Tuesday, March 31, 2009

M'sia's strategy in a climate of falling trade and rising protectionism

One of the unfortunate fallout from the economic turmoil is the decline in the volume and value of international trade. As the trade data from the last quarter of 2008 has shown, Malaysia is not immune from this.

Another effect is the rise of protectionist measures. These are barriers to importation of goods.

Malaysia's official stance has at all times been against trade protectionism. We are, after all, an overt mercantilist nation that depends on export earnings for a wide range of finished manufactured goods, oil and gas products and agricultural commodities, namely, palm oil and rubber.

Tariff-based protectionism
During the Great Depression tariffs were the protectionist weapon of choice. In the U.S., the infamous Smoot-Hawley Act 1930, increased nearly 900 types of import duties. This move received widespread retaliation from U.S. trading partners.

Many believe that there are sound reasons for assuming that there won't be a rise in excessive protectionism nowadays when compared to the past.

International agreements to limit tariffs, built over the post-war decades, are regarded as a bulwark against all-out tariff wars.

Moreover, the increase in global supply chains have bound national economies together tightly making it more difficult for governments to increase tariffs without harming producers in their own countries. This appears to be Malaysia's position.

But, it should be noted that many countries are able to raise tariffs, because their applied rates are below the maximum allowed by their WTO commitments. They may choose to do so despite the possible disruption to global supply chains. And, since global sourcing amplifies the effect of tariff rises, even action that is permissible under WTO rules could cause a lot of damage.

The point that should not be ignored is that a slight lowering of trade barriers can cause a huge increase in trade. By the same token, if tariff barriers rose above a certain point, which might still be below the maximum agreed on at the WTO, global supply chains would become unfeasible. Trade would drop even more steeply than it has in recent months.

Non-tariff protectionism
This time round, despite the economic turmoil few tariffs have been raised. But tighter licensing requirements, import bans and anti-dumping, which imposes extra duties on goods supposedly dumped at below cost by exporters, are being used instead. India appears to be particularly adept at using this protectionist weapon.

Certain developed countries have begun using discriminatory procurement provisions in their fiscal-stimulus bills and offered subsidies to ailing national industries.

These count as protectionist measures.

Use of subsidies as a form of protectionism
International trade agreements provide little protection against domestic subsidies. Nor do they provide immunity from greater use of anti-dumping laws. The subtler variants of protection may be similarly disruptive.

WTO action against subsidies is not straightforward. To complain successfully, a country has to show that a subsidy offends the numerous criteria used to measure protectionist conduct.

We also cannot ignore the double-edged problem that an aggrieved country has when lodging a complaint. Having subsidies of your own does not stop you from challenging someone else’s, but if you pick a fight they may challenge yours.

It is this uncertainty and ambiguity that may encourage many countries to use subsidies as a form of protection. For example, the Malaysian governments can aid national carmakers and, at the same time criticise others for their protectionist ways.

Threats to supply chain strategies
Many will recall that just before the economic turmoil began festering, global supply chains were all the rage. Outsourcing was sexy.

Protectionism threatens to dismantle the grand conventional wisdom of the 1990s and the millennium. Countries like Malaysia stand to lose from its policy of relying on FDIs. Multinational companies move into countries like Malaysia to establish manufacturing bases due to supply chain efficiencies. The icing on the cake are the incentives such as tax exemptions offered by MITI. But, a key attraction was Malaysia's low-cost labour.

Forwards or backwards
A positive thinker will see the ruptures in global supply chain strategies as opportunity for domestic manufacturers to pick up some advantages in the vacuum left by missing FDIs.

The sad truth is that in countries like Malaysia the decades-old dependence on FDIs to formulate industrial and economic development plans have left domestic industries to play ancillary support roles. These domestic industries are mostly SMEs who are far from being world-beaters. Most SMEs are still in labour-intensive activities.

For Malaysia, as with other countries, there are many economic policy challenges that has arisen in this negative economic climate.

One of the key challenges is to decide to move away from labour-intensive industries to higher value-added manufacturing.

Education is a key component
One suspects that in order to give effect to this strategy, Malaysia needs to step up its education policies to produce the high-quality workforce that is needed to form the foundation for this strategy.

Otherwise, we can only look forward to competing with other low-cost labour jurisdisctions like Vietnam and Thailand.

Monday, March 30, 2009

Qing Ming

This fortnight is the period of Qing Ming (Hokkien, Cheng Beng) or All Souls Day (not to be confused with the Catholic event) which is an elaborate family function for Chinese families to commemorate and honour ancestors.

The Qing Ming festival is very much a family heritage and at the same, a family obligation.

The Chinese see this festival as a time to reflect, honour and give thanks to their forefathers by visiting the graves of their ancestors at the nearest weekend of the actual date.

According to custom, grave site veneration is only feasible 10 days before and after Qing Ming festival which falls on April 4 this year.

This date is a statutory public holiday for China, Hong Kong, Taiwan and Macau.

Friday, March 27, 2009

The best of times

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.

Charles Dickens, A Tale of Two Cities

Thursday, March 26, 2009

Valuecap redux

If we were to use Valuecap as an indicia of transparency or opacity of any Malaysian body, public, quasi-public or, even, private body, the sad finding would be that in Malaysia, there is a clear prediliction towards being opaque.

It would seem that Malaysians are very averse towards transparency. One suspects that such aversion is not due to innate modesty. The feeling is that such aversion belies a less savoury purpose.

Malaysian public bodies and semi-public bodies appear to have a serious problem with coming to terms with any mistakes they or, their officers, make. The instinctive reaction to any allegation of mistake, mistep or any error, is to draw the blinds, pull down the shutters, slam the door shut, shroud the matter ... well, you get the picture or, not.

It is, therefore, with regret and, unfortunately no surprise, that I read the travails of the attempts by journalist Eric Ellis, who writes in the Asian Sentinel about his thwarted efforts to obtain more information on Valuecap. His piece is entitled, The Malaysian Mystery of Valuecap.

Valuecap's opacity, despite it's being a quasi-public entity, a GLC if you will, is troubling.

Should a GLC behave like a sendirian berhad? The stakeholders of a GLC includes the general Malaysian public. The nexus is even more direct in Valuecap's case since it involves EPF funds.

As I posited at the beginning of this post; if Valuecap is the indicator of whether Malaysian public or semi-public bodies have begun to imbibe the values (pun intended) of transparency and accountability, then, there is clearly a hell of a lot of work that still needs to be done.

The question posed by an irate spouse to her worse half when staring at their gutted home is apposite on the issue of transparency and accountability; "Where does renovation end and, demolition and completely new construction begin?"

Keeping with the building analogy; transparency and accountability is all about full-glass see-through wall panels.

http://www.neudoerfler.at/images/products/ts5/bp2.jpgpix from here.

It's not about closed doors and shuttered windows.

http://www.istockphoto.com/file_thumbview_approve/5040066/2/istockphoto_5040066-two-shuttered-windows-and-dark-blue-door.jpgpix from here.

It certainly is not about peep-holes.

http://www.bejane.com/fs/articles/diy_install_a_peephole/peephole-picture_492.jpgpix from here.

Wednesday, March 25, 2009

English in Maths and Science saved?

Going by Najib's speech at the joint opening of Wanita, Pemuda and Puteri UMNO assemblies will the issue of the teaching of English in Maths and Science be put to rest once and for all?

I certainly hope so.

Brother Rocky seems to think Najib is taking a "huge risk" by endorsing the use of English since it posits Najib against "the likes of former DPM Anwar Ibrahim, Malay laureatte A. Samad Said, and PAS boss Hadi Awang who are dead against the use of English for the two subjects".

My own estimation is that on this issue, the stand Najib is taking is, to paraphrase former U.S. President Bill Clinton, "on the right side of History".

UMNO: A correct move and a caveat

Addressing the joint opening of Wanita UMNO, UMNO Youth and Puteri UMNO general assemblies at the Putra World Trade Centre, Najib is reported to have said that the right to choose leaders should be given to the greater number of members to reflect the preferences of more than three million UMNO grassroots members.

In his speech Najib is quoted as having said, "To my mind, the time has come for us to review the selection of UMNO leaders that will be more inclusive of a greater number of UMNO members from all levels.

"This move will enable us to end money politics and abuse of power. This is the path we must take, if we are to regain the strength of the party by returning to the grassroots the mandate for choosing party leaders."

This is a correct suggestion and assessment. If the UMNO Constitution is amended to do away with this odious nomination procedure - which was at all times designed to favour the incumbent - it will go a long way to re-institute democratic practices back into the party.

And, in my humble estimation, it will be a catalyst to regenerate the much-maligned party.

But, to all and sundry who are participating in the party proceedings, please do away with the annoying, cloying, gallery-pandering tribal antics about "us" and "them" replete with the self-serving brandishing of ancient bladed weapons.

It may play well to a mob.

But in the reductive effect that television has on oratorical and gesticulatory flourishes, such gallery-pandering tribal antics about "us" and "them" only makes the speaker and, the party, look like a mob that is completely out of touch with the reality of multiracial, multiethnic and multicultural Malaysia.

And, as we all know, it also has an annoying tendency to cause the loss of valuable votes.

Full text of Najib's speech.

I must say that I am relieved after having read the text of Hishamuddin's speech to the Pemuda UMNO that he has refrained from the "us" and "them" polemic that I was quite worried about. Kudos to him for that restraint.

Tuesday, March 24, 2009

Chapter 17

When the Master governs, the people
are hardly aware that he exists.
Next best is a leader who is loved.
Next, one who is feared.
The worst is one who is despised.

If you don't trust the people,
you make them untrustworthy.

The Master doesn't talk, he acts.
When his work is done,
the people say, "Amazing:
we did it, all by ourselves!"

- Chapter 17: Tao Te Ching

But not yet, Lord

HOW do a person’s religious beliefs influence his attitude to terminal illness? The answer is surprising. You might expect the religious to accept death as God’s will and, while not hurrying towards it, not to seek to prolong their lives using heroic and often traumatic medical procedures. Atheists, by contrast, have nothing to look forward to after death, so they might be expected to cling to life.

The Economist piece entitled But not yet, Lord reports on the startling (to me at least) study published in the Journal of the American Medical Association by Andrea Phelps and her colleagues at the Dana-Farber Cancer Institute in Boston that religious people seem to use their faith to cope with the pain and degradation that “aggressive” medical treatment entails, even though such treatment rarely makes much odds.

Apparently, end-of-life chats conducted by doctors with religious patients had little impact on “religious copers”, most of whom still wanted doctors to make every effort to keep them alive.

This led the Economist to observe that, Saint Augustine of Hippo, one of Christianity’s most revered figures, famously asked God to help him achieve “chastity and continence, but not yet”. When it comes to meeting their maker, many religious people seem to have a similar attitude.

What is the relevance of this post you may well ask?

I have no idea. The responses of the patients imbued with religiosity that they wished to hang on to their mortality despite the inconvenience of disease is, somehow, quite intriguing.

One would truly have thought that the strength of one's faith would encourage a terminally ill patient to welcome the relief of crossing over so to speak. But...apparently not.

Batang Ai, Sarawak

While many in Semenanjung are obssessing over the 2 Bukit by-elections, the one Batang by-election in Sarawak is equally interesting, if not more so.

http://media1.malaysiakini.com/32/cd3770af252b6453a29d087a90da7e80.gifchart from here.

The reason is that the Batang Ai by-election may well be a barometer of two things:

First, the state of Sarawak BN's governance under Taib Mahmud.

Second, the coalescence of the disparate Dayak community that has been divided and ruled for many, many decades.

There are two blogs, in particular, that are particularly high-profile. One is Sarawak Headhunter. The other is The Broken Shield.

Read these two blogs to get a better understanding of the depths of the Dayak sentiments in Sarawak.

chart from here

Whether these sentiments can translate into a victory for PKR in Batang Ai is the key question.

All things considered, the powers of incumbency and the substantive political largesse of the Sarawak BN delivered via the tuai rumah is very, very significant.

In an isolated constituency with poor transportation infrastructure, the political battle is pitched and guerilla-style.

But, the erstwhile Dayak political powerhouse, SNAP's declaration that it will not participate in the Batang Ai campaigning (presumably for BN) is also a significant gesture that does not augur well for Sarawak BN.

Keep the tuak flowing, guys.

Monday, March 23, 2009

Cleaning up

Clean-up 1
Three European countries have indicated their willingness to clean up and beautify the Klang River in Selangor.

Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim, however, said the project had nothing to do with Syarikat Bekalan Air Selangor Sdn Bhd (Syabas).

http://www.my-rummy.com/images/Klang/Klang_Mosque_golden_dome.jpgpix from here

The cost of cleaning and beautifying the 120km-long river was estimated at RM10 billion, and was expected to be completed in five years. Abdul Khalid, however, declined to name the company or the countries concerned.

"By June, we should already have a project management team and by August, we should have the private funding and by the end of the year the physical work will take place," said Khalid.

Clean-up 2
Having wasted two chances, it is now up to Umno delegates to rid the party of corrupt leaders, said former prime minister Tun Dr Mahathir Mohamad.

He said firstly, the divisions did not do a very good job on this during the nomination process for the party's polls which will be held this week while Umno's disciplinary board also failed to arrest the scourge of money politics in Umno.

http://nazret.com/blog/media/blogs/new/corruption.jpgpix from here.

"Now a third opportunity arises and it is in the hands of the delegates attending Umno's general assembly to rectify the situation, failing which, the final chance will be with Datuk Seri Najib Razak (who will take over as Umno president and prime minister after the assembly).

"If Najib too picks tainted leaders in his cabinet, I think all hopes for Umno to remain a strong party will be lost," he said.


One clean-up is necessary to arrest environmental degradation.

The other clean-up is an euphemism about the necessity to arrest degradation in a political environment.

Both clean-ups are very necessary.

Friday, March 20, 2009

MCA faulted by Sabahans for cabotage policy woes

Malaysiakini has an interesting piece by Joe Fernandez entitled MCA faulted for cabotage policy woes where traders in Sabah are placing the blame for the cabotage policy on the Malaysian Chinese Association (MCA) presumably because the MCA has held the Transport Ministry portfolio for as long as one can remember.

Under the existing cabotage policy foreign shippers are not allowed to visit ports in Sabah and Sarawak directly with their goods. They have to offload at Port Klang, the designated national load centre. About 3,400 Malaysian-owned ships are engaged in the domestic trade many of which ply the Semenanjung to Sabah and Sarawak route.

An importer is quoted as having pointed out that it costs RM2,436 to ship a 20-foot container (TEU) from Port Klang to Kota Kinabalu, Sandakan (RM3,236), Tawau (RM3,336), Lahad Datu via Sandakan (RM4,186) and Lahad Datu via Tawau (RM4,386).

Having said all that it should be noted that the Malaysian shippers are the ones holding the Transport Ministry to the cabotage policy. That the Ministry is helmed by the MCA politicos is an inconvenient truth.

I realise and fully understand that this issue may be arcane and, yet, emotive, depending on where each of us stand.

But, whatever the case, the following policy questions need to be addressed:

First, why should there be a cabotage policy that favours Port Klang and, by logical extension, the local shippers at the expense of the Sabahans and Sarawakians?

Second, should there be a time-limit to the policy since home-grown enterprises seem never to be able to cut the umbilical cord or government (read, taxpayers) support?

Third, if the trade-off is between the cost of abandoning the cabotage policy and measures taken to reduce the cost of goods in Sabah and Sarawak, what can the federal government do to reduce the cost of goods in Sabah and Sarawak - or, at least, the cost of freight component?

Fourth and, possibly, the most challenging question is, is it possible to institute a ONE-PRICE POLICY to unify Semenanjung with Sabah and Sarawak?

Thursday, March 19, 2009

Dodgy thinking dogs levy policy

Part of the stimulus package involves the doubling up of levies on foreign workers. The idea, quite obvious really, has several prongs. The obvious one is to enable Malaysians to take over the jobs. The less obvious one is to compel Malaysian businesses and enterprises to ratchet up the value chain by introducing some trite innovations and processes.

Here, we have a call made by the MCA Youth Chief (who also doubles as Deputy Minister of Education) Wee Ka Siong, that the Government (that he is a part of) should reconsider its decision to double the levy on foreign workers as this may end up hurting businesses.

From The Star, “MCA Youth is in support of such a move if it actually proves to help retrenched locals but our feedback is that despite advertisements, many are still reluctant to work in restaurants or factories,” said Dr Wee, adding that the movement had prepared a memorandum to be presented to Deputy Prime Minister Datuk Seri Najib Tun Razak.

I have some observations on this:

First, what happened to the principle of collective Cabinet responsibility. Even a Deputy Minister should be subjected to this constitutional provision. This is breaking the ranks. I suppose this is one dodgy version of democracy as understood by the MCA Youth Chief.

Second, this smacks of crass pandering to lazy and overweight businesses that are used to years of cheap foreign labour. That a member of the ruling coalition and, a Deputy Minister to boot, should support this myopic call only demonstrates the paucity of genuine visionary political leaders in this country.

Third, as I understand it and, I may be wrong since my understanding is based on official statements and speeches and what is reported in the Mainstream Media (MSM), the Second Stimulus Package is largely predicated upon Malaysians working to increase efficiency. What is the efficiency of reverting to the usage of cheap and unskilled foreign workers?

Fourth, which dovetails from the preceding third point, the eateries, hawker stalls, kedai mamak and warungs should move towards some form of self-service principle. And, factories that are labour-intensive need to either close down or increase their automation processes (the loans are available under the Second Stimulus Package). In due course these measures will result in a demand for higher skills (and, hygiene, in the case of the restaurant and food sector). This means better pay. This will attract Malaysian workers.

Presently, the archaic, unsafe and unhygienic workplaces in Malaysia are suitable only for cheap, unskilled foreign workers. No Malaysian who is used to a higher standard of living and sanitary conditions (I hope) will step into the industrial and F&B cesspools.

So, why, YB Wee, are you calling for a review of the policy to reduce Malaysia's dependence on unskilled foreign workers?

Why do you insist on championing the cause of inefficient Malaysian businesses?

Do you not understand that the Second Stimulus Package offers an opportunity for Malaysian businesses to restructure their erstwhile inefficiencies and ratchet up to the next few levels?

Or, do you doubt the effectiveness of the Second Stimulus Package?

Wednesday, March 18, 2009

Structural issues in Malaysia's Federal Constitution

In Malaysia, as with countries like the United Kingdom, which practices the so-called Westminster model of parliamentary democracy, succession to the leadership of a single party can mean the assumption to leadership of the nation.

One party dominance
The palpable difference between Malaysia's experience is that one political party has seamlessly determined the next succeeding Prime Minister.

But, when seen in the Asian context, which includes non-parliamentary democracies such as Taiwan (until recently) and Japan (until recently), one-party dominance is not that unprecedented or, unique.

Travails of importation
There is a point to be made about the fact that Malaysia's parliamentary democracy, being an imported politico-constitutional model, was bound to undergo modifications to suit the challenges and transformation unique to the Malaysian federation and polyglot society.

We should, therefore, be reminded that the evolution of the Westminster model of Government in the United Kingdom is unique to the political ethos of the UK. The supremacy of the British Parliament, the unwritten British constitutional principles and the evolution of the concept of the Cabinet in UK are based upon practices and critical episodes treasured, appreciated and abided, only by the British and, in particular, the English.

Furthermore, Malaysia's Federal Constitution can be regarded as a mere fruit of the attempt by Indian constitutional jurists in the late 1940s, the Reid Commission and the communal elite in the Alliance to codify the uniquely British and, to a lesser extent, American (via the Indian constitutional experience), political and cultural experience in establishing constitutional government.

It may well be said that the Westminster model was the only paradigm of constitutional government that the political elite in the British colony of Malaya had. In any event, an alternative to the Westminster model may not have been accepted by the colonial masters. This is evident from the use of the Sedition Ordinance (precursor to the current one) against pioneers like Ahmad Boestaman who was inclined towards the formation of a broader nation straddling the Malay peninsular and the Indonesian archipelago which, would have resulted in a more Dutch model than the British one that we now have.

Theoretical presumptions
The Westminster constitutional model that Malaysia has imported presumes the following countervailing forces at work between and amongst constitutional institutions.

Firstly, the flows and ebbs of the fortunes of political party leadership depend upon the ability of the leader to control the party machinery. Such control is contingent upon continued electoral success. Electoral failure will result in the resignation from party leadership since it reflects the failure of confidence. This regenerates the process of political change and acts as a factor to limit excessive exuberance in governance.

Secondly, the successful party leader who is invited by the monarch to form the new government selects his or her Cabinet composition based on certain criteria. Since Cabinet colleagues are second echelon party leaders in their own right, the Prime Minister who is also the party leader depends upon the continued support and loyalty of the Cabinet. This requires a certain degree of consultation, a process, it is submitted, that also tempers and limits the growth of Executive power since opinions do differ and the eventual decision is influenced by the input of several points of view instead of the view of one man. Failure to command consensus may result in moves to challenge party leadership and, therefore, the choice of Prime Minister and the Cabinet composition.

Thirdly, in the Westminster model there is no guarantee that the party in majority in the Legislature led by the Prime Minister, by virtue of his being the leader of that party, would have regular consensus on all matters of government policy. Notwithstanding the role of the Whip, backbenchers, as third echelon leaders, often revolt. Such events may lead to a vote of no confidence, either in the Legislative Chamber itself or within the party hierarchy. This possibility also serves as a limiting factor of the growth of Executive power.

Fourthly, the presumptive role of the Opposition in the Westminster model serves as a major bulwark against the growth of Executive power since the Opposition is capable of forming the next government. The Legislature serves as an important forum for the Government to explain and defend its policies. At the same time the Opposition is granted an equal opportunity to criticize Government policies and, more importantly, explain its own alternative policies. This process tempers and limits the excessive growth of Executive power.

The fifth factor is the role of the Public Services to influence the ambitious policies of the political leaders in their Executive positions since the Westminster-style democracy rarely allows a single party to rule for more than a decade. In this setting the heads of Public Service departments offer a seamless continuity that tempers and limits drastic changes in policy.

The conditions in Malaya and, later, Malaysia did not support the growth of the above features of the Westminster model.

Reform the party, not the Constitution?
Astute and experienced commentators such as Dr M and Tengku Razaleigh Hamzah (and, here, I should include Sakmongkol AK-47) have advocated the proposition that the fault lies with the political party, its values and culture (or, the lack thereof).

That assessment is, if I may say, correct.

Monday, March 16, 2009

EPF to pay only 4.5% dividends

The word is that the Employees Provident Fund (EPF) is going to declare only 4.5% dividends for the 2008 period.

I'm quite certain this will raise the ire of many, many working Malaysians who work hard for an honest living.

The capital markets did take a beating in 2008 shrinking, if memory serves me, by about 40% or so in value.

The EPF board is now required to be super-transparent in tabling the basis for arriving at the paltry 4.8% dividends. The hardworking Malaysian workers require an explanation.

No opaque postures. No nebulous statements. No fudging.

Open the books.

EPF's financial results and, it's dividend policy is not a state secret. Nor should it ever be regarded as such.

It's the money that belong to all Malaysian workers who've worked hard and, will depend on the EPF after they retire from active work. So, let's be open about the performance basis.

Friday, March 13, 2009

English in Maths and Science: What he said

Using the famous phrase used by judges when they agree with something another judge has said, I concur with the view and reasons offered by Dr M here.

And as Stan Lee, the genius behind the Marvel superheroes like to write, 'Nuff said.

Thursday, March 12, 2009

Second Thrust

The second thrust is meant to augment aspects of the social safety net. It doesn't quite achieve the effect, though.

The First Minister of Finance has said that, The Government provides various subsidies, incentives and assistance for fuel consumption, food security, scholarships and educational assistance as well as social welfare programmes. The allocation for subsidies and other assistance in 2008 totalled RM34.1 billion or 22% of total operating expenditure. Of this, RM18.1 billion was for fuel subsidies, RM6 billion as assistance for students, disabled and poor families as well as RM3 billion for food assistance, while RM7 billion was for other forms of assistance.

The second thrust involves RM674 million in consumption subsidies for things such as sugar, bread and wheat flour.

I've always been leery of broadbased consumption subsidies since it is a drag of Malaysia's competitive spirit. Such subsidies can be targeted to lower-income groups. It should not be across-the-board from the super-rich to the super-poor. Maybe it's time we considered food stamps for the truly needy, instead. Really, these consumption subsidies are paid directly by the government to the sugar tycoons, bread barons and flour kings. What gives?

Home ownership
The plan is to give house buyers tax relief on interests paid on housing loans capped at RM10,000 per annum for 3 years. This plan is neither here nor there. I don't think anyone will go and buy a house just to get 3 years of tax deduction on loan interest especially if the loan is for 15 years. After 3 years, how?

Improving public infrastructure
The plan is to, enhance public infrastructure for the benefit and welfare of the rakyat. Apart from building capacity for the future, these efforts will also promote greater activities in the construction sector and stimulate domestic demand. Towards this, the following measures will be taken:

First: Accelerate implementation of projects under the Ninth Malaysia Plan, which have high local content and multiplier effect, people-centric and can be implemented immediately. These projects amount to RM8.4 billion. In addition, RM1.6 billion is allocated for funds to promote investments (Very short on details. More information should be given just so we understand what specifics there are. There's a lot of money here. What local content? What multiplier effect? Where's the people-centric features?);

Second: Provide additional allocation of RM200 million to repair and maintain drains and roads. In addition, the surroundings of public flats will be improved to ensure more comfortable living conditions. This includes painting, repairing of lifts and improving waste disposal facilities (Sounds like something local councils should be doing...including the Pakatan Rakyat states. There should be no discrimination on the basis of politics. Everyone is a Malaysian.); and

Third: Undertake renovation, maintenance and repairs of welfare homes, fire and rescue stations and quarters, as well as public toilets in mosques, surau and tourist spots. For this, a sum of RM150 million will be provided.

Government savings bond
Like etheorist has observed, the plan for RM5 billion worth of savings bonds is anomalous in a stimulus package since this issue is about fund-raising. But, at 5% per annum yields payable quarterly, it's good for Malaysian savers. I'll take it.

Improving school facilities
RM1.95 billion to build and improve facilities for 752 schools. For goodness sake, don't just bloody buy computers and build all sorts of nonsense. Resources should be allocated to training the teachers. The quality of the delivery system is questionable.

And, there must be stringent and highly transparent tender processes for any construction work. The bloody sub-sub-sub-contractors are prone to curi makan on sand, cement and steel frames. Why do you think school buildings are cracking and sinking?

About RM1.8 billion are allocated. That is good. This blog has advocated microcredit/microfinance for a long, long time.

Helping the less fortunate
Another RM20 million to augment the RM830 million already allocated in Budget 2009. The ordinary Malaysians are not feeling the effect of this one. This plan is regarded as a social safety net. It is a flimsy net.

Retrenched workers
They are retrenched but they get a tax exemption on RM10,000 of the retrenchment benefits. I don't think this one will go down well with the retrenched workers.

Incentivising banks to defer loan repayments
No outlay here. Just get the banks to agree to defer loan repayments for 1 year. What happens after that?

I don't think kudos can be given for the second thrust. No oomph. No real social safety nets.

Wednesday, March 11, 2009

Stimulus: Funding and First Thrust

The RM60 billion second stimulus package involves a budget deficit in the tune of 7.6% of Malaysia's GDP, up from the earlier forecast of 4.8%. This makes it the 2009 fiscal year, the largest fiscal shortfall that Malaysia has seen in 22 years.

Fitch Ratings had lowered the outlook on Malaysia’s long-term Ringgit credit rating of A+ to “negative” last month, citing an expected worsening of Malaysia's expected deficit budget position this year and next.

The source of funding for the second stimulus package needs to be clarified by the government as soon as possible.

Will the EPF's considerable funds be called upon? Tabung Haji and Tabung Angkatan Tentera also? These local funds must be the obvious candidates since the government has eschewed borrowing from overseas in foreign-currency denominated arrangements due to currency risk.

I hope the government isn't banking on selling government land in Jalan Peel and the Rubber Board's huge land bank in Sungai Buloh to fund the deficit. That sounded quite desperate to me when the Second Finance Minister announced the idea last year.

Back to the local funds. This is likely to mean the issuance of more Malaysian Government Securities or Treasury Bonds. Will the yield be similar to the 5% per annum for the Syariah-compliant Savings Bonds? By the way, the 5% per annum yield sounds pretty good to risk-averse people like me.

Under the so-called First Thrust, the plan is to create a total of 163,000 training and job placement opportunities in the public and private sectors.

Of the 163,000, a total of 100,000 training opportunities and job placements will be undertaken as joint collaboration between the Government and the private sector. This will be implemented through training programmes by various Government agencies, including government-linked companies (GLCs), and the private sector, including private training institutes.

The main objective is to enhance skills to meet industry requirements, as well as employability. The plan will also be to implement job placements and provide incentives to employers to recruit and train local workers.

The target should be employability. No point churning out half-baked workers who are useless to everyone, including themselves.

Double-deduction: A peculiar but inventive way to encourage employment
To encourage the private sector to contribute towards providing jobs to retrenched workers, the plan is for employers who employ workers retrenched from 1 July 2008 to be given double tax deduction on the amount of remuneration paid. The amount of remuneration eligible for this deduction shall not exceed RM10,000 per month and is limited 9 up to 12 months remuneration per employee. This incentive is applicable to workers employed from 10 March 2009 to 31 December 2010.

This double-deduction idea is quite interesting. Employers will prioritise hiring retrenched workers, then...if jobs are available.

Jobs opportunities in the already bloated Civil Service
The plan is to recruit 63,000 staff to fill vacancies and serve as contract officers in various Government agencies.

This one is dodgy. But, in a contracting economy a lucky 63,000 Malaysians will find a safe harbour for a few years....not permanently, I hope.

Opportunities for Post-Graduate Education
The plan is to encourage more Malaysians to pursue Masters and PhD courses. The Government will undertake to finance tuition fees and research grants up to RM20,000 for every student pursuing PhDs locally. For students in the Masters programme, the Government will provide up to RM10,000 per student.

I wonder which agency will undertake this bursary function. Although some other blogs have been cynical about this plan, I, for one, find it quite compelling. The academically-inclined Malaysians itching to write their thesis may just take the 2-year to 4-year sabbatical to pursue this...but not at Harvard, Oxford, Princeton, Cambridge and the like. The grants are not for that level. But, it's still good.

Reduction of foreign workers
The steps to reduce the dependence on foreign workers and give priority to hiring local workers is necessary. The measures undertaken will involve:

First: Levy on foreign workers will be doubled for all sectors except construction, plantation and for domestic maids. The levy will be paid by the employers and not by the workers;

Second: In the event the services of foreign workers are prematurely terminated, the levy will be refunded on a pro-rated basis to the employers. In addition, the employers’ bank guarantees will be returned; and,

Third: Freeze the issuance of licences to foreign labour recruitment agencies and tighten the conditions for recruitment of foreign workers by existing agencies.

The property and construction sector have been vocal in their complaints about this. But, really, how long can this sector use the excuse that Malaysian labour is too expensive? How long can they avoid being fined and prosecuted for having kongsi that double-up as cess-pools of Aedes mosquitoes and burglars? It is a social problem that the government is finally addressing, albeit indirectly.

More thrusts to come later....

PKFZ: Where's the PriceWaterhouseCoopers report?

While digesting the contents of the RM60 billion second stimulus package, I am minded to call upon the Minister of Transport and President of MCA, Ong Tee Keat, to release the contents of the PriceWaterhouseCoopers report on PKFZ.

Where is the Report?

When will it be released?

Tuesday, March 10, 2009

Najib unveils RM60 bil stimulus package

Malaysiakini, as usual, is one of the first media to report that the Malaysian government has tabled a whopping RM60 billion stimulus package in Parliament this afternoon, to combat the contracting economy. This is equivalent to 9% of the Malaysian GDP of 2008.

The stimulus amount is truly a "shock and awe" that defies even the most bullish estimates (last estimate was RM30 billion).

The stimulus package is time-released over the next 2 years. As reported by Malaysiakini:

The package, which is equivalent to 9 percent of last year’s GDP, is broken down as follows:
  • RM15 billion in fiscal injection
  • RM25 billion in guarantee funds
  • RM10 billion in equity investment
  • RM7 billion for private finance dinitiative and off-budget projects
  • RM 3 billion in tax initiatives
The First Minister of Finance has admitted for the first time that the Malaysian economy could contract by -1% GDP this year.

Let's wait for the details shall we?

Update: I'm doing a link to the Star Online report that also contains the full text of Najib's speech. This way we can review the RM60 billion package properly.

Monday, March 9, 2009

Cabotage and federalism

Not many Malaysians are away or, even bothered with the existence of a cabotage shipping policy in Malaysia.

Apparently, under the cabotage shipping policy, implemented since 1980, domestic trade between any two ports within the Malaysian federation can only be served by Malaysian-owned shipping companies registered in Malaysia's shipping registry.

The cost components for the transportation of goods include freight charges, port charges, forwarding fees, haulage or transport charges, storage charges and terminal handling service costs.

Goods costs more in Sabah and Sarawak
It is a fact wearily accepted by fellow Malaysians in Sabah and Sarawak that the same packet of instant noodles cost more than the prices in Semenanjung Malaysia.

Obviously transportation costs are one key factor.

But, if the incidence of poverty is said to be very high in Sabah and Sarawak, couldn't the federal government do more to reduce the obvious price differences?

The irony is that Sabah and Sarawak contribute oil and gas revenues to the federal coffers via the Petroleum Development Act.

The economics of federalism
It is high time that the federal government conduct a serious accounting of the reasons for the price discrimination between Semenanjung Malaysia with Sabah and Sarawak.

More importantly, the federal government should take active measures to institute pricing parity so that the same packet of instant noodles will cost the same anywhere in Malaysia. Saying that distance is a cost factor will not be acceptable past a point.

The irony and central and driving fact should be that the further a citizen lives from the administrative capital and great commercial centres, the more help that citizen needs. This is a fact.

Trust me, it will become a big bugbear as the economy contracts.

I also seem to recall that after the General Elections of March 8 last year, the BN components in Sabah and Sarawak appear to have delivered their part of the bargain.

It's a good time to listen to these working level complaints before they rise to political level complaints.

This, to my mind, is the proper mindset when dealing with federal-state matters.

Sunday, March 8, 2009

Malaysia and Crowdsourcing

C'mon Malaysia. Crowdsourcing is the one area that that is a fieldflattener. I say again, all you need is the right skill sets for any projects that are structured for crowdsourcing.

Sign up and, you are part of a global team. Wonderful and easy. All you need is to have the correct skill sets.

And....I believe that the universal language between boundaries is ENGLISH. I repeat, ENGLISH.

Here's an extract of a Businessweek piece, Pushing the Limits of Crowdsourcing for your reference:

From around the world, almost 20,000 people chipped in on a five-minute animated film that features a love story between a guitar and a violin. You could have been one of them. All you needed was a Facebook account and an itch for computer-generated animation. The Mass Animation project, led by Yair Landau, is showing how much further crowdsourcing can go, and how traditional production methods may get left behind.

David Perry is also pushing the limits, and expectations, of just what's possible by tapping the brainpower of the multitude. Project Top Secret, which Perry began in early 2007, has elicited contributions from 60,000 people who have signed in to help create a giant multiplayer online game. Like Landau, Perry is a novice in his new creative role. Both still have their day jobs: Landau, 45, is head of Bedouin Media, a production company; Perry, 41, runs Gameconsultants.com. And both claim their concepts have proven wildly successful. So how did they do it?

After seven years as president of Sony Digital Pictures (SNE), Landau didn't need to take a big jump to launchMass Animation, a three-way partnership of Intel (INTL), Dell (DELL), and Facebook. He got interested after a friend at Facebook told him how easily Facebook was able totranslate its Web site into different languages by simply letting users do the work. Facebook, meantime, was interested in seeing what other crowdsourcing projects it could come up with. Familiar with Landau's work in digital movies, Facebook approached Landau about crowdsourcing a movie via its site and Live Music, the animated tale, was born in Los Angeles.


Perry, a 26-year veteran of the video-game industry with several No. 1 titles under his belt, was looking for ways to include the video-game community into the production of games. Working with Acclaim Entertainment, the Beverly Hills resident had also seen how crowdsourcing made translation easier: On their own, users would record game dialogue in different languages. Perry and Acclaim figured gamers could do much more. On a plane ride from Korea to the U.S. in November 2006, Perry and Acclaim Chief Executive Howard Marks agreed to launch a contest that would crowdsource a full-fledged game. "We just decided to give them the rope to let them hang themselves," he laughs. In early 2007, Project Top Secretbegan.

Landau and Facebook spent less than $250,000 creating the Mass Animation application that would run on the site and host the entire contest. It was built by AniBOOM and SpreadApp and designed by Noise New York. Autodesk (ADSK) was brought in to provide a trial version of the industry-popular Maya animation software. To help users along, Landau created storyboards, character models, and broke the movie into 107 shots for the crowd to animate.

Within two months, 50,000 people became "fans" of the project on Facebook. A third of them stepped up to either animate a segment, uploading QuickTime video files to the Facebook app, or vote on submissions through the application or by creating their own fan pages. In the end, people from 101 countries contributed animated shots. Each person with a winning clip won $500. In addition, Dell and Intel, which used the contest to promote its Core i7 processor, gave away a Dell Studio XPS computer every week. In all, the sponsors spent about $1 million and eight months on the project. Landau says producing the same five minutes of film by traditional methods would have cost millions more and taken at least six months longer.

Read more here.

C'mon Malaysia! Let's get onto the global bandwagon at a faster click.

Mobile running dogs

Sometimes I come across something which is thrilling and scary at the same time. The Newsweek piece, A Trillion Points of Data is one such article.

It describes the innovation insight that taps into our usage of mobile telephony as a means of tracking human behaviour.

Our absolute dependence on mobile phones has led our mobile phones to betray aspects of our privacy; they have become the running dogs of celcos who will make money from this piece of data stream.

At this point, it isn't serious because via our mobile phones we are little red dots of data stream that broadcasts our movements and, therefore, our behaviourial patterns. Even before GPS technology was available in phones we were already aware that law enforcement officials can actually use mobile phone cells to create a vector on our location.

But, this data mining of mobile telephone technology has taken things to the next level.

We have become little red dots whose movements are processed into analytical data that describes individual, communal and societal behaviourial trends and patterns.

This presents a gold mine of data for social scientists and, marketers...and, Big Brother?

As I said, it is exciting as it is scary.

Friday, March 6, 2009

What's the deal with deflation?

This talk of concerns about deflation is quite perplexing. And, exasperating. 

Since it is quite clear that the entire globe will be experiencing economic contraction this year why should anyone in Malaysia be concerned about deflation?

And, more to the point, is it disinflation or deflation when prices fall after an obvious economic bubble caused by American hedonism?

Wasn't it only a matter of 2 or 3 months ago that the talk was about how sticky prices were as the inflation rate stubbornly refused to come down?

And, now, suddenly we are told to be fearful of deflation. What gives, man?

Okay, enough sanctimonious ranting. It's off the chest now.

Falling prices is not good for businesses because it is likely to mean 2 things. First, less people are demanding and consuming their goods or services. Second, the profit margins may be compressed and become thinner.

Falling prices are good for consumers because goods and services become more affordable.

Falling prices are bad for those consumers who are employed in certain weaker businesses because they may experience pay cuts or, lose their jobs.

Falling prices may be good for the re-generation and restructuring of the economy because businesses that made risky decisions will fail. Business activities that are obsolete will have to die. This clears the way for new businesses that are more robust and well-managed and, businesses in new and innovative areas to come up and flower. 

There are many facets to any economic equation. There are trade-offs.

But, the overriding principle must be that the weak and inefficient businesses and business activities must be allowed to die. 

Workers that are caught in the dying throes of businesses that are obsolete (like certain wafer plants in places like, say, Kulim) can be re-trained. Workers that are part of businesses that took huge risks and failed, can look for other similar jobs elsewhere.

Economic stimulus packages will be useless if they are directed towards propping up obsolete sectors and, businesses that are strong in political lobbying, like, say, the property development sector (for example, the first stimulus package is directed almost entirely at building materials...why?).

Wednesday, March 4, 2009

Stimulating the G-spot

All stimulus packages announced by governments the world over are directed towards boosting something called aggregate demand.

Aggregate demand is a special phrase used by economists (and those who pretend to be one) to describe the total demand for final goods and services in the economy at any given time and at various price levels. Of course, this is a simple description. But, it will do for our purpose.

There are 4 elements that comprise aggregate demand. These are:

C for consumption, which basically means the disposable income that is available to everyone in an economy multiplied by something that Keynes called the marginal propensity to consume. Basically, it is assumed that whatever is NOT saved, will be consumed or spent.

I for investments by the private sector.

G for government spending.

(X - M) which basically means the net effect total exports (X) minus total imports (M).

C first
Unless you were in some faraway place without access to Malaysian business news, you will probably be aware that C is declining. This could be a matter of people deciding to postpone spending. It could be a matter of people having less money to spend (maybe lost in the share market). So, C doesn't look good.

Looking at (X - M) 
This is a strange thing. Imports (M) are down. Exports (X) are also down. So, in absolute terms, the net effect of (X - M) has a lower value. So, (X - M) doesn't look good either as a component of aggregate demand.

I is looking shaky
Businesses who are related, directly or indirectly, to FDI activities, particularly the Electrical and Electronics (E&E) sector won't be investing in new plants or equipment for some time. Many SMEs which produce goods for export also won't be investing any time soon either.

Which leaves good 'ol G
The G component includes the RM7 billion first stimulus. It will also include the estimated RM10 billion to RM30 billion (no one can confirm yet, until March 10) second stimulus package.

Where will G go?
This is the billion Ringgit question.

Which part of I can the G stimulate and arouse?

Which part of C can the G stimulate and arouse?

The best G-spot
Where does education and training fit in? Because that is the absolute and, most important, expenditure that G should be directed into. It is not sexy because education and training has a time-lag effect. It takes time. 

But, education and training is directed towards HUMAN CAPITAL. That has to be the best G-spot of all to arouse; the MINDSET and SKILL SETS of the Malaysian.

Tuesday, March 3, 2009

Roubini: From "V" to "U" to "L"

Nouriel Roubini is not called "Dr Doom" for nothing. He is now warning of a precipitous drop in the global economy, all things being equal, of course. He wrote this op-ed piece:

LAST year, the debate over how long the recession will last was between those in the consensus who argued that it would be V-shaped — only about eight months long like those in 1990 to 1991 and in 2001 — and those like me who argued that it would last at least three times as long, 24 months, and be more than three times as deep as the previous two.

Today, as we enter the 15th month, it’s obvious that we are already in a painful U-shaped recession that has become global and will last at least until the end of the year — 24 months, the longest since the Great Depression. Even if the gross domestic product grows in 2010, it is likely to be no higher than 1 percent. And at that rate, with the unemployment rate rising toward 10 percent, we will still be substantially in a recession.

Even if appropriate aggressive policy actions were undertaken — monetary and fiscal stimulus, bank clean-up and credit restoration, mortgage debt reduction for insolvent households — the growth rate would not rise closer to 2 percent until 2011. So this recession may last 36 months.

And things could get worse. We now face a 1 in 3 chance that, if appropriate policies are not put in place, this ugly U-shaped recession may turn into a more virulent L-shaped near-depression or stag-deflation (a deadly combination of economic stagnation and price deflation) like the one Japan experienced in the 1990s after its real estate and equity bubbles burst.

Falling off the cliff

sheep_off_cliff.jpg picture by robertretallick .
Pix from here

reports: Malaysia’s corporate earnings are “decelerating rapidly” and will worsen this year, reflecting the global recession that will erode profits at plantations, banks and transport operators, RHB Research Institute Sdn said.

“Earnings are falling off the cliff and will likely worsen over the next two to three quarters,” RHB said in a report today. “Malaysian companies have yet to feel the full-blown effect” of economic decline and “the market is poised for a downshift.”

RHB Research expects corporate earnings to shrink 14 percent this year, more than the 8.7 percent contraction predicted two months ago, it said. Earnings shrank 2.8 percent last year after expanding 22 percent in 2007, RHB said. The benchmark stock index risks “breaking” the 801 level and may fall to 750 in the coming months, it said.

Sounds pretty bleak.

Flying blind without econometrics models

There is a good reason why the Malaysian government's economic managers were in denial until the waning days of February 2009. Our "economic managers" are the First and Second Ministers of Finance, the Minister in the Prime Minister's Department responsible for economic planning and the Minister of International Trade and Industry. Let's also add the Bank Negara Governor into the mix.

I have not included the Minister of Domestic Trade and Consumer Affairs for charitable reasons since his Ministry is so far backward that it doesn't even have a Retail Index. But, even this planned Retail Index contains weaknesses that this posting will address.

Why the economic managers were in denial
The simple truth is that the economic managers were relying on stale data. They were relying on the data compiled by the Statistics Department. Go to any of the websites maintained by these ministries. You will find that the data displayed are two months old. Historical data.

I am almost 100% certain that the Retail Index proposed by the Ministry of Domestic Trade and Consumer Affairs will be based on these types of two-month old data.

The inefficiency of the Statistics Department
The inefficiency of the Statistics Department is one factor that has to be seriously looked into.

Planning with historical data
When each 5-year Malaysia Plan is being conceived, reliance on historical data is quite okay. Preparation for a 5-year plan has the luxury of several months of time-window before being tabled at the Cabinet and, later, Parliament.

Likewise, Annual Budgets are fiscal policies that, in the norm, has a 12-month time-window. There is time for coffee and cakes at the cavernous conference halls in Putrajaya with industry groups.

So, too, with monetary policies where Bank Negara can fete stakeholders from the financial sector in each quarter to chit-chat about the state of the velocity of M1, M2, M3 and, even M4 from the preceding quarter. Then they decide on SRR ratios, OPRs and so on.

Those are processes that Malaysia's economic management have been praised for. Some have even won awards internationally. These are the laurels that Malaysia's economic managers have sat on and basked in. Joy! Enjoy!

What does one do in a fast unfolding economic crisis?
Can the time-tested languorous fiscal and monetary processes described above apply to a precipitous drop in almost all economic sectors? You know the answer to that.

In their serendipitous and over-sized offices, Malaysia's economic managers must have waited patiently for economic data to be compiled by the Statistics Department, then wait further for the data to be delivered to whoever is in charge of summarising the data in their respective ministries before being (probably) summarised into a one-page executive summary (maybe double-spaced, with coloured bar charts and pie charts) to be presented to the Minister. Some superficial questions may be asked or, not.

The Minister will probably ask a minion to include the data in speech to be delivered at some function some time later in the month.

As I said, in the norm, when the cosmic order is in harmony and the stars are all aligned in proper order, this languid pace is not a problem.

But, we have an economic crisis. It is hardly good enough to say that as at Q3 2008, Malaysia was fine. It is terrible to say that they could only confirm a possible crisis only when the data from Q4 2008 is available at the end of February 2009 (which is the middle month for Q1 2009).

So, what does one do in a fast unfolding economic crisis?

Timely data gathering, high-powered econometric forecasting
The Malaysian government needs to immediately set up a high-powered and well-funded team of economists and econometricians to pore over economic data and formulate quarterly, annual and 5-year forecasts and projections.

http://www.statoek.wiso.uni-goettingen.de/mitarbeiter/ssperlich/gentree2.JPG. Diagram from here.

What is econometrics? This is how Wikipedia describes it:

Econometrics is concerned with the tasks of developing and applying quantitative or statistical methods to the study and elucidation of economic principles. Econometrics combines economic theory with statistics to analyze and test economic relationships. Theoretical econometrics considers questions about the statistical properties of estimators and tests, while applied econometrics is concerned with the application of econometric methods to assess economic theories.

Although many econometric methods represent applications of standard statistical models, there are some special features of economic data that distinguish econometrics from other branches of statistics. Economic data are generally observational, rather than being derived from controlled experiments.

Because the individual units in an economy interact with each other, the observed data tend to reflect complex economic equilibrium conditions rather than simple behavioral relationships based on preferences or technology. Consequently, the field of econometrics has developed methods for identification and estimation of simultaneous equation models.

These methods allow researchers to make causal inferences in the absence of controlled experiments.

To put it simply, a team of econometricians are required to use the economic data collected and create economic forecasting and projection models based on certain assumptions given by economists.

These econometric models will provide the Malaysian government with a picture and, an idea, of what the worst case scenario is. They will give the economic managers an idea of what policy options are available. They will give the economic planners an idea of which economic sectors require how much fiscal input or stimulus to generate the required multiplier effect.

At the moment, our impression of economic crisis planning in Malaysia is akin to someone licking his forefinger and holding out the forefinger to determine the direction of the wind. Or, a golfer pulling a blade of grass and tossing it high to see the direction of the wind before deciding on club selection and direction to address the golf ball.

http://cache.daylife.com/imageserve/08wpflp7YWdmi/340x.jpg.Pix from here.

The alchemy of economic planning
The alchemy in economic planning is actually in being able to obtain timely economic data and, being able to econometrically "crunch" the numbers and, being able to make one assumption after another to test the effect of fiscal policy options and monetary policy options.

Educated guesses from econometric forecasting trumps flying blind
Needless to say, our economic managers really need to get their act together and direct some resources towards creating a high-powered team of economists and econometricians fast.

While doing that, kick the asses of the Statistics Department to gather economic data even faster.

Monday, March 2, 2009

A constipated stimulus

You have to wonder about the leadership and management skills of the country's leaders in times of crisis.

Less than 9% of the RM7 billion stimulus package has been implemented to-date.

Despite the amount of crowing made about Pemudah and ketelusan procedures on the delivery system that Malaysians have been treated to long before this, at a time when the country's leaders were still in a state of denial about the economy, the admission by the Second Finance Minister is that the stimulus package is being stymied by a poor delivery system is indeed very ironic.

Red tape appears to be the most significant challenge for the government in trying to help give the Malaysian economy some breathing space in the face of a global recession.

Second Finance Minister told Parliament today that just RM567.9 million of the RM7 billion had been spent so far.

http://www.scripting.com/images/notAngry.jpg.Pix from here.

Politicians who cannot exhort the Civil Service and energise them into a state of urgency do not meet the basic criteria of leadership.

What Malaysia needs right now is the economic equivalent of the wartime Winston Churchill. Is there a Churchillian figure in the Malaysian Cabinet? Is there one outside of it?

http://www.rumorsdaily.com/brd/wp-content/uploads/2008/07/winston_churchill.jpg.Pix from here.

We need one. Right away. Can we order one up? Maybe we can check in eBay?