Sunday, September 08, 2013

The Economist: Malaysia in better shape now

An accountant to told me a couple of nights ago he was really quite worried about the Ringgit. Seemed to him that in the event of another currency crisis, our country/economy will be hard hit. He gave me a mountain of reasons why the odds are stacked against us - Malaysia - especially. Well, you guys know I don't know much about the ringgit (I know I'm better at spending than saving it, though) or the currency but I remember what happened during the 1998 currency crisis that crippled a host of economies, including our neighbours. Countrymen were killing one another because of the hardships that followed, but not here. We had our own way of dealing with the crisis, so I'm quite optimistic we will survive another one.
Today someone sent me an article ran by The Economist on the risk of an abrupt end to capital inflows, which is now a worry for much of the emerging world. "Bro, the Malaysian economy is not that bad."


Excerpts:
"Many of the emerging world’s bigger economies lie in amber territory. India and Indonesia are already feeling the pressure. Others, like Mexico, have fared well amid recent turmoil: the peso has been roughly flat over the past year. But credit growth and high levels of financial openness are potential points of fragility. Malaysia and the Philippines, victims of the Asian crisis of the late 1990s, are in better shape now. Both run current-account surpluses and have built up a much larger reserve buffer relative to short-run external obligations. Yet credit growth has also been zesty."


The capital-freeze index

Stop signs

Which emerging markets are most vulnerable to a freeze in capital inflows?



Read the entire article H E R E

27 comments:

Anonymous said...

As usual your logic is if we are not the worst, we are good!

Bru said...

Anon,

As usual, you give me credit for someone else's brilliant logic ... in this case, The Exonomist's!

Joe Black said...

Just so you know, The Economist on average has been proved to be wrong in most cases.

IT.Sheiss said...

I had lunch with a friend who works with a local bank this afternoon and she told me that foreigners are moving their investments out of Malaysia to invest in the US where the economy is "improving" (I'm not convinced about that).

However, domestic investment by Malaysians is strong, so the economy is fairly OK. Well,that's a relief. I hope she is right.

Earlier, a unit trust agent told me that their mid-risk trusts invest in stable domestic companies such as banks, telecoms, etc., rather than higher risk foreign investments.

On another note, some people just like to hear bad news about Malaysia's economy and place too much importance on FDis, as if that is the key criterion of our economic health, when in fact, our economy would be very healthy if we could prosper domestic investments with zero FDI.

What they don't seem to realise or want to realise is that an economy which has to rely on FDI is not healthy but is dependent on others, whilst those which don't need FDI are healthy.

Anonymous said...

Not sure, bro.

We were once tipped to be the next Asian tiger economy. Right now, we're on par with Myanmar, Cambodia, and the Philippines in terms of appeal as our foreign investment record. It's hit a 20-year low and we're the only country in ASEAN which achieved nett FDI outflow in 2012.

So not so good long term. We need to reel in the spending, the cronyism and corruption, and really trim non-performing arms of the govt.

The BR1M commitment - don't we all love it - may be popular but in the long run is not what the doctor ordered for Malaysia when commodity prices and oil reserves are wobbly.

Anonymous said...

The Economist may have been wrong in the past but just so you know, the numbers don't lie. With regards to whether Malaysia can weather a similar financial crisis like the '98 one, just check whether Malaysia now demonstrates a high degree of compliance with Basel III requirements for a start. And that, they have, as confirmed by the IMF and the World Bank.

You gotta be able to know at least the difference between the financial structure of the economy, current account and capital account to know whether more FDI (where you TRANSFER CONTROL of Malaysian assets to foreigners) as compared to portfolio foreign claims as a proportion of non-financial assets is good or bad for the country.

From the numbers that don't lie, it seems Malaysia has been successful at spurring growth by tapping into foreign savings instead of selling away control of Malaysian assets via FDI, while simultaneously funding its liabilities in domestic currency. Seems like a smart move from that perspective. That's why the Economist says better managed now than under the regime of the 90's.

Gram Kong said...

Joe Black,

I don't know where you come from and what you read.The EIU has consistently been close to the bullseye with its forecasts and predictions, it is our local educated soothsayer who make shitty predictions.

BADUT NASIONAL said...

Malaysia merdeka 1957, Singapura merdeka 1963...

2012 Malaysia GDP USD17,143 Vs Singapura USD61,803...

2013 RM2.62 = SGD1.00...

Apa Lagi Mahathir Mahu pura-pura!???

Anonymous said...

talking about cronyism makes me remember anwar ibrahim. the father of cronyism in msia.

Anonymous said...

Badut

Singapore tahun 1963 sudah 2 kali ganda lebih kaya dari Malaysia. Semenjak lebih seratus tahun sebelum tu, pihak British telah menukar Singapore dari hutan menjadi entrepot trading centre. Masa tu Mahathir pun tak ada lagi. Cuba baca apa peniaga Belanda kata pasal Singapore. Penuh dengan orang kaya Cina pada abad ke 19. Pulau besar lubang hidung apa susahnya nak jadi kaya

Anonymous said...

Badut the Bodoh,

If you think the higher SGD is so good, go and live in Singapork and see how much you can get for your SGD. HDB flat is already in excess of SGD 400k, Marlboro Light is SGD 12.50, Nasi Padang is already SGD 6-7. Proton also costs SGD 70k in Singapore. In terms of PPP, SGD 1 is actually equals to RM 1. Go figure.

Stop using nominal exchange rates as basis for forex comparison. You should use Purchasing Power Parity as you basis for comparison.

Bodoh!

Anonymous said...

Anonymous 9:58 am

Yes, you're right. I'm so glad that in Umno, people aren't motivated by the desire to get rich quick, and they all have spotless reputations completely untainted by money politics.

Hence, I respectfully disagree with Tun Dr M's recent comment about "fortune hunters" and agree with DS Najib's comment:

"Siapa kasi, salah, siapa tak kasi, kalah."

Joe Black said...

Gram Kong,

Been following The Economist for 35 years and may differ in opinion on its prowess...Am No Fan of Any Economic Analyst much less the Economist. There are somethings we can agree on and that is (hindsight aside) if all these fellers could foreseer the extent of the US Banking Debacle and the European Financial Crises, their governments may have been able to draw up defensive plans very much earlier than later.

tokyojoe2020 said...

Bru

This morning, the friendly money changers in Singapore's Raffles Place were quoting 2.57 Ringgit for 1 Singapore Dollar.

Seems to me that this is as good an indication as any of our economic situation.

Because, when it comes down to fundamentals, it's the strength of one's currency that separates the men from the boys.

Or is that too an esoteric idea for you to comprehend?

As for IT.Sheiss's suggestions, one may as well go the whole hog and say that competitiveness is not important because, hey, we have domestic investments to fall back on.

I wonder if Sheiss can tell us just which are the "healthy" economies that don't need to rely on FDI or which have made a deliberate decision to discourage FDI in favour of domestic investments?

Even Tun Dr Mahathir, in his iconoclastic heyday, didn't espouse such radical ideas!

But then Sheiss is a law unto himself/herself in matters economic, political and social!

Anonymous said...

I can agree with you on what you said but please dont bring in Proton. Hardly anyone sensible ever buy Proton in Singapore. In Padang, Indonesia which is a poorer part of Sumatera the taxi drivers will rather buy and use a beat up Toyota than a Proton.

Anonymous said...

IT Sheiss, you are spot on mate. Don't get flustered by a phony troll who mouth garbage for 5 Singapore cents and a free arsefuck.

The fact it keeps harping about currency without an inkling of PPP and it repetitious use of the word "esoteric" here, there, everywhere, yesterday, today, tomorrow is enough proof of both the Singaporean education system and troll's shitty brain.

Dare it to argue with facts and watch the pig either run away and hide or change goalposts after peeing in its panties. You can never win with this one, its "a heads my shitbrain and tails my arsehole" law unto itself. So quit wasting your time engaging with a pimped fucked whore's son for he has no self respect nor any integrity left.

Anon 1.19 pm, well known fact in history that in 1965, Singapore was the second richest country after Japan

http://furrybrowndog.wordpress.com/2010/08/06/putting-singapores-gdp-in-perspective

Anon, lets see what arguments mr shitty arsehead will come up to counter dog......er...I forgot it has no brains only a pondan's bark.

Babi tetap Babi di mana jua ia berada. Enuff said.

Anonymous said...

This afternoon, the currency merchants at Kings Cross were doling out 85 Aussie cents for every SGD 1 brandished. Remember trading in 1 for 1 just 4 short years ago.

Seems to me that this is as good an indication as any of Singapore's dire economic situation.

Because when it comes down to fundamentals, it's the strength of one's currency that separates the real men from them sissy boys.

Or is that too an esoteric idea for a shitty brained trolls to comprehend.? Hahahahahahahaha

Now let me go hopping along good ol Bondi.

Anonymous said...

By the way, exchange rate is determined by demand and supply of one currency relative to another, as well as the monetary policies of those countries. It's therefore not an indication of economic situation. A single movement in a week doesn't indicate anything either. It is a volatile market. If the country had a lot of FDI it'll affect its currency.

I don't know why everyone is comparing to Singapore. It's been struggling to produce even 3 percent GDP growth. And its consumer prices are accelerating faster than Malaysia's. That'll easily make its real GDP growth close to zero. And its trying to make its currency weaker so that it can continue exporting its goods. Here in this country everyone wants stronger currency. Not a clever move.

Anonymous said...

malaysia should hire RM1 financial wizard who is now the financial consultant for selangor. He would turn the news around and put malaysia is numero uno.....

he is so good, people all over the world (yes, obama included) thinks that on 16 Sept (just like princess fiona in SHREK!) will become the PM.

top that , the economist!

Anonymous said...

A smack for a cunthead Joe:

1. Singaporeans have a low purchasing power of only 39.9, comparable to Kuala Lumpur (39.5), Warsaw (34.0) and Bogota (33.7).

2.Though Malaysia is still a developing country and has a GDP (PPP) per capita of only $14,215, less than 3 times of ours, the ordinary Malaysian citizen has about the same domestic purchasing power as the Singaporean.

source = http://therealsingapore.com/content/singapore-has-lowest-wages-and-domestic-purchasing-power-among-asian-tigers-part-1


Now off to Bondi, once more for more ogling, of course.

The said...

On a ppp basis (purchasing power parity, the per capita GDP are as follows:
MY = US$17,200
GS = US$61,400

Sheiss.tech said...

Yadda, yadda.....so, what else is new?

Let's wait for the PM's budget speech in October to see who blinks first - the government or the markets?

As for Singapore, it's already mapped out it's own path and strategy. Good luck to them.

But I just wish that we'd done a better job with our education system.

And that Malaysians didn't have to look overseas for good jobs.

Purchasing power parity notwithstanding!

Anonymous said...

Singapore bottom 10 percent household member earns $422. Top 10 percent earns $10,543. Almost as hot as Malaysia eh?

Tell the bottom dwellers in Singapore about PPP GDP. Bet ya they don't care a toss if they can't pay their bills.

Anonymous said...

Duduk la situ boy and enjoy your high currency......

Anonymous said...

Its ok just be proud of you have and produced which is? Ah never mind ........

Anonymous said...

Cina semua kasi oooo.........

Anonymous said...

Sorry bro..In Singapore, those who buy Proton are many Chinese Singaporeans...no issues with Proton...at least not with that T...T. which hv many recalls recently. I, a Malay Singaporean drove Proton...no issues..good car. 6 years already..