Malaysia's Slowing Down!!!!

The article below was qouted from DAP chairman Lim Kit Siang's blog.
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Malaysia’s Slowing Performance

by Greg Lopez

Asia Sentinel

25 August 2011

There are strong institutional reasons for the lagging performance against its regional neighbors

In the 70 years since World War II ended, East Asian economies, including Malaysia, appear to have largely got performance right. Malaysia was also one of 13 countries identified by the Commission on Growth and Development in its 2008 Growth Report to have recorded average growth of more than 7 percent per year for 25 years or more. Malaysia achieved this spectacular performance from 1967 to 1997.

However, since the Asian Financial Crisis of 1997 and1998, Malaysia’s economic performance when compared to previous decades has been lackluster and most macroeconomic indicators are trending downwards. This was confirmed by Prime Minister Najib Tun Razak himself in the publication on March 30, 2010 of the New Economic Model – Part 1. This was a very brave move but a necessary one by the premier as he acknowledged publicly the failures of Malaysia’s current economic model in order to demonstrate urgency for reforms.

The New Economic Model identifies domestic factors such as weak investor confidence, capability constraints (weak human capital, entrepreneurial base and innovative capacity) , productivity ceilings and institutional degradation and external factors such as a sluggish global economy caused by the global financial crisis of 2008-2009 and the rise of neighbors in the region in contributing to the declining growth trajectory.

If we were to revisit the determinants of growth and agree that proper institutions form the overall structure that determines long-term sustainable growth, then the logical response is to reform Malaysia’s institutional set-up, as it must be the deepest determinant of what is hindering economic growth.

This view is further strengthened as Malaysia’s other deep determinants, geography and trade, are favorable. The country has abundant natural resources, is shielded from natural hazards and is well-located strategically both geopolitically and economically. Malaysia has also benefitted tremendously from being an open economy, especially in the merchandise sector.

The New Economic Model also reports that regional challenges from China, India and Vietnam, etc. are a cause for Malaysia’s declining economic performance. What has changed about these countries? They have all undertaken institutional reforms: China since 1978, India since 1992 and Vietnam since 1986. They are reaping the benefits while Malaysia has stalled in its institutional reforms since the 1990s, regressed in some ways and is suffering from the consequences.

The above points stress the importance of institutional reforms in Malaysia, something that Najib has ironically neglected in his signature policies – 1Malaysia, Government Transformation Programme and Economic Transformation Programme.

According to the Growth Commission report, “…fast sustained growth is not a miracle; it is attainable for developing countries with the ‘right mix of ingredients.’ Countries need leaders who are committed to achieving growth and who can take advantage of opportunities from the global economy. They also need to know about the levels of incentives and public investments that are necessary for private investment to take off and ensure the long-term diversification of the economy and its integration in the global economy…”

Michael Spence, the Chairman of the Growth Commission, elaborated on his extensive experience working with developing countries on growth issues in his latest book by emphasizing two important characteristics for developing countries to ensure long term sustainable growth – the role of political leadership and democratic norms. He suggests four characteristics for governments that are necessary requirements to underpin long term growth:

1.The government takes economic performance and growth seriously.

2.The governing group has values that cause it to try to act in the interest of the vast majority of the people (as opposed to themselves or some subgroup, however defined)

3.The government is competent and effective and selects a viable sustained-growth strategy that includes openness to the global economy, high levels of investment, and a strong future orientation.

4.Economic freedom is present and is supported by the legal system and regulatory policy

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I'm surprised to see that even Najib is aware that our economy is going downward, jeez, it took a long time for him to figure it out though!!!

Malaysia's economy had been spiraling downwards ever since BODOWI took over. I remembered he once did something really useful by imposing a minimum salary of RM600, but after much pressure from the private sector he kept the issue aside and let it chill.

Ever since Najib took over, nothing much changed.....erm, apart from the 1 Malaysia slogan.
Fresh graduates with overseas degrees starts with a low salary of RM2k+, and it was the same few years ago, see how stagnant it is?. Half of it will go to the condominium, because you could barely afford a landed house, and the other half onto a car. This means all that's left is peanuts, and you'll be forced to eat Roti kosong RM1,Nasi lemak RM1, and teh tarik RM1.20 , of which will kill you faster than your loan tenure, than the government says we have to excersice more often because malaysian are obese...F**k it

What i'm stressing here is that, our spending power had been suppressed because we pay heftily on cars which is considered a must in Malaysia, why? Ask BODOWI lo. LRT line was announced since he stepped into office, but now in 2011, haven't build yet!!!.

Cars in Malaysia is so expensive that we some of us literally spend 10 years in repayments, on top of the 35 years repayment that we spend for the condo, that's a heavy burden for a light monthly paycheque. Guess right now it will be more economical to eat mamak/malay food rather than chinese/indian food...no wonder those Pendatang overtaken the Malays