BUKIT LANJAN: Is there light at the end of the tunnel for Malaysia’s economy?

Source: Hong Kong Trade Development Council
Malaysia has 5 Major economic advantages, including:
Continued increase of the country’s Gross Domestic Product (GDP)
Malaysia’s economy expanded by 5.8% year-on-year (YOY) in Q4 of 2014, after rising by 5.6% and 6.5% respectively in the previous two quarters.
The services and mining sectors were the main drivers of economic expansion, growing 6.2% and 9.6% YOY respectively.  Trade surplus for the 17th consecutive year
Malaysia’s exports expanded by 6.4% to US$234 billion in 2014, and imports edged up by 5.3% to US$209 billion during the same period. Exports of manufactured goods, accounting for about two-thirds of total exports, saw an expansion of 7.6% amid stronger sales of electrical and electronic products. With faster exports growth, Malaysia reported a trade surplus for the 17th consecutive year in 2014, amounting to US$25 billion. The Government launched the Economic Transformation Program (ETP) in 2010 targeting 12 National Key Economic Areas believed to have the greatest potential to boost overall economic growth, including palm oil cultivation, tourism, financial services and electronics industries. The ETP is a comprehensive economic plan to propel Malaysia’s economy to the rank of high income economies (with a per capita income of at least US$15,000) by 2020. Encouragement of trade integration at the regional and global level Malaysia is a member of the World Trade Organization (WTO), and it adopts a liberal trade regime. Import tariffs, where applicable, are mostly imposed on an ad valorem basis. The average applied duty rate was 6% in 2013. For non-agricultural products, import duty ranges between 0%-50%, and about 65% of the non-agricultural imports were duty-free. Raw materials, machinery and essential foodstuffs are generally non-dutiable or subject to duties at lower rates. The trade regime has been progressively liberalized to encourage integration at the regional and global level. The establishment of the ASEAN Economic Community and Malaysia is a member of ASEAN that y is committed to the ASEAN Common Effective Preferential Tariffs (CEPT). Malaysia also adopts the rotational chair of ASEAN in 2015, and is scheduled to roll out the ASEAN Economic Community by December 2015. Malaysia has continued to participate in various free trade arrangements (FTAs). – GOLDEN EMPEROR (June 16, 2015)

BUKIT LANJAN: Is there light at the end of the tunnel for Malaysia’s economy? 

At least there’s some positive news from the World Bank that Malaysia’s growth is gaining a lift from higher investment and a recovery in global trade.

Malaysians sure hope that the World Bank’s growth forecasts on East Asia is accurate.

“At least there’s light at the end of the tunnel with so many negative forecasts and claims from certain quarters,” Gerakan Deputy Speaker Syed Abdul Razak Alsagoff said.

With investments from China and India at all-time highs the past year, Syed Razak said the World Bank’s positive outlook was certainly a welcome relief.

“Malaysians must remain alert and seize the opportunities that come with such a positive outlook. Ignore what the doomsayers or naysayers are claiming.

“The World Bank’s forecasts are based on economic statistics. So, do the necessary, and that is for investors to keep a lookout for real and solid opportunities,” he added.

But that were all based on an Oct 4, 2017, report by international news agency Reuters. And five days after, on Oct 9, 2017, online news portal The Malaysian Insight posted a contradictory report titled “Latest World Bank report bad news for BN”.

And not too far back, on Sept 26, 2017, international business news provider Bloomberg reported the Asian Development Bank (ADB) as listing Hong Kong and Malaysia as the biggest growth surprises.

It even reported that the global trade recovery was helping boost exports in Hong Kong and Malaysia.

So, how confusing and confused are they and you? It sure looks like the World Bank and ADB are even more confused than Confucius! 

Malaysia's economy has been slowing, but real GDP growth on average is still stronger than the 'A' median.
HONG KONG: Fitch Ratings has affirmed Malaysia's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'A-' with a Stable Outlook. In a statemnt issued in Hong Kong the rating agency said: "The Outlook is Stable. The issue ratings on Malaysia's senior unsecured foreign- and local-currency bonds are also affirmed at 'A-' and 'F1'. The Country Ceiling is affirmed at 'A' and the Short-Term Foreign-Currency IDR at 'F1'. The Short-Term Local-Currency IDR is also affirmed at 'F1'. KEY RATING DRIVERS Malaysia's rating of 'A-' reflects its strong net external creditor position, real GDP growth that remains stronger than the median of 'A' rated peers and a current account that is still in surplus although it has been narrowing. Malaysia's economy has been slowing, but real GDP growth on average is still stronger than the 'A' median. -The Star Online 

Syed Razak, who is Gerakan’s nominee to contest N.37 Bukit Lanjan in the coming 14th General Election (GE14), said Malaysians should refrain from helping those out to sabotage the country’s economy with negative comments and views that are tainted with self-serving agenda.

“It’s better to spend all your time and energy on looking out for the economic opportunities that are worth investing into,” he added.

Here are the two contradictory reports:

"World Bank raises East Asia growth forecasts

Wednesday, 4 Oct 2017
10:05 AM MYT 

SINGAPORE: The World Bank raised its economic growth forecasts for developing East Asia and Pacific for this year and 2018, but added the generally positive outlook was clouded by risks such as rising trade protectionism and geopolitical tensions.

The Washington-based lender now expects the developing East Asia and Pacific (EAP) region, which includes China, to grow 6.4% in 2017 and 6.2% in 2018.

Its previous forecast in April was for 6.2% growth in 2017 and 6.1% growth in 2018.

“The economic outlook for the region remains positive and will benefit from an improved external environment as well as strong domestic demand,” the World Bank said in its latest East Asia and Pacific Economic Update report on Wednesday.

The outlook, however, faces risks from rising trade protectionism and economic nationalism, which could dampen global trade, as well as the possible escalation of geopolitical tensions in the region, the bank said.

Increasingly hostile statements by US President Donald Trump and North Korean leader Kim Jong Un in recent weeks have raised fears of a miscalculation that could lead to war, particularly since Pyongyang conducted its sixth and most powerful nuclear test on Sept 3.

“Because of the region’s central role in global shipping and manufacturing supply chains, escalation of these tensions could disrupt global trade flows and economic activity,” the World Bank said.

That could be accompanied by financial market volatility that would likely hamper economic growth in the region, and there could also be a ”flight to safety” that spurs capital outflows, the bank said.

The World Bank said it now expects China’s economy to grow 6.7% in 2017 and 6.4% in 2018. Its previous forecasts were for China to grow 6.5% in 2017 and 6.3% next year.

China’s economic growth is projected to moderate in 2018-2019 as the economy rebalances away from investment and external demand towards domestic consumption, the bank said.

The World Bank cut growth forecasts for several countries in Southeast Asia including Myanmar and the Philippines, while raising forecasts for Malaysia and Thailand.

“Businesses in Myanmar appear to have delayed investments as they wait for the government’s economic agenda to become clearer,” said the bank.

It cut Myanmar’s growth forecasts by 0.5 percentage points for both 2017 and 2018, to 6.4% and 6.7% respectively.

“These projections do not factor in any longer-term impact of the ongoing insecurity in Rakhine State, which if it persists could have significant adverse effects by slowing foreign investment.”

More than half a million Rohingya have fled from a Myanmar military crackdown in Rakhine State launched in late August that has been denounced by the United Nations as ”ethnic cleansing”.

In the Philippines, a delay in a planned government infrastructure programme has softened the economic growth prospects, the World Bank said.

It added that Malaysia’s growth is gaining a lift from higher investment and a recovery in global trade, while Thailand’s growth forecasts have been revised higher due to a stronger recovery in exports and tourism. – Reuters/The Star Online

Latest World Bank report bad news for BN

Updated about 5 hours ago · Published on 9 Oct 2017 12:

THE latest World Bank report shows that Malaysia’s economy is growing weaker.

Out of the 15 Asian economies analysed in the report, Malaysia and a few others are the only ones expected to worsen.

The World Bank forecasts that under current conditions, in 2018, Malaysia’s growth rate will lower to 5% and in 2019, decrease further to 4.8%.

There are less than three months to go until 2018.

As the new World Bank report describes Malaysia’s economy: “The main risks to growth arise from the policy uncertainty in the major economies, geopolitical developments and commodity price volatility.”

While most Asian economies are rising, Malaysia’s is in decline, because it has not adapted to both global and domestic economic conditions.

The report also singled out Malaysia as one of only two Asian economies where household debt “exceeds 70% of GDP”. Many economists have concluded that Malaysia’s debt bubble is about to explode.

As others have correctly noted, the gross domestic product numbers and global economic rankings with which Najib is obsessed haven’t benefited Malaysians.

As the World Bank country manager for Malaysia Farid Hadad-Zervos recently warned: “This is the fundamental question: what does GDP really mean in the daily life of Malaysians?”

During his failed US visit, Najib said Malaysia’s 5.2% growth is “the envy of advanced economies”. To which everyone should immediately respond: “Iraq had 11% growth, Bangladesh had 7.1% growth and Ethiopia had 7.6% growth last year – should they be the envy of the advanced economies, too?”

Instead, Malaysia is falling behind its Asian neighbours.

As Bloomberg reported last month, Indonesians and Thais are the world’s top 10 populations where the highest numbers of millionaires are being created, increasing by 13.7% and 12.7% respectively.

Unlike its Asian neighbours, Malaysia still has not entered either the G20 or the trillion-dollar GDP club (Barisan Nasional’s latest target is a trillion ringgit).

According to the United Nations, today the Malaysian youth unemployment rate has skyrocketed to 12.1% and rising – approximately quadruple the national unemployment rate. A recent Bank Negara survey showed that three out of four Malaysians find it difficult to raise even RM1,000 in an emergency.

Najib is notorious for falsifying economic data in his speeches, selectively quoting reports, omitting bad economic news, and twisting the complete economic portrait of Malaysia, because he is politically unstable.

In the recent best-seller The Rise and Fall of Nations, the author describes a particularly hilarious but disturbing story about Najib’s inability to understand the Malaysian economy:

“On a visit to New York in October 2015, one of my colleagues asked (Najib) whether the collapse of the value of the ringgit is offering any boost to the nation’s embattled manufacturing sector. He answered by missing the point, saying the cheap ringgit is great for tourism, which can be an important contributor to growth in a country as large as Malaysia. Pressed on the manufacturing question, Najib seemed at a loss. An aide in the back of the room pitched in to help, but spoke about investing in oil and other raw materials. The crowd left with the impression that Malaysia is missing an opportunity, because the cheap currency coupled with the right reforms could supercharge Malaysian manufacturing.”

All Malaysians should read the new World Bank report to draw their own conclusions about whether Barisan Nasional is missing additional opportunities for growth – or whether it’s more focused on protecting the elite few. – October 9, 2017.

* Athena Athena is a reader of The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight.



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