toward the work of the committee. So that princely sum then was assigned to the new institute.
I had spent the three months period between notice of my resignation and my actual departure from the university at the end of 1985 travelling down to KL and working out of an office in Bank Bumiputera headquarters on Jalan Melaka. During that time, I was actively helping the bank’s economic department with their strategic plan and restructuring the bank’s portfolio when so many bumiputera companies were beginning to feel the impact of the 1985 recession. At the same time, I worked with Lin See Yan, the deputy governor of the central bank, with Tan Tat Wai as temporary secretariat, to establish the new institute. I had been proposed as the candidate for the founding executive director of MIER, and while finalizing the memorandum and articles of association of the institute I was already starting to design its research program.
In the mean time, as I was working out of the Bank’s premises, Taufik Ahmad the new executive director was sounding out whether I would like to consider filling up the post of chief economist left vacant by Rais Saniman, himself another member of the Economic Panel, who was caught up by the BMF scandal, whose room I was actually occupying at that very moment. Together with Syed Hamid Albar, then leading the Bumiputera merchant bank subsidiary, we were to assume the newly created posts of chief general managers of the bank’s reconstructed senior management team. Working for a bank certainly would pay more than what I anticipated in the proposed MIER post. To add to the heady excess of options, Munir Majid then group chief editor of the New Straits Times group, one day called to say he wanted to recommend me to Daim Zainuddin, who was then about to be appointed Minister of Finance, to become chief executive of TV3, another company under the Fleet Group. Munir, my junior in RMC, being an anglophile that he was, thought that as an ex-academic I could do a good job like Lord Fraser did in the BBC. So, indeed God did look out and provide for me after leaving a comfortable though challenging academic life in USM.
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| Tan Sri Basir Ismail (1927-2007) |
In the end, I chose research over money and glamour, and agreed to accept the job of executive director of MIER. I duly signed the letter of appointment, with the date of appointment to formally start on 2nd January 1986; at my first meeting with Tun Ismail Ali, who would become the chairman of the MIER board of trustees, he insisted that my appointment cannot start on New Year’s Day because that was a public holiday, being true to his deserved reputation as a man of integrity and a stickler! The MIER Board of Trustees would include some of the real heavyweight movers and shakers in the country at the time: besides Tun Ismail, there was Tun Salleh Abas, the Lord President, Basir Ismail, executive chairman of Bank Bumiputera, Thong Yaw Hong, the former director-general of EPU, the bankers TH Tan and Geh Ik Cheong, the lawyer Mahadev Shankar, and my friend Khatijah Ahmad. Tun Ismail started me off by saying he was looking forward to working with me; and I on my part was relishing the prospect of working under his tutelage.
There was still to be one final temptation before I got down to the real business of setting up and running MIER. With my initial staff, consisting of Prem my personal assistant at the IGU Study Group secretariat in USM who followed me to KL, and Mei Ling Young becoming my first full-time research staff appointment, we were allowed to set up temporary offices at the SEACEN training center in Petaling Jaya near the old INTAN. It was here that I got a call from the Governor’s Office in Penang that Tun Awang Hassan had consented to confer a state honours award on me for my services to USM and the state. The previous year I was his public orator when the Governor was awarded an honorary doctorate by USM. But that was not the real icing. Just a few months before we shifted office rent-free in August 1986 to permanent quarters on the ninth floor of the old Bank Negara building overlooking Dataran Merdeka, I received a call from Zainul Ariff, the secretary general of the Ministry of Education, to meet his minister, Anwar Ibrahim. At the appointed meeting, Anwar informed me that the Prime Minister had asked him to offer me the vice chancellor’s post at University Utara Malaysia (UUM) to succeed Awang Had Salleh, the first VC who was retiring. At the time I was just at the end of my three-year appointment to UUM’s university council. UUM as a management university was the brainchild of Mahathir, set in the northern village of Sintok on the Thai border. Why not, I thought, but I was barely three months into the job of leading MIER. Fresh out of USM, the academic in me found the UUM job offer quite tempting; so being quite confident I can simultaneously run a university and a research institute, I asked Anwar if I can hold both positions. He said why not and would confer with the PM. After consulting with the MIER board, Thong Yaw Hong registered his objection, saying that holding down the UUM post would be a conflict of interest and compromise the independence that the Board thought is important for MIER to succeed in performing its mission. So, that was that. I was not unhappy with this decision, and the rest as they say is history.
While still in temporary quarters in Petaling Jaya, I was already contemplating the first task of MIER, namely to develop an econometric model to forecast the Malaysian economy. It would be a vital tool for the Economic Panel as well as the private sector, when charting the recovery of the national economy from its 1985 recession. No such operational model I know then existed on the government side, whether at the Treasury or Bank Negara. Knowing the earlier works of Cheong Kee Cheok, an economics professor at University of Malaya, Hideki Imaoka a Japanese econometrician, and Muthi Semudram of University of Malaya, I initiated a survey of the existing models of the Malaysian economy in order to construct a new model which would become MIER’s workhorse in its annual forecasts of the performance of the economy. This survey was eventually published as the first monograph of the institute. Muthi Semudram was commissioned to develop the new model, assisted by research fellows such as Aziz Rahman, Ho Ting Seng and research officers including Kevin Chew, Michael Yap and Azizi. The completed model was tested, fine-tuned and was to be eventually used for the first time for the planned launching conference at the end of the year. At the point when we were still in the SEACEN campus, with nothing to show yet but with expectations high, word filtered down from Bank Negara that things were a bit slow. I was not perturbed by that, because I was determined that the institute’s work should be properly grounded on sound empirical research, not just spin. Semudram would join MIER full-time after the commissioning of the econometric model to head the forecasting group.
In the early stages, unbeknowest to the public, my first challenge was not the research programme, but to set the institute on a sound financial footing. The RM1.0 million set aside by Bank Negara was to be part of the institute’s endowment, so I had to get Tun Ismail’s concurrence to use part of it as initial working capital, with promise to restore it from income earned further down the road.. Setting up an endowment was part of the remit of an executive director: to seek donations and raise income from consultancies as well from activities such as conferences, publications and seminars. This was the hard part of running MIER; unlike the Institute of Strategic and International Studies (ISIS), set up by the government a year earlier than MIER, which had an annual budget appropriated by the Prime Minister’s department. I had envied Nordin Sopiee, the founding director of ISIS after he left his group chief editor's job at the NST, his charge’s financial security. We were to develop a friendly rivalry between our two think tanks over the years. A short while after the first MIER National Outlook Conference, both Petronas (through Basir Ismail’s effort) and Shell Malaysia helped MIER’s financial basis by each matching BNM’s RM1.0 million contribution. With that RM3.0 million endowment I later set the eventual target for contributions at RM20.0 million for the Institute’s endowment fund which the Trustees endorsed. But, it promised to be heavy going trying to reach that target for me and my successors.
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| The Logo |
What actually helped sustain the Institute’s operations in those early years was IDRC. Thong Yaw Hong when still director-general at EPU, and a senior vice president of IDRC had been in communication regarding Canadian technical assistance to build institutional capacity for Malaysia, and MIER fell into that category. As a result of further negotiations following the set up of the institute it was decided that the assistance would be provided through exchange of research staff organized with the economics department of Queen’s University in Kingston, Ontario, Canada. The fact that I had been previously associated with IDRC through Yeung Yue-man in their support of the IGU Working Group on Urbanization in Developing Countries gave me a familiarity with the workings the Canadian aid agency. The first technical assistance agreement involving a substantial funding to support research collaboration and staff exchange over an initial three years, was signed on a visit I made to Ottowa and Queens in the middle of 1986, six months into the establishment of MIER. Frank Flatters, a public finance specialist, became the coordinator on the Canadian side, and we developed a professional and personal relationship that lasted a whole seven years when the IDRC financial support was extended twice till the year before I departed from MIER. It was a highly fruitful collaboration.
On that official first trip to Canada, I was a guest of the government which arranged for me to visit, besides the economics department at Queen’s University, the leading research institutes in Ottowa and Toronto as well, such as the Canada Economic Council, the economic policy research institute in Toronto University and the Conference Board, an association of business organizations in Canada. It was at the latter meeting about the work of the Conference Board that I learned about its work on economics and business research to support the business sector. I came home from the latter meeting with the idea of the quarterly business conditions and consumer sentiments reports, using indices derived from business and consumer responses to the respective surveys. Thus the Business Conditions Index (BCI) and the Index of Consumer Sentiments (ICS), along with the annual forecasts of economic performance, became permanent features of MIER’s activity.
With the appointment of the full complement of support staff, including for the IT department, and a handful of research associates from the universities, MIER now was ready to announce its arrival to the world, none too soon by November of 1986.
Having earlier settled the family in KL, and after Mostek Rosna was headhunted as human resource manager with Standard Chartered Bank, and the two boys safely in Cempaka School, Anwar in Form I and Syafril Hadi in Std.1, I was ready to face the world in this new life beyond academia.
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