Malaysian firms have registered strong growth and accumulated some wealth, which will help them to get through any downturn for between one and three years, says RAM Consultancy Services chief economist
The major markets for Malaysian companies like the United States, Japan and Europe may be down at the moment but the bright spots could be markets like China, India and the Middle East.
Can Malaysia weather the storm ahead? RAM Consultancy Services Chief Economist, Dr Yeah Kim Leng, thinks the country will be able to do so.
The government, he said, had done the right thing to prop up the local economy and offset any adverse impact from the contracting global economy.
And Malaysian firms are also likely to withstand the storm clouds because for the past six years, they had registered strong growth and accumulated some wealth, which will help them to get through any downturn for between one and three years, he said.
"Some may need to lay off some workers but I don't see that to be a major trend," he said, adding that some companies had already adjusted to the softer demand by reducing production shifts.
Based on RAM's assessment, the country's estimated unemployment will be about 4.0 to 4.5 per cent from the current 3.5 per cent, Yeah said. In terms of numbers, it would be about half million people, with half of them new entrants to the job market.
He said labour-intensive sectors would be mostly affected by the economic downswing if companies were to downsize.
"But since most of them hire foreign workers, the impact on Malaysians are expected to be minimal. With 2.2 million foreign workers in the country, they would be the first ones to go if retrenchment exercises are carried out," he said.
Second Finance Minister Tan Sri Nor Mohamed Yakcop recently said the unemployment rate in the country would be at four per cent or below this year and would be at same level next year as he was confident that the RM300 million training fund under the stimulus package should minimise unemployment besides upgrading workers' skills.
"The most testing challenges for the government in any crisis would be to make sure the government can find jobs for the people and business credit is flowing. We've to ensure the employed now remained employed and graduating students can find jobs later," he said.
Human Resources Minister Datuk S.Subramaniam said the government has formed two committees to help those being retrenched so that they can be absorbed by sectors in need of workers.
Two committees, comprising representatives from employers, trade unions, government ministries and agencies, would meet monthly to track job terminations and potential retrenchments, and to provide assistance for retrenched workers through re-skilling and retraining.
"We hope it (economic downturn) will not happen but looking at the other countries, this is already happening. We have to be prepared to address it," he said.
Recently the government announced a RM5 million allocation to re-train retrenched workers under the Pembangunan Sumber Manusia Bhd (PSMB). Some 750,000 workers from small- and medium-sized enterprises will benefit from this programme.
Dr Subramanian said the government would top up RM1 for every RM1 spent by employers for retraining and to upgrade workers' skills and from November 1 this year, 100 per cent financial aid would be given to all skills upgrading retraining programmes held locally.
In terms of domestic demand in Malaysia, it is unlikely to suffer despite some surveys painting a bleak picture of consumer sentiment in the region, thus sparking fears that consumption, as an engine of economic growth, is under threat.
The Malaysian Institute of Economic Research said that "signs of consumer moderation are becoming more apparent" after its consumer sentiment survey for the third quarter plunged nearly 30 points year-on-year.
However, there are still bright spots: retail sales, which totalled US$67.1 billion last year, are still expected to rise 7.0 per cent to US$71.8 billion this year and consumption is still expanding.
Private consumption grew 9.0 per cent in the second quarter, after 11.7 per cent in Q1 2008. One forecast puts the 2008 consumption growth at 7.4 per cent, down from some 11 per cent last year.
Consumer spending is expected to remain significant as the government has announced a number of fuel price cuts, discounted highway toll rates, reduced prices in hypermarkets and allowing contributors to the Employees Provident Fund to voluntarily contribute less to the pension fund so that they would have more disposable income.
The EPF is expected to inject at least RM2.5 billion a month into the economy even if only half of its members take up the incentive.
In terms of consumer credit, Yeah said as long as consumers had access to financial credit, there would not be any credit crunch although many banks had tightened their loan procedures as a result of the financial mess in the West.
He also believed that the Malaysian economy was diversified enough to ensure that domestic demand could be sustained.
Dr Yeah said even if the GDP contracted by 0.5 per cent next year compared to the projected 3.5 per cent, the Malaysian economy was still not in a serious situation but cautioned that the government needed to ensure the availability of funds in the market.
In addition, he said the government must continue adopting pro-active measures like reducing taxes, improving its efficiency and introducing greater liberalisation to make Malaysia more competitive.
"This crisis may put Malaysia in a stronger position. If they (the government) put these reforms into place, we would be able to recover much faster, very much faster or be resilient to further shocks," said Dr Yeah.
Dr Yeah said the government must pay more attention to help small- and medium-scale entrepreneurs (SME), especially those who were export-oriented and unable to find new markets during this trying period.
International Trade and Industry Minister Tan Sri Muhyiddin Yassin recently said that easing the financial burden of SMEs would be looked into and that the Finance Ministry and Bank Negara Malaysia would be asked to help ease the burden on borrowers. - Bernama
THE first wave of repercussions from the financial crisis in the West may seem to have hit Malaysia, with commodity and equity prices falling of late.
And with the slump in the price of crude oil, a major income earner for Malaysia, all these seem to be a perfect recipe for added pressure on the government as its ability to collect revenue is impinged upon.
But the government has been quick to spring into action by introducing pre-emptive pump priming measures with a RM7 billion stimulus package.
As things stand, the impact on Malaysia may be minimal, given that the government had taken steps to ensure that the economy chugs along, although at a slower pace.
Can Malaysia weather the storm ahead? RAM Consultancy Services Chief Economist, Dr Yeah Kim Leng, thinks the country will be able to do so.
The government, he said, had done the right thing to prop up the local economy and offset any adverse impact from the contracting global economy.
And Malaysian firms are also likely to withstand the storm clouds because for the past six years, they had registered strong growth and accumulated some wealth, which will help them to get through any downturn for between one and three years, he said.
"Some may need to lay off some workers but I don't see that to be a major trend," he said, adding that some companies had already adjusted to the softer demand by reducing production shifts.
Based on RAM's assessment, the country's estimated unemployment will be about 4.0 to 4.5 per cent from the current 3.5 per cent, Yeah said. In terms of numbers, it would be about half million people, with half of them new entrants to the job market.
He said labour-intensive sectors would be mostly affected by the economic downswing if companies were to downsize.
"But since most of them hire foreign workers, the impact on Malaysians are expected to be minimal. With 2.2 million foreign workers in the country, they would be the first ones to go if retrenchment exercises are carried out," he said.
Second Finance Minister Tan Sri Nor Mohamed Yakcop recently said the unemployment rate in the country would be at four per cent or below this year and would be at same level next year as he was confident that the RM300 million training fund under the stimulus package should minimise unemployment besides upgrading workers' skills.
"The most testing challenges for the government in any crisis would be to make sure the government can find jobs for the people and business credit is flowing. We've to ensure the employed now remained employed and graduating students can find jobs later," he said.
Human Resources Minister Datuk S.Subramaniam said the government has formed two committees to help those being retrenched so that they can be absorbed by sectors in need of workers.
Two committees, comprising representatives from employers, trade unions, government ministries and agencies, would meet monthly to track job terminations and potential retrenchments, and to provide assistance for retrenched workers through re-skilling and retraining.
"We hope it (economic downturn) will not happen but looking at the other countries, this is already happening. We have to be prepared to address it," he said.
Recently the government announced a RM5 million allocation to re-train retrenched workers under the Pembangunan Sumber Manusia Bhd (PSMB). Some 750,000 workers from small- and medium-sized enterprises will benefit from this programme.
Dr Subramanian said the government would top up RM1 for every RM1 spent by employers for retraining and to upgrade workers' skills and from November 1 this year, 100 per cent financial aid would be given to all skills upgrading retraining programmes held locally.
In terms of domestic demand in Malaysia, it is unlikely to suffer despite some surveys painting a bleak picture of consumer sentiment in the region, thus sparking fears that consumption, as an engine of economic growth, is under threat.
The Malaysian Institute of Economic Research said that "signs of consumer moderation are becoming more apparent" after its consumer sentiment survey for the third quarter plunged nearly 30 points year-on-year.
However, there are still bright spots: retail sales, which totalled US$67.1 billion last year, are still expected to rise 7.0 per cent to US$71.8 billion this year and consumption is still expanding.
Private consumption grew 9.0 per cent in the second quarter, after 11.7 per cent in Q1 2008. One forecast puts the 2008 consumption growth at 7.4 per cent, down from some 11 per cent last year.
Consumer spending is expected to remain significant as the government has announced a number of fuel price cuts, discounted highway toll rates, reduced prices in hypermarkets and allowing contributors to the Employees Provident Fund to voluntarily contribute less to the pension fund so that they would have more disposable income.
The EPF is expected to inject at least RM2.5 billion a month into the economy even if only half of its members take up the incentive.
In terms of consumer credit, Yeah said as long as consumers had access to financial credit, there would not be any credit crunch although many banks had tightened their loan procedures as a result of the financial mess in the West.
He also believed that the Malaysian economy was diversified enough to ensure that domestic demand could be sustained.
Dr Yeah said even if the GDP contracted by 0.5 per cent next year compared to the projected 3.5 per cent, the Malaysian economy was still not in a serious situation but cautioned that the government needed to ensure the availability of funds in the market.
In addition, he said the government must continue adopting pro-active measures like reducing taxes, improving its efficiency and introducing greater liberalisation to make Malaysia more competitive.
"This crisis may put Malaysia in a stronger position. If they (the government) put these reforms into place, we would be able to recover much faster, very much faster or be resilient to further shocks," said Dr Yeah.
Dr Yeah said the government must pay more attention to help small- and medium-scale entrepreneurs (SME), especially those who were export-oriented and unable to find new markets during this trying period.
International Trade and Industry Minister Tan Sri Muhyiddin Yassin recently said that easing the financial burden of SMEs would be looked into and that the Finance Ministry and Bank Negara Malaysia would be asked to help ease the burden on borrowers. - Bernama
Malaysian Ringgits per Gram
Malaysian Ringgits per Kilo
0 comments
Post a Comment