Hornbill Unleashed

August 18, 2012

Malaysia likely to be a two-speed economy, say analysts

Filed under: Politics — Hornbill Unleashed @ 12:00 AM
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Lee Wei Lian

Malaysia’s surprisingly strong second-quarter economic growth despite weakening exports was largely due to the buffer of ongoing construction projects and increased spending attributed to civil servant salary hikes and government cash handouts, say economists, which could point to uneven growth in the months ahead.

Malaysia’s firm Gross Domestic Product (GDP) performance of 5.4 per cent growth stood in sharp contrast to externally-driven economies such as

Singapore which grew only 1.9 per cent in the second quarter as global uncertainties continued to depress demand in Western economies.

File photo of a container yard at North Port in Port Klang. outside Kuala Lumpur January 8, 2009.Net exports slumped by 36.2 per cent during the second quarter of the year. — Reuters pic

While domestic demand growth in the country accelerated to 13.8 per cent in the second quarter from 9.7 per cent in the first, net exports slumped by 36.2 per cent during the same period.

“The economy is showing a diverging trend between the domestic and external sectors,” said Maybank Investment Bank chief economist Suhaimi Ilias.

He noted that the leading indicators for the manufacturing sector was “not good”, which was a tell-tale sign that manufacturers were not ramping up production.

Suhaimi said however that while the government wanted to rebalance the economy to be more domestic driven, it was important to keep leveraging growth opportunities abroad.

“We are well positioned to benefit from regionalisation and globalisation,” he said. “There is an advantage to keeping the door open and we can have the best of both worlds.”

The economist added that whether Malaysia could successfully make the leap to a domestic-driven economy also hinged on whether it could achieve the ambitions of becoming a high-income nation.

RAM Ratings chief economist Yeah Kim Leng said that the domestic consumption growth could continue as long as there were no major shocks to the employment market or any sharp corrections to asset prices which tended to bring about a wealth effect and encouraged spending.

“Our consumers will continue to spend although consumer sentiments have edged lower,” he said.

Citi Research said in a report that the strong support provided by domestic demand, underpinned by activities in both the private and public sectors, has ensured higher growth amidst the challenging global environment.

“This trend is expected to be sustained going forward, although downside risks emanating from external developments remain,” said Citi.

UOB, meanwhile, upgraded its forecast for Malaysia’s economic growth to five per cent from 4.3 per cent, thanks to the “exceptional” second-quarter performance.

“Nonetheless, risks of global weakness persisting into 2013 and a high base effect could dampen the growth rate next year,” it said in a report.

The government had hiked civil servant pay by up to 13 per cent in March which affected some 1.4 million public sector employees.

The monthly cost of living allowance was also increased by RM50.

Several large construction projects are also under way, including the RM4.6 billion Sabah-Sarawak gas pipeline, the RM4.5 billion second Penang bridge, the RM7.7 billion LRT extension project and RM5 billion Janamanjung power plant.

More mega projects are also in their beginning stages which could further bolster the construction sector in the months ahead including the new Klang Valley MRT which has been estimated to cost at least RM20 billion, a proposed high-speed rail link to Singapore and the RM60 billion RAPID petrochemical complex in south Johor being spearheaded by Petronas.

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3 Comments »

  1. YOU CAN QUOTE WHATEVER FIGURES ABOUT GROWTH ! TO US LAYMAN , FIGURES CAN BE MANIPULATED TO SHOW GOOD REPORT. WHAT WE CANNOT UNDERSTAND IS WHY WITH THE SAME AMOUNT OF MONEY WE CAN NOW ONLY BUY LESSER THINGS. DON’T TALK ABOUT GETTING MORE PAY AND THINGS LIKE THAT. WE PRIVATE SECTOR WORKERS DON’T GET ALL THOSE SPECIAL INCREASED GAJI FROM THE GOVERNMENT. YOUR FEEL GOOD GROWTH FIGURES DOESN’T HELP US IN OUR DAILY NEEDS. INSTEAD WE ARE BLEEDING TO DEATH SLOWLY.

    Comment by gagojackman — August 19, 2012 @ 2:12 PM | Reply

  2. Remember the Idris Jala’s gloom economic prediction only to change his tune slowly two years later…

    Very sad to see Idris Jala being changed by UMNO instead of trying to change UMNO’s way of running (or looting) a nation economy…

    Who-Changed-Who is the game today

    So you wanna jump inside Tong Taik BN hoping to clean it but you’ll get Taik BN instead….
    ____________________________

    RPK said:
    “…My Mecca trip and the meeting with Ustaz Fadzil were not long after Anwar Ibrahim joined Umno in 1982. Ustaz Fadzil and I spent hours talking into the wee hours of the morning about politics, Islam, and the ‘betrayal’ by Anwar Ibrahim. Surprisingly, Ustaz Fadzil was more tolerant about what I viewed as Anwar’s betrayal. Ustaz Fadzil said that there are many ways to fight…
    …Some have to fight from the outside and some from the inside. And while we may want to fight from the outside, Anwar has chosen to fight from the inside. So we must give him the benefit of the doubt that he sincerely joined Umno to change Umno from the inside…
    …Ustaz Hadi and Mustafa were not that convinced, though. You can’t jump into the tong taik to clean the shit from the inside, they argued. Instead of cleaning the shit, you will get shit on you. Anwar will never be able to change Umno, they said. Instead, Umno will change him…”
    ———————————————————————–
    62 years and years well spent
    Malaysia Today, Friday, 30 March 2012

    Maybe this is a dream, and a dream that can never come true. However, as the late Tun Ghafar said, we all must have dreams. Only dead people no longer have dreams, said Tun Ghafar. As long as are still alive then we shall certainly have dreams, Tun Ghafar argued. Martin Luther King Jr. had a dream at a time when dogs had a higher status than African-Americans. And, today, that dream eventually saw a non-white become the President of the United States. Is it wrong, therefore, to dream of a Chinese Prime Minister of Malaysia?

    NO HOLDS BARRED

    Raja Petra Kamarudin

    Another weekend will soon be upon us — a week gone and a week closer to our graves. Friends have told me that my articles of late have been very morbid. Actually, thinking about death remind us about the journey we have travelled and what awaits us at the end of that journey. It is good to reflect on whether we have achieved anything or whether we have wasted our entire life.

    My first 21 years were wasted in trying to get an education. Yes, 21 good years wasted sitting in a boring classroom when I could have learned more on the streets of Kuala Lumpur. However, it was not a total loss. At age 11, I got caught up in the 1960s Revolution. Today, that era is known as The Sixties. It was the era when changes swept the world. I lived through that era. I was part of it. I experienced it. And that is probably why the spirit of change flows through my veins.

    We had the Vietnam War. We had Woodstock. We had the Bay of Pigs invasion in Cuba. We had the Cuban Missile Crisis. We had Marilyn Monroe and President Kennedy who brought glamour to the White House. We had Muhammad Ali who brought glamour to boxing and Islam and who was arrested for refusing to fight in the Vietnam War. We had the anti-Vietnam War university student protests in the hundreds of thousands in the US, France, Germany and Italy. We had the India-Pakistan War. We had the Six Days War between the Arabs and Israel. We had the Cultural Revolution in China. We had the North Ireland conflict. We had Gay Rights Movements springing up all over the world, the result of the Stonewall riots in the Greenwich Village neighbourhood of New York City. We had Martin Luther King Jr.’s “I Have a Dream” speech in Washington. We had the Civil Rights Act of 1964 signed into law by President Lyndon B. Johnson. We had the March on Washington. We had Martin Luther King Jr.’s famous “Letter from Birmingham Jail”. We had the construction of the Berlin Wall. We had British Prime Minister Harold Macmillan deliver his “Wind of Change” speech. We had the assassinations of President Kennedy, Robert Kennedy, Vietnam President Ngo Dinh Diem, Malcolm X, Martin Luther King Jr., and many more all over the world. We had the Hells Angels in the US. We had the Rockers in England. We had the Mersey side music revolution in Liverpool. We had Jane Fonda, Peter Fonda, Janis Joplin, Jimi Hendix, Joe Cocker, The Beatles, The Rolling Stones, Jethro Tull, The Who, Jefferson Airplane, Uriah Heep, Grand Funk, Cream, Crosby, Stills, Nash & Young, Bob Dylan, Donovan, Led Zeppelin, The Byrds, The Moody Blues, Procol Harum, Bob Marley, Santana, Joan Baez, Ravi Shankar, Maharishi Mahesh Yogi, Yoko Ono, and many, many more.

    Phew, my brain is bursting just trying to remember every significant event and person of the 1960s. I think I just managed to scratch the surface with my list above. Closer to home, we had the Pudu Jail demonstration and the first time I ever experienced the pain of tear gas (yeap, I was there). We had the demonstration in front of the USIS where one chap was shot dead. We saw Umno almost brought down. And, of course, we had May 13.

    The 1960s was also when I met the first love of my life. Actually, to be honest, I had four loves in my life. The first was my wife Marina, who I met when she was 14 and I 17, and the other three were my Honda 350, Honda 450 and Yamaha 650 — not necessarily in that order of priority.

    THE FOUR LOVES OF MY LIFE

    The 1960s certainly moulded me into what I am today. Okay, I admit, I did not mould into a perfect human being. I mean, when I transferred my education from the classroom to the streets of Kuala Lumpur, I discovered that the Long Fu Tong was more exciting than the rugby team. I discovered that fistfights solved arguments better than debates and gang fights are more fun than track and field events. I discovered that if you can’t avoid a bike crash then smile as you go under and go out in style — I had 12 bike crashes in the 1960s and lost as many comrades due to bike crashes, all spectacular, I must add. Further to that, about ten or so comrades were murdered in gangland wars and ambushes.

    I really don’t know how I survived the 1960s when, with my lifestyle, the odds of living past 21 were very slim. Anyway, enough talk about the events of the 1960s. Let’s move to the 1970s. That was when my father died and I was forced to wise up to the reality that life is not just about partying, fighting and racing at breakneck speed along Jalan Tuanku Abdul Rahman. With my father now gone I had to go out and earn a living and the following year Marina and I got married. Two years later, we moved to Kuala Terengganu to start our own business. And that was when my life changed — not sure whether for the better, though.

    In Kuala Terengganu, I ‘discovered’ Islam and almost immediately became a Muslim fundamentalist. I aspired to see Malaysia turned into an Islamic State. I became the chairman of our local mosque in Kuala Ibai (I brought Bernard Khoo, Haris Ibrahim and the rest of the gang to visit that mosque in 2008 during the Kuala Terengganu by-election). I participated in the anti-Saudi-anti-American demonstration in Mecca. And, for the first time, I met the late Ustaz Fadzil Noor, the President of PAS (this was in Mecca together with Ustaz Hadi Awang, Mustafa Ali and a couple of other PAS leaders).

    My Mecca trip and the meeting with Ustaz Fadzil were not long after Anwar Ibrahim joined Umno in 1982. Ustaz Fadzil and I spent hours talking into the wee hours of the morning about politics, Islam, and the ‘betrayal’ by Anwar Ibrahim. Surprisingly, Ustaz Fadzil was more tolerant about what I viewed as Anwar’s betrayal. Ustaz Fadzil said that there are many ways to fight. Some have to fight from the outside and some from the inside. And while we may want to fight from the outside, Anwar has chosen to fight from the inside. So we must give him the benefit of the doubt that he sincerely joined Umno to change Umno from the inside.

    Ustaz Hadi and Mustafa were not that convinced, though. You can’t jump into the tong taik to clean the shit from the inside, they argued. Instead of cleaning the shit, you will get shit on you. Anwar will never be able to change Umno, they said. Instead, Umno will change him. I could see why Ustaz Hadi and Mustafa were considered the ‘Young Turks’ while Ustaz Fadzil was perceived as the diplomat.

    Nevertheless, I had tremendous respect for Ustaz Fadzil and listened to what he said. Hence, as Ustaz Fadzil suggested, I was prepared to give Anwar the benefit of the doubt, and although I was with PAS and he with Umno, I supported him and campaigned for him when he contested the Umno Youth leadership. Actually there were three contests in all — twice against Suhaimi Kamaruddin and once against Syed Hamid Albar. Then, in 1993, Anwar challenged Tun Ghafar Baba for the Umno Deputy Presidency. After ten years of supporting Anwar, I decided to walk away. I felt it was wrong for Anwar to oust Ghafar. Our struggle was not about power but to try to change Umno, from the inside as what we were told. Now it appeared like it was all about seeking power.

    The rest of my story has been told many times before so maybe I do not need to repeat it. Suffice to say, I kept searching for the right platform to seek change. The 1960s was a different era for me. It was an era of challenging authority, of opposing the establishment, the age of protest. The 1970s was about Islam. The 1980s was about making money and to hell with the world. The 1990s was about reforms and about seeing change in Malaysia (yes, we started our fight even before Anwar was kicked out of Umno and jailed in 1998). The 2000s was about challenging Umno and Barisan Nasional and about seeing a strong opposition and the emergence of a two-party system.

    So now we come to the 2010s. What is the struggle of the 2010s to me? The 2010s is about peoples’ power. It is about taking back the fight for change from the hands of the politicians and giving it back to the people. It is about bringing the 2010s back to the era of the 1960s when the people made a difference and the people were that platform for change.

    Maybe this is a dream, and a dream that can never come true. However, as the late Tun Ghafar said, we all must have dreams. Only dead people no longer have dreams, said Tun Ghafar. As long as are still alive then we shall certainly have dreams, Tun Ghafar argued. Martin Luther King Jr. had a dream at a time when dogs had a higher status than African-Americans. And, today, that dream eventually saw a non-white become the President of the United States. Is it wrong, therefore, to dream of a Chinese Prime Minister of Malaysia?

    I have reflected on the various stages of my journey in life — the 1960s, the 1970s, the 1980s, the 1990s, and now the 2010s. I have changed course many times, I admit. I have changed platforms more than once. But my destination has never changed. From the 1960s till now, for almost 50 years, it has always been about challenging authority, about fighting the establishment, and about daring to be different.

    I was the only Malay amongst hordes of Chinese running down Jalan Pudu to protest the hanging of the Chinese prisoners who had killed a Malay warder in Pudu Jail. I was the only Malaysian amongst 100,000 Iranians protesting against Saudi Arabia and the US along the main street of Mecca. I was also in the demonstration that protested the relocation of the Damansara Chinese school.

    I liked to do what others would not do. And I am still doing what others would not do, and would not approve to boot. That’s me. And nothing is going to change the way I think and the way I do things. I am a product of the 1960s. I was moulded in the 1960s. We may have left the 1960s, but the 1960s has not left me. You can take me out of the 1960s but you can’t take the 1960s out of me. That is my 62 years and years well spent as far as I am concerned.

    Death will be upon us all in due time. It is only a matter of when that time would be. We must not regret our deaths. What we must regret is how we lived our lives. Have we lived the life we wanted to live or have we lived the life that others expected of us? I do not live up to other peoples’ expectations, I know. But that is only because I do not wish to do so. What I wish is to live the life that pleases me. And what pleases me may not please others. Tough!
    _______________________

    Idris Jala: M’sia must cut subsidies, debt by 2019 or risk bankruptcy!!!!!!!!!!!!!!!!!!!!!!!
    By TEH ENG HOCK and SHAUN HO, The Star, Thursday May 27, 2010

    KUALA LUMPUR: Malaysia will be bankrupt by 2019 if it does not cut subsidies and rein in borrowings, said Minister in the Prime Minister’s Department Datuk Seri Idris Jala on Thursday.

    He said that Malaysia’s debt would rise to 100 percent of GDP by 2019 from the current 54% if it did not cut subsidies.

    “We do not want to be another Greece,” he said when officiating the Subsidy Lab Open Day here to receive feedback from the public on subsidies.

    Some of the recommendations of the subsidy rationalisation lab:

    – Reduction of gas subsidy, resulting in an increase in electricity tariffs. However, most households will not be affected as the move will only affect those consuming more than 200kWh.

    – Toll rates to increase in mid-2010 as per concession agreement except for highways without alternative toll-free routes.

    -Outpatient treatment at public hospitals to be increased from RM1 to RM3. In-patient treatment will also increase, depending on the wards (Class One, Two or Three), from between RM3 and RM80, to between RM6 to RM160.

    -Text book loan scheme and tuition subsidy aid to be abolished. Students will also have to pay for public examination fees.

    -Foreign students will pay full fees at public universities.

    -Local undergraduates and postgraduates to pay more in student fees, ranging from RM300 to RM800.

    Meanwhile, Bernama reported Idris as saying that Malaysia was likely to become an oil importer as early as next year at the current rate it was consuming petroleum,

    Malaysians continue to be among the highest fuel consumers per capita in the world fuel consumption habits pattern which generally has remained relatively unchanged despite increased oil prices in 2008.

    He also said that approximately 70% of the government’s liquid petroleum gas (LPG) subsidy went to commercial concerns and not the intended households.

    About 30% of the cooking oil subsidy was also abused, he said.

    He said the government is proposing to phase out the petrol subsidy gradually in line with its move to strategically position Malaysia’s economy on a stronger footing to realise the aspirations of Vision 2020, which is to achieve a developed, high-income nation status.

    “Subsidies are an inaccurate representation of trade,” Idris said when officiating the Subsidy Lab Open Day here to receive feedback from the public on subsidies.

    “In addition, they pose a fiscal burden that emerging economies such as Malaysia should move away from. As such, we desperately need an exit strategy for subsidies, as they are unsustainable,” he said.

    “In order to save the country, we need to increase our GDP, Malaysians need to be aware we are giving the highest subsidies – 4.6 per cent of GDP even higher than Indonesia (2.7 per cent) & Philippines (0.2 per cent),” said Idris, who is also the Chief Executive Officer of the Performance Management and Delivery Unit (PEMANDU).

    Malaysia is one of the most subsidised nations in the world. Its total subsidy of RM74 billion in 2009 is equivalent to RM12,900 per household.

    This covers the areas of Social (RM42.8bil), Fuel (RM23.5bil), Infrastructure (RM4.6bil) and Food amounting to RM3.1bil.

    “All savings to reduce these savings are intended to reduce our deficit and debt of RM103bil in five years,” he said.

    Meanwhile, studies by Bank Negara have shown that inflation will rise to four per cent (2011-2012) and three per cent post 2013.

    Subsidies only result in market distortion and they drain the government of much needed funds that could be better used for more strategic and pressing development projects for the rakyat, Idris said.

    “The time for subsidy rationalisation is now,” he said.

    “We are reviewing the possibility of introducing a floating price mechanism, mitigation measures and assistance needed to put in place.”

    “We do not want to end up like Greece with a total debt of EUR300 billion. Our deficit rose to record high of RM47 billion last year.”

    “If the government continues at the rate of 12 per cent per annum, Malaysia could go bankrupt in 2019 with total debts amounting to RM1,158 billion,” he cautioned.
    _____________________

    Malaysia’s debt still manageable, says Idris Jala………
    Bernama, 24 July 2012

    KUALA LUMPUR: Malaysia’s debt is still manageable as it is below 55 per cent to the Gross Domestic Product (GDP) ratio, said Minister in the Prime Minister’s Department Datuk Seri Idris Jala.

    He said the 53.8 per cent of national debt for last year is within the range as the government continues its efforts to bring down the fiscal deficit level.

    “With the implementation of the Economic Transformation Programme, we are on the right trajectory and continue to reduce the deficit level every year. For 2012, we aim to narrow further the fiscal deficit to 4.7 per cent from 5.0 per cent of last year’s GDP,” he told the media on the sidelines of the GTP Roadmap 2.0 Open Day here on Tuesday.

    Citing the Mass Rapid Transit project, Idris said though the government had to raise funds for the project, it still managed to keep the debt level below 55 per cent.

    “We borrow for investments (aiming) to grow our GDP and economy. The debt level will directly reduce. Unlike Greece, they are borrowing a lot of money but the economy is shrinking,” he added.

    Idris, who is also the Chief Executive Officer of the Performance Management and Delivery Unit (PEMANDU), said Malaysia’s GDP at 4.7 per cent in the first quarter was still growing, whereas Singapore’s only grew at 1.4 per cent, due to the slowdown in the global economy.

    “This is good…with more investments coming in and positive indicators, going forward,” he added.

    The GTP Roadmap 2.0 Open Day at the Kuala Lumpur Convention Centre aims to gather feedback from the public and provide a basis for review for PEMANDU.

    The GTP Roadmap 2.0 was formulated after PEMANDU conducted a series of labs, held over six weeks in April and May, to identify key issues and new areas of growth opportunities, which would work on within the National Key Results Areas. – Bernama

    Comment by Teddy Gumbang — August 18, 2012 @ 10:11 AM | Reply

  3. An increase in import of mostly consumer goods without corresponding rise in export will surely end the country in bigger trouble. And the government freely spending of money, which are borrowed money, even if some of it do go towards financing huge local projects but the cash pay-out like Raya’s money and BR1M will only spawn inflation and prices rises of even essential goods consequently causing more hardship to the people, especially the poor in the long run. Of course the government is heavily relying on the oil and gas to generate more money to pay up all of these. But for how long, and at what price?
    This country should promote food production among the people so that we don’t import too much of the essential goods such as rice, for example. The production of goods like rubber, coffee and cocoa beans which is easy should be encouraged and properly financed instead of building high rise buildings. While the latter can only beautify the urban skyline but benefit little portion of the population that can get jobs there, the former will involve the people widespread throughout the country be employed in situ and will help preventing huge number of people converging to town and cities to work and looking for works. And what is better than to spend money by building roads to, and in which process to open up new and smaller township in the rural areas? Presently the government is, as it is apparent, leaving the development of the rural areas to private sector in the form of opening up large tract of land for oilpalm plantation in large scale. This effort while it does help in producing the oil commodity for local consumption and export, and the latter earning foreign exchange, is not actually involving a large part of the population. The actual rural people are only seeing red because they see large plantation companies as encroachment. The government should instead help local people in small plots per individual to farm oilpalm and by setting up marketing outlet for them. This process will better spread out income to a large portion of the society. Otherwise the future of the people is bleak as their present circumstance of poverty is not property addressed. And in that scenario no money generated by oil and gas sector, anyway that’s depleting, will help Malaysia escape future troubling times.

    Comment by dayaksarawak — August 18, 2012 @ 9:45 AM | Reply


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