CURRENT ECONOMIC LANDSCAPE & NEM

Current Economic Landscape

Last February 4, I wrote that Dato’ Sri Najib has performed better than Obama, Brown and Sarkozy as an economic driver.

Now I wish to congratulate him and his Cabinet for the outstanding achievement in maintaining the momentum of turning around the economy. Latest economic data such as IPI, export and inflation seem to suggest that the country’s economic recovery is steadily gaining ground. Leading indicators also indicated that the economy will continue to expand over the next 6 month period.

This success is indeed very extra ordinary since it is achieved against a background of a much reduced government expenditure of 31% in 2010 (RM191.5b) when compared with that of 2009 (RM277.7b). In actual fact, the government has quietly withdrawn the stimulus package in order to maintain fiscal prudence and financial sustainability.

Notwithstanding, the phrase ‘cautious optimism’ remains as a useful reminder since China’s PM had also cautioned about the possibility of a double dip recession. Indeed, if it does happen, fortunately, Malaysia still has the capacity to dig into its pocket since its fiscal deficit as a percentage of its GDP and its debt-service ratio are relatively low.

At the same time, may I highlight rakyat’s problems which may not be news to PM anymore. An average rakyat is yet to feel the benefit of the recovery and at the same time he is feeling the strains of the deep cut. For examples, SME Corp is suspending all the grants, TEKUN seems to have no more fund and no news about PIA/PIAS.

What the poor rakyat, single mothers, orphans, OKU, chronic patients and senior citizens want are only a few hundred Ringgits a month and about RM5,000 to repair their houses. And they want the financial help NOW – RM10 today is better than RM10,000 tomorrow! They may no longer be around.

Such financial help for this group will generate a higher political dividend; hence, better value for money politically.

The government may not have to cough out additional fund in order to pursue this agenda. As I always maintain, it can be achieved by restructuring the various subsidy schemes, especially petrol, diesel and sugar,  by giving only to the poor.

Concurrently, the government has to overhaul the delivery system. Implementation is still slow because decision is very much centralised; for examples, even 1 lamp post under BELB, 1 PBR, RM1 under RISDA economic program must be approved by Putrajaya. Perhaps this is one of the real reasons why PM is introducing the GTP.

New Economic Model (NEM)

I fully support the NEM concept since it is also in line with the spirit of Zakat (growth). Only when the economy is growing can we share the riches; otherwise we are sharing the poverty. Besides Biotech, ICT, green tech and renewable energy as the new sources of high growth / high value-added, perhaps the PM can consider de-manufacturing of old vehicles.

Malaysia can be the hub for ASEAN. It consumes less energy, at the same time generates energy and produces metal / non metal, ferrous / non ferrous products.

Nonetheless, the identification of high value-added industries still has to be guided by input / output ratios.
Whatever the input that goes into the NEM in order to catapult Malaysia into the high income bracket (in US$), the outcome for ALL rakyat ought to be:

* full employment,
* higher household income
* lower poverty
* narrower income gap between races, intra race, between regions and urban/rural (Gini Coefficient around 0.33)
* fairer distribution of wealth
* low / moderate inflation

In short, the NEM must have a human face and heart, guided by moral economics.

The above have been achieved under DEB. Hence I don’t understand why certain Malays/Bumis at the NEAC, I was told, were behaving like the Non-Malays. They joined them to condemn the DEB; by extension they were also condemning Tun Razak, the architect of DEB.

One has to ensure the Malays and other races will benefit from the NEM. The Malays in Kelantan, Kedah and Kuala Trengganu had sent a strong signal that they preferred development that generated RM500 which is theirs rather than development which generated RM10,000 but goes to others.

Purchasing Power Parity (PPP)

Low/medium/high income country is based on GDP Per Capita, as defined by the World Bank. It is measured in US$. For example, in 2009, Malaysia’s GDP Per Capita was US$6,818. Hence, Malaysia is categorised as in the middle income group.

If it is measured in PPP, it was US$12,826; nearer to the high income (minimum) level of US$14,818.

Since PPP is a better measurement of comparable purchasing power and, hence, comparable disposable income and, thus, a better approximation of a comparable standard of living, therefore, it is strongly urged that PPP be used instead of US$.

Ministry of Finance, Bank Negara and EPU can educate the World Bank on this subject.

  1. #1 by cam on March 29, 2010 - 2:01 pm

    mmm.. your style of writings seems to be like another blog jebatmustdie and he/she also came from malacca.
    Aren’t you?
    just a question.

    • #2 by darahtuahb on March 29, 2010 - 11:40 pm

      Dear cam,

      Didn’t realise that my style of writing has that semilarity. Your observation may not be wrong.

      The answer to your question is abundantly clear.

      Darahtuah.

  2. #3 by sputjam on March 29, 2010 - 2:36 pm

    Dear Tuah,

    sometimes, the govenrment does not have to do anything to turn around or imrpove the economy.
    In the early 1990’s, rapid development was attributed to Dr M. What was ignored by the news, was that, the whole region was developing at more than 7% per annum. In fact 7% growth was considered a failure.

    This rapid growth was due to a huge influx of foreign money. Unfortunately for Malaysia, that influx of investment was not made fully used of, and many went to waste.

    The NEM has not been announced. But presently, Malaysia is ignored as an investment destination due to many negative news, some of which made headlines overseas an even on CNN and BBC. These includes flogging/caning single mothers giving birth in govenrment hospitals and drinking beer in public places for malays.

    I cannot imagine, if I represent a high end technology investor, or an investment fund, whether I should invest in a place that still practices abhorrent religious punishment, and insist on people of other faiths to abide by the ruling of the majority.

    Coming to the subject of subsidy, do you know that govenrment subsidies never get to the people they were suppose to give it to?
    For example, Bernas give cheap subsidise fertiliser to rice farmers. That means, the subsidy money goes to the fertiliser manufacturer and distributor.

    Same with petroleum subsidies. It goes to to the huge oil corporations, who then manipulate their figures to screw our government into paying even more.

    What you said is true. If the govenrment want to help the poor, then the assistance should be in the form of money given directly to these people. But we all know that most of these will be written off, like giving cows to the kampung people. As long as the malays refuse to make themselves more useful, it will be very difficult to make an improvement in the rural economic front.

    • #4 by darahtuah on April 9, 2010 - 11:39 am

      Dear sputjam,

      Let me just make 2 comments:

      1. those so called negative news that u extrapolated – serious and pragmatic investors are not influenced by such news and they know those rules only meant for the MUSLIMS and are NOT imposed on other faiths; only wicked persons thought so.

      2. subsidies – pls read my 2 articles on the related issues.

      Tq.

  3. #5 by sputjam on March 29, 2010 - 2:44 pm

    And may I add, it will be very difficult to encourage the local economy to grow, if the govenrment is not efficient, and come up with the right policies in terms of education/training and investment policies.

    This year, Indonesia is projected to export 80000 MPV’s. Thailand is already the world’s largest truck exporter, and soon, eco-cars. But in Malaysia, we hinder car companies from investing locally due to protectionist policies in favour of proton. And how many cars have proton exported or is projected to export this year? Probably not many.

    The govenrment has also ignored the many parents, teachers and students who are clamouring for PPSMI, i.e. science and maths to be taught in english. I can only come up with the reason as to why this is happening, and that is due to the loss of business for dewan bahasa dan pustaka in their monopoly in supplying school text books in malay. Again, subsidising the few at the expense of the many.

    Thank you

    • #6 by darahtuah on March 29, 2010 - 11:43 pm

      Dear sputjam,

      If you’re free, please watch Awani (501) on 30 Mac 2010 @ 8.15 pm.

      Tq.

      Darahtuah.

  4. #7 by flyingman on March 31, 2010 - 2:48 pm

    “The above have been achieved under DEB. Hence I don’t understand why certain Malays/Bumis at the NEAC, I was told, were behaving like the Non-Malays. They joined them to condemn the DEB; by extension they were also condemning Tun Razak, the architect of DEB.”

    It is very alarming and disheartening to see Malays behaving in this manner…Aren’t they fortunate to be the majority and be in a country where the government is fair and equal to all citizens?

    I guess these people will only know what is the value of being a majority after the minority successfully oust them. But I pray that that day will never come.

    Regards
    Flyngman

    • #8 by sputjam on April 1, 2010 - 9:39 am

      What good is it to have a malay dominated govenrment which is corrupt, inefficient and wasteful, unjust and wicked.
      I think the qualification to lead the nation should be based on ability, justice and righteousness.
      Why can’t we look at one another as brothers, instead of rivals. Learn from the positive side of any ethnic group, and maybe we will prosper at a greater rate.

      • #9 by flyingman on April 1, 2010 - 6:27 pm

        So you think if someone from a minority race were to lead, the government would be efficient, corrupt, free and just?

        I dont think so. Sputjam, you fart too much and at the wrong place.

        You are lucky that in this so called “undemocratic” Malaysia, the freedom of speech is still clear and fair. You are able to criticise the government and to the extent of even shaming political leaders.

        If you are in a neighbouring country, I can bet that you would be facing a wall in a room the size of a portable toilet cubicle.

        So count yourself lucky..

        • #10 by sputjam on April 4, 2010 - 3:45 pm

          @ flyingman
          two other countries which started off with similar background as the states of Malaysia, i.e. brunei and sinagpore, are in a better position, financially then us.

          with regard to free speech and liberty, the authorities practices selective persecution.

          In Brunei, the citizens are provided with free healthcare, education, housing. tax free imports for cars and no tax on income. the sarawakians and sabahans can only envy the bruneians for not being part of malaysia.

          The rakyats in malaysia are made to pay to subsidise the rich and elites. The bigger the losses, the larger the projects the elites get in order to cover up their mistakes. And that is why the poor sarawakians and sabahans who have no interest in proton, twin tower and KLIA, are taxed for the benefit of those people living in the klang valley.
          I would count mself lucky if we get to over throw this govenrment and their pampered cronies, and silence the syariah’s office to family matters only.

      • #11 by Average Joe on April 2, 2010 - 8:55 am

        Don’t blame the Malays for allegedly dominating government service if you non-Malays could speak neither English nor Bahasa Malaysia properly during your Public Services Commission (SPA) interview, plus the age-old chauvinistic ego of not willing to work under a Malay superior in your organisation no matter how good he/she is – another actual reason many non-Malays shun government services.

        • #12 by sputjam on April 4, 2010 - 3:54 pm

          the minorities are not interested in working in the civl service that is inefficient and bereaucratic. never get their work done. These civl servants have committees and meetings for simple problems, many of which can be solved by one enthusiastic person.
          The civil servant who mans the counter has to have the ability to speak in several languages. That is te reality, if you serve the rakyat in malaysia.
          We must compare ouselves to switzerland, where there are 4 official languages, i.e. german, french, italian and rumanian.

      • #13 by darahtuah on April 9, 2010 - 11:53 am

        Dear sputjam,

        Can u tell me who is that (1) lady exco in Selangor that is morally tainted? and (2) party chiefs that did not keep his promise and involved in sex scandal? What about the moral values of those who voted for them? I raised my hat for DP Chew.

        I totally agree with u that we should ‘look at one another as brothers, instead of rivals…’. Do U practise what u preach?

        Tun Dr M has introduced the policy of ‘Prosper Thou Neighbour’ but the Chinese still pursue ‘Beggar Thou Neighbour’.

        I’ve done my part. Pls read the relevant articles in my blog.

        Tq.

        • #14 by sputjam on April 11, 2010 - 3:17 pm

          personal sexual orientation/activities of anybody is none of my business. What sickens me is that after having consensual intimacy, their partners then decide to blackmail their more prosperous/famous partner for some rewards.

          Dr M is a hypocrite of the highest order. his “prosper thy neighbour” policy is nothing but hearsay with no results. In fact he hindered the policy by creating a barrier preventing ASEAN assembled/made cars fom being imported freely, in the spirit of AFTA.

          If the “chinese” you refered to means those of Malaysian citizens, they hve all given up hope of ever being treated equally by this govenrment. They have already invested billions building their own universities and colleges, in order to assist their needy students obtain higher education. It is the able “chinese”, who are assisting their less fortunate community in “proper thy neighbour” policy. The Malaysian govenrment, on the other hand, encourages malays all the bad habit in life, like work less to be a success with the “NEP”. I have already ecplaned to JMD that the government is full of these third graders making decisions that will decide the fate of the nation.
          The rich and elite malays, on the other hand, prefer to spend their wealth overseas. Very little trickling effect ever goes to the poor malays by means of the rich malays spending power.
          The longer the malays have trust on these hypocrites, the longer the time it will take for them to acheive economic briliance.

          • #15 by darahtuah on April 12, 2010 - 8:02 pm

            Dear sputjam,

            What good is it to have a malay dominated govenrment which is corrupt, inefficient and wasteful, unjust and wicked…[These malay dominated governments (Federal, Selangor, Kedah n Kelantan) are also made up of non-Malays who are, therefore equally corrupted, etc..Even the Chinese dominated government in Penang is not practising its CAT!

            Also pls be aware that normally there are 3 parties in a corruption case – the giver (mainly Chinese), the middleman (normally Chinese / Malays)and the reciever (mainly Malays in govt sector and Chinese/Indians in the private sector).

            Acc to CPI, The Chinese and Indian governments are more corrupted than the Malaysian govt.! Based on productivity rates, we’re higher!].

            I think the qualification to lead the nation should be based on ability, justice and righteousness…[these are yr exhortation…incl. “righteousness”..so pls don’t give us other execuses…]

            Why can’t we look at one another as brothers, instead of rivals. Learn from the positive side of any ethnic group, and maybe we will prosper at a greater rate…[The deafening problem is that u don’t display positive attitude / thinking…equivalent to a Malay proverb ‘the crab is trying to teach her young how to walk straight’..there will be a credibility / rejection problem’].

            We know and the govt knows that no single race is 100% happy and, hopefully, no single race is totally unhappy. We can have a peaceful, happy and prosperous Malaysian community if most of us are positive, constructive and accomodative in our thinking and action.

            Tq

  5. #16 by kita anak melayu on April 1, 2010 - 7:08 am

    Datuk

    kit amelancung luar topik sikit

    Rakan rakan semua, kalau nak tahu macamana rapatnya Anwar Ibnrahim dengan regim Zionis Israel sila ikut link di bawah

    GEMPAR; Disini ada bukti terbaru Anwar ada rakan dalam kerajaan ZIONIS Israel

    • #17 by darahtuah on April 2, 2010 - 3:59 pm

      kita anak melayu,

      Ribuan t/kasih.

      Bukti-bukti yang lain dialu2kan tapi hendaklah sahih.

      Darahtuah.

  6. #18 by Average Joe on April 1, 2010 - 8:28 am

    Salam…

    If I may add, nowhere in the document are they talking about Human Development Index (HDI) which has been renowned as the most appropriate single figure/formula to represent overall quality of life in a country. You may want to dig further into United Nations Development Programme (UNDP) website for yearly HDI reports especially on how HDI is formulated from various economic, technical and social variables. HDI proves that higher percapita income alone does never guarantee higher quality of life.

    Salam hormat.

    • #19 by darahtuah on April 1, 2010 - 5:06 pm

      Dear Average Joe,

      HDI & PPP were the 1st two issues I raised that night. Of course Dato’ Mahani tried to defend.

      I agree with u that HDI is a better measurement of development. Based on this Index, Malaysia is already a developed country; ranked no. 66/182 countries, compared to that of Russia (71), Thailand (87), China (92), Indonesia (111), Vietnam (116) and India (134).

      PPP is a better proxy of purcasing power and standard of living than the US$. In 2008 we were already in the high income bracket (PPP US$15,040).

      Tq.

      Darahtuah

  7. #20 by Average Joe on April 1, 2010 - 8:41 am

    Quoting Sputjam:
    “In the early 1990’s, rapid development was attributed to Dr M. What was ignored by the news, was that, the whole region was developing at more than 7% per annum. In fact 7% growth was considered a failure.”

    that 7% figure was merely a target. Malaysia’s actual growth from 1990 to 1996 WAS more than 8.5% annually. Please get your facts right before you even fart here. Thanks to our unorthodox recovery following the Asian financial crisis effective Sept 1 1998, Malaysia quickly bounced back while her bigger ASEAN neighbours were still reeling with the deleterious effects the IMF austerity package imposed upon them.

    • #21 by sputjam on April 1, 2010 - 2:48 pm

      Maybe you have misunderstood. the whole region, from Indonesia to china was growing at more than 7% – 11 % per annum pre 1997. Even the most despicable incapable retard leader got these growth numbers, thanks to an influx of foreign money. In other words,during this period, the growth was more to do with extraordinary economic/financial phenomena and not due to govenrment policies.
      We are talking about indonesia, Malaysia, thailand, Phillipines, cambodia, vietnam, China and maybe, even myanmar.

    • #22 by sputjam on April 1, 2010 - 3:04 pm

      Oh I forget, post 1997, car sales/truck sales in thailand dropped. So they started exporting to countries unaffected by the slump, i.e. australia, middle east, africa, europe and is now the largest truck exporter in the world. This would not have happenend if they focused on domestic sales alone. I believe, they export about one million trucks a year today.
      Indonesia on the other hand, have started to spring to life, and will export 80000MPV’s this year.
      Proton was injected with the usual govenrment aid post 1997, and is still incapable of exporting in huge numbers.
      There are some good points about IMF and some good points about capital controls. Like the Wall street bankers who should have been unemployed, but saved by govenrment bailouts, same thing happened in Malaysia. When the trouble is over, the crooks sarted spinning the same web and doing the same crooked stuff again.
      For Indonesia, IMF aid meant a new vigour, as the old chronic system collapse, and a more dynamic one evolved. Today, Indonesia is more transparent, liberal and investement friendly than malaysia ever was. Their education system produce students who are capable of speaking perfect malay and english. Our education system produce students incapable of speaking either languages.

    • #23 by darahtuah on April 1, 2010 - 5:38 pm

      Dear Average Joe,

      You are right – M’sian GDP growth rate ranged between 8.9% – 10.00% during the 1990 – 96 period.

      M’sia was even better than S. Korea; not just better than most of her ASEAN neighbours in handling the Asian Financial Crisis. After experiencing a negative growth of -7.4% in 1998, she quickly recovered to register a phenomenal growth of 6.1% (1999) and 8.9% in 2000.

      Lets us give the recognition due to shrewed and pragmatic Tun M; if given to DSAI, M’sia would have gone to the drain and, worst, controlled by IMF.

      Tq,

      Darahtuah.

  8. #24 by sputjam on April 4, 2010 - 4:32 pm

    whether it is PPP or GDP, the fact is that the west have more leisure time and money for their hobbies and activites, which is a huge industry iself, generating income and jobs during the weekend and holidays.
    our low rank workers are paid over RM1000/month, which is enough for transportation to work and food and maybe rent. But will not be enough to buy sports equipmnt, musical instrument/show tickets etc which, could have generated creative jobs and commercial entities.

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