The US subprime mortgage crisis that sent shockwaves across the world’s largest economy is now 1 year old. The reverberations from the crisis are only just beginning to be felt in Malaysia.
The subprime woes have seen its worst and the impact is now affecting the broader economy, which was initially confined to the US and European housing markets.
The Edge Financial Daily quotes local economists who observed that it has taken a year for thr subprime crisis to impact Malaysia. They say that gross domestic product growth (GDP) numbers in Malaysia as well as the region point to a slower growth.
We are facing a confluence of inflationary pressure, prolonged domestic uncertainties and slowing US and global economy.
Policies to deal with economic slowdown
The issue now is how to offset the expected slowdown in developed countries. The economists figure that government could probably boost the economy via pump-priming. This means that the upcoming Budget may entail higher government spending and providing incentives for consumer and business spending.
The issue now is how to offset the expected slowdown in developed countries. The economists figure that government could probably boost the economy via pump-priming. This means that the upcoming Budget may entail higher government spending and providing incentives for consumer and business spending.
The subprime crisis has been an indirect catalyst for the woes in the Asian markets. Some Asian economies have been affected directly via their holdings of US mortgage-backed securities and others indirectly through changes in investment and consumption patterns.
But can the economy bounce back early next year? Economists are not taking a bet that the economy will recover anytime soon. A lot will depend on the government's fiscal policies.
Malaysia's GDP growth is expected to decelerate to 5.3% this year from 6.3% last year on rising inflationary pressures, political uncertainties and global economic slowdown.
Corridors of growth?
The numerous corridor development projects should, theoretically represent the pump-priming fiscal efforts of the government. From a quantitatve perspective there will be billions of Ringgit available for this pump-priming effort.
But, it has to be said that after 50 years of economic development, Malaysia's best efforts seem to be directed at being a venue provider where the government create designated geographic areas for development, build the infrastructure and invite foreign investors to set up shop.
Where's the strategic thinking?
Where is the strategy to help create Malaysian multinational companies that will enable Malaysia to project outwards competitively?
The basics of educating a talent pool
I believe this starts with good quality education to produce a pool of managerial and technical talent that has the correct skill sets for Malaysian companies to tap into. Malaysia's talent pool is increasingly thinner over the past few decades.
Helping local companies get out from under the tempurung
The other issue is that Malaysian companies lack the exposure to global developments. In countries like Singapore 2 to 3 decades ago, it was the government that undertook the task of studying international economic trends and brought the local enterprises into line with such trends. This ensured that local corporations developed symmetrically with international demand. This enabled Singapore to remain competitive.
There is much lip-service in Malaysia these days. Planners and policy-makers have become lazy, not wanting to bother with consulting with local corporations preferring instead to wait for inquiries to come in. I've always posed this question, How do you know what to ask if you can't even define the issue at hand?
The job of governments in developing countries such as Malaysia is to understand the international economic trends and get the local economy to adjust in line with those trends. That's what the taxpayers pay the government to do. Local companies just do not have the financial resources to employ economic planners and strategists.
The scene at the microeconomic level
Last year I employed a Bumiputra Bioscience local graduate to a clerical post in my professional services firm. When asked why she is opting for a menial clerical job instead of pursuing a bioscience job, she said she was not interested in bioscience! How does this happen?
Strategic vision and tactical moves
de Bono has explained that when we set a strategic goal (such as Vision 2020) we also need tactical decisions within the strategic framework.
Sadly, there is no evidence of such awareness on the part of the government in recent years.
2 comments:
Just look at the financial standing of the Ministers, both past and present. They have garner tremendous wealth by being part of the ruling institution.
certainly these batch of Elite have enriched themself through SPECIFIC means, without a damn care for the development or betterment of the ordinary rakyats.
Hasn't 51 years of merdeka made the Country a truly independant and happy country.
Sadly, the the leaders are engrosed in political stabbing rather than looking into the future betterment of the Rakyat. Our neighbours of Cambodia, Vietnam, Indonesia who were far behing us economically, are fast catching up, and expected to ovetake us within the next 3 years.
Why are we in such a situation when we are so rich in terms of god sent raw materials, and rich agricultaral production? We have been plundered into deep shit by these self-enriching leaders.
It's inevitable that with global economic slowdown, gomen need to pume-prime. The $1m question what's of priority.
We all know that construction has 8 times multiplying effect. I would suggest that total revamp and expansion of publc transportation would be one area because besides creating economic activity, it'll also improve productivity and reduce fuel consumption.
The other area would be in revamping the education system. Not so much on the infrastructure but on the delivery system. Over here any suggestion on opening up single race institution like UiTM, you'll get a backlash from the Malays.
In contrast, other countries such as China is competing to reverse the brain drain like this article Chine lures home best and brightest, with some westerners as well in Newsweek and Singapore going at great length to interview final year students (Many Malaysians!) and offering them jobs before the results are out. Sigh!!!!
And BN still 'catch no ball'!
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