The Minister's answer was narrowly on the financial sector. He completely overlooked, side-stepped, ignored or, avoided (take your pick) the question from the MP from Tenom. The question was on the general economy. He was NOT asking about the banking sector. Duh?
The rest of the economy
Take the Malaysian capital market. The KLCI, as a broad indicator is now below 1,000 points despite having started the year with ambitions of achieving 1,500 points. What has been the impact of this loss of wealth on the wider economy?
Exports
Take the export sector which is driven by oil, manufactured goods and oil palm. Oil prices per barrel touched USD144 per barrel and has eased to USD78 per barrel. CPO prices crossed RM4,000 per metric tonne and has eased down to RM1,800 per metric tonne.
Automotive sector
Despite announcements by car manufacturers to the contrary, it is certain that automotive sales are down. Proton needs a new suitor again. What is the rate of projected sales for 2009 for this sector?
White goods
Exports of white goods such as TV, radios, camcorders, air-conditioning units, washing machines, and so on are on the decline. What is the extent of the decline? What is the projected value of exports for 2009?
Retail
Retail sales are going down. How far down has retail sales gone since January 1, 2008? What is the projected scenario for 2009?
The list goes on.
Economic data needed
Will the government be able to release economic data for the type of information raised above? The Malaysian economic players and the general public needs to know all this in order to forward plan.
Knowledge elsewhere
Malaysians are not unaware that countries like the U.S. are projected to enter into recession mode. Ironically, there is more economic data available on other countries than there are on Malaysia.
We know, for example, that Nouriel Roubini, the professor who predicted the financial crisis in 2006, has said that the U.S. will suffer its worst recession in 40 years, causing the recent rally in the stock market to sputter.
Roubini has warned that there are significant downside risks still to the U.S. market and economy and, that, the expected recession will last 18 to 24 months, driving unemployment to 9 percent, and already depressed home prices will fall another 15 percent.
Roubini reckons that the U.S. government will need to double its purchase of bank stakes and force lenders to eliminate dividends to save them from bankruptcy. The U.S. government has just committed USD250 million to purchase bank stakes.
More ominously, Roubini also reckons that this will only be the first round of recapitalization of the banks. He is also quoted as saying that the stock market is going to stop rallying soon enough when they see the U.S. economy is really tanking right now.
From available data, we know that the U.S. unemployment rate stands at a five-year high of 6.1 percent last month. From the available data, we also know that home prices in 20 U.S. metropolitan areas fell 16 percent in July from a year earlier.
Knowledge in Malaysia
It is not as if Malaysian economists and analysts are stupid. But one senses a lingering fear of speaking out freely between and amongst economists and analysts whose livelihood may be threatened by powers that be for offering contrarian views to the bland and dull and vague pronouncements by Ministers and their departments. In some cases the dreaded three-letters, I.S.A., have been uttered; you know, threats to economic security and all that.
What does it say about Malaysia's economic management and general socio-political environment when we know more about the U.S. economy and, even the economy of China, compared to what we know about the Malaysian economy?
11 comments:
Dear Friend,
How I wish I could write like you.
Nicely done all your articles posted here in your blog.
Over the past few days, we have been getting unprecedented reassurances from everybody. To me, once this happened, something is wrong somewhere. Part of what I learned from behavioral studies.
Happened in US right before the big plunge.
Hello CTChoo
Great post! A very erudite commentary of our current predicament.
Your statement here is very astute :
"But one senses a lingering fear of speaking out freely between and amongst economists and analysts whose livelihood may be threatened by powers that be for offering contrarian views to the bland and dull and vague pronouncements by Ministers and their departments."
So, is there any hope at all for Malaysia?
*sigh*
Thanks for this informative post :).
I should have stumbled upon your blog much earlier. Am glad to have found you :)!! Better late than never.
Cheers!
whisperer
You are too modest about your own penmanship. I should know. I am a visitor at your blog. :)
masterwordsmith
I always believe that there will be a better future for our beloved country. I know you do too. For, otherwise, why would we bother to post our thoughts? :)
They walked out from parliament when asked how come Taiwan which was behind us has advanced ahead.
When practised by impeachable authority, denial becomes the mainspring of disaster.
This country is run by people who buy votes using money they receive in return for future blessings to their sponsors.
The people who rise to the top from such means are least expected to discipline those below for fear they will be called hypocrites.
Therefore money politics, patronage and corruption will remain entrenched.
The only way out for the citizens of this country is to evict the entire party.
You pull out the weeds right down to their roots, so that the plant can grow anew.
If this is not done, even the healthiest economy will be run down by the unhealthiest political leadership.
And the feds have announced that the US is officially now in recession.
Which means if they have to buy, they would choose the cheapest. Which won't be us.
While the economy shrinks, Singapore will send back one third of its foreign workforce, namely malaysians.
We'll be hit by three whammies - one, low oil price-high govt deficit-low sovereign rating-high debt servicing ratio-poor maintenance-reduced investment attractiveness; two, weakened manufacturing sector-retrenched workforce-weak employment market-social unstability; and three, weakened currency-high costs-inflation-stagnant wages-brain drain.
And all they can say is how much for this vote, wait and see who will be deputised.....
CT,
Things look really bleak, don't they? I wonder, what can we as individuals do so that the hit in our stomachs causes minimal pain?
Pat
p.s.
I love that John Cleese quote! I love him - he makes me laugh till I cry. You ever watched his Faulty Towers?
Pat
walla
Thinking Malaysians are unable to accept the vague generalisations made by our government ministers. First, it may be the tendency of the Malaysian govt to treat the Malaysian public as children (only Big Brother knows best). Second, the government is not able to forecast and project future scenarios. They are unable to create econometric models that help with forecasting. And, even if they have such modelling programmes, they are not able to input the correct assumptions. Therefore, they only rely on historical data. Who knows?
Hi Pat
The Malaysian economy is softening further than it's already soft position. Those Malaysians who are able to keep their jobs and continue to earn an income should be alright. Those who do not borrow heavily from banks should be ok, too. Those Malaysians who are careful with their spending will be in good condition.
Bear in mind that even if there is an economic contraction (the government does not expect this) only people who are NOT in the above categories will be seriously affected. The rest of us will be affected in some way. But the magnitude will not be severe. Can still have teh tarik and roti canai. It would really help the Malaysian public if more information and data is made available so that we can make our own plans. What peeves me is that the government is NOT providing real guidance. If we make decisions, say, to upgrade our 5-year olf 1.3 litre car to a 2.0 litre new car and take hire-purchase financing today, what if the economy really starts to contract in 6 months' time and, the boss tells us that there will be a 15% pay cut? That 15% may have been the sum that we expected to use to pay the monthly HP instalments. Would the govt compensate us for "misrepresentation"?
On a lighter note, I actually have the Fawlty Tower series!!!! Cleese as Basil Fawlty is downright outrageouslyu hilarious. The best part is that even the kids laugh at the 70s and 80s humour. It goes to show that if there is a good quality product (even if that product is humour), it transcends time.
Hi CT,
What you've said makes complete sense. And yes, we need real guidance from this government; and if that is too much to ask, at least real information, the truth about what's happening in our economy - and we can take it from there. What we don't know, we can ask the experts.
What worries me is that the government may not know - or at least, it seems that way to me. Whatever I hear from an official mouthpiece - my brain refuses to lend credence to. I wonder why....
You have the whole series?! I need to go out and look for it, then. There's only one season, maybe two at the most - and I've watched every single episode many times over - and laughed every time. My children have laughed, too - but I haven't been always sure why they're laughing: is it cos it's too, too funny, or are they maybe laughing at mummy laughing!!! Hahaha.
Cheers,
Pat
Hi Pat
I'm quite certain that they children are laughing at Basil Fawlty's extreme antics. Especially when he gives an unkind cuff or kicks Manuel's rear end. One of the most classic episodes, you may recall, is "The German's are coming". A few years ago, over beer, I just happened to mention to an Englishman that he loosely resembled John Cleese when he immediately jumped from his seat and started re-enacting the "goose-step scene" which Basil Fawlty performed in front of bewildered German tourists who had just arrived at Fawlty Towers. So much much his warning to all his staff not to mention "the War".
My take is Amirsham is sitting at the centre of hurricane and Najib travelled to Sabah, suddenly felt strong wind changed his mind on the current of our economy. Duh!
So it looks like if you stay in Klang Valley, you should be alright. Sighhh!
Post a Comment