So you are wasting time calling ‘super-economists’ to fix economic problems that are not found described in any text books on economics.
There is no vet or animal doctor anywhere in the world who can revive a dead horse. When the horse has died you just have to get a new horse to pull the wagon.
Falling Ringgit and economy
Murray Hunter
Jun 26
cost of living, lacklustre Bursa, EPF, rise in interest rates
Ringgit has fallen from 4.60 to 4.68 over June
Ringgit falling below what has been psychologically acceptable
BNM raised OPR to 3.0% Ringgit still on downward trend
bank base lending rates to 6.47-6.70%
repayments of mortgages and business up by 13.5%
far above official inflation rate for May 2023, at 2.8%
rate rise devastating upon business and households
Malaysia economic policy vacuum
economy very challenging
April’s year on year exports fell 17.4%
Capital outflow likely to keep increasing
downward pressure on the Ringgit
cost of repaying external govt debt will increase deficit
going to increase imported inflation
Malaysia has national problem
no super-economists among political elite
think tanks all seemed to run for the hills
not facing public with explanations and plans to fix economy.economy really needs to develop very quick plan
Originally published in FMT 26th June 2023
My Comments :
The Malaysian economy really has no problems at all. Genuine private sector Malaysian companies and entrepreneurs already work hard and compete with the rest and the best in the world. Our country did not become the 24th or 25th largest trading country in the world because our entrepreneurs and businessmen do not know how to do business.
There are TWO very huge problems in Malaysia which have a chokehold on our economy. The two huge problems are the government and worse still the government’s failed policies which have continued unabated for the past 53 years.
And since corruption has not been eradicated by ALL the governments it can be assumed that corruption is a part of government policy. There is plenty of close one eye still going on in the country. One example is online betting which, no less than a minister has made public in Parliamentary debate, is protected by the politicians. Corruption is part of policy making.
And the government’s economic policy is race based. What does this mean? It means that race based economic policies are not found in any economics textbooks. You cannot apply the known principles of economic management to race based economic policies.
So you are wasting time calling ‘super-economists’ to fix economic problems that are not found described in any text books on economics.
There is no vet or animal doctor anywhere in the world who can revive a dead horse. When the horse has died you just have to get a new horse to pull the wagon.
Dont misunderstand me. I am not saying that race based economic policies are wrong. I have said before that we must continue with the Affirmative Action Policies in this country for a very long time. And I will repeat my mantra one more time – you abolish Affirmative Action and this country will burn.
But we must marry Affirmative Action Policies with the free market Price Mechanism. The simple price mechanism will save us all.
There has to be a combination between the two – Affirmative Action and the Price Mechanism.
Yes give the contract to the bumiputra but why must we pay two times or three times the market prices?
(I met a very enterprising young man the other day. I have known him from just a few days after he was born. He drives a Porsche now. He does government contracts and he is already an expert at Variation Orders. I will not say anymore.)
The Malaysian economy has been dealt death blows that have already killed the economy. The presence of each and every foreign worker in the economy means higher value jobs have been destroyed in the economy.
The corruption in the Immigration over entry of illegal immigrants 40 years ago, then the corruption in the Immigration over “legal” foreign worker permits, the cronies given licenses to “traffic” in foreign workers have all destroyed higher value job creation in the economy.
The semi-literate Banglas, Indons and Nepalis now produce our less value added goods. You cannot expect a semi-literate Bangla or Indon to assemble rocket engines or create software apps. So we are stuck in producing slave-labour, manual work, low value added goods. That is why the Ringgit is also falling. We export shiploads of output but their value is decreasing.
The GLCs and their monopolies, the government licensed monopolies that choke the economy, the crony capitalism, the rent seeking and the piracy that does not add market value to the economy – have killed the economy long ago. Now just wait and see the next generation become poorer. They will end up sleeping in the streets.
The politicians will not even understand what I am saying here. Almost all of them cannot even understand English.
The bottom line is the governments (plural) economic policies for the past 50 years cannot be found written in any text books of economics. All the governments, from the BN-UMNO of 63 years until the present government today.
You cannot go to Oxford University or Harvard University and ask them ‘Can you show me an economic textbook which details Malaysia’s New Economic Policy’.
They will just laugh at you. Not just because you are an idiot but because they see a monkey pretending to wear shoes.
Here is the real problem – they will not understand what I am saying. – http://syedsoutsidethebox.blogspot.com/2023/
Malaysia: Anwar’s First Real Crisis As PM
This will be a true test
Over the last month there has been a lot of chatter over the state of the economy. The cost of living, lacklustre Bursa, EPF, and rise in interest rates have all been topics of contention.
However, the Ringgit is now falling below what has been psychologically acceptable. When the Bank Negara Malaysia (BNM) raised the OPR to 3.0%, most economists felt this would stabilize the Ringgit, especially when the US Federal Reserve Bank hinted it would not raise US interest rates for a while. However, the Ringgit is still drifting on a downward trend, to the point where the BNM may feel compelled to raise the OPR to 3.25%.
Any interest rate rise would be devastating to both businesses and households. The last rate rise moved bank base lending rates to 6.47-6.70%. That increased repayments of mortgages and business loans by 13.5%, straining household budgets and rising the cost of doing business. This is far about the official inflation rate for May 2023, at 2.8%.
The conventional wisdom for the BNM board is to follow up with another rate rise in an attempt to steady the fall of the Ringgit. However, such a move would be devastating upon both business and households.
Malaysia is now in an economic situation where there is an economic policy vacuum. The BNM board is relatively new and the Anwar administration advisors are also new. There is an unprecedented mix of economic indicators where monetary and fiscal policy must be applied correctly to alleviate the situation. Correcting the economy will take skill that hasn’t been seen yet. Malaysia needs a philosophical approach to economics, or economist creative enough to develop a remedy.
Anwar now faces an economy with a very challenging set of attributes to deal with.
As expected, the international economy is taking a deep drive, with China also beginning to become sluggish. China is Malaysia’s largest trading partner, and Malaysia needs strong exports after April’s year on year exports fell 17.4%. Capital outflow is likely to keep increasing as investors look for more stable exchange rates in other markets. This is likely to keep downward pressure on the Ringgit.
As the Ringgit keeps falling, the cost of repaying external government debt will increase, thus increasing the deficit. This is going to increase imported inflation.
A strong electoral win in the state elections by Perikatan Nasional will give the appearance of political instability. The very discussion of political instability by political analysts and news portals could psychologically spook investors into believing there is real political instability, when the federal government still has a very comfortable majority in the Dewan Rakyat. There is danger talk can become a self-fulfilling prophecy.
During the 1998/99 Asian financial crisis, then prime minister Mahathir Mohamed and members of his cabinet talked up the economy on a daily basis. Mahathir eventually pegged the Ringgit at RM 3.80 to the USD. This protected Malaysia’s from external inflation over the period of the Asian financial crisis.
This was a move Anwar opposed at the time, and still opposes today. In contrast to 1998, the Anwar administration is not talking much about the economy, reassuring people, which can allow fear and panic to enter into sentiment. This is dangerous, and Anwar must start talking up the Ringgit.
The psychological barrier could be 4.7, 4.8, or 4.9. If the Ringgit hits any of those levels, it will bring pessimism to the economy. Anwar has a good international reputation and must use it to woo international confidence in the Ringgit. This hasn’t been done, and its now time to do it.
Anwar is now in his first real crisis as prime minister. The buck stops with Anwar, as he didn’t appoint anyone to take the finance minister job. Many other national leaders use this duet (PM and FM) to their advantage. Anwar doesn’t have that advantage at present, and it might be time to appoint a very competent and respected economist as finance minister. This would give people the perception there is someone fulltime looking at the problem. A prime minister can only be a part time finance minister, and Malaysia needs a fulltime finance minister, heading into crisis.
With a separate finance minister, Anwar would have the luxury of being able to throw the problem at his new finance minister.
Malaysia has a national problem. There are no super-economists among the political elite. The think tanks have all seemed to run for the hills, and even the chairman of BNM is mostly silent.
With the Ringgit at 4.68, Anwar by default is alone, as all his advisors are in the backrooms somewhere, and are not facing the public with explanations and plans to fix Malaysia’s economy.
However, if Anwar comes through, this will be his ‘Churchill’ moment, if he comes up with a solution.
The current Malaysian economic scenario really needs the nation’s best and brightest economists to sit down together and develop a very quick plan or action. Not in August, but in the next week. At least some talking points. The Anwar administration must be seen to be in control. That’s half the solution. – By Murray Hunter – Murray Hunter has been involved in Asia-Pacific business for the last 30 years as an entrepreneur, consultant, academic, and researcher. – https://www.eurasiareview.com/
–– http://syedsoutsidethebox.blogspot.com/2023/ / https://www.eurasiareview.com/
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