Thursday, October 08, 2015

Going our own way (with apologies to JP Morgan)

No Indonesian "detour" for Malaysian economy

By Abdul Wahid Omar

Minister in the Prime Minister's Departmenr

KL, Oct 8:  Upon my return from the recent NEw York trip, one of the fund managers I met emailed to me a research note from JP Morgan entitled " Is Malaysia taking the Indonesia Detour? "

Here's my short answer to his email:

"Likewise it was a pleasure to meet with you again too. Thanks for sharing the JP Morgan piece. Unfortunately I did not meet with Harsh Modi when he came to KL. Having led Maybank which has sizeable operations in Indonesia, I would say the economic fundamentals between our countries are very different :-

1. Malaysia's economy is far more diversified where its dependency on commodities as at 2014 (before the significant drop in commodity prices) is much less ie 18% in terms of GDP, 23% in terms of exports and 30% in terms of Government revenue. In April 2015, we implemented GST which broadened our revenue base further. This helps to partially cushion the drop in oil & gas revenues. 
2. Our Government debt level at 54% is below the self imposed limit of 55% and is expected to decline gradually as we get the private sector to drive fixed capital formation / investments. Private investments grew to 64% of total investments in 2014 and increased further to 71% in first half 2015. 97% of Government debts are denominated in MYR. 
3. Our financial system is well developed with sizeable equity and debt capital markets. In fact our debt capital market is the most developed in ASEAN with ability to fund long term infrastructure projects. Our banks are well capitalised, well managed with good risk & liquidity management, well regulated and effectively supervised by Bank Negara Malaysia. 
4. Corporate debt levels at 56% for PLCs are significantly lower than during1997/98. Most corporate debts are denominated in MYR. Companies that borrow in USD or other foreign currencies have matching assets or revenue streams. 
5. With forward PE of 14 times, the market valuation can be considered reasonable especially if you take into account the Maybank Kim Eng's recent analysis on the resilience of Malaysian stock market.

Indeed, I would say that Malaysia is more resilient now compared to our position during the previous crises  and certainly more resilient than the neighbouring country mentioned if you were to do a side by side comparison. On my part, we will continue to focus on the fundamentals and let the market decide on the appropriate 'pricing' for our financial markets.

Bru Notes: Back in 97-98 currency crisis, Indonesia suffered not just economic woes but a troubled race/religious relations due to those woes. Despite enlisting the help of the IMF, some parts of Indonesia continued to "bleed" for years. In Malaysia, the ethnic groups drew closer rather than apart even as the crisis ravaged their wellbeing and put their future in doubt. In the end, we did not go the Indonesian-IMF way.

Read also:
Note that the original heading before the correction was "JP Morgan: Sell Indonesian bonds, Rupiah NOW"


  1. Anonymous8:27 am

    Bru Notes: Back in 97-98 currency crisis................... Thanks to who?

  2. Anonymous9:06 am

    "In Malaysai, the ethnic groups drew closer rather than apart even as the crisis ravaged their wellbeing and put their future in doubt."

    Yes, but in those days "Malaysai" wasn't being led by an incompetent Bugis buffoon who can't think deeper than using the race card to save his bangsawan ass.

    Such is the tragedy of Malaysia (and Malaysai).

  3. Anonymous9:22 am

    What Jokowi should do is this:

    a) Get the equivalent of US$700 million transferred into his personal account, deny it for a month, then get his minions to spin 5 different excuses for it, none of which make sense.

    b) Set up a state investment fund that racks up the equivalent of RM50 billion in debt (which is fine), while repeatedly lying to the public about its governance (which ain't.) Oh, and try to get a couple of accounts frozen too. Throw in half a dozen international investigations. Good job.

    Then see what happens to the economy.

    I'm not Jokowing. Seriously.

  4. Anonymous10:07 am

    To the two ordinary-sounding (as in not so educated) Anonymouses above,

    Thanks to Mahathir back then. And not forgetting George (Soros) the punching bag!

    But NO thanks to Mahathir now.
    He seems bent on destroying not just his own legacy, which is all right by us, but also our economy and well-being.
    Please remember most of us don't have homes in Canada, London and Argentina, not to mention Kerala, to migrate to.

    Harvard Bugis

  5. Anonymous10:47 am

    "Please remember most of us don't have homes in Canada, London and Argentina, not to mention Kerala, to migrate to."

    Tumpang-lah on the private jet when Ferdy & Rosie finally flee the country into exile. They have plenty of overseas properties (not in Kerala, though), and might be able to "donate" one to you. Maybe not one of the US ones, in case those get seized by the Dept Of Justice, but plenty of others. Rilek lah.

    Ferdy & Rosie will leave behind a superb legacy for "our economy and well-being", don't you think?


  6. Rocky,
    Comments unrelated to this post, but just wondering if you are planning to write something on the decree made by the Conference of Rulers regarding investigation on 1MDB, or you need more time to cook up stories?

  7. Anonymous11:14 am

    smart. divert the attention from the current issues.. muhyiddin speaks up, the royal decree, mahathir relentless attacks.. 1MDB needs another 6 months extension...

    i just got back from Toyota Service Centre PJ.

    ur name came up, I guess it was among malay mail staff.. u know what they said? ure a sellout bru. no more an honorable journalist.

    oh well.. kita kena ingat bru. ramai yg tak suka baca awak punya Blog, sebab suka jilat bontot najib. bila dah ramai menyumpah baca apa yg awak tulis...

    "ah.. itu datuk attan sudah dpt byk wang. pegi mampus sama dia"..

    "itu Rocky bru dah bukan mcm dulu.. sekarang ni dia berjuang utk dpt duit makan.. walaupun najib razak dah terang terang salah"

    "ya Allah, kenapa Rocky buat article mcm ni.. tak sedar lagi ke? berikan petunjuk kepada dia.. turunkan BALA kepadanya kerana suka sangat backup najib"

    etc etc. kata itu doa bro

  8. nice intelligent tounge-in-cheek comments here. In line with AWO's well thought out response. You probably would'nt get such comments if this was the Malaysian Insider.

    i feel compelled to add that 1MDB aside, the PM still has not answred the RM2 billion to the satisfaction of many, including me. In fact the PM's response was really an insult to everyone's intelligence really.

    Perhaps he is actually telling the thruth (which is incredibly hard to believe). Either way, it could have been better spun.

  9. Anonymous11:48 am

    "SPRM buka juga balik kes Pulau TIOMAN cthnya di mana disyaki tanah kampung BUMIPUTERA Islam/Melayu diPAKSA jual dgn. amat MURAH kat si Pendatang KAPIRDAJAL termasuk dari SingaPORK dan si PENJILAT PENGKHIANAT Kedah ni! Siasat juga satu lagi hotel mewah VincentPENJILAT ni kat Langkawi - JANGAN pula keadaan pengambilan tanah org. kampung yg. sama spt. di Tioman! Kat siapa RAKYAT boleh MENGADU no, kalau si SPRM ni tak buat KERJA dia dgn. betul – takkan SPRM ni KEBAL undg-undg. pula (yg. ganjilnya bukan main BERAPI nak SIASAT IMDB dan YAB PM kami saja – tapi isu DEIG tu mahupun DERMA utk. PKRHOMO/DAPBANGKAI BABI dr. CIA-Mossad/Soros-NED/PAP, awat SPRM ni senyap aja?????????????"

    CIA-Mossad/Soros-NED/PAP yg hantar rasuah 2.6bil tu pada YAP (Yang Amat Poyo) ke, yop?

    Nah ambik ler ko:

  10. Anonymous3:04 pm

    @ Saudara Half-A Bugis 10:07 a.m.

    And yet the persistent "Sang Kelembai" odour of the pendekar PM lingers unpleasantly, tainting both our economy and well-being. Not to mention our currency. (Ask Zeti about that one.)

    The raja2 melayu have politely slapped the bogusbugis worrier in the face, with both grace and delicacy. It is well-deserved. And overdue.

    The country's recovery can only begin once the bogusbugis worrier songlaps one of the private jets, filled with the remains of the Umno "TRUST FUND" (ha ha), and flies away forever.

    (Don't leave the missus behind, ya.)

  11. Anon 11.14am

    Makcik saya selalu pesan kepada saya dulu, "Doa tak baik akan berbalik, Din." :-)

    If I couldn't stand the heat, Mo, I'd leave the kitchen, Ron.

    Brickbats come with the territory. Nobody said blogging is for the fainthearted. Many have closed their blogs because they can't stand the stalkers, the online pervs, the trawlers (is that the right term?) and even the spammers. Many gave up because they could not get the traffic, ie too few people read their blogs. Let me assure you, I suffer from neither.

    Keep 'em coming, bro.

  12. Dear Lawrence Tan,

    I plan to. But since it's a statement by the Conference of Rulers and they are still meeting, I'd wait for their meeting to conclude before I make any comemts. In deference to the Malay Rulers, of course. You'd notice several people including Zaid Ibrahim, Mahfuz and the anti-Najib bloggers who have jumped on the bandwagon hoping to ride on the Rulers' to bring down the Prime Minister. That's disrespeting the Raja2, if your ask me.

    Thank you

  13. Why Ferdy, Encik Masyuk! 11.07 am?

    I mean, your comment's rubbish and I would have thrown it into the gutter where it belongs, Encik Mashyuk, but I am curious, where does this "Ferdy and Rose" phrase comes from?


  14. Anonymous7:37 pm

    Datuk at 6.25pm,

    The "Ferdy" is a reference to Ferdinand Marcos.

    Is the comparison apt?


    “Five months later they would also buy the three adjoining apartments, paying a total of $4,000,000.00 for the four and using Antonio Floirendo’s company, The Aventures Limited in Hong Kong, as front for these purchases.

    Marcos fled the Philippines leaving behind a foreign debt of $27 billion and a bureaucracy gone mad. “Cash advances” for the elections from the national treasury amounted to Php 3.12 billion ($150 million).

    Imelda charged off most of her spending sprees to the PNB or Philippine National Bank which creatively wrote off her debts as “unresponded transfers”

    These losses were primarily due to cronyism – giving loans to cronies that had little or no collateral, whose corporations were undercapitalized, whose loan proceeds were not used for the avowed purpose, and where the practice of corporate layering was common, i.e. using two or more companies with the same incorporators and officers, whereby one company which gives the loan owns the company which obtains the loan, or similar arrangements.

    Because of the free rides taken by Imelda, Marcos and the cronies, the Philippine Airlines was in debt by $13.8 billion.

    Inside were thirty-five suitcases secured with locks and tape. They contained a treasure trove of documents about Swiss bank accounts, New York real estate, foundations in Vaduz, and some notepaper on which Marcos had practiced his “William Saunders” signature.

    Questioned by Philippine and US lawyers about his hidden wealth, Marcos took the Fifth Amendment 197 times. Imelda followed suit – 200 times.

    By 1986, the number of Filipinos living below the poverty line doubled from 18 million in 1965 to 35 million. And the ecological balance of the country had degraded from 75 % to 27% forest cover remaining – with 39 million acres of forest falling victim to rampant logging.

    Meritorious officers in the armed forces experienced low morale due to Marcos’ penchant for promoting friends over more deserving officers.

    Marcos was found guilty of violating the human rights of 10,000 victims.”

    If you see amazing similarities to home, well -

    - you may be right.



  15. Anonymous9:46 pm

    Datuk...kipidap...the good job!..i think its also about time for the malay rulers to rethink or abandon their "business collaboration" with the tauke tauke cina.