The Minister of Housing and Local Government, who has a Bachelor of Arts degree in Literature from University Malaya, is reported to have made the call that housing developers should launch their projects now that fuel prices and the cost of building materials have dropped.
He said that over the past six months many projects had been stalled by the rising cost of building materials. He has pointed out an average of 100,000 homes were built each year, but as of October, only half that number had been delivered. He also said that Malaysia always needs the sale of houses to generate economic activity saying that every house has 140 components, so if the developers stop building, then this also affects the factories producing the building materials.
That is clearly supply-side thinking. Is that going to work?
Fortunately, there is clear evidence that the private sector are rational players. There are clear indications that the private property development sector are not foolish enough to heed the Minister's naive statement.
.
FIABCI
Evidence of this rational realism comes in the form of the International Real Estate Federation (FIABCI) Malaysia president Datuk Richard Fong's reported observation that some real estate agencies in Penang had started to bring in groups of foreign tourists under a “property” tourism package that included visits to property launches and show houses.
FIABCI has suggested that Malaysia should promote “property” tourism to bring in foreign direct investment that would benefit not only the economy but also the retail industry. The idea, is to encourage these tourists to buy local property. As these visitors also shopped and stayed at hotels, their visits had benefited the hotel and retail industry.
Whether this strategy works effectively or not, it is sensible thinking.
Domestic consumption trends
As if to underline the weaker sentiment in the softening demand in Malaysia's property sector, a recent poll report by Synovate Research points towards the recent phenomenon where more than half of Malaysians have reduced “impulse” purchases and postponed major life decisions. Malaysians are delaying getting married, having children, moving house, changing jobs or furthering their education due to the current downbeat economic conditions. Despite this weaker consumption sentiment, 45% of the Malaysians surveyed were optimistic that the weak economy would improve soon while only 22% thought the economy was going downhill and that the domestic economy would worsen before it recovers.
Now that's not a bad statistic for the Malaysian economic managers to work on.
Muhiyiddin learns his lesson
In an earlier blog post entitled, The dreaded "R" word, I had panned the Minister of International Trade and Industry's glib and throwaway remarks about not fearing declining exports to the US, Europe and Japan since Malaysia had other trading partners.
It is heartening to see that the Minister has now demonstrated more respect for the Malaysian public being reported as saying, Obviously what we need to do is to take pre-emptive steps at this stage so that the impact will not be too negative to the extent of lowering export figures. Significantly, the Minister also said that it was critical to say what the impact would be on Malaysia's projected 7% export growth for 2009. The Minister also said the Government would gather feedback on the orders for export from exporters and manufacturers after which the impact on individual sectors like electronic, pharmaceutical, petroluem, metal, metal-based, wood, and wood-based would be analysed.
Now that's more like it.
Dissonance in understanding the policy approaches to economic management
Frankly, all political leaders, especially members of the Malaysian Cabinet needs a solid grounding in economics and economic policy. Then, they need to be given a solid grounding in modern governance.
For one thing, the Minister of Housing and Local Government needs to understand that supply-side economics doesn't work in an environment of weak consumer demand. If his call is taken literally, there will be another huge property inventory overhang...again! I don;t think we've even cleared the property inventory overhang from 1998. You can ask the people at Jabatan Perumahan Negara, if you can stop them snickering at the Menteri's statement.
Another thing that arises from FIABCI's suggestion is that the Minstry of Housing and Local Government needs to work with the Ministry of Tourism to discuss the FIABCI suggestion and assist the industry players.
Both Ministries, then, need to also earnestly hold discussions with the state governments, especially in Penang, Selangor and Johor where most of the property inventory exists. The fact that Penang and Selangor are Pakatan Rakyat states is completely irrelevant in the context of Malaysia's economic health. Maybe it's wishful thinking. Maybe we have to wait until there is a real recession in Malaysia before such bipartisan approaches can be worked out. Silly. Stupid.
.
Raja Nazrin
It is apposite to end with Perak Regent Raja Dr Nazrin Shah's advocacy of the principle of inclusiveness in tackling challenges, arguing against formulating policies, laws and regulations on a discriminatory basis and in an ethical vacuum.
He said, No segment of society must be disrespected, discredited and disenfranchised. No group should feel that their efforts and contributions go unrecognised and unwanted.
Bringing this about is one of the greatest challenges of governance today.
We must abandon the ‘silo’ mentality where we only look up at what is happening and not beside us at what others are experiencing. Diversity is only strength if the unity of the whole, and not the differences, are being emphasised.
He said that over the past six months many projects had been stalled by the rising cost of building materials. He has pointed out an average of 100,000 homes were built each year, but as of October, only half that number had been delivered. He also said that Malaysia always needs the sale of houses to generate economic activity saying that every house has 140 components, so if the developers stop building, then this also affects the factories producing the building materials.
That is clearly supply-side thinking. Is that going to work?
Fortunately, there is clear evidence that the private sector are rational players. There are clear indications that the private property development sector are not foolish enough to heed the Minister's naive statement.
.FIABCI
Evidence of this rational realism comes in the form of the International Real Estate Federation (FIABCI) Malaysia president Datuk Richard Fong's reported observation that some real estate agencies in Penang had started to bring in groups of foreign tourists under a “property” tourism package that included visits to property launches and show houses.
FIABCI has suggested that Malaysia should promote “property” tourism to bring in foreign direct investment that would benefit not only the economy but also the retail industry. The idea, is to encourage these tourists to buy local property. As these visitors also shopped and stayed at hotels, their visits had benefited the hotel and retail industry.
Whether this strategy works effectively or not, it is sensible thinking.
Domestic consumption trends
As if to underline the weaker sentiment in the softening demand in Malaysia's property sector, a recent poll report by Synovate Research points towards the recent phenomenon where more than half of Malaysians have reduced “impulse” purchases and postponed major life decisions. Malaysians are delaying getting married, having children, moving house, changing jobs or furthering their education due to the current downbeat economic conditions. Despite this weaker consumption sentiment, 45% of the Malaysians surveyed were optimistic that the weak economy would improve soon while only 22% thought the economy was going downhill and that the domestic economy would worsen before it recovers.
Now that's not a bad statistic for the Malaysian economic managers to work on.
Muhiyiddin learns his lesson
In an earlier blog post entitled, The dreaded "R" word, I had panned the Minister of International Trade and Industry's glib and throwaway remarks about not fearing declining exports to the US, Europe and Japan since Malaysia had other trading partners.
It is heartening to see that the Minister has now demonstrated more respect for the Malaysian public being reported as saying, Obviously what we need to do is to take pre-emptive steps at this stage so that the impact will not be too negative to the extent of lowering export figures. Significantly, the Minister also said that it was critical to say what the impact would be on Malaysia's projected 7% export growth for 2009. The Minister also said the Government would gather feedback on the orders for export from exporters and manufacturers after which the impact on individual sectors like electronic, pharmaceutical, petroluem, metal, metal-based, wood, and wood-based would be analysed.
Now that's more like it.
Dissonance in understanding the policy approaches to economic management
Frankly, all political leaders, especially members of the Malaysian Cabinet needs a solid grounding in economics and economic policy. Then, they need to be given a solid grounding in modern governance.
For one thing, the Minister of Housing and Local Government needs to understand that supply-side economics doesn't work in an environment of weak consumer demand. If his call is taken literally, there will be another huge property inventory overhang...again! I don;t think we've even cleared the property inventory overhang from 1998. You can ask the people at Jabatan Perumahan Negara, if you can stop them snickering at the Menteri's statement.
Another thing that arises from FIABCI's suggestion is that the Minstry of Housing and Local Government needs to work with the Ministry of Tourism to discuss the FIABCI suggestion and assist the industry players.
Both Ministries, then, need to also earnestly hold discussions with the state governments, especially in Penang, Selangor and Johor where most of the property inventory exists. The fact that Penang and Selangor are Pakatan Rakyat states is completely irrelevant in the context of Malaysia's economic health. Maybe it's wishful thinking. Maybe we have to wait until there is a real recession in Malaysia before such bipartisan approaches can be worked out. Silly. Stupid.
.Raja Nazrin
It is apposite to end with Perak Regent Raja Dr Nazrin Shah's advocacy of the principle of inclusiveness in tackling challenges, arguing against formulating policies, laws and regulations on a discriminatory basis and in an ethical vacuum.
He said, No segment of society must be disrespected, discredited and disenfranchised. No group should feel that their efforts and contributions go unrecognised and unwanted.
Bringing this about is one of the greatest challenges of governance today.
We must abandon the ‘silo’ mentality where we only look up at what is happening and not beside us at what others are experiencing. Diversity is only strength if the unity of the whole, and not the differences, are being emphasised.
1 comment:
Ong who?...:)
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