Archive for category Economics
Sinking deeper and deeper
Posted by Kit in Budget Debate, Economics, Finance, Financial Scandals on Wednesday, 2 November 2011
By S JAYASANKARAN, KL CORRESPONDENT | 31 Oct 2011
Business Times
MALAYSIA should take heed of the problems – the public anger, the social unrest – posed by the solutions offered to tackle rising sovereign debt in Europe. God forbid that we head that way!
The Auditor-General’s recent report pointed out that Malaysia’s national debt rose 12.3 per cent to over RM407 billion (S$165 billion) in 2010. The amount is equivalent to 53.1 per cent of gross domestic product. It’s the second straight year that the national debt has exceeded 50 per cent.
The figure is a reflection of the spending spree the country went on to mitigate the effects of the 2009 global financial crisis. At its peak that year, the budget deficit rose to 7.6 per cent of GDP, the highest in two decades.
It has since come down to 5.4 per cent of GDP and the government projects that it will decline further to 4.7 per cent of GDP next year. But that may be overly optimistic.
Read the rest of this entry »
Four Nations, Four Lessons
By N. GREGORY MANKIW
The New York Times
October 22, 2011
AS the economy languishes, politicians and pundits are debating what to do next. When we look around the world, it’s hard to find positive role models. But as we search for answers, it is useful to keep in mind those fates that we would like to avoid.
The recent economic histories of four nations are noteworthy: France, Greece, Japan and Zimbabwe. Each illustrates a kind of policy mistake that could, if we are not careful, presage the future of the United States economy. Think of them as the four horsemen of the economic apocalypse.
Let’s start with Zimbabwe. If there were an award for the world’s worst economic policy, it might well have won it several times over the past decade. In particular, in 2008 and 2009, it experienced truly spectacular hyperinflation. Prices rose so fast that the central bank eventually printed 100 trillion-dollar notes for people to carry. The nation has since abandoned using its own currency, but you can still buy one of those notes as a novelty item for about $5 (American, that is).
Some may find it hard to imagine that the United States would ever go down this route. Read the rest of this entry »
Malaysia Losses From Racial Law Exposed
Posted by Kit in Economics, Good Governance, Lim Guan Eng, Penang Government on Thursday, 20 October 2011
By Chong Pooi Koon | Oct 20, 2011
Bloomberg
Lim Guan Eng turned Malaysia’s second-smallest state into the nation’s biggest economic success after he bumped into two National Instruments Corp. (NATI) executives at the local airport in 2008.
Elected in March that year as Penang’s first chief minister from an opposition party in 36 years, Lim was struggling with the prospect of federal funding cuts. He convinced the managers to set up a research and production center in the state, and within two years the former British trading post was Malaysia’s top destination for foreign manufacturing investment.
“The deal was struck very quickly,” said Eugene Cheong, a director at the local unit of the Austin, Texas-based maker of industrial testing and automation equipment.
Read the rest of this entry »
Malaysian confidence dives as global recovery ends, says survey
Posted by Kit in Budget Debate, Economics, Finance on Monday, 17 October 2011
By Lee Wei Lian
The Malaysian Insider
Oct 17, 2011
KUALA LUMPUR, Oct 17 — The largest-ever global survey of finance professionals by the Association of Chartered Certified Accountants (ACCA) shows that all signs of the global economic recovery have disappeared.
The confidence level in Malaysia also deteriorated markedly in the survey as out of 222 finance professionals who responded in Malaysia, only eight per cent reported confidence gains, down from 20 per cent in the last quarter, and 77 per cent believe the global economy is either stagnating or deteriorating compared with 54 per cent.
In terms of the global outlook, three-quarters of the 2,873 professionals who took part in the Global Economic Conditions Survey between August 19 and September 7, 2011 thought global economic conditions were deteriorating or stagnating.
The ACCA’s global business confidence index returned a reading of -34 for the third quarter of 2011, down from -8 in the previous quarter.
It said that based on past observations, a reading lower than -14 should indicate that the developed world is slipping into negative growth. Read the rest of this entry »
Rich world economic malaise to endure into 2012: Reuters poll
Posted by Kit in Budget Debate, Economics, Finance on Friday, 14 October 2011
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. Read the rest of this entry »
IMF trims Asian growth forecasts as risks grow
Posted by Kit in Budget Debate, Economics, Finance on Thursday, 13 October 2011
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. Read the rest of this entry »
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. Read the rest of this entry »
Pakatan Rakyat Budget 2012 (Part 10 of 10)
Posted by Kit in Budget Debate, Economics, Pakatan Rakyat on Wednesday, 5 October 2011
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:
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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;
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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. Read the rest of this entry »
Pakatan Rakyat Budget 2012 (Part 9 of 10)
Posted by Kit in Budget Debate, Economics, Pakatan Rakyat on Wednesday, 5 October 2011
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. Read the rest of this entry »
Pakatan Rakyat Budget 2012 (Part 8 of 10)
Posted by Kit in Budget Debate, Economics, Pakatan Rakyat on Wednesday, 5 October 2011
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:
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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.
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To restructure the Public Complaints Bureau (Biro Pengaduan Awam) into an Ombudsman institution.
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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.
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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. Read the rest of this entry »
Pakatan Rakyat Budget 2012 (Part 7 of 10)
Posted by Kit in Budget Debate, Economics, Pakatan Rakyat on Wednesday, 5 October 2011
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.
Read the rest of this entry »
Pakatan Rakyat Budget 2012 (Part 6 of 10)
Posted by Kit in Budget Debate, Economics, Pakatan Rakyat on Wednesday, 5 October 2011
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.
Read the rest of this entry »
Pakatan Rakyat Budget 2012 (Part 5 of 10)
Posted by Kit in Budget Debate, Economics, Pakatan Rakyat on Tuesday, 4 October 2011
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:
Read the rest of this entry »
Pakatan Rakyat Budget 2012 (Part 4 of 10)
Posted by Kit in Budget Debate, Economics, Pakatan Rakyat on Tuesday, 4 October 2011
3 Malaysia Today
Malaysia, too, has less fiscal options than before in weathering the impending turbulence:
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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;
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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;
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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: Read the rest of this entry »
Pakatan Rakyat Budget 2012 (Part 3 of 10)
Posted by Kit in Budget Debate, Economics, Pakatan Rakyat on Tuesday, 4 October 2011
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:
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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
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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.
Pakatan Rakyat Budget 2012 (Part 2 of 10)
Posted by Kit in Budget Debate, Economics, Pakatan Rakyat on Tuesday, 4 October 2011
CONTENTS
- 1 The Key Thrusts of Belanjawan Kesejahteraan 2012
- 1.1 Opportunities and Dignity for All Malaysians
- 1.2 Sustainability
- 1.3 Empowering Malaysians
- 2 The Global Backdrop
- 3 Malaysia Today
- 4 Policy Highlights
- 4.1 Spending RM220 billion more effectively, while reducing the deficit
- 4.2 Prosperity through higher skills, incomes and opportunities
- 4.3 Subsidy policy to be overhauled: The poor to be uplifted
- 4.4 Immediate Measures to Help Malaysians
- 4.4.1 Senior Malaysian Bonus for the elderly
- 4.4.2 Support for home-makers
- 4.4.3 Eradicating hardcore poverty
Pakatan Rakyat Budget 2012 (Part 1 of 10)
Posted by Kit in Budget Debate, Economics, Pakatan Rakyat on Tuesday, 4 October 2011
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. Read the rest of this entry »
Foreign sell-off, economy top concerns despite reforms push
Posted by Kit in Economics, Elections, Finance, Najib Razak on Monday, 19 September 2011
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. Read the rest of this entry »
After 54 years independence, Malaysia still sufferring in the middle income trap
Posted by Kit in Dr. Chen Man Hin, Economics, globalisation, Najib Razak, NEP on Thursday, 15 September 2011
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.
Read the rest of this entry »
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. Read the rest of this entry »