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Rich world economic malaise to endure into 2012: Reuters poll

By Andy Bruce
Reuters

LONDON (Reuters) – Stagnation is probably the best many of the world’s biggest developed economies can hope for over the next year, with several facing a significant chance of recession, Reuters polls of around 350 economists showed on Thursday.

After a promising start, 2011 has turned into an enormous disappointment for major rich world economies, which have been hobbled by a noxious combination of austerity, debt crises, natural disaster and political impasse.

Backed up by Thursday’s weak trade figures from China, which pointed to profound global economic weakness, the October quarterly survey suggested a bout of weak growth in many G7 economies could extend deep into next year and beyond.

The world economy will grow 3.8 percent in 2011, the poll showed, and just 3.6 percent next year — a stark contrast to the 4.1 percent and 4.3 percent forecasts from the last quarterly survey in July.

But even these tepid growth rates could depend on progress in clearing some of the world’s biggest economic hurdles, like the euro zone sovereign debt crisis and finding ways to boost growth in the United States. Continue reading “Rich world economic malaise to endure into 2012: Reuters poll”

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IMF trims Asian growth forecasts as risks grow

By KELVIN CHAN
AP Business Writer – 3 hours ago

HONG KONG (AP) — The International Monetary Fund trimmed its economic growth forecasts for Asia on Thursday because of financial turbulence in Europe and a possible slowdown in the U.S.

The risks to Asia’s growth are “decidedly tilted to the downside” reflecting the negative outlooks for Europe and the U.S., which are the major markets for the region’s exports, the IMF said in a twice-yearly report.

Asia’s economic growth is forecast to average 6.3 percent in 2011, rising to 6.7 percent in 2012. That’s lower than the IMF’s April forecast of nearly 7 percent in both years.

The report covers 20 economies in a vast region stretching from India to Japan to New Zealand. Continue reading “IMF trims Asian growth forecasts as risks grow”

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Budget 2012 fails to live up to the Prime Minister’s reform pledges in NEM, GTP and ETP

Media Statement by Tony Pua, DAP National Publicity Secretary and Member of Parliament for Petaling Jaya Utara in Kuala Lumpur

The expectations were high for a pre-election budget where Datuk Seri Najib Abdul Razak will stamp his “reformist” credentials. It is for the Prime Minister to put into action the various reform pledges made in his cornerstone policy blueprints – the New Economic Model (NEM), Government Transformation Programme (GTP) and the Economic Transformation Programme (ETP).

However, the announcement of the budget left much to be desired as little has changed beyond tweaking the budget of the previous financial year. Instead what is perhaps the most worrying is that Malaysians are like the proverbial frog in the hot soup – where the frog does not realise the soup is slowly but surely reaching the boiling point.

We may not yet be facing the crisis of Greek proportions, but Budget 2012 is doing very little to avert such eventuality, leaving the Malaysian economy nakedly exposed to the inevitability. Continue reading “Budget 2012 fails to live up to the Prime Minister’s reform pledges in NEM, GTP and ETP”

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Pakatan Rakyat Budget 2012 (Part 10 of 10)

9 2012 Allocations

9.1 Auctioning APs, enhancing collections and higher oil prices will grow revenue

Pakatan Rakyat notes that prospective economic turbulence may reduce revenues from existing sources. However, Pakatan Rakyat also recognises that the ineffectiveness of the Barisan Nasional government provides headroom for revenues to be raised without further increasing the burden on honest, tax-paying citizens. For example:

  • The full value of government concessions and permits is not always extracted. These are instead offered at low valuations or prices to favoured parties who then reap super-normal and rent-seeking profits;

  • High levels of illicit activity are tolerated. For example, it is estimated that nearly 4 out of 10 packets of cigarettes consumed in Malaysia are illicit43 – taxes have not been paid. This illicit trade has soared by 67% in the 7 years between 2003-10. Illicit trade results in direct opportunity losses to the government from revenue foregone. In addition, it also impedes private enterprise and employment opportunities as legitimate tax-paying businesses grapple against the illicit traders. Continue reading “Pakatan Rakyat Budget 2012 (Part 10 of 10)”

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Pakatan Rakyat Budget 2012 (Part 9 of 10)

8 Public Finance Strategy – the Pakatan Rakyat budgetary framework

8.1 Rationalising Expenditures, Efficiency and Value for Money
The Pakatan Rakyat government will strive to contain expenditures with the ultimate objective of ensuring the long-term sustainability of public expenditures while supporting the continued growth of the economy and the achievement of a high quality of life for all the rakyat.

Rationalising expenditures will restore fiscal space for Malaysia to face future adversities from global perturbations and ameliorate the uncertainties from the accelerating debt burden facing future generations of Malaysians.

In the short-run, while limiting expenditures, Pakatan Rakyat will put in place resolute policies to improve the efficiency of public outlays and simultaneously generate greater value for money. This will bring immediate and direct benefits to the rakyat in the form of better public services (education, health, education and social services), employment prospects, security, and infrastructure. Continue reading “Pakatan Rakyat Budget 2012 (Part 9 of 10)”

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Pakatan Rakyat Budget 2012 (Part 8 of 10)

7 Thrust 3: Empowering Malaysians

7.1 Political Reforms- Democracy Now
Five decades on, democracy as practised in Malaysia today is little more than a shade of its former glory as various key public institutions have been routinely compromised by an unchecked Federal Government. Thus, Pakatan Rakyat is committed to immediately implementing the following reforms:

  • To revoke all existing emergency proclamations and repeal all laws that provide for detention without trial, as outlined in the draft Emergency Revocation Act (Akta Pemansuhan Darurat) submitted by Pakatan Rakyat in the March 2011 parliamentary session.

  • To restructure the Public Complaints Bureau (Biro Pengaduan Awam) into an Ombudsman institution.

  • To place key public institutions including the Auditor-General’s Department, Department of Statistics, Judicial Appointments Commission, the Malaysian Anti-Corruption Commission (SPRM), the Election Commission (SPR), and the Malaysian Human Rights Commission (SUHAKAM), and an Ombudsman institution under the purview of Parliament.

  • To ensure freedom of the media by removing all discretionary licensing requirements via the repeal of the Printing Presses and Publications Act 1984. In lieu of this, an independent and self-regulating media council will be put in place. Continue reading “Pakatan Rakyat Budget 2012 (Part 8 of 10)”

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Pakatan Rakyat Budget 2012 (Part 7 of 10)

6 Thrust 2: Sustainability

6.1 Inclusive growth
One of the most important ways for Malaysians to contribute to our country’s progress is by being productive, working citizens.

However it is evident that the vast majority of Malaysians have not reaped the benefits of their work. Under the Barisan Nasional Federal Government, overall income levels remain low, inequality has leveled out at comparatively high levels and deep pockets of poverty continue to exist, as discussed earlier.

The current policies of centralising powers and funding with the federal government will, if continued, foster even more geographical concentration and further amplify rural-urban differences. Pakatan Rakyat will focus on developing income-earning opportunities across the economy and the nation.
Continue reading “Pakatan Rakyat Budget 2012 (Part 7 of 10)”

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Pakatan Rakyat Budget 2012 (Part 6 of 10)

5 Thrust 1: Empowerment, Opportunities and Dignity for All Malaysians

5.1 All Malaysians and government must collaborate to restore dignity
The holistic economic and structural policies of Pakatan Rakyat will:

  • Restore dignity to all working Malaysians and their families.Dignity through improved skills, increased productivity, higher incomes, better job conditions and better quality of life;
  • Re-establish incentives for businesses and investors to upgrade and launch innovative high-value added product and services activities, and
  • Enhance the motivation of government employees to facilitate this bold transformation process.

But the Pakatan Rakyat government cannot carry out these essential policies by itself and in isolation. The rakyat, as employees and employers; as housewives, caregivers and students, and most importantly as contributing citizens must play their individual and collective roles and take their place in advancing this brave agenda to move Malaysia forward to greater heights to stand tall globally.
Continue reading “Pakatan Rakyat Budget 2012 (Part 6 of 10)”

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Pakatan Rakyat Budget 2012 (Part 5 of 10)

4 Policy Highlights

4.1 Spending RM220 billion more effectively, while reducing the deficit

The global uncertainties and prospect of lack-lustre private demand would ordinarily call for pump-priming and stimulus measures by the government.

However, Malaysia’s finances, after 13 consecutive years of budget deficits by the Barisan Nasional government, no longer permits massive stimulus packages. On the contrary, the recent experiences of crises in countries with massive deficits eg the United States, United Kingdom and Greece, calls greater attention to reducing budget deficits.

Against this backdrop, Pakatan Rakyat will strive to maintain the total level of federal government spending at RM220 billion10 in 2012. Pakatan Rakyat practices of competency, accountability and transparency will result in:
Continue reading “Pakatan Rakyat Budget 2012 (Part 5 of 10)”

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Pakatan Rakyat Budget 2012 (Part 4 of 10)

3 Malaysia Today

Malaysia, too, has less fiscal options than before in weathering the impending turbulence:

  • In 2007, before the 2008/09 crisis, our federal budget deficit was RM21 billion and total federal debt was RM267 billion, equivalent to 42% of GDP;

  • For 2011, our federal budget deficit is expected to hit RM45 billion and total federal debt was already RM437 billion as at the end of June, equivalent to about 53% of GDP8;

  • Indeed, ratings agency Fitch downgraded our long term RM sovereign debt rating to A from A+ in Feb 2009. Malaysiahas not been able to secure a return to A+ even though the global economic situation subsequently stabilised and improved. The Barisan Nasional government continued to expand spending after prime minister Najib assumed leadership in Mar 2009, even though stimulus measures were no longer necessary.

The scope for pump-priming and stimulus measures in the face of another slowdown is now limited. But we still have strengths and alternatives: Continue reading “Pakatan Rakyat Budget 2012 (Part 4 of 10)”

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Pakatan Rakyat Budget 2012 (Part 3 of 10)

2 The Global Backdrop
The world economy is entering another period of turbulence and uncertainty following two years of tentative recovery. It now seems clear that the US-led response of easing monetary policy following the 2008/09 financial crisis bought only temporary respite.

The extensive monetary easing masked the structural imbalances in the world economy and allowed “business as usual” to continue. Asian economies continued to depend heavily on exports, particularly to the developed, western economies.

In the meantime, the US and EU governments recorded huge increases in sovereign debt as they eased monetary policy:

  • US government debt has more than doubled since 2008, ballooning from US$7.0 trillion in 2008 to bump up against its original ceiling of US$14.3 trillion in Aug 2011. The ceiling was raised only at the last minute after a bruising political battle between Democrat President Obama and the Republican-dominated Congress; and

  • In the European Union, sovereign debt worries are expanding. Starting with Ireland and Greece, concerns extended to Spain and, most recently, Italy. Total sovereign debt of the 27 Euro nations soared 26% in two years to €9.8 trillion in 2010 from €7.8 trillion in 2008.

Continue reading “Pakatan Rakyat Budget 2012 (Part 3 of 10)”

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Pakatan Rakyat Budget 2012 (Part 2 of 10)

CONTENTS

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Pakatan Rakyat Budget 2012 (Part 1 of 10)

Snapshots

1. Kesejahteraan Untuk Semua
Belanjawan Kesejahteraan 2012 is a continuation of the collective effort by Pakatan Rakyat to chart a new future for Malaysia, following the releases of the Common Policy Platform in December 2009 and the Buku Jingga in December 2010.

Kesejahteraan Untuk Semua can be only achieved with political will to effect genuine and comprehensive institutional reforms guided by the principles of transparency and good governance.

Malaysia’s diversity is our strength. Our economic growth depends on the solidarity of all people regardless of gender, ethnicity or religion. Only through a budget which is gender responsive, and one that empowers ordinary Malaysians to live a dignified life full of opportunities , will we unleash the full potential of our people.

Recognizing the inflationary pressures on the Malaysian public, Belanjawan Kesejahteraan 2012 creates growth for all through providing policies and frameworks aimed towards uplifting the 60 percent of Malaysian households earning less than RM3,000 monthly.

Introduction of minimum wage, reduction of unskilled foreign workers, upgrading of skills and productivity will massively benefit the Malaysian workforce. In particular, special attention is given to improve women’s participation in the workforce. Wage, skills and productivity will improve in tandem.

Improvements to public transport, housing and healthcare will contribute to increasing disposable income of the people. Higher disposable income will enhance domestic consumption, which is increasingly more important in the volatile global environment.

Monopolies and oligopolies will be broken up, enhancing competition while helping Malaysian businesses to reduce costs. A competitive environment will mitigate inflationary pressures and generate more choices for the people. Continue reading “Pakatan Rakyat Budget 2012 (Part 1 of 10)”

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Foreign sell-off, economy top concerns despite reforms push

by Lee Wei Lian
The Malaysian Insider
Sep 19, 2011

KUALA LUMPUR, Sept 19 — Despite the Najib administration’s political reforms, a Bloomberg report today said foreign funds may continue paring down local share stakes in an indication that the world economy will remain the government’s biggest headache ahead of an expected general election.

Terence Wong, head of research at Kuala Lumpur-based CIMB, was reported as saying that worsening global economic turmoil may cause investors to keep unloading the nation’s equities.

Wong also said that promises made last week by Prime Minister Datuk Seri Najib Razak to burnish Malaysia’s democratic credentials and abolish the controversial security and media laws will not be enough to boost confidence.

The Bloomberg report said that KLSE data showed that foreign funds sold RM3.8 billion worth of Malaysian shares last month, the most since at least October 2009 after four consecutive months of inflows. Continue reading “Foreign sell-off, economy top concerns despite reforms push”

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After 54 years independence, Malaysia still sufferring in the middle income trap

By Dr Chen Man Hin, DAP life advisor

There is not much to celebrate after 54 years of independence, as Malaysia is still caught in a middle income trap, where 60% of our households are living below the poverty line of RM3000 per month.

In the past few weeks, PM Najib made some moves calculated to impress the people that the economy is resurging and well on the way to full recovery.

The first plan was to announce that FDIs (foreign direct investments) inflow was spectacular. He admitted that the FDI dropped to a low of US$1.5 billion in 2009 but in 2010 it had rebounded by over 500 per cent to US$9 billion. It looks impressive, but the increase was large only because it rebounded from a very low baseline.

However, the US$9 billion was minuscule compared to a FDI of US$38 billion in 2010 for Singapore, US$15 billion for Indonesia and US$105 billion for China.
Continue reading “After 54 years independence, Malaysia still sufferring in the middle income trap”

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Economists no longer able to predict economic crisis, says ISIS chief

By Lee Wei Lian
The Malaysian Insider
Sep 14, 2011

KUALA LUMPUR, September 14 — The global economy is now so unbalanced that economists are no longer able to predict crises, said Institute of Strategic and International Studies (ISIS) chief Datuk Mahani Zainal Abidin today.

This comes as the global markets continue to be plagued with uncertainty due to the lingering effects of the 2008 financial meltdown that hit the United States and Europe.

While Malaysia was spared from the financial crisis and has resumed economic expansion after the 2009 recession, its stock market has been rocked by global volatility, while inflation has soared due to pressure from high commodity prices. Property prices have also jumped dramatically owing to ample liquidity.

The think tank chief said that the problem was that the financial economy has become much larger than the real economy and admitted that assumptions used by economists no longer work. Continue reading “Economists no longer able to predict economic crisis, says ISIS chief”

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Air Asia MAS tie-up – ordinary Malaysian consumers will be the losers?

By Teh Chi-Chang | REFSA

Ordinary Malaysians must view the MAS-Air Asia Collaboration announced on 9 August with dismay. When previously fierce competitors such as MAS and Air Asia choose to collaborate instead, consumers tend to be the losers. This arrangement, called the MAS-Air Asia Comprehensive Collaboration Framework might be more appropriately named the MAS-Air Asia Comprehensive Collaboration Framework Against the Rakyat:

REFSA believes at least some of the synergies and savings to be reaped by MAS-Air Asia will be paid for by Malaysians in the form of higher ticket prices, less frequent flights, poorer service levels and reduced job prospects. Continue reading “Air Asia MAS tie-up – ordinary Malaysian consumers will be the losers?”

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Malaysia’s Slowing Performance

by Greg Lopez
Asia Sentinel
25 August 2011

There are strong institutional reasons for the lagging performance against its regional neighbors

In the 70 years since World War II ended, East Asian economies, including Malaysia, appear to have largely got performance right. Malaysia was also one of 13 countries identified by the Commission on Growth and Development in its 2008 Growth Report to have recorded average growth of more than 7 percent per year for 25 years or more. Malaysia achieved this spectacular performance from 1967 to 1997.

However, since the Asian Financial Crisis of 1997 and1998, Malaysia’s economic performance when compared to previous decades has been lackluster and most macroeconomic indicators are trending downwards. This was confirmed by Prime Minister Najib Tun Razak himself in the publication on March 30, 2010 of the New Economic Model – Part 1. This was a very brave move but a necessary one by the premier as he acknowledged publicly the failures of Malaysia’s current economic model in order to demonstrate urgency for reforms. Continue reading “Malaysia’s Slowing Performance”

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Is the world facing fundamental changes?

Viewpoint by Chris Williamson
Chief economist at global financial information firm Markit
BBC News Business
18 August 2011

Recent events, including stock market falls, the escalating sovereign debt crises, US credit rating downgrade and a near-stalling of growth in the developed world is leading increasing numbers of experts to wonder if the world is facing some fundamental changes.

In reality, many of the ideas reflect trends that have been under way for many years, but the crisis had accelerated the process of change.

Four years after the financial crisis began and the world has certainly not returned to normal.

No major developed economy has yet fully regained the output lost during the recession and global share prices remain almost a third lower than their peak prior to the crisis.

Financial stocks have lost two-thirds of their value. Government debt has spiralled due to the bank bailouts, although it has become apparent that not all governments can finance this debt.

If stage one of the crisis involved the transfer of liabilities from the financial sector to governments via bank bailouts, stage two is witnessing transfers from weaker governments to stronger governments, as the latter seek to prevent the former from defaulting and causing more financial turmoil. Continue reading “Is the world facing fundamental changes?”

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Malaysia’s economy: resilient?

by Kevin Brown
Financial Times
August 17, 2011

Is Malaysia set for sustained economic growth this year, or exposed to serious potential problems if wobbles in the West turn into another slowdown? It depends who you ask.

The central bank is in no doubt that growth will continue, in spite of a fall in the annual pace of growth from 4.9 per cent in the first quarter to 4 per cent in the second.

In robustly positive comments issued with the numbers on Wednesday, Bank Negara acknowledged the impact of weakness in the advanced economies, but insisted that growth prospects remained underpinned by the expansion of private domestic demand and strong exports of commodities and resource-based products – for which read oil, gas and palm oil. Continue reading “Malaysia’s economy: resilient?”