MALAYSIA’S gross domestic product should be measured in US dollars to better reflect the economic growth of country heavily involved in international trade, The Edge business daily reported a manufacturing leader as saying.
Dr Lim Wee Chai, president of the Federation of Malaysian Manufacturers, said if calculated in US dollars, the country’s GDP and per capita GDP would have shrunk as the ringgit’s value had fallen.
“The GDP grew 5.8% in the second quarter of 2017 (2Q17) … but it grew in ringgit. If we calculated in [the] US dollar, it would be about -3.3% because the ringgit has devalued by 9%,” said Lim.
“The GDP shows proper indication in ringgit. However, there is no growth in dollars. In terms of dollars, it did not grow. It is a minus growth,” he said at a media conference yesterday to announce the results of its 11th joint survey with the Malaysian Institute of Economic Research (MIER).
The Edge reported that the ringgit had slipped 9% since April 1, 2016 when it strengthened to RM3.8905 against the US dollar. It closed at RM4.279 to the dollar yesterday.
Lim said Malaysia did business in the global market, and calculating GDP based on the US dollar was necessary to become a developed country.
He said the GDP growth in first half of this year was supported by exports of manufactured goods and domestic demand.
Last Friday, Bank Negara Malaysia announced that Malaysia’s economy expanded by 5.8% in the second quarter of this year, and 5.7% in the first half, with growth supported by domestic demand and robust exports.
BNM said GDP is expected to grow at above 4.8% this year, given the strong growth in in the first half of this year.
The Edge reported today that the FMM-MIER joint survey focused on local business conditions the first half of this year and the outlook for the rest of 2017.
FMM past president Saw Choon Boon said the survey results show that some of the 396 respondents’ businesses did not grow as fast as others or as indicated by the GDP.
“So manufacturing as a whole actually did do well, mainly because of exports, but not all manufacturers’ exports. Looking at the BNM figures, domestic consumption for 1H17 was good although there are many sectors in domestic demand.
“For instance, the retail outlook was not so positive. Our members who manufactured for the retail outlet did not do so well as those who manufactured for others parts of the economy,” Saw said.
Saw said despite the headlined improvements, scrutiny of the numbers would show that some businesses gained “more, less or not so much”.
He said relative to last year, the first half of this year was good and manufacturers were optimistic for the next half.
Saw said manufacturing grew by 6% in the first half of this year, with 8.3% growth for construction and 6.3% for services.
The survey found that 38% of respondents expected export sales to pick up in in the second half of the year, up from 31% in the last hald, as a result of a favourable foreign exchange rate, while 21% project lower sales abroad and 41% remained neutral.
“The statistics show good export in 2H17 because of a weaker ringgit which means we become more cost-efficient, and labour and operation costs become cheaper. However, that is not so good.
“We must be competitive, efficient and productive. We have [a] quality product to compete to gain market share but ringgit devaluation is not our effort, so it is not a good way to gain market share,” he said.
He said the outlook wouldn’t be good if the government did not manage the economy well or was unstable.
He also said the high number of civil servants was also a cost to the government.
“If it is a cost to the government, it means a cost to the industries, and that would increase the cost of doing business. If a business is not efficient, that will show in the bottom line. So if we work well with the government, the outlook for the export sector would be good,” Lim said.