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Is the economy in crisis now?

By P Gunasegaram
Malaysiakini
Jan 22, 2015

QUESTION TIME Granted we have lots of problems in the country and tonnes of wastage. We overpay for contracts, we have a strategic investment fund which has gone amok and is investing willy nilly with borrowed money, we have a looming disaster in the form of RM30 billion at risk in a private finance initiative gone wrong and we have loads of patronage.

Does this necessarily mean that the economy is in crisis if we put all this together with a weakening ringgit and oil prices which have fallen off a cliff? Does this mean this year will be a disaster and one of gloom and doom for Malaysia?

It is tough to do but this is when we need to be rational about things and assess economic conditions with a cool head, separating this to some extent from the sad state of politics in the country which leads to a whole host of economic concerns.

Let’s just take a couple of the most serious concerns and examine them in some detail to see what gives. First, the weakening ringgit which was at its lowest levels in six years. But why was it low six years ago – early 2009 to be precise? Continue reading “Is the economy in crisis now?”

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Malaysia ranks 35 out of 50, loses to Singapore in talent competitiveness index

The Malay Mail Online
January 20, 2015

KUALA LUMPUR, Jan 20 — Malaysia has been ranked 35 out of 50 countries in international business school Insead’s global talent competitiveness index (GTCI) for 2014, trailing behind Singapore, which retained its number two spot for a second-year running.

The index placed Switzerland at number one, followed by Singapore and Luxemborg in second and third places, while Australia came in at number nine.

Malaysia scored higher than China, Brazil and Greece, which came in at number 41, 49 and 50 respectively.

The study, produced by Insead along with the Human Capital Leadership Institute of Singapore (HCLI) and Adecco Group, measures a nation’s competitiveness based on the quality of talent it can produce, attract and retain.

This is the second time Singapore, the only Asian country, was featured in the top ten rankings of the index.

Malaysia moved up two notches from the number 37 spot in GTCI’s 2013 rankings index which continues to be heavily-dominated by European countries. Continue reading “Malaysia ranks 35 out of 50, loses to Singapore in talent competitiveness index”

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Sustainable development goals: changing the world in 17 steps

Liz Ford
Guardian
19 January 2015

The countdown has begun to September’s summit on the sustainable development goals, with national governments now discussing the 17 goals that could transform the world by 2030

What are the sustainable development goals?

The sustainable development goals (SDGs) are a new, universal set of goals, targets and indicators that UN member states will be expected to use to frame their agendas and political policies over the next 15 years.

The SDGs follow, and expand on, the millennium development goals (MDGs), which were agreed by governments in 2000, and are due to expire at the end of this year.

Why do we need another set of goals?

There is broad agreement that while the MDGs provided a focal point for governments on which to hinge their policies and overseas aid programmes to end poverty and improve the lives of poor people – as well as provide a rallying point for NGOs to hold them to account – they have been criticised for being too narrow. Continue reading “Sustainable development goals: changing the world in 17 steps”

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New Oxfam report says half of global wealth held by the 1%

Larry Elliot
Guardian
January 19, 2015

Oxfam warns of widening inequality gap, days ahead of Davos economic summit in Switzerland

Billionaires and politicians gathering in Switzerland this week will come under pressure to tackle rising inequality after a study found that – on current trends – by next year, 1% of the world’s population will own more wealth than the other 99%.

Ahead of this week’s annual meeting of the World Economic Forum in the ski resort of Davos, the anti-poverty charity Oxfam said it would use its high-profile role at the gathering to demand urgent action to narrow the gap between rich and poor.

The charity’s research, published on Monday, shows that the share of the world’s wealth owned by the best-off 1% has increased from 44% in 2009 to 48% in 2014, while the least well-off 80% currently own just 5.5%.

Oxfam added that on current trends the richest 1% would own more than 50% of the world’s wealth by 2016.

Winnie Byanyima, executive director of Oxfam International and one of the six co-chairs at this year’s WEF, said the increased concentration of wealth seen since the deep recession of 2008-09 was dangerous and needed to be reversed. Continue reading “New Oxfam report says half of global wealth held by the 1%”

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DAP proposes a two-day special Parliament meeting on Jan 26 and 27 on the revised 2015 Budget instead of Najib unilaterally announcing restructuring of the 2015 Budget in utter contempt not only of Parliament but also of Cabinet

The Prime Minister, Datuk Seri Najib Razak, seemed bent on announcing his restructured 2015 Budget tomorrow.

This will mean that the revised 2015 Budget is made not only without parliamentary sanction or approval, but also without Cabinet approval or sanction.

This is because the Cabinet would only meet the day after on Wednesday, January 21 2015.

This is most irregular and improper, revising the 2015 Budget after the Dewan Rakyat had approved the original budget on Nov. 25 after more than a month of debate, both on general policy as well as during the detailed committee stage, by MPs from both the Barisan Nasional and Pakatan Rakyat in the Dewan Rakya

This could only mean that what the MPs from both BN and PR had said on the 2015 Budget, both during the policy and committee stage debate, were an utter waste of time, resources and effort as far as the Finance Minister was concerned!

Now Najib proposes to announce his revised 2015 budget tomorrow, when clearly it has not been cleared or approved by the Cabinet.
Continue reading “DAP proposes a two-day special Parliament meeting on Jan 26 and 27 on the revised 2015 Budget instead of Najib unilaterally announcing restructuring of the 2015 Budget in utter contempt not only of Parliament but also of Cabinet”

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Revised 2015 Budget should declare war on corruption, incompetence and extravagance to provide example and leadership of government commitment to austerity, accountability and integrity

The revised 2015 Budget should declare war on corruption, incompetence and extravagance to provide example and leadership of government commitment to austerity, accountability and integrity.

Such a campaign would save the Malaysian government and taxpayers scores of billions of ringgit, which would help the country tide through the looming economic crisis as a result of the sharp fall in prices of oil and commodities and the weakening of the Malaysian ringgit.

Despite the greatest investment in anti-corruption campaign, with the Malaysian Anti-Corruption Commission developing into a huge bureaucracy but with very little to show in terms of results, the Najib premiership is still far behind the Abdullah and Mahathir premierships in both ranking and score of the annual Transparency International (TI) Corruption Perception Index (CPI).

Malaysia lags seriously behind other countries in the battle against corruption, particularly Indonesia and China, and Malaysia is at risk of being overtaken by these two countries which had occupied the bottom two of rungs of the TI CPI 1995 two decades ago in a matter of a decade.
Continue reading “Revised 2015 Budget should declare war on corruption, incompetence and extravagance to provide example and leadership of government commitment to austerity, accountability and integrity”

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To rescue the economy, put national interests before self-interest

Rash Behari Battacharjee
The Malaysian Insider
17 January 2015

It is as plain as daylight that Budget 2015 must be revised in the wake of plunging world oil prices, given that some 30% of government revenue comes from petroleum. In addition, it has been noted, the unprecedented ferocity of the year-end floods which will require a multi-billion ringgit reconstruction effort means that development expenditure must be reallocated to rehabilitate damaged infrastructure and restore normalcy to the victims’ lives and the economies of the affected regions.

Last week, Prime Minister and Finance Minister Datuk Seri Najib Razak indicated, not a day too soon, that an announcement about a possible restructuring of the budget to address these challenges would be made this week.

Analysts have noted that a confluence of external and internal factors in recent months – including the oil price shock, capital outflow, flood devastation and 1MDB’s performance, besides corrosive political developments – have heightened concerns about the prospects for the Malaysian economy, both in the immediate future and the longer term. Continue reading “To rescue the economy, put national interests before self-interest”

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Putrajaya must revise budget in light of oil slump, says economist

by Anisah Shukry
The Malaysian Insider
3 January 2015

As Putrajaya responds to falling global oil prices by prioritising domestic spending and investments, a leading economist has warned that the national budget for 2015 was unsustainable if it is not revised to account for the price drop in the commodity, of which Malaysia is a net exporter.

Tan Sri Dr Kamal Salih, an adjunct professor of Economics and Development Studies at Universiti Malaya, said no amount of tax increase could compensate for Petroliam Nasional Bhd’s (Petronas) lower revenue contributions to Putrajaya.

“Of course, the government has to revise the budget. The assumption of the oil price was quite high and now it must be reduced to a realistic level, especially as the price may go down for a long time,” he said.

“The current budget is not sustainable now.” Continue reading “Putrajaya must revise budget in light of oil slump, says economist”

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Questions for 2015

Tan Siok Choo
The Sun Daily
29 December 2014

WITH 2014 drawing to a close, I have several questions about issues that arose this year but could impact Malaysia’s future.

Question 1: Why does Putrajaya persist in maintaining Malaysia’s growth in gross domestic product (GDP) in 2015 won’t be affected by plummeting prices of oil, a commodity that contributes significantly to federal government revenue?

Budget 2015 was prepared when Brent oil – the benchmark for Petronas’s Tapis blend – was in triple digits. Analysts estimate federal government revenue next year is based on an oil price of US$105 per barrel.

Last Friday, amid thin trade, Brent oil for February settlement closed at US$59.45 a barrel.

Labelling the World Bank’s revised forecast of 4.7% GDP growth next year as “too conservative”, top Malaysian policymakers announced the 5% to 6% economic growth target for 2015 will be maintained.

Admittedly, plummeting oil prices could be beneficial – it could stimulate global economic growth and reduce fuel costs for motorists and for sectors like airlines and truckers. Even so, shouldn’t Putrajaya prepare for the worst rather than adopt a wait-and-see attitude? Continue reading “Questions for 2015”

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China Revises Its GDP Calculations

By Mark Magnier
Wall Street Journal
Dec 19, 2014

New Calculation Adds About 3.4% More to 2013 Data

BEIJING — With the stroke of a pen, China announced Friday that world’s second largest economy was 3.4% larger last year than previously thought — chiefly due to a more accurate counting of services and their impact on economic output.

China’s 2014 gross domestic product will be calculated using the new methodology when the full-year results are released next month.

The new calculation added 1.92 trillion yuan ($308.3 billion)—or about the equivalent of the economy of a Colorado or a Singapore—to the size of China’s economy in 2013, bringing it to a total of 58.80 trillion yuan.

While at one level the statistical change is fairly arcane, it should give investors and policy makers a more accurate picture of the economy as Beijing tries to pivot from investment-led growth in industry and infrastructure toward services and consumption.

“I think they’re genuinely trying to improve the quality of the numbers,” said Michael Pettis, professor at Peking University’s Guanghua School of Management. “When you have bad numbers, it’s hard to make policy, and this is especially important in China, where the single most important player is the government.”

Analysts said the recalculation likely moves forward the date approximately a decade from now when China’s economy is projected to surpass the U.S.’s as the world’s largest. The U.S. surpassed the U.K. as the world’s largest economy in 1872. China has been expected to surpass the U.S. as the world’s largest economy around 2024 or 2025. Continue reading “China Revises Its GDP Calculations”

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Major flaw in computing bumi equity target

By Lucky Star
Malaysiakini

Part 1: Has 30pct bumi equity target been achieved?

COMMENT At the initial stage of the New Economic Policy, privatised entity and government-linked companies (GLCs) were almost non-existent.

Khazanah Nasional Berhad, the main institution through which the federal government controls GLCs, only came into existence in 1993. Therefore, before 1990, the exclusion of government shareholding owned by Khazanah was a non-issue.

But, when the privatisation policy was vigorously implemented after the publication of the ‘Privatisation Master Plan’ in 1991, the exclusion of government shareholding in privatised entities and GLCs had a significant distorting effect on equity ownership by ethnic group.

Musa Hitam, in an exclusive interview in August 2014 with the Malaysian Insider said, “But the government does not take GLCs into account when they point out that the present bumiputera equity ownership is 24 percent. We are deluding ourselves by continuously pointing a finger at the Chinese.” As a former deputy prime minister and chairperson of a GLC, Musa definitely knew what he was talking about.

For the purpose of showing bumiputera equity ownership, government data are divided into three categories of bumiputera, namely:

1) Bumiputera individuals
2) Bumiputera institutions
3) Bumiputera trust agencies
Continue reading “Major flaw in computing bumi equity target”

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Has 30pct bumi equity target been achieved?

By Little Stars
Malaysiakini

COMMENT At the outset, we wish to make it abundantly clear that we fully support the New Economic Policy (NEP) objective of eradicating poverty irrespective of race and we completely agree with the 30 percent bumiputera equity ownership target.

In a multiracial country, social engineering using affirmative action to uplift the economic status of a lagging community is necessary. We do not doubt the noble intention of the founding fathers of NEP and we believe the objectives can be achieved if right policies are formulated and implemented.

Government in any part of the world is usually quick to claim credit for any success. However, in the case of Malaysia, with regard to the achievement of 30 percent bumiputera equity ownership target, the government seemed to be more inclined to declare “failure”.
Continue reading “Has 30pct bumi equity target been achieved?”

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Malaysia 19 years behind South Korea, complacency, graft among culprits

by Lee Shi-Ian
The Malaysian Insider
17 October 2014

Malaysia are 19 years behind South Korea in terms of productivity, the Malaysian International Chamber of Commerce and Industry said today, naming graft, leakages, complacency and archaic labour laws as road blocks.

Its executive director Stewart Forbes said Malaysia’s Gross Domestic Product (GDP) per worker productivity last year was equivalent to South Korea’s – but in 1995.

“Malaysia’s historic productivity growth was unimpressive although at one time, Malaysia, South Korea and Taiwan all started out on the same level playing field.

“Putrajaya is always quick to point out that Malaysia is better than Thailand or Vietnam or Indonesia. But why is Malaysia choosing the worst to make comparisons?

“Putrajaya ought to be comparing Malaysia to Taiwan, Singapore or South Korea. They should set the bar higher when making comparisons,” Forbes said. Continue reading “Malaysia 19 years behind South Korea, complacency, graft among culprits”

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RM5,900 a month income is simply not true

By Steven Sim | TMI
9 September 2014

People say politicians often tell lies. But really, more often than not, they actually give us statistics. What is the difference? I’ll let Mark Twain tell you: “There are three kinds of lies; lies, damned lies and statistics”.

The latest statistics our government proudly brandish at us is the report that household income in Malaysia has surpassed RM5,900 a month. This was presented by Datuk Seri Abdul Wahid Omar, the former Maybank boss roped into the Cabinet as “economy minister”.

Intuitively, most Malaysians know it’s a farce. Why?

Because many families we know, maybe including our own, earn much lesser than RM5,900 a month.

Because even the government itself proudly claimed that its cash transfer programme BR1M has benefited 80% of Malaysian households. The only condition for BR1M is that a recipient household must earn less than RM3,000 a month. Continue reading “RM5,900 a month income is simply not true”

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Rising debts will rob Malaysia of its competitive edge, warns economist

by Eileen Ng
The Malaysian Insider
9 June 2014

Malaysia risks seeing its economy contract and losing its global market share in key export sectors if it fails to tackle its high levels of public and rising external debts, a United Kingdom-based economist has warned.

Sarah Fowler from Oxford Economics said while the nation’s shrinking current account surplus was not a major concern as it was expected to stay in excess in the next few years, there are worries over Malaysia’s capital account due to rising external debt, which has shot up close to 40% of its gross domestic product (GDP) in recent years.

The country’s public debt-to-GDP ratio has been hovering at an all-time high of more than 50% since 2010 because of large fiscal deficits incurred when an aggressive stimulus package was launched to bolster the country’s economy during the global financial crisis.

“Addressing the concerns would enable Malaysia to achieve a higher growth path, reaching a higher per capita income sooner. We expect the economy to grow by just more than 4% over the next five years but if the concerns were addressed growth could exceed 4.5%,” she told The Malaysian Insider in an email.

Fowler, who produced a report on “Why Malaysia is now a more risky prospect than Indonesia” which was highlighted by global financial news site Bloomberg’s columnist William Pasek last week, used 17 indicators to develop a scorecard to assess emerging market vulnerability to external economic and financial shocks. Continue reading “Rising debts will rob Malaysia of its competitive edge, warns economist”

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Is Malaysia Asia’s Weakest Link?

By William Pesek
Bloomberg View
Jun 5, 2014

From missing airplanes to jail-bound opposition leaders, Malaysia has recently made international headlines for all the wrong reasons. Will the nation’s economy be next?

That’s the thrust of new report from Sarah Fowler of U.K.-based Oxford Economics, which ranks Malaysia the “riskiest country in Asia of those we consider,” more so than India, Indonesia and even coup-happy Thailand. On the surface, she points out, all’s well: Growth is zooming along at 6.2 percent, the external balance is reasonably sound and political stability reigns. But all’s not what it seems. “Prompted by its high levels of public debt, rising external debt and shrinking current account surplus, there has been a shift in the perception of risks towards Malaysia and away from Indonesia,” Fowler explains.

Malaysia wasn’t included in Morgan Stanley’s “fragile five” list of shaky emerging economies last year, as were India and Indonesia. But Fowler scratches at a number of Malaysian vulnerabilities that deserve more attention: external debt levels that in recent years have risen to close to 40 percent of gross domestic product; a higher public debt ratio than India; the biggest short-term capital flows among the 13 major emerging markets Oxford tracks, including Indonesia; and a shrinking current-account surplus. Continue reading “Is Malaysia Asia’s Weakest Link?”

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Asia’s Dangerous Strongman Nostalgia

By William Pesek
Bloomberg
Feb 4, 2014

Indonesia is growing at 6 percent, has rejoined the ranks of investment-grade nations, and after decades under the corrupt and repressive Suharto, has reaffirmed its place as the world’s third-largest democracy. Yet somehow enough Indonesians remember the Suharto years fondly that his Golkar Party has hopes of regaining power in upcoming elections.

Golkar isn’t alone in trying to exploit nostalgia for past strongmen (and -women). India’s Congress Party is trying to squeeze any remaining good feelings about the Nehru-Gandhi period (from 1947 to about 1989) to elevate lackluster heir apparent Rahul Gandhi. Even as China’s Xi Jinping pushes ahead with market reforms, he continues to pay homage to Communist icon Mao Zedong (1949-1976). Thais are destroying their economy rather than cut off support for tycoon Thaksin Shinawatra (2001-2006) and his sister Yingluck. Many Malaysians wax sentimental about the boom days of Mahathir Mohamad (1981-2003). Japanese are indulging Shinzo Abe’s dangerous stroll down memory lane.

What gives with nostalgianomics? The yearning for yesteryear speaks to our disorienting times and a dearth of visionary leadership when it’s most needed. This is an upside-down era when the unthinkable has a way of becoming reality: The U.S. is a developing nation again; Europe is hitting up “poor” China to bail out its debt markets; central banks have gone Islamic with zero-interest rates everywhere; the free trade that once raised living standards now foments poverty. Many simply want to get off this crazy ride. Continue reading “Asia’s Dangerous Strongman Nostalgia”

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Tolls and hikes short-circuiting Malaysian future

S RAMAKRISHNAN | 12:47PM Jan 2, 2014
Malaysiakini

COMMENT The simultaneous increase in fuel and sugar prices, electricity tariff and toll hikes have got Malaysians worried and bewildered as to how they will manage their household expenses. Compounding matters will be the Goods and Services Tax (GST) that will kick in in 2015. The already weakened ringgit and the sudden withdrawal of subsidies on essential goods will hit hard where it hurts most – the pocket.

Not unlike Marie Antoinette, the prime minister is obstinately insisting that the people can afford these massive hikes. Talk about telling the masses to eat cake, he adds insult to injury by saying these increase are not a burden!

The entire cabinet and prime minister suddenly woke up from their slumber. It dawned on them that the budget deficit, huge public and household debt have to be narrowed. What is shocking is that for 16 continuous years, the deficit and the mounting debt did not raise any alarm bells.

In fact the pro-government economists and mainstream media stoically reminded the rakyat that economic fundamentals were positive and our country is on track to become a developed nation by 2020. But all that propaganda did not convince the world. Fitch Rating Agency, in a startling report, downgraded Malaysia from stable to negative. And the game was up.

The media propaganda failed and even more frightening, instead of being developed Malaysia, by 2020, may be a bankrupt nation!

The acrimonious Fitch report had a jolting effect that aroused the Malaysian government from its deep slumber and self-delusion. It suddenly dawned upon the cabinet that the lies they had believed to be the truth, were, in fact, lies. Continue reading “Tolls and hikes short-circuiting Malaysian future”

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10,000 defy warning, police give in to protesters

Malaysiakini
7:40PM Dec 31, 2013

In anticipation of a gloomy 2014, demonstrators took to the streets in Kuala Lumpur tonight to protest the rising cost of living as a result of the government’s austerity measures.

The New Year’s Eve protest, organised by a coalition of NGOs led by Gerakan Turun Kos Sara Hidup (Turun), saw participants gathering at three meeting points – Sogo Shopping Complex at Jalan Tuanku Abdul Rahman, Pasar Seni and Masjid Jamek

They then marched to Dataran DBKL before proceeding to the adjacent Dataran Merdeka where the Kuala Lumpur City Hall is organising a New Year’s concert.

The authorities have accused protest organisers of planning to overthrow the government and police have branded the rally “illegal”.

Police claim to have intelligence that dangerous weapons and bombs will be present at the demonstration but protest organisers have vehemently denied this.

Turun chief Mohd Azan Safar said the government was attempting to distract attention from the cost of living issues, which is the focus of the protest.

LIVE REPORTS

Videos
Photo Gallery

1.00am – This conclude our LIVE coverage of the rally. And no, the federal government has not been toppled. Happy New Year.

12.15am, Dataran Merdeka – Addressing the crowd, Turun chief Azan Safar leads the protesters to pledge for a corruption free 2014, while Solidarity Anak Muda Malaysia (SAMM) chief Badrul Hisham Shaharin later takes over the microphone and asked: “Was there any violence? Was there any bombings?”

He then leads the protesters in a comedic song which contains the lyrics “We love the police and the police loves us… We are only just upset that BN cheated us because they said toll will go down, but instead it went up”.
Continue reading “10,000 defy warning, police give in to protesters”

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Power tariff – the last straw that broke the camel’s back?

Liew Chin Tong
Malaysiakini
Dec 6, 2013

MP SPEAKS

The spate of new taxes and price hikes, the latest being the electricity tariff hike, have caused me to doubt whether the government under Najib Abdul Razak has any idea about the macroeconomic risks that Malaysia faces.

Against the backdrop of an uncertain global economy and the likeliness of the quantitative easing tapering, domestic demand is crucial in sustaining the Malaysian economy. Yet the spate of new taxes and price hikes will produce an opposite result: the further decline of domestic demand.

Will the electricity tariff increase become the last straw on the camel’s back that will see the Malaysian economy collapsing due to the confluence of several domestic and global factors?

The electricity tariff will be increased by an average of about 14.89 percent for Peninsular Malaysia, and by about 17 percent for Sabah and Labuan from next year.

The average electricity tariff in Peninsular Malaysia will be up 4.99 sen per kWh or 14.89 percent from the current average rate of 33.54 sen/kWh to 38.53 sen/kWh.

For Sabah and Labuan, the average tariff will be up 5 sen per kWh or 16.9 percent from current average rate of 29.52 sen per kWh to 34.52 sen per kWh. Continue reading “Power tariff – the last straw that broke the camel’s back?”