Wednesday, July 21, 2010

What Is Wrong With Us, I Mean The Malaysian Economy ?

Hantu Laut

While Malaysia expect contraction in its economic growth in the second half of 2010 as announced by the Prime Minister our neighbour across the causeway upgraded its growth rate to an explosive 13 to 15 per cent for the year.Singapore's economy in the first quarter was 16.9 per cent and estimated a massive 19.6 per cent in the second quarter.

Singapore's economy will be the strongest growing in Asia and the world in 2010.

Now, if Singapore without any natural resources and a land the size of a needle head can pulled itself out of a recession as fast as a Formula 1 car why are we still in thermal inertia in the paddock.Instead of picking up the pieces and restore it back to normalcy we just throw in the towel and admit defeat because some smart economists say so.

During the US and European financial meltdown where most developed economies predicted an ensuing global recession Malaysia with its bunch of inward looking economic experts which include the second Minister of Finance then and the Governor of Bank Negara were insistence that Malaysia would not be in a recession.

While the government institutions lumbered in making final adjustment to the growth rate my adjusted forecast was strong likelihood of negative growth for 2009. The GDP in 2009 was -1.17 percent. It was a mild downturn but long enough to be called a recession and we are still feeling the side effect.

As anticipated, all export dependent economies in the region showed negative growth except for China and Indonesia.As they say, when America sneezes you catch the flu.

Some economists came up with a silly new theory "decoupling" of major markets meaning you would not catch the flu if that market is sick.Decoupling is farcical as long as there are voluminous cross border transactions in whatever form, financial or commodity, markets contagion would continue to exist.

We seem to be doing thing in reverse order.Can't tell the difference between good and bad times.

Just because of slow recovery in the US and some Western economists predictions of slowing down of the European economy in the second half this year and a potential financial meltdown in Europe, particularly the PIGS (Portugal,Ireland,Greece and Spain) somebody rings the alarm bell.

Even if those EC countries struggling with unproductive economies and fast-mounting deficits go down it doesn't mean we should pull down the flaps and slow down our economic outputs.

A financial meltdown in the European Union is possible as some of the countries continue to weaken and drag down the financial system.Banks in Europe are in precarious position because of their exposure to those countries.Some French and German banks, already weakened by the last crisis, hold some $640 billion in Spanish government bonds.Spain bill of health ain't that good. A default will likely create a domino effect.All said and done even the U.K economy is not on strong foothold yet.

Will Malaysia suffer the contagion?

Not likely.

How much trades and financial papers do we have with Europe?

Our top 10 trading partners in order of volume/value in 2009 were China, Singapore, US, Japan,Thailand, Republic of Korea,Indonesia,Hong Kong,Germany,Taiwan.

The top 5 trading partners for 2009 are shown below.

Country Value(RM Billion) Our Export (RM Billion)

China............ 127.90 ...................67.24 (2)
Singapore..... 125.30 ................... 77.20 (1)
US................. 109.20 ................. 60.58 (3)
Japan............ 108.71 ...................54.42 (4)
Thailand......... 56.16 ...................29.85 (5)

Our largest export was with Singapore followed by China.Singapore re-exported most imports from Malaysia.

If Singapore and China's economy can continue to be robust for the rest of the year why not us? On what basis our economy is slowing down? Can someone tell me?

Somebody in the Ministry of Finance and Bank Negara should explain instead of just telling the Prime Minister to go out and tell the people the economy will be slowing down for the rest of the year.

12 comments:

Anonymous said...

What to do when 50% of Malaysia worker that have internet connection already sick with facebook addict(like drug abuse), keep online, less work, just want to update facebook.

i hope government block facebook from goverment agency internet connection. if not productivity will drop a lot.

justicenequality said...

Just OUTSOURCE the Federal Administration to the S'pore PAP Govt since Jibby is now buddy-buddy with them.
You tolong gua, I tolong you.

vinnan said...

UMNO. Stop pretending to be ignorant.

Pak Zawi said...

We can't compare ourselves with Singapore as they are too smart. A case in point is how easy it was for them to make half a billion profit from the sale of a health care company back to Malaysia. They made a small fortune from the sale of the Indonesian Bank too as well as numerous other sales which we may not know of.

eddy said...

I suppose we are still struggling from the aftermath of the US debt crisis and our hopes are pinned on the RMK 10 with its economic stimulus but it will not start until another 5 months in 2011 and FDIs are not as much as it used to be and it was reported that money outflow from Malaysia is in quite high volumes too. What is your take Bro.

You said Singapore is experiencing high growth of 15% and it was noted by some, despite lack of stimulus. So how did they do it? There's a good blog to go if you are keen:

http://blogs.law.harvard.edu/philg/2010/07/19/how-to-explain-singapores-growth-despite-lack-of-stimulus/

Some of the comments in that blog are really interesting, have a look see.

Hantu Laut said...

Pak Zawi,

I think Spore has fine-tune the art of picking the right people to do the job, not on political consideration but on merit.

Malaysia pick their kawan and saudara even if least qualified, not to do the job but protect their interests.

eddy said...

Anon 9:01pm..you could be right..in my office we have blocked/banned Facebook altogether and you know what, some things that get done in one day now gets done in an hour.

asrar said...

the answer is property bubble ,the house price(3rm flat 190,000 now 340,000) and rental (3 rm $900 now $1700 have almost double in 5 years. This has lead a rush frenzy of property transaction for the fear that it will go higher the situation is not help when the minister in charge announce that property prices is set to higher.

On top of this 100,000 new foreign talent(aka Pendatang) also join in the frenzy of house buying, as soon as they are eligible to by HDB resale flats

Hantu Laut said...

eddy,
I agree Facebook and even the Internet can be a big distraction.All offices should ban it unless the staff are doing research work.

Employees should be discipline and not use working hours to while away.They should do it from their homes.

I only access my Facebook once or twice a week.

SM said...

Bro Eddy,

If we are facing problems from the aftermath of the US debt crisis, so is Singapore. That's no excuse.

Pak Zawi,

You have hit the nail on the head! As the saying goes, "how can you soar with the eagles when you work with turkeys"! Spore choose eagles to lead their important institutions & if they don't have anough of these eagles, they steal them from Malaysia. Malaysia on the other hand put turkeys in their important institutions!

Bro HL,

I think you know the answer to your questions. As long as we have an administration that is so outwardly corrupted, what can we expect?! It isn't going to change anytime soon.

flyer168 said...

A frank discourse by a bumiputra of Malaysia.

THIS IS A MUST MUST READ: LEE KUAN YEW : AT 85 , THE FIRE STILL BURNS BY AHMAD MUSTAPHA

The writer is a nephew of Dr Mahathir.
Excellent one ! By Ahmad Mustapha

Singapore's Minister Mentor, Lee Kuan Yew, who was Singapore's founding father, has always been very direct in his comments. This was the man who outsmarted the communists in Singapore (with the innocent help of Malaya then and the willing help of the British) and who later outwitted the British and outpaced Malaysia in all spheres.

Singapore practices corrupt-free meritocracy and Malaysia affirmative action. The former attracted all the best brains and the latter chased out all the brains.

The Singapore cabinet consists of dedicated and intelligent technocrats whereas Malaysia has one of the most unwieldy cabinets. Not only that, brain wise it was below par not even good for the kampong.

With that kind of composition, one that is very brainy, naturally Singapore , with no natural resources could outstrip Malaysia in every aspect of development.

Malaysia, on the other hand, was too much preoccupied with its Malayness and the illusory 'Ketuanan Melayu' and was also more interested in useless mega iconic development rather than real social and economic development.

Whenever Kuan Yew utters anything that deemed to be a slight on Malaysia , voices were raised admonishing him. Malaysia would never dare to face reality. That Singapore had shown that it could survive was a slap on those who believed that Singapore would fold up once it left Malaysia.

Therefore it was natural that these doomsayers would try to rationalise their utterances to be in their favour to combat on whatever Kuan Yew commented. Its political jealousy.

Singapore achieved its development status without any fanfare. But here in Malaysia , a development that was deceptive was proclaimed as having achieved development status. It was trumpeted as an achievement that befits first world status. This was self delusion.

Malaysians are led to believe into a make believe world, a dream world. The leaders who themselves tend to believe in their own fabricated world did not realise the people were not taken in by this kind of illusion.

Lee Kuan Yew believed in calling a spade a spade. I was there in Singapore when the People's Action Party won the elections in 1959.

He was forthright in his briefing to party members as to what was expected of them and what Singapore would face in the future. Ideologically, I did not agree with him. We in the University of Malaya Socialist Club had a different interpretation of socialist reconstruction. But he was a pragmatist and wanted to bring development and welfare to the Singaporeans.

Well! He succeeded.
Malaysia was so much embroiled in racial politics and due to the fear of losing political power, all actions taken by the main party in power was never targeted towards bringing wealth to all. Wealth was distributed to the chosen few only. They were the cronies and the backers of the party leadership to perpetuate their own selfish ends.

Seeing the efficiency and the progress achieved by Singapore caused the Malaysian leadership to suffer from an inferiority complex. That Malaysia should suffer from this complex was of its own making.

In a recent interview, Kuan Yew said that Malaysia could have done better if only it treated its minority Chinese and Indian population fairly.

Instead they were completely marginalised and many of the best brains left the country in drove. He added that Singapore was a standing indictment to what Malaysia could have done differently.

He just hit the nail right there on the head Malaysia recently celebrated its 50th year of independence with a bagful of uncertainties. The racial divide has become more acute. The number of Malay graduates unemployed is on the increase. And this aspect can be very explosive. But sad to see that no positive actions have been taken to address these social ills.

Contd...2

flyer168 said...

....2

Various excuses were given by Malaysian leaders why Singapore had far outstripped Malaysia in all aspects of social and economic advancement. Singapore was small, they rationalised and therefore easy to manage. Singapore was not a state but merely an island.

There was one other aspect that Malaysia practises and that is to politicise all aspects of life. All government organs and machinery were 'UMNO-ised'. This was to ensure that the party will remain in power.

Thus there was this misconception by the instruments of government as to what national interest is and what UMNO vested interest is.

UMNO vested interest only benefited a few and not the whole nation. But due to the UMNO-isation of the various instruments of government, the country under the present administration had equated UMNO vested interest as being that of national interest.

Thus development became an avenue of making money and not for the benefit of the people. The fight against corruption took a back seat. Transparency was put on hold. And the instruments of government took it to be of national interest to cater to the vested interest of UMNO.

Enforcement of various enactments and laws was selective. Thus a 'palace' in Kelang, APs cronies and close-one-eye umno MPs could exist without proper procedure. Corruption infested all govt departments, the worse is the police and lately even in the judiciary.

Singapore did not politicise its instruments of government. If ever politicisation took place, it is guided by national interest. To be efficient and to be the best in the region was of paramount importance. Thus all the elements like corruption, lackadaisical attitude towards work and other black elements, which would retard such an aim, were eliminated.

Singapore naturally had placed the right priority in it's pursuit to achieve what is best for its people. This is the major difference between these two independent countries.

Malaysia in its various attempts to cover up its failures embarked on several diversions. It wanted its citizens to be proud that the country had the tallest twin-tower in the world, although the structure was designed and built by foreigners. Its now a white-elephant wasting away. It achieved in sending a man into space at an exorbitant price. For what purpose? These are what the Malays of old would say 'menang sorak' (hollow victories).

It should be realised that administering a country can be likened to managing a corporate entity. If the management is efficient and dedicated and know what they are doing, the company will prosper. The reverse will be if the management is poor and bad. The company will go bust.

There are five countries around this region. There is Malaysia , and then Indonesia . To the east there is the Philippines and then there is that small enclave called the Sultanate of Brunei .

All these four countries have abundance of natural resources but none can lay claim to have used all these resources to benefit the people. Poverty was rampant and independence had not brought in any significant benefits to the people.

But tiny Singapore without any resources at all managed to bring development to its citizens. It had one of the best public MRT transport systems and airlines in the world and it is a very clean city state. Their universities, health care, ports are among the best in the world.

It is impossible to compare what Singapore has achieved to what all these four countries had so far achieved. It was actually poor management and corruption, and nothing more. Everything is done for the vested interest of the few.

Malaysia, Indonesia and the Philippines and the Sultanate of Brunei need good management teams. They would not be able to do this on their own steam. I would advise that they call on Kuan Yew to show them what good governance is. Why look East to Japan when it is just next door across the causeway.

Youu be the judge.

Cheers.