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The UMNO Malays are so short sighted. They ‘fight’ our local Chinese and Indians, but they forgot to fight globally with those competitors from China and India. UMNO is not bothered with the progress of the country and rakyat. UMNO will protect its plunder with all its might, that’s why they are electing the biggest … to be the President and they always will.

Those with good conscience like Zaid are considered traitors to the … Fraternity.

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The opposisiton should see this an opportunity. Najib already has caught on, not so much because of March 8 th results but he senses things may get worse economically and people will no longer have the stupidity to talk about racial quotas. Everyone has to pull up their socks, not least policy makers who have enjoyed a great extended party thanks to the asset bubble of Anglo Saxon economics.
Now is the time to feel the pain of relying on US and Europe’s asset-fueled bubble.

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Also, how much money did we invest in that ‘IT entrepreneur” who ran away?

But my real frustrations is with the Sarawak government who continue to bulldoze the aluminium smelting plant.

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Asia Times
31 Oct 2008

Malaysia’s ostrich economics
By Anil Netto

KUALA LUMPUR – Malaysia is bracing for an economic slowdown, as the
government gradually comes to grips with the fact that the country is
not as isolated as it hoped from the mounting financial turmoil in the
United States and Europe. Already dark clouds loom on the economic and
financial horizons.

This week, Deputy Prime Minister Najib Razak, who is also finance
minister, said the government would review its 2009 economic growth
forecast of 5.4%. He said that budget deficit forecasts may also be
reviewed after critics pointed out that its previous budgetary
assumptions, including revenue forecasts, no longer held.

Najib, who is expected to succeed Abdullah Badawi as premier
by March next year, has consistently denied that the trade-geared
country is on the brink of a financial crisis or economic recession
and “certainly we should not talk ourselves into one”. He said in no
circumstances would state spending be cut back.

Those assertions are raising questions about whether the government is
in denial about the country’s economic and financial prospects. Along
with Hong Kong and Singapore, Malaysia is the region’s third most
trade-geared economies, with exports representing around 120% of gross
domestic product last year. In recent years around 20% of total
exports have been sent to the US, where consumer demand is expected to
fall off drastically in the quarters ahead.

The Malaysian Institute for Economic Research (MIER) predicts growth
will slow to 3.4% next year, while other economic analysts are already
talking about the possibility of a full-blown recession. The umbrella
trade union body for public sector employees has warned that up to
50,000 contractual civil service employees could be retrenched by the
end of the year and there are fears that export-oriented multinational
corporations could also shed jobs.

For its part, the government has said it will announce several
measures on November 4 to ensure that the country will not slide into
a recession. The trade-oriented economy has already taken a hit
following the sharp drops in the prices of crude oil and palm oil,
which will adversely affect both export revenues and the national
budget. The price of crude palm oil price fell from a high of nearly
4,500 ringgit (US$1,262) per ton in March to around 1,500 ringgit at
present.

Meanwhile, the budget deficit for this year is expected to reach 4.8%
of gross domestic product (GDP) against a previously forecast 3.1%.
And the Malaysian stock exchange is now at its lowest point in four
years, with 24 billion ringgit in market capitalization lost on
October 24 alone. A string of the country’s wealthiest tycoons have
reportedly lost billions in the market value of their equity holdings.
The opposition People’s Alliance coalition, led by former finance
minister Anwar Ibrahim, last week came up with budget recommendations
to keep the economy afloat and stave off a crisis of confidence. The
main thrusts were ensuring the stability of financial markets,
enhancing provisions for the social safety net, maintaining domestic
price stability and enhancing national competitiveness.

The opposition expects an 11% drop in government revenue to about 157
billion ringgit (US$44 billion), compared with the government’s
projection of 176 billion ringgit, due to declining volumes and prices
of exports. Even that lower projection may be understated as the
Alliance’s forecasts were based on a global oil price of US$80 per
barrel and crude palm oil price of 1,700 ringgit per ton.

To manage the bulging deficit, it proposes to trim operational
expenditure by 15.5% or 24 billion ringgit compared with the
government’s targeted spending, which as scheduled represents a 20%
rise from the previous year. Of the proposed 24 billion ringgit budget
cut, 10 billion ringgit in savings would supposedly come from
eliminating corruption and implementing open tenders for government
procurement.

At the same time, the opposition has proposed boosting spending in
education, public transportation, health and housing “as we believe
they will contribute quickly and with more multiplier effects towards
strengthening the economy in 2009 and beyond”.

Adds a Penang-based senior equity analyst: “What the country needs to
do now is to come up with a new budget and get rid of the unproductive
mega-projects that are a drain on the country’s resources.”

The government’s recent proposal to inject 5 billion ringgit from a
state workers’ pension fund into Valuecap, a stock market fund
management firm jointly owned by three statutory government owned
agencies, has also come under heavy fire and raised concerns about
ham-fisted market interventions. The injection “serves no logical
purpose other than to prop-up some companies in the stock market,
resembling the same pattern of abuse of power and misallocation of
public funds which took place in the 1997 bailout scheme”, said the
opposition alliance in a recent statement.

Meanwhile, central bank governor Zeti Akhtar Aziz recently said that
Malaysia faces a challenging period from a previous position of
strength. She pointed to a recent current account surplus of 15% of
GDP as evidence of this strength and predicted that even under the
toughest of global economic circumstances that the surplus would still
be around 10%, The Edge business weekly recently reported.

As recessionary fears roil the region, central banks have been forced
to intervene to stabilize depreciating domestic currencies. Foreign
portfolio investors have recently dumped ringgit-denominated assets
and exited the markets, forcing Bank Negara to play a more aggressive
role in shoring up the local currency. That’s been reflected in a
recent dip in foreign reserves, which dropped from $126 billion at the
end of June to $110 billion at the end of September – still equivalent
to a comfortable nine months cover of imports.

The faltering economy has also impacted on what were already heated
internal politics of the ruling United Malays National Organization
(UMNO), which is gearing up for party elections that will determine
the second echelon of leaders. The country’s wealthiest tycoons and
shareholders have taken a beating as the share values of oil palm
giants, state investment funds, and government-linked firms plummets.
Many of these individuals are known to have strong connections with
the UMNO leadership.

Najib has recently said that elements of the controversial New
Economic Policy (NEP), an affirmative action policy that largely
favors ethnic Malays over minority Chinese and Indians, would be
gradually liberalized once he takes over power. The liberalization
would not burden Malay entrepreneurs and would be based on fairness
for all groups, he assured the UMNO faithful. Anwar and his People’s
Alliance, on the other hand, have advocated replacing the NEP with a
new Malaysian Economic Agenda, which broadly would promote market
policies balanced with generous social policies.

There is a growing recognition even in UMNO that elements of the NEP,
though it initially uplifted significant segments of disadvantaged
Malays and created a new Malay middle class, have proven to be a
stumbling block to the country’s overall economic well-being and these
distortions will likely intensify amid an economic downturn.

A vice-president of the Malaysian Chinese Association, a ruling
coalition partner has said that the 30% quota for bumiputera, or
indigenous Malay, equity ownership in all listed companies in Malaysia
is an obstacle to creating a true partnership between business people
of various ethnic groups. Former premier Mahathir, a strong advocate
of the policy and whose son Mukhriz is one of the leading contenders
for the UMNO youth chief post, has disagreed, saying the original
target for bumiputera equity participation has still not been met.

As the economy falters and factionalism in the UMNO intensifies,
expect divisive issues of race and religion to be raised as UMNO bids
to bolster its position and stave off threats from Anwar’s People’s
Alliance, which before the global financial meltdown was already
bidding to topple the government through parliamentary defections.

Judging by Najib’s remarks about liberalizing the NEP, the country
must grapple simultaneously with long-held and deeply entrenched
race-based policies while defending itself against global financial
and economic turmoil. If the economy and markets slide further and the
government denies there is a problem, Anwar and his opposition
alliance can be expected to capitalize politically on the
displacement.

Anil Netto is a Penang-based writer.

http://www.atimes.com/

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