Archive for category Economics
by Jayant Menon, ADB and ANU, and Thiam Hee Ng, ADB
East Asia Forum
April 25th, 2013
Private investment in Malaysia never fully recovered from the impact of the Asian financial crisis.
Foreigners have continued to shun Malaysia, but it now seems that even domestic investors are fleeing, with Malaysia becoming a net exporter of capital since 2005. One explanation for the sluggish performance of domestic private investment relates to the crowding-out effect of the growing dominance of government-linked corporations (GLCs) in many sectors. The influence of GLCs, however measured, is both widespread and pervasive.
The GLC share of operating revenue is approximately one-third in the aggregate, and they control more than half the industry share in utilities, transportation, warehousing, agriculture, banking, information communications and retail trade. GLCs employ around 5 per cent of the national workforce and account for approximately 36 per cent and 54 per cent, respectively, of the market capitalisation of Bursa Malaysia and the benchmark Kuala Lumpur Composite Index. Read the rest of this entry »
by Pak Sako
Centre for Policy Initiatives
I refer to the article in The Malaysian Insider/New Mandala on reducing Malaysia’s debt burden by Nurhisham Hussein, an economist with Malaysian Rating Corporation Berhad and former employee of Permodalan Nasional Berhad.
It is encouraging to have him participate in this national conversation on Malaysian debt.
Close to 20 prominent Malaysian academics, comprising economists and political scientists, had earlier urged the Barisan Nasional and Pakatan Rakyat to state the steps for remedying the worrying situation of Malaysia’s finances (see ‘Academics call upon Barisan and Pakatan to declare policy positions on national finance and debt‘, Centre for Policy Initiatives, 8 April 2013). Read the rest of this entry »
By Koon Yew Yin | 13th April 2013
My object in writing this is to support Professor Dato Dr. Woo Wing Thye’s lecture on 12th April in Syuen Hotel, Ipoh. In his lecture he listed 5 root causes for our poor performance in comparison with South Korea and Taiwan.
Prof. Woo, possibly because of the election fever, tried to be politically correct and made little mention of the New Economic Policy role in our failure to keep up with our neighbours. In fact it is not only Prof. Woo who is silent on the NEP – most analysts appear to have sidelined this policy in the election debate to date.
This is a mistake as the real policy culprit explaining our failure to devlop as quickly as our neighbours (see table attached) is the New Economic Policy (NEP) and the abuse of power in the B.N. Government’s implimentation. As a result, our neighbours are doing much better than us in spite of the fact that they all did not have the natural resources such as oil and gas.
In an unsigned article entitled “Pemandu: We didn’t lower 2009 GNI figure”,(Malaysiakini Apr 8, 2013) Pemandu has made a feeble attempt to defend itself from the allegations that it had manipulated the GNI estimates contained in its Annual Report.
The article contains 11 points; the article is contentious and the claims and assertions being made are open to challenge.
This Rejoinder exposes the many fallacies and untenable statements offered by Pemandu in its own defense. The 11 points are taken up sequentially.
The article begins by a flat denial that the GNI per capita figure for 2009 was deliberately and that it had an intention to mislead the public. The primary attempt at defending the number is that the unrevised GNI figure for 2009 was used in the preparation of the Annual Report issued last month because that was the number used originally at the starting point of Pemandu’ s launch as a bench mark.
This is rather simplistic.
Pemandu appears to be in a state of denial and is offering a rather lame defense. It ignores the fact that professionally, all assessments are normally based on the latest available data.
What Pemandu did in its Report was either unprofessional or an act of incompetence or a deliberate attempt to hoodwink. The effect was to present “feel good” results.
Read the rest of this entry »
3-Day Countdown to 13GE: BN’s Manifesto shows that it is fundamentally incapable of transforming, much less reforming, Malaysia
Despite having more than a month to thoroughly scrutinize the Pakatan Rakyat Manifesto – Pakatan Harap Rakyat – the Barisan Nasional (BN)’s Manifesto, which was launched to great fanfare on the 6th of April, shows that it is a coalition that is fundamentally opposed to and incapable of introducing significant and much needed reforms in the country.
They say that imitation is the sincerest form of flattery.
While we have no problems with the BN trying to incorporate our ideas into their own manifesto, it is laughable to see that even this copying is half-hearted, like many of the so-called transformation initiatives of Prime Minister Datuk Seri Najib Razak.
The BN promises to reduce car prices by 20%-30% but stays absolutely silent on the unfair and opaque system of Approved Permits (AP) allocations that have been given to many BN cronies.
The BN promises to expand the Rapid Bus System to every state but does not allow the state governments or the local authorities to provide their own bus services.
Read the rest of this entry »
Recent financial crises have visited economic calamity upon ordinary citizens in the countries of the East and West alike. Experience tells us that there can be no complacency about a nation’s financial state.
Concerns voiced in various reports and the media call for special attention to Malaysia’s finances and their management. These concerns are:
A record-breaking capital flight out of Malaysia. Financial watchdog Global Financial Integrity (GFI) reported that a total of RM880 billion of funds were illegally transferred out of the country between 2001 and 2010.
A sharply rising trend in government debt. This debt almost doubled from RM274 billion at the beginning of 2008 to RM502 billion at the end of 2012. International Monetary Fund (IMF) statistics expect it to grow by RM277 billion to RM779 billion in 2017.
Incomplete information about the Malaysian government’s full exposure to debt. The official figures for government debt exclude debts that are called contingent liabilities. These include off-balance-sheet borrowings and the debts of banks, government-linked companies and other private-sector enterprises that the government has guaranteed to pay off in the event that these entities default. One estimate of these hidden debts in 2011 placed it at RM117 billion.
Datuk Seri Idris Jala in his article entitled 12 Clear Signs of Success has the chutzpah to make the claim that he believes in numbers and that their proper use and measurement does not result in lies.
It is rather laughable that having staked out this position, he proceeds to use fabricated numerical data in a brazen manner to make claims that do not have a basis and the assertions being made deviate from the truth.
However, he is not alone in spewing false and spurious numbers to befuddle the public. This has indeed been the season in which the nation has been treated to a recitation of false numbers to telltales of success and to make promises and paint mirages.
Pemandu has led the way and carved a niche for itself as the propaganda arm of the Government; and Datuk Idris is now a purveyor of twisted facts to cover up the failings of the Government.
The BN effort started with the Prime Minister claiming in the course of his March 23rd televised interview that per Capita GNI had grown by 49 percentage – and according to him the fastest ever in global terms – between 2009 and 2012.
This audacious claim, despite being challenged, was repeated by Pemandu in its Annual Report.
When further challenged, Datuk Idris was forced into issuing a “correction” citing a figure of 41 percent, further repeated in his article.
Read the rest of this entry »
by Pak Sako
This is the third part of a three-part CPI series on Malaysian debt. The first part, entitled, ‘Investigate Malaysia’s debts now‘ , surveyed the overall debt situation. The second part, entitled, ‘Malaysian government debt to approach RM1 trillion by 2020‘, looked at the trend in government debt.
This part critiques the debt-to-GDP ratio and questions Malaysia’s official debt figures.
An over-optimistic and misleading impression of debt results when the government puts its faith in one number, the debt-to-GDP ratio.
The current government-debt-to-GDP ratio for Malaysia of 53% is assumed as being within safe limits, below the 55% ceiling set by Malaysian policy.
Here it is argued that judging the nation’s debt condition primarily on account of this one indicator is wrong. A critical look at debt is required to understand the real situation and health of the economy. Read the rest of this entry »
Mar 23, 2013
Whether 41 percent or 49 percent, the numbers in the Economic Transformation Programme 2012 annual report is essentially trying to tell us this – Malaysia will reach high income status by 2020.
That gives the impression that the average Malaysian will be bringing home about RM48,000 (or US$15,000) a year by that time.
But will they? Does the average Malaysian feel 41 percent – or even the more modest 24 percent in ringgit terms – richer today compared to 2009? Are their pockets deeper?
The simple answer is no.
So is the government lying to us? Not exactly. Read the rest of this entry »
When first we practise to deceive!
Sir Walter Scott, Marmion, Canto vi. Stanza 17.
Scottish author & novelist (1771 – 1832)
Datuk Seri Idris Jala, CEO of PEMANDU has issued a statement stating that growth of Gross National Income (GNI) per capita in US dollars from 2009 to 2012 has been revised down to 41 percent from 49 percent.
He is reported to have said that the revision arose following the adoption of a new accounting method, rather than a deliberate attempt to fudge numbers.
He pointed out that the change in figures was due to the adoption of the latest version of the United Nations System of National Accounting (SNA 2008) in 2012 which had pushed the GNI per capita up for 2009 from US$6700 to US$7059.
He offered other weak and lame reasons defending the method and the numbers put out by PEMANDU.
Little of what he said cuts much ice. The change in numbers makes little difference. The attribution to an adoption of a new method or international standard has little to do with the nature of the numbers.
He has been caught in a gross deception by applying the concept of GNI to project growth in per capita incomes of individuals. GNI is defined by the UN Statistical Division as: Read the rest of this entry »
by Anas Alam Faizli
The Malaysian Insider
MARCH 20, 2013
MARCH 20 ― “They are simply lazy”
“His father is a Tan Sri”
“He knows someone from the inside”
“I made it purely out of effort; I worked hard to get where I am today”
These are some typical expressions that are sure to be heard in coffee chats, every time the topic of rich and poor is brought up. People have grown easily accustomed to brushing off the topic of inequality as welfarist or socialist.
This happens even amongst supposedly “middle class” Malaysians, not realising that they are in actuality, most likely top income earners and wealth owners. Households earning RM10,000 a month and above already qualify as top 4 per cent Malaysians!
In fact, while partisan voices continue their discourse in the racial imbalance tone, Malaysia has silently migrated into new battles, concerning intra-racial, income, and class-based imbalances.
It is often argued that the poor and the low income earners are plain lazy and do not work hard; that one earns what one deserves. This is not true. Many are simply unlucky, to be born to parents who lack education or skills to escape from the clutches of poverty.
Some were born with disabilities and diseases, while some others live in flood-prone or hazardous places. On the other hand, we have sub-quality undeserving businessmen linked to political patrons, estate and fortune inheritors, and individuals plainly lucky to be placed in lucrative industries with high economic rent. Accusations like laziness then become hardly the issue. The rich can be lazy too! Read the rest of this entry »
Unlike many developing countries, Malaysia had until the last 15 years, avoided deficit funding and the accumulation of high levels of external and internal debt that culminated in debt crises of the type that afflicted Argentina, Mexico and many countries in Sub-Saharan Africa.
The Federal Government followed prudent policies and followed fiscal policies that were viewed favorably. Both Foreign Direct Investment flows and the domestic private sector contributed to growth.
Thus, through the early 1970s and the decade of the 1980s small deficits were recorded, indeed in the early 1990s small surpluses were recorded. The size of the public debt was largely stable and did not exceed RM 100 billion.
However, the 1997 East Asia crisis, triggered by contagion effects of the crisis in Thailand, led to a radical change in fiscal policy. The Federal Government embarked on a pump priming effort to revive the economy.
Many large scale projects were mounted; many heavily indebted crony corporations were bailed out. The public sector surplus of RM 6.6 billion recorded in 1997 evaporated and became a deficit of RM 5 billion in 1998.
Since 1998, despite the recovery, the Barisan Nasional (BN) Government has continued to run deficits ever increasing deficits which peaked under the Prime Ministership of Datuk Seri Najib to RM 47 billion. Read the rest of this entry »
By Ong Kian Ming | 4:56PM Mar 14, 2013
COMMENT Yesterday, March 13, 2013, national news agency Bernama quoted Prime Minister Najib Abdul Razak as saying:
“We have been able to buck the external global economic trend. In the last quarter, we achieved 6.4 percent growth, which indicates the resilience of the national economy.
“When we talk about benefits to the people from 2009 to 2011, our gross national income (GNI) per capita has grown from US$6,670 to US$9,970, roughly about 49 percent. There is no country in the world that has achieved this kind of result.”
Najib said this in the ‘Conversation with the PM’ programme aired by Media Prima group’s TV3 on Tuesday night (March 12).
Where did our prime minister-cum-finance minister get these figures from? I suspect that it’s from none other than Idris Jala (left), the chief executive officer of the Performance Management and Delivery Unit (Pemandu), which comes under the PM’s Department.
Read the rest of this entry »
27-Day Countdown to 13GE – IMF Report Card warns of an austerity scenario for Malaysian economy not too dissimilar to that of several EuroZone countries
The nation is just weeks away from choosing a Government to steer the ship of state.
The upcoming General Election will be momentous and will demand a choice between Barisan Nasional, a coalition that has ruled the nation for almost five and a half decades, and Pakatan Rakyat, an alternate group that offers change and a new direction.
Meaningful choices should ideally be based on full information about the current state of affairs and the alternative visions offered by the two coalitions.
The information on the state of the economy is less than transparent and that which is available is skewed in favour of the incumbent regime. The opposing coalition lacks full access to information.
Under these circumstances, it is necessary to look to alternative independent sources to arrive at objective assessments.
Such an objective and comprehensive assessment is indeed available. The International Monetary Fund (IMF) conducted its Annual Article IV Consultations in Nov –Dec 2012. A report based on the consultations was considered by the IMF’s Board of Executive Directors in late February 2013. The Fund has released the report and posted it on its website. Read the rest of this entry »
28-Day Countdown to 13GE – Najib’s “Alice-in-Wonderland Statistics in his Transformational Malaysian Economy”
I have received an email from a retired international banker from the Malaysian Diaspora, who describes himself as a “Fact-Finder” monitoring the Malaysian economy, sharing his outrage on what he described as Prime Minister Datuk Seri Najib Razak’s “Alice-in-Wonderland Statistics in his Transformational Malaysian Economics” in his hour-long television interview on Tuesday.
I find this email so interesting, perceptive and pertinent that I am reproducing it in full, viz:
” Misuse of Data
The Prime Minister cut a rather sorry figure in his appearance on TV3’s programme entitled ‘Conversation with the PM’ aired on March 12th.
His remarks were a disappointment as he indulged in delivering clichés and ‘feel good’ statements concerning the state of the economy. He missed an opportunity to present a clear a vision of what he stands for. Read the rest of this entry »
— Aspan Alias
The Malaysian Insider
March 14, 2013
14 MAC — Kenyataan Musa Hitam semalam memberikan pencerahan yang sangat baik untuk politik rakyat dan negara. Beliau tidak bersetuju apa yang didakyahkan oleh pimpinan Umno khususnya Dr Mahathir Mohamad yang negara akan bankrap jika Pakatan Rakyat memerintah selepas pilihanraya yang akan datang ini.
Musa berkata Pakatan Rakyat akan bekerja keras untuk memastikan yang negara akan terus mencapai kemajuan dan tidak akan melalaikan tanggungjawab yang buat pertama kali diberikan oleh rakyat terhadap pihak pembangkang.
Musa juga tidak bersetuju dengan politik rasis yang menebal sekarang dan pihak yang memainkan sentimen perkauman itu merupakan permainan poltik bankrap yang sudah tidak relevan lagi buat masa dan zaman ini. Kenyataan Musa ini tentunya bertentangan dengan pandangan Dr Mahathir, seorang pemimpin yang boleh berjalan di atas air itu.
Dr Mahathir yang akhir-akhir ini seperti orang yang dalam ketakutan yang amat sangat itu telah membuat kenyataan-kenyataan yang menghangatkan dengan bermatlamat untuk membina dan meningkatkan sentimen perkauman di negara ini.
Beliau (Mahathir) telah meminta Felda untuk memainkan filem Tanda Putera bagi menaikkan perasaan kebencian orang Melayu terhadap kaum Cina dan ianya tentulah untuk menghalang DAP yang menjadi sasaran cemuhan Mahathir akhir-akhir ini.
Seperti yang saya sebutkan selalu Umno hanya akan kekal berkuasa jika ada perbalahan dan perpecahan. Umno tidak kekal jika rakyat dan negara dalam keadaan aman dan damai. Maka itulah sebabnya Umno sentiasa berusaha untuk meningkatkan perasaan benci-membenci di antara kaum agar parti itu terus menjadi parti pemerintah yang berkemampuan untuk melakukan rasuah secara sistematik. Read the rest of this entry »
by ONG KIAN MING
MARCH 13, 2013
A foreign fund manager asked me this question last month – “What exactly are Malaysians unhappy with?” After all, the country grew by 5.6% in 2012 compared to a lethargic 1.2% for Singapore for the same year. Investment, measured by gross fixed capital formation grew by an astounding 25% in 2012 compared to a lacklustre 10.2% in 2011.
As a proportion of gross domestic product (GDP – sum of goods and services produced in a year), investment was approximately 26% in 2012 compared to only 18% in 2009. Foreign direct investment in 2012 reached RM34.8 billion, a significant improvement on the abysmal RM5.0 billion in 2009.
The government seems to have a clear plan of action in putting the country back on track via the Economic and Government Transformation Plans (ETP and GTP). The shopping malls and hotels are bustling in Kuala Lumpur. New buildings and hotels are sprouting up all around the Klang Valley area.
The LRT and MRT projects will address the congestion problems in the Greater KL area and increase property values and development opportunities around their vicinity. Malaysia also had the 2nd and 3rd largest public listing in the world after Facebook via Felda Global Ventures Holding (FGVH) and IHH Healthcare.
Things seem to be looking pretty good for the country. But why is there still talk of the Barisan Nasional losing power in the upcoming general election? Read the rest of this entry »
29-Day Countdown to 13GE – Najib doth claim too much, that Malaysia is world’s fastest country in GNI per capita growth which is as believable as his boast to make Malaysia “world’s best democracy”
I do not envy in Prime Minister Datuk Seri Najib Razak’s shoes at present as he must continue to put up an external front of supreme confidence that he will not be the last Umno/Barisan Nasional Prime Minister and would even survive a coup d’etat in Umno ala-Abdullah Badawi after the 13GE while internally he must be quaking with gnawing doubts whether he could survive the final countdown for the “life-and-death” test for his political life.
As a result, he doth protest and claim too much.
Yesterday, the TV3 programme “Conversation with the PM” provided another example that the sixth Prime Minister of Malaysia “doth claim too much” when he said:
“And when you talk in terms of benefit for the people, within three years, from 2009 to the end of 2011, our GNI (gross national income) per capita, it grew from US$6,670 to US$9,970. That’s roughly a 49 per cent (increase). There is no country in the world that has achieved that kind of result”.
Najib’s claim to be the fastest country in the world for GNI per capita growth in the three years from 2009 to 2011 is as believable as his other claim to transform Malaysia to be the world’s best democracy, when he could not even stand up to national and international scrutiny for the conduct of a free, fair and clean general elections despite his recent signature of the Transparency International-Malaysia’s Election Integrity Pledge. Instead, Najib is branded internationally as a “false democrat”.
Najib made two false claims in one short assertion last night – for Malaysia’s per capita GNI did not increase by 49 per cent in the three years from 2009 to 2011, and Malaysia is definitely not the world’s fastest country in per capita GNI growth in those three years.
The World Bank website shows the true numbers for Malaysia’s GNI per capita for the relevant period, viz: Read the rest of this entry »
Mar 12, 2013
The present Umno-BN government of Najib Abdul Razak is living on borrowed time. It doesn’t want to admit it but its legitimacy is now totally in question because constitutionally, its full term has expired.
The people’s patience is tested to the limit here by the audacity of a government that goes on ruling without a mandate.
A number of bogus analysts and self-appointed doomsday prophets, especially those driven by very personal agendas, have warned that Malaysia will descend into political and economic chaos in the event of a Pakatan Rakyat victory.
On the other hand, the more genuine and independent observers have expressed greater optimism. For instance, the original ‘Dr Doom’, Prof Roubini, says that our economy will stay robust even with a change in government.
We know that a mandate for change is not limited to the political sphere though it is true that without that mandate, economic management itself will be off to a false start.
When Indonesia made that break from military autocracy to constitutional democracy, much of the focus of the free world was on how its economy would weather the transition.
And in their case, transition would stretch for years and indeed the fruits of that initial process of political upheaval are for all to see.
In the case of the Arab Spring, the major worry remains the lack of clearly defined policies that would set the road map to economic recovery and growth.
They are still finding their way and it won’t be an easy way but that is no excuse for rejecting freedom and democracy.
Certainly, political stability is a key factor, and I might just emphasise the most crucial factor in setting the direction and objectives of economic management. Read the rest of this entry »