Archive for category Economics
Prime Minister Najib requires superhuman effort to achieve high income status for the people of Malaysia
Posted by Kit in Economics, Najib Razak on Sunday, 15 November 2009
Media Statement by Dr Chen Man Hin, DAP Life Advisor in Seremban on 14th November 2009
To achieve high income status for the people of malaysia requeires a revolutionary policy and full support from the people.
PM Najib stated that his intention was to raise the present per capita income of US$7,000 to US$17,000 by the year 2020, assuming that the GDP increases on an average of 9% a year.
Later he revised his targets after realising that the targets were unrealistic. His new estimates were a 6% GDP growth annually and achieve per capita income US$13,000 in 2020.
What are the prospects of achieving a pci of US$13,000 by 2020? Dim.
Historically, it would be near impossible. In 1957 at independence, Malaysia enjoyed a pci of about US$500, the second highest in Asia after Japan. In 2008, Malaysia pci was US$7,000. It took 51 years to reach US$7,000. Year 2020 is 11 short years away to reach US$13,000, when it took 51 years to reach US$7,000.
Read the rest of this entry »
2010 Budget: sound and fury without substance (4)
Posted by Kit in Economics, Finance, Parliament on Sunday, 1 November 2009
By S.C.
Key Budget Allocations
The budget allocations listed in the budget speech are indeed astonishing and represent a long litany of projects and allocations, the direct beneficiaries of which appear to be special interests and well connected individuals.
This should be no surprise as the budget has become the chosen means to distribute corporate welfare with a few sops for the public at large. One may well ask why billions more are being channelled to infrastructure at a point in time when the economy is in greater need to strengthen institutions, develop human capital and to widen the safety net programmes to protect the weak and the vulnerable elements of our population. Read the rest of this entry »
2010 Budget: sound and fury without substance (3)
Posted by Kit in Economics, Finance, Parliament on Sunday, 1 November 2009
By S.C.
The Track Record
The Budget for 2010 must be seen against the larger canvass of economic management by the BN Government over the recent past.
It should be recalled that the global Great Recession began in mid 2007 as the sub-prime fiasco in the United States began to unfold. The economic slowdown spread and gained momentum in 2008. As the gathering storm clouds hovered over the horizon, many Governments began to react and take counter recessionary measures.
The Barisan Nasional Government for its part remained in a state of denial. Ministers dismissed with some arrogance the notion that the Malaysian economy would succumb to the global slowdown. They argued rather smugly that Malaysia was immune as it had decoupled from the global economy. Read the rest of this entry »
2010 Budget: sound and fury without substance (2)
Posted by Kit in Economics, Finance, Parliament on Sunday, 1 November 2009
By S.C.
The Macro-Economic Scene
The key economic indicators and assumptions used in the budget formulation are:
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Malaysia economy to grow 2-3 percent in 2010 after a contraction of 3 to 4 percent in the current year.
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Per capita income to increase by 2.5 percent to RM24, 661. This rate of growth is inconsistent with a GDP growth rate of 2 to 3 percent as population growth is in the region of 2.5 percent; this would yield a per capita growth of close to zero
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Budget 2010 allocations total RM191.5 billion, of which RM138.3 billion is for operating expenditure and RM53.2 billion for development expenditure.
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Federal government revenue in 2010 to decline by 8.4 percent to RM148.8 billion despite the tax changes proposed.
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Budget deficit at 5.6 percent of GDP compared with 7.4 percent in 2009.
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Exports will revive to 3.5 percent growth after having fallen by over 23 percent in the first half of 2009; this assumption is dependent on developments globally;
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Private consumption will grow by 2.9 percent as against 0.5 percent in the current year
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Inflation will remain low
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Unemployment will not exceed 4 percent
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Private investment will grow by 3.4 percent in 2010
The 2010 Budget: sound and fury without substance
Posted by Kit in Economics, Finance, Parliament on Sunday, 1 November 2009
By S.C.
Introduction
The maiden Budget unveiled by the Prime Minister was anticipated with great expectations of a new direction to move the Malaysian economy on to a new path of growth and revival through the adoption of policy reforms designed to restore competitiveness. These expectations, sadly, were not met.
The 40-odd-page two-hour long Budget speech delivered by the Prime Minister in Parliament was a great disappointment. It contained little by way of a bold policy agenda or a set of much needed measures to begin to restore the Malaysian economy to health.
The speech was long on rhetorical assertions and a litany of expenditure proposals; it contained little in the way of actual innovative thinking despite the Prime Minister’s resolve to adopt a new model for the economy “based on innovation, creativity and value-added activities”.
There were hardly any credible steps outlined as to how the unsustainable record high fiscal deficit of 7.4 percent recorded in 2009 was to be slashed. The broad assertion that the reduction of the deficit to 5.6 percent was to be largely achieved via proposed expenditure cuts in the year ahead. The main spending cuts are to come from reduced “operating expenditure”, lower food and fuel subsidies, and less money for development spending. Yet the expenditure proposals for 2010 allocate 11 per cent more money for the Government wage bill in 2010 for the nearly one million workers on the payroll which account for almost 10 per cent of the work force and constitute a mainstay of the BN government’s support. Read the rest of this entry »
End NEP which has trapped Malaysia in middle-income group instead of becoming a high-income economy
Posted by Kit in Budget Debate, Economics, NEP, Parliament on Friday, 30 October 2009
In his first budget, the 2010 budget, presented to Parliament last Friday, the Prime Minister and Finance Minister, Datuk Seri Najib Razak claimed that he is laying the foundation for the development of a new economic model to become a high-income economy.
He stressed that the new economic model must be based on innovation, creativity and high-value added activities so that Malaysian can remain relevant in a competitive global economy.
Najib announced that his government “will transform Malaysia through a comprehensive innovation process, comprising innovation in public and private sector governance, societal innovation, urban innovation, rural innovation, corporate innovation, industrial innovation, education innovation, healthcare innovation, transport innovation, social safety net innovation and branding innovation.”
Read the rest of this entry »
End the 50-year New Economic Policy if Najib wants to lay claim to innovation or shift to a new economic model as the NEP had stunted Malaysia’s economic growth and prevented the nation from becoming a high-income country
Posted by Kit in Budget Debate, Economics, Education on Sunday, 25 October 2009
In his first budget, the 2010 budget, presented to Parliament on Friday, the Prime Minister and Finance Minister, Datuk Seri Najib Razak claimed that he is laying the foundation for the development of a new economic model to become a high-income economy.
He stressed that the new economic model must be based on innovation, creativity and high-value added activities so that Malaysian can remain relevant in a competitive global economy.
Najib announced that his government “will transform Malaysia through a comprehensive innovation process, comprising innovation in public and private sector governance, societal innovation, urban innovation, rural innovation, corporate innovation, industrial innovation, education innovation, healthcare innovation, transport innovation, social safety net innovation and branding innovation.”
So far, Najib’s most successful innovation in his First Two Hundred Days is “branding innovation”, as never before has a Prime Minister’s slogan, “1Malaysia”, been promoted so blatantly, not only during by-elections but there is even a 1Malaysia Toilet in Terengganu, Read the rest of this entry »
Malaysian Economic Democratisation – Extract 6
Posted by Kit in Budget Debate, DAP, Economics, Finance on Thursday, 8 October 2009
(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)
9. Thrust II: Rakyat First – Restructuring and Reallocation
9.3 Unfair Public Contracts
The Malaysian economic landscape is littered with many one-sided contracts and concessions under which private entrepreneurs reap supernormal profits while the government or government-linked companies continue to bear considerable business risk. Major privatisation exercises were conducted and concessions granted in manners that were not open, accountable and transparent through public tenders.
An Unfair Public Contracts Act will be enacted and an independent public commission to be known as the Public Contracts Commission will be formed to review such lopsided concessions that are deemed to be against the public interest.
Constitutional and corporate lawyer Tommy Thomas if of the view that such an act will be constitutional as it will be similar in nature to the Land Acquisition Act 1960 which allows the government to take over any private land for public purpose, provided adequate compensation is paid.
Such legislation is not unique to Malaysia. Eminent domain (United of States of America), compulsory purchase (United Kingdom, New Zealand, Ireland), resumption/compulsory acquisition (Australia) and expropriation (South Africa and Canada’s common law system) are examples of the inherent power of the state to seize or expropriate private property without the owners’s consent provided, of course, Read the rest of this entry »
Malaysian Economic Democratisation – Extract 5
(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)
9. Thrust II: Rakyat First – Restructuring and Reallocation
9.2 Managing Oil Wealth
Over-reliance on Oil and Gas
Malaysia is blessed with abundant natural resources. In particular, we are thankful that the country is rich in oil and gas, which created Malaysia’s sole representative in the Fortune 500, Petroliam Nasional Berhad (PETRONAS). Since the incorporation of PETRONAS Group 35 years ago, the Group has paid RM471 billion to the Government, in addition to bearing a cumulative gas subsidy of RM97 billion.
In the most recent financial year ending March 2009, PETRONAS achieved profit before tax of RM89.1 billion amidst the challenging economic backdrop. Of greatest importance was the fact that PETRONAS contributed RM61.6 billion to our national coffers in taxes, royalties, dividends and export duties last year. Contribution from PETRONAS Group alone was budgeted to make up some 46% of the Federal Government revenue for 2008. This represents a steep increase from approximately 20% in 2004. The heavier reliance on oil and gas industry for Malaysia over the years signals an alarming trend.
Despite the fact that the total Malaysia hydrocarbon reserves has increased marginally from 20.13 billion barrels of oil equivalent (boe) at January 2008 to 20.18 billion boe at January 2009, and the reserves replacement ratio (RRR) has improved from 0.9 times to 1.1 times during the same period, our reserves will inevitably run dry at some point. During an interview with Bernama in June 2008, the president and chief executive officer of PETRONAS Group, Tan Sri Hassan Marican said that “we will continue to produce for another 20 years or so.” In more immediate terms, “Malaysia will become a net importer when its domestic consumption, growing at six percent per annum, is expected to overtake national production in 2011.”
Read the rest of this entry »
Malaysian Economic Democratisation – Extract 4
Posted by Kit in Budget Debate, DAP, Economics, Finance on Thursday, 8 October 2009
(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)
8. Thrust I: Economic Democratisation – Fiscal Decentralisation
8.2 Fiscal decentralisation policies
Other countries, such as Canada, Spain, and the UK have been moving in the opposite direction recently compared to Malaysia, by increasing decentralisation. Nearer to home, China and Indonesia have also successfully decentralised much of their financial and economic decision-making process. Even smaller countries such as Switzerland and Belgium have developed forms of fiscal federalism. To ensure that Malaysia is able to tap into the sizeable latent potential benefits arising from the political accountability, economic efficiency and economic growth, DAP proposes that states are granted greater control over their finances.
8.2.1 Tax revenue sharing agreements
It is proposed that the federal government enter into tax revenue sharing agreements with states so that there is a stronger link between a state’s performance and its revenue share. 20% of individual and corporate income taxes collected in a state, as determined by the residence of the taxpayer and location of the establishment, will become the state’s entitlement. Income taxes will continue to be collected by the federal government using the existing infrastructure, but the states’ portion will be distributed back to the states for each financial year. This is the system which has been adopted by Germany.
Read the rest of this entry »
Malaysian Economic Democratisation – Extract 3
Posted by Kit in Budget Debate, DAP, Economics, Finance on Thursday, 8 October 2009
(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)
8. Thrust I: Economic Democratisation – Fiscal Decentralisation
8.1 Greater economic efficiency and political accountability
Many countries have pursued fiscal federalism and have devolved or are devolving more power to state and local governments. China and Indonesia’s recent economic success has also been linked with the decentralisation of economic decision-making. In the UK, the Calman Commission has recommended that Scotland be given greater tax-varying powers in order to further improve their devolution process. This is largely because of the economic efficiency and accountability arguments.
Certain areas of expenditure responsibilities should be decentralised because states and local governments are better placed to tailor their programmes to local needs. For example, state governments are more likely than the central government to know their region’s comparative advantage and hence promote investment initiatives accordingly. In order to decentralise expenditure, revenue must also be shared with states. Instead of being dependent on the federal government spending directly in the states, states would be able to implement their own programmes encouraging tourism, SMEs and industry. In this case, when the 13 states are unshackled in their courting of investment projects with their tailored policies, it is very likely that more and better investments will be attracted and made.
Read the rest of this entry »
Malaysian Economic Democratisation – Extract 2
Posted by Kit in Budget Debate, DAP, Economics, Finance on Thursday, 8 October 2009
(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)
5. Key Policy Highlights
Based on the 3 key thrusts outlined above to achieve greater economic democratisation via fiscal decentralisation, to place rakyat first with restructuring and reallocation, and to empower Malaysians through economic capacity building, the key policy measures proposed include:
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Tax revenue sharing agreements where 20% of individual and corporate income taxes collected in a state will become the state’s entitlement. For Selangor and Penang, this revenue sharing agreement would entitle them to approximately RM 3.2 billion and RM 500 million respectively. An equalisation and development grants formula based on a function of population, poverty, area development, cost, human development and gross revenue per capita indices will also be given to ensure that poorer states do not lose out.
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States will be given the rights to borrow up to a maximum of 50% of their annual ownsource revenue, which is revenue raised directly by the state governments.
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We will set up a fund of RM 400 million to provide grants to state governments to reinstate local council elections, conduct delineation studies, hold trainings and promote awareness via publicity and education campaigns after amending the Housing & Local Government Act.
Malaysian Economic Democratisation
Posted by Kit in Budget Debate, DAP, Economics, Finance on Wednesday, 7 October 2009
(Extracts from DAP Alternative Budget 2010 launched on 7th October 2009)
4. Budget Objectives
To meet the challenges of improving Malaysian global economic competitiveness while addressing the growing rich-poor disparity in Malaysia and being mindful of the fiscal constraints and harnessing our oil resources effectively, the DAP Budget 2010 is themed “Malaysian Economic Democratisation”.
The goals of economic democratisation is to ensure that public funds and expenditure by the government will be more effectively and efficiently spent in accordance to the needs of the people, ensure that public projects are structured in mechanisms which will benefit the rakyat as opposed to politically-connected operators as well as enabling Malaysians to achieve greater economic freedom.
The process of “economic democratisation” will hence focus on 3 key thrusts, that are:
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Economic Democratision – Fiscal Decentralisation
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Rakyat First – Restructuring & Reallocation
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Empowerment & Enablement – Capacity Building
DAP Alternative Budget 2010
Posted by Kit in Budget Debate, DAP, Economics, Finance on Wednesday, 7 October 2009
The DAP Alternative National Budget 2010 marks the progress the Party has made in the field of economic policy making, and our readiness to assume the role of a governing party in the Federal Government as and when such opportunities arise in the near future.
Our first Alternative National Budget was launch on the 5th September 2007 for the year 2008, before the last historic general elections where Pakatan Rakyat denied the Barisan Nasional two-third majority in the parliament, and winning government in 5 Malaysian states. This new Alternative National Budget 2010 picks up from where we left off in 2007, enhancing our proposed economic policies with stronger strategies and proposals based on further in depth research and analysis.
As Malaysia face one of the most challenging economic period in times of uncertain global demand, it is critical that the Malaysian government takes decisive actions to spur the economy and ensure that we will not only recover from this recession, but also emerge stronger and more competitive than we were before the onset of the recession. However, a review of the Barisan Nasional (BN) government’s actions to date coupled with its track record over the past 12 years paints a less than optimistic picture.
At a time when the economy is faltering globally, is exactly the time for the government to be pump-priming to boost domestic demand and competitiveness. However, despite the urgent need to boost government expenditure, the BN government is now finding out the hard way that they have in essence, run out of money to spend and are struggling to contain and maintain the high and escalating cost of government. Read the rest of this entry »
The cultural logic of Najibo-nomics
Posted by Kit in Azly Rahman, Economics, Najib Razak on Tuesday, 29 September 2009
By Azly Rahman
Fashionable it may seem to credit this or that “economic miracle” episode to this or that country to the name of its leader, economist, dictator, emperor, etc. – the larger picture of the historical march of “freakonomics” is neglected.
Freakonomics is what the global society was plagued with beginning with the American sub-prime-inspired crisis; a breakdown of the world’s casino-capitalist system.
Fashionable it may seem to cite this or that case-study to a proposed “Harvard” study, just like calling a university “Harvard of the East” or “Princeton of the Peripheries” or “Oxford of the Outbacks” or even “Cambridge of the Caribbean” – it misses the point of what and how casino capitalism works.
It misses the point that the world is undergoing yet another wave of perpetual revolution in the field of economic thinking.
Malaysians are into this fashionable game of assigning this or that terminology to this or that epoch of “economic cultural depression and how these are cured”.
Read the rest of this entry »
Vision 2020…not bloody likely!
Posted by Kit in Economics, Hussein Hamid on Thursday, 3 September 2009
Mahathir unveiled the Vision of 2020 plan for Malaysia in 1991. Malaysia was to become an industrialized nation and be considered a high-income economy. Najib refined (that is double speak to mean ‘no can do lah’) that vision: “It is clear that our Vision 2020 objective has to be refined to remain viable,” Najib said. “Being richer alone does not define a developed nation. There are important social and quality-of-life measurements that must be factored in when considering our objectives and successes.” Malaysia needs to “redefine and recalibrate” how and when it will achieve Vision 2020, Najib told reporters after the speech. That doesn’t necessarily mean a change in the timeline, he said.
I would have agreed with him in principal had he not put in the “that does not necessarily mean a change in the timeline” proviso. I am no economist but let us just use common sense to look at realities.
Let us look at the differences between salaries earned, the cost of a vehicle and a house between 1973 and 2009.
| YEAR | increase | ||
| 1973 | 2009 | ||
| 1.3 liter Japanese Car | 7,000 | 60,000 | 8.5 |
| Double Story House | 45,000 | 300,000 | 6.6 |
| Engineer Salary | 1,000 | 2,000 | 2 |
Affirmative Action Spurs Asian Debate
By JAMES HOOKWAY | The Wall Street Journal
KUALA LUMPUR, Malaysia — Tony Fernandes, the chief executive of Malaysia’s upstart AirAsia airline, seldom shies away from a fight.
A former executive at Time Warner Inc.’s music division, Mr. Fernandes bought the debt-laden carrier in 2001 for 27 cents and turned it into Asia’s biggest budget airline with $754 million in annual revenues. It hasn’t been easy. To expand AirAsia Bhd., he’s battled reluctant governments for landing rights and routes and has endured price wars with regional competitors.
Now, as Mr. Fernandes pushes to build a new low-cost global hub and expand into Europe, Australia and the U.S., he is running into a tenet of modern Malaysia: affirmative action. Malaysia’s political leaders prefer to see big business such as airports in the hands of the ethnic-Malay majority, and often that means government control.
“A lot of Malaysians are proud of what AirAsia has achieved,” says Mr. Fernandes, a 45-year-old Malaysian of Indian descent. But successes such as his, he believes, are outnumbered by the economic problems created by the affirmative action system. “It’s a very Jekyll-and-Hyde situation here.”
Read the rest of this entry »
Reforms must be liberal, must promote a competitive and meritocratic society
Posted by Kit in Dr. Chen Man Hin, Economics, Najib Razak, NEP on Sunday, 5 July 2009
By Dr Chen Man Hin, DAP Life Advisor
REFORMS BY PRIME MINISTER NAJIB RAZAK ARE NOT LIBERAL OR MODERN ENOUGH TO PROPEL MALAYSIA TO BE COMPETITIVE TO MEET THE CHALLENGES OF A GLOBAL WORLD
PM NAJIB RAZAK have introduced a series of reforms in an attempt to transform Malaysia to a high income country. He has slimmed down the NEP by reducing the 30% bumiputra equity quota to 12.5%. He has also curbed the powers of the Foreign Investment Committee and substituted it with a smaller committee.
To reassure the bumiputras, he has retained the 30% bumiputra equity target, but will use different modes to achieve the objective.
It is a pity that the PM has not understood why the 40 year old NEP has failed to help poor Malaysians, whether Malays, Chinese or Indians. The average poor Malay household only earn about RM3,000 per household or only RM500 per person (in a family of 5). Admittedly, the NEP enriched Umno cronies who became obscenely rich, while the Malays in rural areas are still mired in poverty.
PM NAJIB SHOULD LEARN FROM THE NEP EXPERIENCE
The 40 year old NEP slowed down economic growth since it was implemented in 1971. In 1957 at independence, Malaysia had the second highest per capita income (PCI) in Asia, after Japan. The World Bank has statistics that showed the per capita income slowed down since 1971, and has fallen behind S Korea, Taiwan, Hong Kong and Singapore. In 2008, Malaysia has a PCI of US$6,000, while S Korea has US$19,000, Taiwan US$17,000, Hong Kong US$30,000 and Singapore US$34,000.
Read the rest of this entry »
Umno must abandon old politics and work together with Singapore to bring about prosperity and progress for Malaysia and Singapore
Posted by Kit in Dr. Chen Man Hin, Economics, Foreign, UMNO on Thursday, 18 June 2009
By Dr Chen Man Hin, DAP Life Advisor
PM Najib wants more development for Johore and Malaysia by improving relationships with Singapore. His proposal to build a third bridge to link South East Johore with Changi of Singapore was meant to bring economic development for South East Johore and Singapore.
Umno insisted that selling land to Singapore was akin to giving up Malaysia’s sovereignty. This is ridiculous.
Umno should be aware that large quantities of sand and quarry stone have been sold to Singapore for many years. Yet we have not lost our sovereignty.
Umno must realise that the rural population of South Johore – in particular both South East and South West Johore are still quite poor Read the rest of this entry »
Najib’s two RM67 billion economic stimulus packages are both failures – forecast of 3.5% GDP growth in 2009 ending up in Malaysian economy shrinking by 4-5 per cent
Posted by Kit in Economics, Education, Najib Razak, nation building on Sunday, 14 June 2009
Datuk Seri Najib Razak is nearing his first two-and-a-half months as the new Prime Minister in Malaysia, but he does not seem to be able to do anything right, as he is still dogged by a deepening crisis of credibility, integrity and legitimacy of his premiership.
This is why Najib should be brave enough to cut the Gordian Knot of this crisis of confidence and ask for a vote of confidence as the first item of parliamentary agenda when Parliament reconvenes on Monday.
Whether on the political, economic, educational or nation-building front, Najib has still to deliver his first accomplishment.
Politically, Najib inflicted on himself a deep and grievous wound in orchestrating the unethical, undemocratic, illegal and unconstitutional power grab in Perak.
Economically, Najib’s two RM67 billion economic stimulus packages are both failures as evident by the downward revision of 3.5% GDP growth in 2009 in the first RM7 billion package last November to the current estimate that Malaysian economy will shrink by 4-5 per cent. Read the rest of this entry »
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