Part 1 – Middle men or orang tengah.
Today I want to share some thoughts about some words or phrases that are very commonly used in Malaysia – often in a negative way – by people who really do not know or understand what they are saying. Cakap pakai hentam saja – tapi tak faham apa benda pun.  
And the outcome of not understanding or knowing the important meanings of these words and phrases is not just silly confusion and wasted anxiety (marah tak tentu pasal) but worse than that, the suggested solutions produce no good outcomes from their ‘imaginary’ problem. And they really do not understand that theirs is an ‘imaginary problem’.
Orang tengah or middlemen, share the cake (thank you to the commenter), foreign remittances, minimum wage, umur pencen etc are some commonly ‘not understood’ words and phrases which have 
  • caused unnecessary anxiety 
  • which then gave birth to really misguided policy making 
  • which then have all failed
  • which then creates even more unnecessary anxiety and 
  • more misguided policy making and 
  • even more failure. 
  • It is a vicious circle.
I hope we can break this vicious circle once and for all. 
We DO NOT NEED to discuss these things in  depth.
We just have to understand what these things mean.
1.  The orang tengah or middle-man boogeyman.
For a very long time, the conventional ignorance (kejahilan umum atau jahil al am) is that the orang tengah or the middle man is bad and evil. And in Malaysia the middle man is frequently associated with race. Chinese are middle men.
Middle man or orang tengah refers to the distribution system in trade, commerce and industry where any ‘middle men’ are seen as bad and evil blood suckers who squeeze the producers and farmers by offering the cheapest prices for their products and then charging the highest prices to the end buyers or the consumers.
People who had no idea about business, economy or finance suddenly became Nobel Prize level experts and discovered that the solution to all their economic problems was the orang tengah or middle man. The middle man is bad.  
They forgot to use simple common sense to just look around them. In all prosperous business communities among the other races, in other advanced countries (negara maju) and advanced economies there has always been and there always will be orang tengah or middlemen who play a very vital role in the economy.  Singapore has middlemen. Other communities and other countries can become rich despite the orang tengah or middle man. How come? Tak pernah terpikir ke? Sudah 62 tahun Merdeka.
We must understand that in business, commerce and industry there are always the producers and manufacturers who will produce output in larger quantities. The key point to note is larger quantities. 

Kita kena faham, to cover their costs and to be profitable a shoe factory must produce thousands of shoes per day. The shoe factory cannot make one pair or 20 pairs of shoes a day. Lingkuplah factory.
And the shoe factory may not have the expertise to sell  their products to the end user or the end consumer.  
The people who sell the products (like Nike shoes) to the end user or the end consumer are the retail businesses. These will be the supermarkets, shops, stores etc who are located closer to the end consumers (you and me).
But the retailer cannot buy ALL the thousands of shoes that are manufactured by the shoe factory. The retailer can only buy a small portion of the shoe factory’s output.   

Or the warong tepi jalan cannot buy all the thousands of durians produced by Haji Karim’s 30 acre durian plantation.  
So what does the shoe factory do with all the thousands of pairs of shoes that it manufactures everyday? Where does it put them?
What will Haji Karim do with the ten lorry loads of durians that are produced by his 30 acre durian plantation?
This is where the wholesalers, the stockists, the importers, the specialty distributors come in. They become the orang tengah or middle men in the distribution system. 
The wholesalers, stockists,  distributors play an extremely vital role for the survival of the producers. 

And kita mesti faham ok – that the middle men take huge risks to buy the output from the factories, the producers, the durian plantation  and then sell the products in smaller quantities to many different retailers.
The manufacturers, producers, durian planters have the production skills. 
Meaning they know how to manufacture shoes, how to grow durians, how to catch fish etc.
The wholesalers, distributors, importers, stockists (the orang tengah) have very vital ‘commercial skills’.    Meaning they know how to assess the market, develop a network of buyers, suppliers, sort out the logistics (lorries, warehousing, delivery schedules, paying import taxes, observing regulations etc). They take business and credit risks – if they sell for cash then the prices have to be lowered. But can they make a profit? If they sell for credit (bagi hutang kat orang) maybe they can sell for a higher price but can they collect back the hutang? What if their buyers tak bayar balik hutang? They will suffer losses.
So the factory, the manufacturer and the durian plantation have their role and function and they take one set of risks.
Similarly the middlemen or wholesalers or stockists or importers have their roles and they take another set of risks. 
The same goes for the retailers. They also take the same set of risks as the middlemen. 
The middlemen may deal in some classes of products, a few products or just one product.
A middlemen supplying to a supermarket will NOT have all the products sold in a supermarket. The cheese importer and the toothbrush supplier could be different people. 

In this country, flawed government policy has often been driven by a psychotic urge to ‘eliminate the middle men’.  “Kita perlu hapuskan orang tengah“. 

Dengan tiba-tiba brader-brader yang tak tahu niaga, tak faham bisnes, tak reti finance sudah menemui solution kepada ‘imaginary problem’ mereka –   Kita perlu hapuskan orang tengah“.

Who told you this? Siapa yang cakap benda pelik ini ? 

Tidak ada sebarang buku ekonomi atau buku teks bisnes yang berkata orang tengah itu adalah jahat atau tidak baik dan mesti dihapuskan. None. Kecuali buku tulisan professor kangkong kut?

Kalau lah fahaman itu betul then why stop at Kita perlu hapuskan orang tengah“?

Why not kata Kita perlu hapuskan manufacturer” sekali?  

Jadi sesiapa perlukan kasut, buatlah kasut sendiri. 
Sesiapa perlukan kereta, buatlah kereta sendiri. 
Tak payah beli kasut dan kereta daripada kedai kasut atau car dealer. 

Sebab kalau orang tengah boleh ‘cekik darah kita’, serupa juga manufacturer. Manufacturer pun boleh ‘cekik darah kita’.

But that is not how the real world functions. The real world needs manufacturers, producers, farmers, plantations, importers, stockists, wholesalers, break-bulking, distributors, supermarkets, shops, retailers etc.  This is the real world. No conspiracies involved.

But sadly – and disastrously – many bad policies have been implemented on the basis of  Kita perlu hapuskan orang tengah“.  

But these really stupid policies did no such thing. 
These policies achieved nothing.
And always – without fail – these policies have made the Malays poorer. 
Melayu miskin dulu. 

Because too often these nonsensical “Kita perlu hapuskan orang tengah” policies and projects actually meant that you and me (the taxpayer) ended up burning our money to subsidise and (worse) to buy the ouputs from these “Kita perlu hapuskan orang tengah” projects.

1.  For example one project was set up for the kampong people to grow guava or jambu in Perak so that Malay growers could sell their guava direct to the market without the Chinese middlemen. Some government agency would buy their fruits (ok but at what price?).  

The kampong people grew the guava but no one came to collect the guava from them.  The government lorries did not turn up to buy their guava. And since the kampong was far ‘inside’ no one else came either. The project folded.

But whether it is the Chinese or the government agency, they are still orang tengah. And someone has to pay for the lorry, the diesel fuel, the lorry driver’s salary etc to come and pick up the fruits. (Yalah kerajaan bayar tapi bukan duit kepala bapak dia. Duit itu duit kita. Someone has to pay.) Plus also pay the kampong people for the harvested guava.  

2.  Bernas is another orang tengah. Dulu orang Cina jadi orang tengah dalam perniagaan beras. Depa jual beli beras tempatan dan boleh impot dan ekspot beras. Then some dunggu yang tak reti niaga, tak faham ekonomi, tak tahu finance said ‘We must control the rice business. Food security lah, entah ape lah.

So they gave it to Bernas. They created a monopoly. Nauzubillah. 

Sekarang orang Melayu (yang paling banyak makan nasi) bayar harga tinggi tetapi dapat beras kualiti haprak. Another friend of mine just came back from Canada for a visit and he says basmathi rice in Canada is cheaper than in Malaysia. 

Jadi orang Melayu kena tipu dulu. Melayu miskin dulu. 

Orang tengah baru cekik darah lagi.

3.  Felda became the orang tengah or the middleman in the Felda plantations. 

The Felda settlers were not supposed to sell their FFB to anyone else except to Felda. 

Felda’s business cycle was actually a ‘Circle of Righteousness’. 

Felda (the govt) provided subsidised fertiliser. But there was still a cost for that fertiliser. Felda paid.

The land was given free. There was also a cost for that land. The government paid.

The oil palm trees were given free (for some time). There was a cost too. Felda paid.

The harvest was picked up by Felda lorries. There was a cost. Felda paid for the lorries and the drivers salaries. 

There is always a cost. You cannot run away from the costs. 

Orang tengah or no orang tengah there is a minimum cost to produce one ton of oil palm FFBs (fresh fruit bunches).

So because of all this ‘free’ and subsidised stuff, of course Felda bought the output at effectively lower prices. Then Felda could sell the output at market prices and make a profit, enough to cover ALL those costs that are listed above. The arithmetic had to add up.  Someone has to pay for everything.

Then when the Bugis Lanun saw the money in Felda this ‘Circle of Righteousness’ was broken.  Felda’s money was siphoned out.

So Felda could not pay the settlers on time for their harvests. Payments were delayed.  Some settlers had no choice but to sell their FFB to outsider orang tengahs, other than Felda – who paid them cash on the spot for their FFBs.

So they had no choice but to go back to the “orang tengah” or middlemen. 

(This also meant that Felda palm oil mills had less FFBs to buy from the settlers. To keep their mills running, they had to buy FFBs from outside as well – at full market prices. This ate more into their profit margins.)  The whole thing collapsed. 

Now here is the conclusion to this walkabout about middlemen or orang tengah.  

The middlemen or orang tengah are not a Zionist conspiracy. 
Or Christian conspiracy. 
Or Chinese conspiracy 
Or DAP conspiracy. 
Or any other conspiracy.
In my readings over the years I have paid attention to how the concept of producers, wholesalers and retailers came to be. I cannot find any specific time period or beginnings of this structure. 
Meaning this structure has been there since human beings started to trade. 
Since the first caveman traded his coconuts for a chicken.
It is a system that came to be quite naturally, all by itself. 
So the real threat is not the middle man or the orang tengah. 
The real threat is your ignorance or kejahilan about the role of the middlemen. 
No middlemen susah untuk commerce. 
No middlemen susah untuk business. 

Bila orang yang tak reti niaga, tak faham ekonomi, tak tahu finance sengaja pi usik system yang sudah wujud sejak beribu tahun – nahas lah hangpa. Remember this. 

– http://syedsoutsidethebox.blogspot.com