There is an old saying by Lao Tzu that "Give a man a fish and you feed him for a day. Teach him how to fish and you feed him for a lifetime". This is indeed very true in everyday life.

Many of the super rich families find that often their estate cannot survive the third generation.

The first generation often started as poor working people, but through sheer hard work and thriftiness became rich. From being rich, many of them became super rich with good entrepreneur skills and good judgement. Many of them remained thrifty even when they became very rich.

The second generation often grew up during the time their parents were struggling to make their fortune, but when they were older, often their parents had already made the cut. They were often better educated, and often taught by their parents on how to "fish'. So when the fortune passed to their hands , many of them could still maintain the business and some might even expand the business. They were, of course, less thrifty than their parents, and often married a spouse also from a rich family.

However, the third generations were usually born with the silver spoons in their mouth. They were often brought up in a life of luxury, and were given expensive 'fish' to eat every day . Often, they were not taught how to fish. Many of them were educated overseas, but many of them just fooled around and lived a life of luxury. They were given everything, and because of that , they did not really know how to cope with difficult situations, and the intricacy of the business world.

Many of them also became big time gamblers and womanisers.

Adding to that, the family wealth inevitably got diluted among the more numerous siblings in the second and third generations, especially when these generations were unable to do much to expand the family businesses.

Often, the wealth that was passed down just withered away. This is known as the curse of the third generation.

The 'oil curse'

I am talking about this curse because there is another curse which works in a similar manner but affects a country rather than a family.

Thomas Friedman, in his book The world is flat talks about the "curse of the oil". Many of us would think that a nation with petroleum resources would be a lucky and blessed nation.

However, Friedman mentions that in countries like Venezuela, Nigeria, Saudi Arabia and Iran, the presence of oil in fact is the main retarding factor on the emergence of democracy and a diverse economy.

He is of the view that the rulers of these countries use oil money to monopolise all the instruments of the state, including the army, the police and the intelligence services. They don't need to be transparent because they don't tax their people, and when they don't tax their people, they don't need to be accountable on how they spend the money. There is often no freedom of the press.

Oil money will eventually run out. Because of the short term wealth (oil is short term wealth as in history, a 100 years is considered a short duration), they are like the third generation rich men mentioned above. The rulers don't bother to develop their economy just like the third generation that doesn't bother to learn how to fish. They don't bother to develop their human resources, drill for natural talents instead of oil, train their people instead of importing trained people from other countries to work for them.

Eventually, when their oil runs out, they will find that they cannot compete with much of the world that depends on their human resources instead of natural resources. In other words, they don't bother to let their people to learn to fish, and when their supply of fish is exhausted, they will be in trouble.

Bahrain was one of the gulf states to find oil first and also one of the first to finish its oil resources. It is also an exception to the "curse of the oil". It is the first to have free elections, in which women are allowed to vote. It is also the first to sign an FTA with the US and the first to develop its own labour market.

It is able to do so because it finished its oil money before other gulf states, and the people there knew that they cannot depend on the oil revenue forever and hence the development of democracy and free trade treaties.

Teach them to fish

We are also a small oil producer. We are lucky in that we were already independent and had all the democratic institutions in place before we discovered oil. Our economy is also very much diversified, we are a workble democracy with regular elections, we have opposition parties, we have fairly vocal NGOs.

We have not been afflicted with the curse of oil, so far.

However, our oil revenue has become increasingly important. Last month, Petronas, our national oil company, announced a record revenue of RM184.1 billion and a pretax profit of RM76 billion for the financial year ending March 2007.

Taxes and royalties from oil and gas now amount to about 35% of our government revenue, up from 10% a decade ago.

This revenue must be utilised with utmost care because oil and gas revenue is a depletable income; it will end one day and that day may be quite soon. It should not be wasted on non productive expenditure such as building offices and other non productive hardware, or in the rescue of failed state or certain private enterprises.

It should be used for developing our human resources, train our people and prepare them for the challenges ahead. It should be utilised for those infrastructures that will spur the expansion of our economy.

Human resources development must be based on meritocratic principles with assistance to the weaker and poorer sectors , irregardless of colour and religion. Only by doing so, with suitable amount of competition, we can develop fully our human resources.

We should not allow our people to be like the third generation rich mentioned above; we should not pamper our people too much but instead let them take on competition and develop their skills.

Only by letting our people learn how to fish in the best possible way, can we then avoid the curse of the oil and the curse of the third generation.

HSU DAR REN is a medical doctor with interest in politics and socio-economic issues. He believes in the preservation of nature and a green environment.