Archive for October 12th, 2011

Malaysia’s Old Economic Model

The government still offers handouts instead of reforms to woo voters.

Wall Street Journal
12th Oct 2011

Malaysian Prime Minister Najib Razak has unveiled a budget full of freebies designed to win over voters in the next general election, expected in the next six months. In the process, he is dashing expectations of economic reforms needed to promote growth.

This contrasts with the political reforms Mr. Najib announced last month. A promised overhaul of the country’s colonial-era legal code would guarantee political and civil freedoms long denied to Malaysians.

Mr. Najib seems to have thought of a handout for nearly everyone in 2012. The country’s 1.3 million civil servants will see salaries and pensions rise, in many cases by as much as 30%; households earning less than 3,000 ringgit ($960) a month will receive one-off payments of 500 ringgit; parents will find many school fees abolished or reduced. Then there are the taxi drivers who get fat tax exemptions. Read the rest of this entry »


Recession risk high and rising, says RHB

By Lee Wei Lian
The Malaysian Insider
Oct 12, 2011

KUALA LUMPUR, Oct 12 — Malaysia’s economic growth could slow to just 3.6 per cent next year from a projected 4.3 per cent this year due to the increasing risk of a double dip global recession, said the RHB Research Institute.

The RHB unit’s growth projection issued yesterday is significantly lower than Prime Minister Datuk Seri Najib Razak’s forecast of five to six per cent growth for 2012 in his proposed RM232 billion Budget 2012 tabled last Friday.

The research house said that the risk of a double-dip global recession is high and rising as both the US and Europe cannot withstand another shock although a recession could be averted if leaders in both continents act fast enough to contain the debt crises and avert a contagion that could lead to a complete meltdown in confidence.

It also expected businesses to cut spending in view of rising uncertainties although some growth will come from the implementation of the Economic Transformation Programme (ETP).

Private investment growth is projected to soften further to 4.6 per cent in 2012, after slowing to an estimated 5.7 per cent for 2011, the report added.

Exports, meanwhile, are expected to grow at just 1.1 per cent compared to 3.4 per cent this year due to dampened foreign demand for electronics and electrical items.

Domestic demand is projected to grow at a slower pace of 5.1 per cent in 2012, compared with an estimated 5.8 per cent for 2011.

RHB said, however, that consumer spending is expected to remain “reasonably resilient” and grow at around 5.3 per cent in 2012, compared with 6.0 per cent for 2011, given high savings, rising consumerism and an increase in salary.

Most research houses have lowered their 2012 growth projections for Malaysia despite Najib’s optimism in the Budget proposals, which critics have say is primed for the next general election that must be called by early 2013. Read the rest of this entry »