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Monday, October 13, 2008

Pay attention, Malaysia

Below is an article on the impending economic crisis about to hit Malaysia when everybody is only concentrating on political issues right now. It's written by Hazlin Hasan and contains a lot of important pointers for everyone in facing the coming crisis.



October 10, 2008 Friday, 03:17 PM

Hazlin Hassan takes stock of the Malaysian economy.
-------------------------------------------------------------------
In Kuala Lumpur

WHILE the world is reeling from what is possibly the worst global economic
crisis since The Great Depression, most Malaysians have been too preoccupied
with its own political drama to pay much attention to the financial
meltdown.

Everyone is busy talking about politics. The opposition taking over, the
opposition not taking over; the PM stepping down, the PM not stepping down;
who will become the new PM's deputy, who will not; is Anwar guilty of
sodomy, is he innocent.

Based on the newspaper headlines, many seem to think that it only affects
the US, Europe, and other countries in the region. Malaysians tend to think
that based on strong commodities and crude oil prices that Petronas is
selling, we are somehow insulated from what is happening elsewhere.

Well, if they have been reading reports closely, they would see that palm
oil and crude oil prices have plunged also.

Local newspapers have not been reporting the meltdown on a big scale. The
coverage is still mainly limited to the business or foreign sections, and
tend to present the 'official' side of things.

In today's publication of The Star, the biggest English daily, a story on
local banks focused on the positives.

The lead story of the business section of The Star said that banks were
turning cautious but have not put the brakes on lending to businesses.

It also stressed that the country's high savings rate and healthy foreign
reserves would enable local banks to weather the global credit squeeze.

As a result, perhaps not many Malaysians are even aware of the spreading
fear in global markets.

This sort of thinking is perhaps further boosted by the country's leaders
who kept insisting that Malaysia's economic fundamentals are strong, rather
than preparing the ground for what is to come -- slower economic growth, and
perhaps job losses.

Second Finance Minister Nor Mohamed Yakcob was quoted in today's papers as
saying that Malaysia is unlikely to enter into a recession. He did admit
however that "if the crisis creates a recession in the US and Europe, all
countries will be affected."

Mass-selling Malay-language Utusan Malaysia played up Nor Mohamed's comments
and made it their lead story for the business pages, with the headline
saying "Malaysia confident will not fall into recession."

Quoting the central bank, the government has said that both direct and
indirect exposure of Malaysian financial institutions in terms of holding of
securities linked to the US sub-prime mortgages and lending to entities
associated with them, accounted for only 0.3 per cent of the banking
system's capital base.

Further supporting this argument is the fact that the Malaysian bourse also
has not plunged to the depths seen by neighbouring Indonesia, which was
forced to close for two days this week after huge falls.

But observers cautioned that Malaysians must pay careful attention to events
happening elsewhere before they end up being taken by surprise.

Some say this time, if the recession lands on Malaysian shores, it might
well be worse than the 1997-98 Asian Financial Crisis.

First to go could be Malaysian exports, 20 per cent of which go to the US. A
drop in exports could cause major job losses. This would then affect
consumer spending and curtail growth.

We are already seeing the prices of commodities fall, particularly fuel and
palm oil, two commodities which Malaysia depends on heavily for its
earnings. This could result in a vicious bite soon enough unless prices
recover.

A big chunk of the Malaysian government annual revenue, about 46 per cent,
comes from the petroleum funds. So falling oil prices could mean the
government might have to crimp on building infrastructure and rural
projects, like schools and drainage.

Also, many palm oil growers are rural Malays in the government-backed Felda
estates. During the Asian financial crisis, the sentiment against the
government in the rural areas were negative because many growers found it
tough to make ends meet.

And job losses jumped as electronics factories closed or pared operations.

All these means that, like it or not, whether they pay attention to it or
not, the global meltdown will soon enough knock on the doors of many
Malaysians.

.

10 comments:

Mag M said...

I can still remember the recession of 1997/98, my family experienced a big financial crisis. Fortunately, a wealthy family member was willing to loan us money to get through this troubling period. We are afraid of the comming recession or depression or whatever. In fact, very afraid. I hope our government has a solution to help this country through this coming hard times.

Anonymous said...

I hope The Yang Dipertuan Agung n The Royalties r paying close attention to this report.Rakyat have experinced many times all the ill efefcts of an economic slow down.Loss of jobs,forced to go bankrupt,selling kuih muih/nasi lemak/tosay capati/doin multiple jobs,doin direct selling just to b financially alive.It's the ruling elite who dont care,r not bothered.They r like vampires,suckin the vitality of the nation so dat they can go on with their bollywood lifestyle..yeah,rakyat bayar macam macm cukai,tapi rakyat diludah oleh elite!!Hanya bila election mai,baru depa tau,nuklius seebuah negara adalah rakyat.Tanpa duit dan sokongan rakyat ,mereka boleh hidup ka?

Anonymous said...

B4 the P44 by election,DSAI,Mujahid,MB of Perak invited all the retrenced workers of Nikko.Very few turned up.Why?Bcos,the workers DIDNT HAVE MONEY,NO DUIT TAMBANG TO SEE THEM!!!Thank god,1 week b4 raya, that factory paid out unpaid leave claims to those eligable..but,till 2day,so sign of compensations.At the present moment,according to YB Mahfuz Omar,400,000 Malaysians r unemployed.2day,YB Guan Eng,quetioned Maybank n Temasik,RM8 billion scandal..this wat happens to a country when its ruled by greedy,sleezy,mentally deranged vampires!!!

Baby-Boomer Generation said...

My concern now is EPF's investments. What is it's financial position in this regards?

Should EPF make a public statement to re-assure us contributors who will touch 55 this year and next?

How bad is it?

Anonymous said...

A friend of mine told me,cronies n towkays owe banks multi millions of ringgit..n they dont like service their debt!In fact,due to their connections with YB's ,banks cant revover thier loans frm these bums.Sudah lupakah,Standard Charted Bank absorbing Maybank NPL worth RM100 million..itulah dia..semua angan angan mat jenin,nak jadi Bill Gates,Buffet..Anak anak Mahade a/l Kutty pun bodoh bin dunggu dlm perniagaan ..bapak borek anak rintik!!?;

Anonymous said...

EPF money aah?Kahkahkah..Rosmah will use it for her shopping spree!!

Anonymous said...

I am the bitter tears in the widow's heart
I am the pitieos sighs of the unlucky!
I am the pain and sorrow of all homeless sufferers!
I am the anguish of the insulted heart!
I am the burning and the madness of the jilted lover!
I am the unutterable grief!!
(Frm kazi Nazrul Islam's "The Rebel")

Anonymous said...

Najib jadi MOF?Kahkahkah..salah..Najib todi Rosmah.Jadi sekiranya Najib menang UMNO eleksi-on dan mejadi PM,Rosmahlah sebenarnya akan menjadi PM n MOF.Mampuih ,lingkup negara ni!!

Aah,ex hadari cakap,fundementals strong in Malaysia.Korek korek korek!!..All,the super kucing kurap fundemntals r still strong.Ex hadari lagi cakap,no recession in Malaysia..aah,itu pun betui..sebab,dah lama Malaysia dah jadi negara "banana republik"..kahkahk..constant suffocation ,strangulation of this country has been goin for a long time..as a result,ah longism,flesh trades,robbery,drugs,telah meningkat..

BTW,people lining up for free food,ala soup kitchen during the great depression has started ever since this maha perihatin gomen increased the oil price.Tak caya?Hah,Pi tanya Hare Krishna group!!

cancan said...

We all know that we are in deep trouble. Only the Umno goons think that everything is ok.

Anonymous said...

what ever that the rakyat will have to suffer i am sure the bangsawans & the sultans would not be affected at the very first place.

lately i am beginning to lose hope & am failing to see the significance of these people beside for their symbolic existence.

daulat tuanku?
u think about it yourself?

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