|Laman Webantu KM2: 6299 File Size: 9.1 Kb *|
IHT: Downturn Tests Malaysia's Mettle
By Philip Bowring
6/11/2001 1:19 am Tue
[Sekali pandang ekonomi Malaysia nampak mampu bertahan tetapi bank sebenarnya
sudah semakin tertekan akibat hutang lapuk yang semakin mencengkam. Kadar faedah
yang rendah menyebabkan bank terpaksa digabungkan dan membuang ribuan pekerja.
Jika bank tidak sakit ia tidak akan membuang pekerjanya.... Ini bermakna
pekerja syarikat kroni yang kronik dan sarat berhutang hidup lebih tenteram
dari pekerja institusi yang memberi hutang. Mahathir telah memihak kepada
mereka yang melakukan kesilapan .....
International Herald Tribune Monday, November 5, 2001
Keeping Up Growth Will Be Difficult Amid an Export Slump
KUALA LUMPUR Malaysia is a key test of whether medium-sized
East Asian economies can keep up at least some growth in the face
of the sharp global downturn. At first glance, the odds appear poor.
Malaysia's total exports are 110 percent of its gross domestic
product, one of the highest proportions in the region and well ahead
of South Korea and Thailand. Electronics comprise 60 percent of
exports. The country's currency, the ringgit, is pegged to the U.S.
dollar, so its freedom to use monetary stimulus is small. And since
Sept. 11, it has been suffering from knee-jerk Western nervousness
about Muslim countries.
Officially, the government is keeping a brave face on things, despite
its forecast of a 10 percent fall in exports this year and a slump in
tourism. Its recent budget, focusing on further fiscal stimulus, forecast
growth of 1 percent to 2 percent this year, rising to 4 percent to 5
percent in 2002. In contrast, the consensus of private forecasts calls
for zero growth this year and 3 percent next year.
Some are even more bearish.
The electronics situation is certainly bad. Ten of thousands of
people have been laid off as global demand has slumped. Malaysia
has also lost some manufacturing to China as suppliers have
followed the call of end users to the mainland.
This has more than offset some shifts from Singapore to Malaysia.
But the macroeconomic impact of the bust has been less than was
feared. Because the value added to electronics is less than 30
percent, component imports have fallen as fast as exports, so
Malaysia's terms of trade in electronics have not been affected.
Commodity exports - palm oil, oil and gas, rubber - have had mixed
fortunes, but overall prices and volumes have been satisfactory.
The net result is that Malaysia will have a large current-account
surplus this year of around $6.8 billion, or 8 percent of GDP. Most
forecasts for 2002 are for a similar or only slightly lower figure.
So if there is a recession here, it will be of a very different kind from
that of 1998, which was caused by excessive debt creation and
current-account deficits. This time the problem is to spur monetary
growth and stimulate domestic demand to the point where there is a
sharp fall in the current-account surplus.
The budget announced last month endeavored to do that through a
deficit of 6 percent of GDP, by means of a mix of personal tax cuts,
infrastructure spending and a 10 percent pay increase for civil
servants - partly politically motivated by the governing party's
desire to win back the loyalty of Malays who dominate the public
The deficit looks big, coming on top of one totaling 7 percent of GDP
this year, which has been bolstered by two anti-recession
supplementary budgets. Deficits since the Asian crisis have now
averaged 4.5 percent of GDP. Some observers worry that large
deficits are becoming endemic and a long-term drag on the
economy as the servicing costs outweigh the gains from public
But others suggest that the huge external surplus is evidence of the
need for more stimulus. Domestic demand, as much as exports, have
to be the key to future growth. The ratio of government debt to GDP
is still only 40 percent, half the peak reached after the recession of
For now the government is steering a middle course on the size of
the deficit but has left itself room for additional stimulus should the
picture deteriorate. That will depend not just on external factors but
on whether consumers will spend their extra cash.
Also uncertain is whether government infrastructure spending will
come close to its target amid bureaucratic delays and haggling over
who gets what contracts. Little of the supplementary budgets has yet
been spent, so there is plenty of stimulus to come.
And stimulus is needed. Local sentiment is fragile and probably will
remain so while international political uncertainties reign. But capital
outflow, which despite exchange controls was evident six months
ago, has dried up with the improvement in the domestic political
situation and the weakening of the dollar. Foreign-exchange
reserves have risen, and the sharp fall in U.S. interest rates has
ended fears that a rise in local ones would be necessary to defend
the fixed exchange rate.
The local stock market is dull and a drag on consumer sentiment but
does not appear vulnerable to a major downward slide from here. It
represents the domestic and commodity economy, not the export
manufacturing one. No sharp upturn seems imminent, but bank
liquidity and low foreign exposure to Malaysia provide a basis for
sharp recovery at some point. Valuations are higher than in Thailand
or South Korea but undemanding by international measures, and
many companies have dividend yields in excess of bank deposit
rates. The government is showing belated determination to clean up
corporate debt problems outstanding since 1998. The property
sector is both active and resilient, thanks to low interest rates and
All in all, Malaysia has the potential to outperform despite external
adversity. Whether it has the self-confidence to do so is another
Malaysia : hopes of faster economic reform have risen
By Saul Eslake from Australia & New Zealand Banking Group
The collapse of real GDP growth has been dramatic reflecting
Malaysia's heavy dependence on electronics and the US economy.
Economic growth fell to just 0.5% on a year-on-year basis in Q2
2001, down from an average of 8.3% in 2000 and the weakest
growth since Q1 1999.
Industrial production has plummeted The severity of the slowdown is
evident from the plunge in industrial production from year-on- year
growth of over 20% in mid-2000 to a fall of 7.6% during
June-August 2001. Recent US indicators on IT-related capital
expenditure suggest that the slowdown in Malaysia probably
deepened in Q3, while the terrorist attacks in September have
seriously damaged hopes of an early recovery in the US.
The severe plunge in growth has occurred despite a significant
loosening of fiscal policy. This is mainly because Malaysia is such
an open economy - exports and imports together accounted for
231% of GDP in 2000 - but the slow implementation of new
measures (see below) has also blunted their effectiveness.
GDP is expected to contract slightly in 2001 In October, the government
lowered its real GDP growth forecasts for 2001 and 2002 to 1-2%
and 4- 5% respectively, but these still seem optimistic. ANZ is
forecasting a contraction of around 0.4% in GDP in 2001 and only a
slow, paltry recovery in 2002 with real GDP growth not expected to
exceed 2% for the year. Although the relative importance of the
diversified natural resources sector (crude oil, timber, palm oil, and
other agricultural commodities) has declined, it offers some
protection in helping to prevent an even bigger economic downturn.
Inflationary pressures are subdued and inflation, which stood at
1.4% in September, seems unlikely to rise significantly over the next
12 months. Bank Negara cut its 3-month intervention rate by 50 bps
to 5.0% in September, the first reduction for 2 years. Commercial
banks responded by cutting their base lending rates from about 6.7%
Bank lending to the private sector rose by 5.3% in the year to June
2001, below the long-standing 8% growth target set by the
government. With the economic slowdown exacerbating the problem
of NPLs, banks are likely to face increasing difficulty in finding
lending opportunities with acceptable creditworthiness credentials.
Official figures show that non-performing loans were fairly steady around 6.5% of total lending (on a 6-month overdue basis) throughout last year, but have risen from 6.3% in December 2000 to 8.3% in August 2001 due to the economic slowdown. The increase on the 3-month basis was from 9.7% to 11.5% over the same period.