A recent news brief from S&P just confirmed my thoughts and feel on whats happening in Malaysia – we need to get out of this ‘holding pattern’ and land quickly to rebuild if not the fear of a decelerating economy is inevitable.
Whilst we have strong reforms taking place with the New Government, has everyone forgotten about our Economy and that we are in a competitive framework in ASEAN + China + India and we already before May 9th needed to work harded, faster and smarter.
Just look at our productivity numbers. Malaysia’s labour productivity, as measured by output per hour worked by all persons — including employees, proprietors, and unpaid family workers — grew 3.7% in the second quarter of 2018 (2Q2018), as a result of a 4.5% growth in economic output and a 0.7% rise in total hours worked. Minister of International Trade and Industry Darell Leiking said out of five main economic sectors, mining and quarrying recorded the highest productivity, with growth registered at 6.2%, followed by construction (5.0%), services (4.9%), agriculture (3.4%) and manufacturing (1.7%).
Are the numbers correct for labour force ? What about the illegal workers everyone keeps talking about ? How do we adjust and reflect the GDP growth and Productivity growth if we remove the oil and gas numbers ?
Extracts from the news article: S&P Global Ratings sees higher risks on the Malaysian government’s fiscal performance. But, on the other hand, the government’s austerity measures could hurt long-term economic growth. With a narrow revenue base that is dependent on volatile revenue sources, Malaysia’s budget performance is more vulnerable to negative economic conditions than most others, said S&P Global credit analyst KimEng Tan in the credit rating report titled Hope In Malaysia Comes With Some Questions For Sovereign Credit Support. The report highlighted that if the economy encounters negative conditions in the near future, a fiscal deterioration could weigh significantly on the government’s credit metrics unless the government is willing to introduce new revenue measures.
“We don’t expect Malaysia’s fiscal performance to deteriorate materially in the next few years mainly because of the government’s strong focus on fiscal stability,” said S&P Global Ratings, but it stressed that nevertheless, risks to fiscal performance have risen even if the government spends carefully. S&P Global Ratings said Malaysia’s general government revenue-to-GDP ratio is likely to slide further this year after it fell to a low of 17.7% in 2017. It noted that the ratio is already low among rated sovereigns, limiting its ability to expand social services and public investment. While the government has stopped or postponed some major infrastructure project to control spending, S&P Global Ratings said this will limit new infrastructure spending in the near future and could also weaken long-term economic growth.
“If Malaysia’s capital spending slows markedly, its relative attractiveness as an investment destination could diminish to the detriment of its long-term growth prospects,” said S&P Global Ratings. Moving forward, as new fiscal policies and priorities solidify, S&P Global Ratings highlighted the importance of the administration to ensure stable fiscal performance, even while pursuing worthwhile infrastructure projects. “Otherwise, slippages in fiscal performance and growth prospects will weaken the support for our sovereign ratings on Malaysia,” said S&P Global Ratings.
Ineffective policymaking is another risk to watch in Malaysia, according to S&P Global Ratings. However, the ratings agent notes that differences among the coalition parties and resistance from the bureaucracy do not appear to be obstructing policymaking for now. “We expect the government’s decision to change the reporting structure of several important agencies to increase the independence and transparency of government agencies and state-owned enterprises,” said Tan. For a real change in behaviour, Malaysia will have to sustain these reform efforts; it may even widen those measures to the civil service, he commented.
This news is not very good news. Malaysians need to act fast, both the public and private sector. A focused effect to put into place New Economic Sub Sectors, Extracting more from Downstream Value Chain, Transformation of Industry Workforce Skillset and Smart Digitally Focused Policies has to be devised quickly and put into action.
27Group is comprised of 27 Advisory, 27 Capital and 27 Projects, each a functional building block of our unique, integrated offering across strategic consulting, financing and project delivery with a singular focus on built asset projects, driven and underpinned by our ethos of Rebuilding Humanity. At 27Group, we believe projects need infusion of human values into strategy, funding and delivery in order to deliver sustainable, significant impact in a balanced manner. We strive to achieve this through our focus on Socio Economic Transformation, Innovative Funding Models and Development Integrators. Rebuild with us.
