<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published September 22, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Economic numbers bode well for M'sia
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
</TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Print article </TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Feedback</TD></TR></TBODY></TABLE>MALAYSIA'S latest economic numbers offer some hope. The contraction in the second quarter was much smaller than expected and private economists now believe that the full GDP number for 2009 will be minus 3 per cent instead of the minus 5-6 per cent originally forecast.
Better still, the economy is expected to expand 4-5 per cent next year with government revenues picking up slightly and the budget deficit falling faster than expected - to around 5 per cent of GDP next year.
One of the main reasons for the expected decline in the deficit is Kuala Lumpur's targeting of subsidies as a component for cutback. Fully 22 per cent of government expenditure is taken up by subsidies, 12 per cent on petrol subsidies alone. On Sept 1, however, Kuala Lumpur allowed the price of premium petrol to increase 14 per cent with a cut to the subsidy. That will help cut expenses, but Prime Minister Najib Razak should consider reducing the petrol subsidy even further; prices in Malaysia are significantly below those of regional neighbours.
What is disquieting, however, is the seeming lack of economic expansion fuelled by fiscal spending. Every other Asian country has seen its second-quarter growth surging through government spending, except Malaysia. Mr Najib has announced two separate stimulus packages since last October but little of it seems to have stimulated any growth. And that, we are told, is because of poor delivery on the part of the bureaucracy.
<SCRIPT language=javascript> <!-- // Check for Mac. var strAgent; var blnMac; strAgent = navigator.userAgent; strAgent.indexOf('Mac') > 0 ? blnMac = true:blnMac = false; if (blnMac == true) { document.write('
'); } //--> </SCRIPT><TABLE border=0 cellSpacing=0 cellPadding=4 width=300 align=right><TBODY><TR><TD vAlign=top align=middle>
<!-- AdSpace --><IFRAME height=250 marginHeight=0 src="http://ads.asia1.com.sg/html.ng/site=tbto&sec=btoviewsop&cat1=forum&cat2=btoopinionart&size=300X250" frameBorder=0 width=300 marginWidth=0 scrolling=no bordercolor="#000000"><script language='JavaScript1.1' src='http://ads.asia1.com.sg/js.ng/Params.richmedia=yes&site=tbto&sec=btoviewsop&cat1=forum&cat2=btoopinionart&size=300X250'></script><noscript>
</noscript></IFRAME><!-- /AdSpace-->
</TD></TR></TBODY></TABLE>According to various analyst reports, out of all the money allocated under the first package last October, 80-90 per cent has been dished out but only 40 per cent has been spent. And out of the additional RM10 billion (S$4.1 billion) allocated in March, only 15 per cent has been spent. Given this track record, there are concerns about the RM31.4 billion that needs to be spent over the next 12 months on infrastructure projects. And these are needed infrastructure developments. They include the extension of the light rail transit systems in the notoriously congested Klang Valley and the Pahang-Selangor interstate water transfer project which requires speedy implementation if Selangor (the country's most industrialised state) isn't to suffer water supply shortages by 2012. Similarly, the RM2 billion low-cost-carrier terminal should be awarded quickly if Air Asia - the region's largest budget carrier by fleet size - is to avoid serious congestion at its present terminal in two years.
To enhance Malaysia's attractiveness, Mr Najib should also seriously consider opening up key sectors to foreign investors. There have been reports that Sime Darby, the world's largest listed oil palm company, was planning to issue 10 per cent of its equity in new shares to a Chinese sovereign wealth fund. If this is true, it could prove to be the fillip that foreign investors have been waiting for.
</TD></TR></TBODY></TABLE>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Economic numbers bode well for M'sia
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
</TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Print article </TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Feedback</TD></TR></TBODY></TABLE>MALAYSIA'S latest economic numbers offer some hope. The contraction in the second quarter was much smaller than expected and private economists now believe that the full GDP number for 2009 will be minus 3 per cent instead of the minus 5-6 per cent originally forecast. Better still, the economy is expected to expand 4-5 per cent next year with government revenues picking up slightly and the budget deficit falling faster than expected - to around 5 per cent of GDP next year.
One of the main reasons for the expected decline in the deficit is Kuala Lumpur's targeting of subsidies as a component for cutback. Fully 22 per cent of government expenditure is taken up by subsidies, 12 per cent on petrol subsidies alone. On Sept 1, however, Kuala Lumpur allowed the price of premium petrol to increase 14 per cent with a cut to the subsidy. That will help cut expenses, but Prime Minister Najib Razak should consider reducing the petrol subsidy even further; prices in Malaysia are significantly below those of regional neighbours.
What is disquieting, however, is the seeming lack of economic expansion fuelled by fiscal spending. Every other Asian country has seen its second-quarter growth surging through government spending, except Malaysia. Mr Najib has announced two separate stimulus packages since last October but little of it seems to have stimulated any growth. And that, we are told, is because of poor delivery on the part of the bureaucracy.
<SCRIPT language=javascript> <!-- // Check for Mac. var strAgent; var blnMac; strAgent = navigator.userAgent; strAgent.indexOf('Mac') > 0 ? blnMac = true:blnMac = false; if (blnMac == true) { document.write('
'); } //--> </SCRIPT><TABLE border=0 cellSpacing=0 cellPadding=4 width=300 align=right><TBODY><TR><TD vAlign=top align=middle>
<!-- AdSpace --><IFRAME height=250 marginHeight=0 src="http://ads.asia1.com.sg/html.ng/site=tbto&sec=btoviewsop&cat1=forum&cat2=btoopinionart&size=300X250" frameBorder=0 width=300 marginWidth=0 scrolling=no bordercolor="#000000"><script language='JavaScript1.1' src='http://ads.asia1.com.sg/js.ng/Params.richmedia=yes&site=tbto&sec=btoviewsop&cat1=forum&cat2=btoopinionart&size=300X250'></script><noscript>
To enhance Malaysia's attractiveness, Mr Najib should also seriously consider opening up key sectors to foreign investors. There have been reports that Sime Darby, the world's largest listed oil palm company, was planning to issue 10 per cent of its equity in new shares to a Chinese sovereign wealth fund. If this is true, it could prove to be the fillip that foreign investors have been waiting for.
</TD></TR></TBODY></TABLE>
