Malaysia Most Risky in Weathering Financial Crisis


UPDATED: Anil Netto wrote an excellent article entitled “Malaysia’s Ostrich Economics” much along the same lines of this posting (read here).  It was originally posted at Asia Times Online.

The Straits Times (Singapore) reported today (read here):

On a scale of zero for the least risky to 10 for the most, Singapore scored 2.76, followed by Australia (2.9) and Hong Kong (3.23). Most risky are India (6.87), Thailand (6.28) and Malaysia (6.07). They are vulnerable not so much to the financial fallout but due to internal developments, the report added.

Regardless of what Najib wants us to believe, come November 4 in Parliament, he will have to be candid and honest about the state of affairs in Malaysia.  If he is wanting to be the next PM, he has to be seen to know what he is talking about and do something affirmative and not skirt around the issue or remain in a state of denial.

Interestingly, financial strength in Bank Negara Malaysia is not the only thing that matters.  Pumping another RM5 billion into Valuecap may not help.  It is knowing the impact of global slowdown to the export companies in Malaysia.  It is ensuring that politics is stable and all serving to be positive to investment sentiments.  But at the moment, it appears that everything is working against us.

The current talks about liberalizing NEP by Najib and constant clarification about what that means appears to be in the right direction but is it really going to happen?  We appear unclear as to what is being said as they are all political statements and not economic policy statements.  Everyone is watching to see what is done to the implementation of the NEP with regards to increase the confidence of foreign investments.  Malaysians also want to ensure that eradication of poverty policies need to be strengthened and implemented for all who needs it, not just for some but for all, when dismantling or tweaking the NEP.

Nevertheless, it is most disturbing to hear from others looking at Malaysia that they think that we are most risky to weather the current financial crisis.  While Najib says otherwise and he is our Finance Minister, critics to this view includes Anwar and even Mahathir.  Politics must be put aside to address the real economic issues without clouding the truth.

Oil price has come down significantly.  So are commodities prices.  Sources of income for the Government needs to be revisited to ensure a revitalized budget can be executed to boost the economy.  Key assumptions must be validated as we know we can’t depend on Petronas anymore.  The Government cannot brush aside this merely to defend the Budget 2009 that was tabled earlier.  It’s not about politics, it’s about our country’s economic performance which will have a direct impact on our cost of living which is rising quite significantly.

Hints that the GDP will be revised downwards are aplenty.  But why hint?  Why do we have to wait for an auspicious time to announce the truth?  Why politicize GDP?  It’s a critical situation and needs serious apolitical solutions.

Alas, in Malaysia, we have weaved too many other issues into the economic policies that involve race, party politics, personality conflicts, governmental perceptions, etc.  This is all the BN doing for the past 50 years.  In appearance, there have been improvements but in reality caused a number of serious weaknesses in our economic structure.

Can Najib pull us out?  He hasn’t said much concrete things yet and he is busy with ensuring his position as Umno president.

Can Anwar pull us out?  He may know how but he is not in the position yet, so nothing will happen as BN will not be interested to be bipartisan.

Can Mahathir pull us out?  He has his thoughts but he will most probably be ignored by the present BN Government.

Can Pak Lah pull us out?  He is already relinquishing his positions and he is only looking to get his promise of reforms implemented.

Then who is doing anything for us?  That is the big question!

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