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Showing posts with label Gross domestic product. Show all posts
Showing posts with label Gross domestic product. Show all posts

Friday, August 17, 2012

Malaysia's growth forecasts raised after the actual 5.4% in Q2, 2012

 Malaysia's economy up 5.4% in Q2, manufacturing, demand support growth 

KUALA LUMPUR: Malaysia's economic growth, as measured by gross domestic product (GDP), for the second quarter ended June 30 rose by an unexpected 5.4% year-on-year, underpinned by an expansion in manufacturing and robust domestic demand.

GDP growth for the first quarter was revised to 4.9% from 4.7%, while growth for the first half of the year stood at 5.1% compared with the same period a year ago. Compared with the first quarter, GDP expanded by 3%.

In the supply side of the economy, only the agricultural sector saw a contraction due to lower crude palm oil production. Manufacturing, services, construction and mining all posted growth. Domestic demand jumped 13.8% for the quarter and rose 11.8% for the first-half.

The country's second-quarter GDP numbers came as a surprise to many economists, whose median forecast was for a 4.6% expansion. Growth for the quarter even exceeded the most optimistic forecast of 5.2%.

Zeti (far right) attending the briefing. With her are other Bank Negara officials Zeti (far right) attending the briefing. With her are other Bank Negara officials

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said at a briefing following the release of the GDP data that the surge in private investment was the most encouraging aspect of the economy.

“Private investment has made a strong return because the investment climate has improved tremendously, with Malaysia moving up the rankings of various surveys in terms of competitiveness, costs and ease of doing business,” she said.

Zeti said the improvement was underscored by the higher implementation of investments by domestic and foreign investors. She added that civil engineering projects in the oil and gas, transport, utilities and services industries had helped spur growth in the construction sector.

By numbers, investments from the public and private sectors jumped 26.1% year-on-year for the quarter under review, with the first half rising 21.3%.


By sector, private investments rose 24.6% while public investments surged 28.9%. For the first half, private sector investments grew 22.4% while public sector investments expanded 19.5%.

Consumption rose 8.9% for the quarter and 11.8% in the first half. By sector, private consumption increased 8.8% for the quarter and 8.1% for the first half while public consumption expanded 9.4% for the quarter and 8.4% in the first half.

Zeti said monetary policy continued to be supportive of growth and that for the rest of the year, risks weighed on growth rather than on inflation with external headwinds still overshadowing the outlook.

She said it would take time for the global economy to recover and this would need action from various stakeholders.

“At this point, we're maintaining our forecast of 4% to 5% GDP growth for the year but this may change when the budget is announced (on Sept 28). This will come in at the upper range of the forecast if growth is robust,” Zeti added.

Alliance Investment Bank Bhd chief economist Manokaran Mottain has revised GDP growth for the year to 4.7% from 4.5% previously, with the second half to record growth of 4.5%.

He told StarBiz the third quarter would see expansion at its slowest.

Manokaran said despite the surprising growth figures, the global and domestic economy's outlook for the rest of the year would still be dampened by the eurozone debt crisis, slower expansion in China and tepid growth in the United States.

“We believe the eurozone crisis will continue to have an impact on trade and this will show itself in slower exports growth,” he said.

He added that with a drop in manufacturing activity, sentiments would be affected, leading to slower growth in the domestic-oriented services sector as consumption slowed.

Manokaran said Purchasing Managers Index (PMI) for July indicated that exports would slow as demand dropped in developed markets.

CIMB Investment Bank Bhd economic research head Lee Heng Guie said in a report that the leading index for June suggested that the economy could weaken in the second half.

“We caution that a sharply high base in the second half of last year poses a hurdle to year-on-year growth,” he said.

He pointed out that the global Organisation for Economic Co-operation and Development composite leading together with regional high-frequency indicators, including trade and PMI, were still under external pressures.

Meanwhile, the Statistics Department released data showing that July prices as measured by the Consumer Price Index gained 1.4% year-on-year to 104.8 and remained unchanged compared with the previous month.

By FINTAN NG fintan@thestar.com.my The Star/Asia News Network

Economists turn bullish following better-than-expected growth in Q2
 
PETALING JAYA: Several economists have raised their gross domestic product (GDP) forecasts for Malaysia following better-than-expected growth for the second quarter ended June 30.

Malaysia's economic growth for the second quarter rose by an unexpected 5.4% year-on-year underpinned by an expansion in manufacturing and robust domestic demand.

GDP growth for the first quarter was revised to 4.9% from 4.7%, while growth for the first half of the year stood at 5.1% compared with the same period a year ago.

Compared with the first quarter, GDP expanded by 3%.

Hong Leong Investment Bank's (HLIB) research unit said that following the strong-than-expected second quarter data, it had raised its full-year 2012 GDP forecast to 5% (previously: 4.5%).

For the second half of 2012, HLIB Research expected GDP growth to dip to 4.5% year-on-year in the third quarter (dragged by subdued trade and manufacturing and higher base in the third quarter of 2011) before improving to 5.1% year-on-year in the fourth quarter, yielding an average of 4.8% year-on-year (first half: 5.1% year-on-year).

“We are still positive that line-up of the Economic Transformation Programme projects for the second-half and 2013 could still provide a strong support to GDP growth despite external uncertainty,” said HLIB Research.

According to Bloomberg, Goldman Sachs also raised Malaysia's GDP growth predictions to 4.6% from 3.8% for 2012, and to 5.3% from 5.2% for 2013.

Meanwhile, CIMB Investment Bank Bhd economic research head Lee Heng Guie said given the steady performance in the first half, he had raised the 2012 growth estimate to 5%, from 3.8% previously.

“However, this still implies a slower growth of 4.5% to 5% in the second half versus 5.1% in the first half,” said Lee in a report.

Lee warned that external headwinds still warranted caution as they remained hurdles to Malaysia's export growth.

Meanwhile, Maybank Investment Bank (IB) Research said its 2012 and 2013 growth forecasts of 4.4% and 5.1% respectively were under review.

“Provisionally, we expect 2012 growth to be around 5%, which implies a slightly slower growth of 4.8% in the second half as the global purchasing managers index in July signals that the global economy hence external demand will remain soft in the third quarter.”

Maybank IB Research said domestic demand would continue to be well supported by initiatives to sustain consumer spending, policies and measures to spur investments, and the roll-out and progress of big ticket infrastructure projects and capital expenditures in industries like oil, gas and energy.

By THOMAS HUONG huong@thestar.com.my The Star/Asia News Network

Friday, May 25, 2012

Malaysian GDP grew 4.7% in Q1, 2012

Malaysia's economic growth slowed to 4.7 percent in the first quarter, the government said Wednesday, due to weakening exports sparked by a stuttering global economy and debt woes in Europe.

The slower expansion in the export-dependent Southeast Asian country came after the economy grew at a 5.2 percent clip in the fourth quarter of 2011.

Malaysia is one of the fastest growing developing countries

"Domestic demand remained firm, supported by both private and public sector economic activity, while exports moderated amid weaker external demand," Bank Negara, the central bank, said in a statement.

The bank has projected growth to expand four to five percent this year, slower than the 5.1 percent seen in 2011.

Economists said the slower growth indicated that the economy was "moderating at a better pace than expected" in light of the eurozone crisis.

"One of the headwinds hitting not just Malaysia but also regional economies is the very weak growth in Europe with some countries mired in recession," said Yeah Kim Leng, chief economist with financial research firm RAM Holdings.

"The concern here is of course the slowdown is affecting Asian exports including Malaysia, given its sizeable export sector."

But Yeah said he expected the Malaysian economy to grow at 4.6 percent in 2012, backed by strong domestic demand.

In early May, the central bank kept its key interest rate at 3.0 percent for the sixth time in a row to drive domestic demand.

Inflation was 2.3 percent in the first quarter and is expected to moderate to 2.5-3.0 percent for 2012 amid lower global commodity prices and modest growth in domestic demand.

The central bank said that while the challenging external environment would remain a risk to Malaysia's growth prospects, "domestic demand is expected to remain resilient".

Prime Minister Najib Razak, who must call fresh elections by April 2013 and faces a strengthening opposition, has set a goal of Malaysia becoming a "high-income developed nation" by 2020.

He said last year that annual growth of at least 6.0 percent was needed to achieve that.

Under the plan, Najib aims to double per capita income to 48,000 ringgit ($16,000) by 2020.

The government has promised major infrastructure projects and financial market liberalisation to attract foreign investment and boost growth, but critics say the results have been limited.

Friday, April 27, 2012

Fragile British economy enters double-dip recession

LONDON, April 25 (Xinhua) -- Britain's economy has fallen into double-dip recession after official figures showed its economy shrank in the first quarter this year.

The Office for National Statistics (ONS) said Britain's gross domestic product (GDP) contracted 0.2 percent in the first three months 2012, meaning the country has slipped back into recession.

Technically, a recession occurs after two consecutive quarters of negative growth. The ONS figures said Britain's GDP in the last quarter of 2011 dropped by 0.3 percent. Britain last experienced recession in 2009.

A HEAVY BLOW

The worse-than-expected economic growth figure has dealt a heavy blow for the ruling coalition led by Prime Minister David Cameron.

The prime minister and Finance Minister George Osborne were "very disappointed" at the figures.

Cameron said: "I don't seek to excuse them. I don't see to try to explain them away. There is no complacency at all in this government in dealing with what is a very tough situation that frankly has just got tougher."

Osborne in his March budget forecast growth of 0.8 percent this year and 2 percent next year. In 2014, 2.7 percent was forecast, followed by 3 percent growth the following years.

The current 0.2 percent contraction in GDP is bad for the coalition government as it desperately seek to grow the economy and eliminate the country's large budget deficit over the next five years.

The government is set to unveil new measures to further limit public spending as part of the government's efforts to meet its austerity targets. Under the new rules, government departments will have to set aside 5 percent of their annual budget to cover unexpected expenses in a bid to discourage them from asking for more money from the central government when emergencies arise.

Osborne said: "It's a very tough situation when you're recovering from these enormous debts that Britain built up in the good years."


Cameron added it was "painstaking, difficult" work, but the government world stick with its plans and do "everything we can" to generate growth.

Labor party leader Ed Milliband said the figures were catastrophic, blaming the government's economic policies for landing the country back in recession.

A GLOOMY OUTLOOK

The latest data from the ONS is consistent with a report released by the OECD predicting the British economy would shrink in the first quarter of 2012, taking it back into recession.

Meanwhile, economists and research institutes have warned that Britain's economy will continue to struggle with factors such as high inflation, rising unemployment and uncertainty in its exports market, which is strongly affected by eurozone debt.

According to the ONS, the recession was mainly driven by a sharp fall in construction sector, which contracted 3 percent and 0.2 percent in the last two quarters. At the same time, the manufacturing sector failed to return to growth.

The services sector, which accounts for a third of the economy, grew only 0.1 percent in the first quarter this year, after a decline of 0.1 percent in the previous quarter.

Production industries output also declined 0.4 percent in the first quarter of this year, and 1.3 percent in the previous quarter.

The latest report issued by the Ernst & Young Item Club said Britain's jobless rate is forecast to rise to 9.3 percent in the middle of next year from the current 8.4 percent, with the number of those seeking work rising to almost 3 million.

Britain's Consumer Price Index (CPI), a major gauge for inflation, will reach 2.8 percent this year and drop to 2.1 percent next year.

The country's consumer spending power continued to deteriorate in March, dropping by 1.1 percent compared to a year earlier, reaching the lowest level since February 2011. - 
Xinhua

Saturday, April 14, 2012

The state as market

THE more I study the Indian and Chinese growth models, the more I realise that the current debate over the state versus the market is a false dichotomy.

Both the state and the market are social institutions that are not independent of each other. Indeed, they are inseparable, interactive and interdependent.

Human development or evolution is a complex interaction or feedback between the two. In Small is beautiful author EF Schumacher's view, “Maybe what we really need is not either-or but the-one-and-the-other-at-the-same-time”.

India and China could not have become global powerhouses of growth, without the leading role of the state in planning for development. But those states that have worked with markets have succeeded better than those that worked against markets.

London Business School Prof John Kay defines the market as a relatively transparent, self-organised, incentive-matching mechanism for the exchange of goods and services, usually in monetary terms.

In plain language, the market helps to match willing buyer, willing seller under certain rules of the game to determine market price. The market clears when it functions properly, but market failure happens when the market is imbalanced.

Kay reminds us that capitalism is less about ownership than “its competitive advantages its systems of organisation, its reputation with suppliers and customers, its capacity for innovation”.

Because of globalisation and technological change, we are living in a situation of change within change, as if the national state is not in total control of our destinies. Because of the global economy, state policies such as monetary, exchange rate and trade, cannot be independent of what is happening globally.

No man, no company, no state is an island. Globalisation has changed the rules of the game irreversibly.
Why is the state so much bigger and more powerful than before?

In the 19th century, most governments were not larger than 15% of GDP. By 1960, the size of governments in OECD countries had doubled to 30% of GDP. Today, the average has increased further to 40% of GDP.

The state has grown because there has been demand for more and more state services, but there is also concern that bureaucracies tend to grow to perpetuate itself.

I find it useful to think about the state as a market-like institution for exchange of power (in non-monetary terms). Power comes from social delegation the people give the power to the state to protect them and to fairly enforce social rules and laws. Hence, the “state as market” has the same dilemmas as the market information asymmetry and the principal-agent problem.

In large countries like India and China, there are many levels of government central, provincial, city, town, village and rural governments, each with their own departments and even enterprises. Most citizens find it difficult and confusing to deal with complex bureaucratic power. The Peruvian economist Hernando de Soto was one of the first to point out that rural poverty exists, because the poor's property rights are not protected adequately and their transaction costs are extremely high because of complex government.

In other words, markets are efficient and stable when the state is efficient and stable. It is not surprising from recent experience that financial crises are results of governance failures. As the European debt crisis amply demonstrates, financial markets cannot clear when the fiscal condition of the state is on shaky grounds, and there is no mechanism to make fast, simple, clear decisions.

Finding the right balance between state and market is the real challenge in all economies today. As 20th century British philosopher Bertrand Russell reminded us, “people do not always remember that politics, economics and social organisation generally belong in the realm of means, not ends”.

Today's demands on the state to provide stability, growth and social equity are complex, because recent dominance of free market ideology has ended up with serious problems of wealth and income disparities and environmental degradation.

Realising that large states with geopolitically significant human and ecological footprints cannot consume like the United States or Europe on a per capita basis, China and India are embarking on ambitious 12th five-year plans to change their growth models to become more environmentally sustainable economies with greater social inclusiveness.

But large economies with many layers of government struggle between centralisation and decentralisation of people, resources and power.

For systems to be stable and sustainable, they have to be adaptable to complex forces of change from internal and external shocks.

To maintain integrity, there are complex trade-offs between winners and losers in each society. Such rules and bargains are difficult when the causes and effects of losses are unclear (such as crisis) and when vested interests resist change for fear of losing what they have. Vested interests are often unwilling to change because they value present gains far more than uncertain futures. Politics is the compromise of contending interests.

The belief that markets are always right assumes that markets always balance. The market cannot balance when the state cannot balance the contending interests. The main reason for the advanced country debt crisis is because their consumption has happened today by postponing the costs to future generations.

This raises a fundamental problem. Whichever way you term it, central bank quantitative easing is ultimately state intervention.

The rise in Spanish bond yields, despite ECB long-term refinancing operations, suggest that the markets are saying there are limits to the growing euro public debt.

At the same time, global financial markets are watching carefully whether inflation in China and India will rekindle global inflation.

In other words, the anchor of global financial stability rests on state debt stability. The state cannot escape being priced by the market.

  THINK ASIANBy ANDREW SHENG - Andrew Sheng is president of the Fung Global Institute.

Friday, February 17, 2012

S’pore escaping recession?

Govt reiterates 1%-3% GDP forecast for 2012 after smaller contraction

SINGAPORE: Singapore says it may avoid a recession despite the weak global economic outlook, after data showed the economy contracted less than expected in the last quarter of 2011 despite persistent weakness in electronics.

“The first month of trade numbers, export numbers are quite good,” Thia Jang Ping, a director at the Ministry of Trade and Industry, told a news conference.

“It's still too early to call, but our near-term indicators do not suggest an imminent danger of Singapore slipping very badly into a recession in the first quarter,” he added.

The economy shrank 2.5% in the fourth quarter from the preceding period on an annualised and seasonally adjusted basis, data showed yesterday.

Slowdown: Singapore’s port is seen through the downtown business district. The island nation says its trade and non-oil domestic exports are expected to grow by 3% to 5% this year, down from a rise of 8% and 2.2%, respectively, in 2011. — AP
 
The GDP data was better than an advance flash estimate of a 2.9% contraction, but worse than the median estimate for a 2.3 % decline by economists polled by Reuters.



From a year earlier, gross domestic product grew 3.6%. Singapore stocks and currency weakened yesterday although that was in line with the regional trend, with sentiment hit by a another delay in cementing a bailout package for Greece.

Singapore expects its economy to grow by 1% to 3% in 2012, down from last year's revised expansion of 4.9%, although it warned of risks to the forecast.

Asia is suffering the effects of slowing demand in the West, and the International Monetary Fund (IMF) last month warned that Europe's debt crisis could tip the world economy into recession.

A recession is often defined as two consecutive quarters of contraction, and Singapore, whose trade is three times GDP, tends to feel the chills from a deterioration in global economic conditions faster than most countries.

“Specifically, a disorderly sovereign default in the eurozone could precipitate a global financial crisis, while an escalation of geopolitical tension in the Middle East could trigger a global oil price shock,” Singapore's trade ministry said in a statement.

On Wednesday, South Korea said January exports fell 7% from a year ago in the biggest annual decline since October 2009, while Australia said its leading index of employment dropped in February in a sign that jobs growth could fall.

Singapore also said yesterday its trade and non-oil domestic exports were expected to grow by 3% to 5 % this year, down from a rise of 8% and 2.2%, respectively, in 2011. - Reuters

Thursday, February 16, 2012

Malaysia's GDP Growth 5.1% in 2011, pretty okay?

Malaysia's growth beats consensus

By FINTAN NG fintan@thestar.com.my

PETALING JAYA: Malaysia's gross domestic product (GDP) expanded by 5.2% in the fourth quarter of 2011 despite the challenging external environment as domestic demand continued to support growth.

Bank Negara said in a press statement that full-year growth came in at 5.1% after expanding 7.2% in 2010 as domestic demand conditions remained favourable supported by both private and public sector spending.

The fourth-quarter GDP figures came in slightly higher than the 4.8% median estimate in a Bloomberg survey while the full-year growth was largely in line with a separate survey, where the median estimate was 5% and in line with official estimates of 5% to 5.5% growth.

Domestic demand expanded by 10.5% during the quarter, driven by the continued expansion in household and business spending, and public sector expenditure,” the central bank said.

Private comsumption increased by 7.1% supported by favourable income growth while public consumption rose by 23.6% following higher expenditure on emoluments and supplies and services.

Gross fixed capital formation, which measures the net increase of fixed or physical assets, increased by 8.5% supported by continued expansion in capital spending by the private sector and the non-financial public enterprises.

“The federal government development expenditure during the quarter was mostly channelled into the transportation, trade and industry sectors,” the central bank said.

The services sector grew by 6.4% for the quarter (6.8% for the year), manufacturing expanded by 5.2% (4.5%), construction rose 6.4% (3.5%), agriculture expanded by 6.9% (5.6%) while the mining sector's pace of decline narrowed compared to the third quarter, falling by 3.3% and declining 5.7% for the year.

The headline inflation rate, as measured by the annual change in the consumer price index, declined to 3.2% in the fourth quarter with inflation in the transport category ower at 3.2% reflecting the absence of further adjustments on prices of RON95 petrol, diesel and LPG in the quarter.



“Inflation in the food and non-alcoholic beverages category, however, rose to 5.3% during the quarter, mainly due to higher prices in the fish and seafood subcategory,” Bank Negara said.

Economists said the latest data confirmed earlier reports of the country's growth being on a slower trend largely due to the drop in external demand as global growth slowed.

They said this trend would continue into the first half of this year before recovering gradually in the second half as conditions globally improved with more clarity on the issues surrounding the eurozone sovereign debt crisis.

CIMB Investment Bank Bhd economic research head Lee Heng Guie told StarBiz that the main drag to growth in the fourth quarter and the whole year was the volatile external environment which resulted in stagnant demand for consumer electronics.

He said domestic demand would continue to sustain the economy although there was “a slight let-up” in consumer spending. “The question is how sustainable is consumption going to be and this will depend on key drivers such as commodity prices and income,” Lee said, noting that the Malaysian Institute of Economic Research consumer sentiments index was trending down.

“In summary, we see quite uneven growth in the first half of this year before the economy picks up in the second half,” he said, expecting full-year GDP to come in at 3.8%.

AmResearch Sdn Bhd director of economic research Manokaran Mottain said the latest data showed that the “fear factor” was rising with households becoming more cautious about spending.

However, he was more sanguine compared to his peers where exports were concerned, pointing to the export growth in goods and services (where the current account suplus, although narrowing in the fourth quarter, stood at RM22bil for the year) but said the data showed the economy was geared to domestic activity with government handouts playing a crucial role in supporting consumption.

“Going forward, well-crafted domestic strategies and the timely rollout of the Economic Transformation Programme projects will now be more urgent as they will create multiplier effects especially in the services sector,” Manokaran said.

He added that the data clearly showed that the economy, while experiencing moderating growth, was not “falling off the cliff” with full-year growth in 2012 coming in at 5%. “The worst-case scenario is global growth dropping to below 3% and project implementation delays at home, which means growth of around 4%,” Manokaran said.

Meanwhile Affin Investment Bank Bhd chief economist Alan Tan said growth this year would still be affected despite signs of nascent recovery in the United States and the improvement in global purchasing managers' indices.

“For this year, the first half will still show signs of moderation in exports as consumer electronics demand slows down,” he said, adding that growth for the full year would still be a healthy 4% considering the challenges.

For Bank Negara statements click here

Malaysia should do pretty okay

Making a Point - By Jagdev Singh Sidhu


THE report card for the economy in 2011 is out and by all accounts, Malaysia did pretty okay.

With the official forecast of growth at between 5% to 5.5%, there was much scepticism throughout 2011 whether that could be achieved. Who can blame the tea-leave readers out there whose job is to forecast where the economy is heading?

There was so much external fear with Europe on the brink, America seeing greater economic trouble and China teetering on a bubble bursting that expectations were slashed, and on average far less than what the Government had predicted.

As it turns out, maybe after the gravity-defying performance in the third quarter where the gross domestic product (GDP) expanded by 5.8%, people began to say “hold on. Maybe things aren't so bleak.”

As it turns out, they were mostly right when the GDP data was released yesterday.

The economy expanded by 5.2% in the fourth quarter and for the whole year, growth was 5.1%. There are numbers where things could be better. Industrial production and export growth isn't the best.

 

But what drove the economy upwards was domestic demand, basically what the Government, people and companies spend and invest.

Domestic demand jumped 10.5% in the fourth quarter compared with 9% in the third. Capital investments surged 8.5% compared with 6.1% in the previous quarter and higher investments will mean more production, jobs and better economic strength.

The troubles of Europe might have lost its fear factor and America appears to be repairing itself steadily. There are reasons to be more optimistic but the official tune has turned, surprisingly, a little sour.

Bank Negara in its statement said; “Growth prospects, however, have become increasingly uncertain with the emergence of greater downside risks.”

The warning calls for more caution but there is still enough policy measures to keep domestic demand intact.


There are policies of putting cash in the hands of the people through direct cash handouts. There is a base effect from the consumption boom to worry about and whether that can continue into 2012.

But there are indicators out there to suggest domestic demand might still do well but maybe not at the same breakneck speed.

First, there is the stock market. Yes, people might say its not a perfect barometer of what an economy is doing but it does show there is confidence in how corporate Malaysia might be performing.

With direct investments abroad by Malaysian companies jumping to RM14.4bil in the third quarter from RM12.9bil previously, it shows Malaysian companies are taking advantage of growth opportunities outside Malaysia. That can point to higher profits and maybe salaries in the future.

The other is property. We might have been cautious last year about property prices falling off the cliff at some point in 2012 but there is no indication that might happen. Prices might soften but if we were to see our neighbours down south, it might not freeze the market.

For January, Singapore registered the highest sales of private homes in the past 14 months, despite increasing clamps on foreigners buying homes there.

With jobs steady and likely to increase with more investments being made, the stock market doing alright and property prices holding firm, these are ingredients that will allow people to continue spending.

If the Private Sector Retirement Age Bill gets passed, that should create more consumption by people whose earnings lifespan will increase by a further five years. The mass rapid transit system which is kicking off will also boost construction and the GDP.

Economists do wonder if the growth forecast of 5% to 6% for 2012 will be maintained given the risks and challenges. There might be a revision downwards in March but whatever the case, Malaysia like last year, should do pretty okay.

Deputy news editor Jagdev Singh Sidhu is lapping up the Linsanity! Jeremy Lin's play for the New York Knicks has been a fantastic story. Hope that continues until he meets the Detroit Pistons. 

Tuesday, February 7, 2012

Aspiring nations gain more from Internet



 

Manuel: "Malaysia derives a lot of income from exporting equipment that 
allows people to connect to and use the Internet." 
 
KUALA LUMPUR: Aspiring countries like Malaysia are gaining more from the Internet than developed nations.

The Web helps these countries improve gross domestic product (GDP), better their small and medium enterprises, and boost the creation of new jobs.

Going online helped Malaysian industries contribute 4.1% of the country's gross domestic product (GDP) in 2010, making Malaysia one of the 30 fastest growing countries in the world.

Some of the other aspiring countries are Argentina, Hungary, Mexico, Morocco, Nigeria, Taiwan, Turkey and Vietnam.

They were part of an online study - titled Online and Upcoming: The Internet's Impact on Aspiring Countries - by researchers McKinsey & Co.

McKinsey defines aspiring countries as those that are developing but are at the cusp of becoming a developed nation.



The study found that the Internet contributed US$9.75bil (RM29.7bil) out of a total GDP of US$238bil (RM723bil) for the aspiring countries in 2010. This is far more than what was contributed in the United States and China.

Nimal Manuel, principal at McKinsey, said a big chunk of the GDP contribution in Malaysia came from the IT industry.

"Malaysia derives a lot of income from exporting equipment that allows people to connect to and use the Internet," he said.

"The country will also see significant growth in the value that domestic activity on the Internet delivers to the nation."

Manuel was giving a briefing on the economic impact of the Internet on Malaysia.

Booster

Besides contributing positively to the country's economy, the Internet also helped its small and medium enterprises (SMEs) to make gains.

Manuel said the SMEs in Malaysia and the other aspiring countries that took their businesses online gained over 6% more in revenue than those with only brick-and-mortar stores.

"Thanks to the Internet, these businesses were able to reach new customers in different geographic locations. They also enjoyed a 10% increase in productivity (after embracing technology)," he said.

According to him, this increase in productivity (due to better efficiencies) does not mean decreased job opportunities in the aspiring countries.

"Our study found that for every job lost, 3.2 new jobs were created because of the Internet. And in comparison, for every job lost in developed countries, only 1.6 new ones were created," he said.

These aspiring countries must not rest on their laurels; they should be making an effort to improve their Internet ecosystems.

Manuel said they need to ensure a high quality and secure infrastructure to better capture the value of the Internet.

The governments need secure servers, in addition to basic infrastructure, such as electricity supply, as well as quality fixed and mobile Internet services, he said.

In response to the recommendations, Datuk Mohamed Sharil Tarmizi, chairman of the Malaysian Communications and Multimedia Commission (MCMC), said the Government is championing the quality of Internet services in Malaysia.

"This is an entry-point project under the Economic Transformation Plan, and that shows how serious the Government is on broadband services and issues," he added.

MCMC is the communications and multimedia industry regulator.

Tuesday, November 29, 2011

Allah knows the best: Finding truth in fact and fabrication!

CIA World Factbook 2008 figures of total nomin...

Finding truth in fact and fabrication

Ikim Views
By Mohamad Azhar Hashim Fellow, Centre for Economics and Social Studies

Many Muslim scholars are still debating the authenticity of the expression ‘seek knowledge even as far as China’. While Muslims continue to be divided on this, China is fast becoming the largest economy in the world.

WHILE Muslims are engaging in a long debate whether the expression, “seek knowledge even as far as China” is really the words of the Prophet or a hadith, China has already emerged as the second largest economy in the world.

Economic experts made it official early this year that China has surpassed Japan to become the world’s second largest economy.

Indeed, the huge nation cannot wait any longer for Muslims to resolve their nagging debate on the authenticity of the expression and other trivialities, as toppling the United States as the largest economy in the world is now within sight.

Today, China’s economy is the fastest growing in the world, with the output growth rate in its Gross Domestic Product (GDP) growing consistently at an average 10% over the past 30 years.

China is currently the largest exporter and second largest importer of goods, as well as the world’s largest car market and the biggest energy consumer.

The significant growth in its investments, consumption and living standards is the result of its economic reforms initiated in the late 70s. The reforms have been successful in resolving poverty issues and driving China’s active participation in the global market.

China’s emergence in the world economy today not only has been made through the government but also through private companies.



Its currency, the renminbi or yuan, has become stronger and regarded as a benchmark currency for international transactions, especially on a regional basis.

Economic superpowers often feel threatened by the rising power of the yuan, accusing China that their currency brought about instability in the world trade.

For many years, Muslims have been debating on expression, whether it can be classified as authentic hadith or not. There were also disputes whether it was actually pronounced by the Prophet or just words of wisdom.

There have been differences in opinion. There are scholars who place this expression in the category of weak hadith (dhaeef), and there are also scholars who reject the expression as a hadith all together.

They opined that this expression was fabricated (mawdhu’) or fake words attributed to the Prophet, which means it was not the words of the Prophet at all, as there was no basis to claim so.

In addition, there are scholars who opined that even if this expression is an authentic hadith, it does not mean that there is an obligation for Muslims to seek knowledge in China in the literal sense.

In essence, Muslims are urged to seek knowledge related to Syariah or religious knowledge, even if it takes a person to faraway lands.

These opinions over the years may have had a psychological impact on Muslims, both in pursuing the type of knowledge and the position of China.

Muslims scholars may have found the truth that the expression is not from the Prophet, based on their study in the knowledge of hadith. As laymen, we are obliged to uphold and respect the opinion of the scholars.

However, imagine if Muslims did not engage in the debate on the authenticity of the expression but instead, acknowledge it, and act accordingly to the explicit intention of the message contained in the expression.

Who knows, today Muslims may have done well economically, and may have dominated the world economy in ways that could be superior than present advanced economies.

Whoever uttered or designed or fabricated the expression, “seek knowledge even as far as China” centuries ago, he was wise, as he probably saw the future vividly.

While Muslims have heard the expression for ages, and have been all the while arguing, debating and disputing it with different opinions, other nations have been building bridges with modern China and made an impact on the huge nation.

Indeed, China has successfully transformed its economy from an impoverished communist nation to an economic powerhouse. It has overtaken Europe and Japan, and is now set to take the number one position from the United States, which many economic experts believe can be achieved between 2020 and 2030.

While Muslims continue to embrace and subscribe to the words or expressions of wisdom of every visionary in the world without much hesitation, we still debate at length words of wisdom from visionaries of our rich intellectual civilisation. Only Allah knows best.

Monday, November 21, 2011

Is China still a developing nation?


Global Trends By MARTIN KHOR

Last week, US President Barack Obama said China has ‘grown up’ and must take on the responsibilities of a developed country. But is China already grown up – or is it still a developing country?

 China’s fight to retain its developing country status is of interest to other developing countries, for they will be next if China loses that fight

IS CHINA still a developing country, or has it joined the ranks of the advanced developed countries? This has become a topical question, especially after US Presi-dent Barack Obama reportedly told Chinese President Hu Jintao last week that China had to act more responsibly now that it has “grown up”.

This interesting conversation took place at the Asia-Pacific Economic Cooperation (Apec) Summit in Hawaii. And when Obama met Chinese premier Wen Jiabao at the East Asia Summit hosted by Asean in Bali last week, he must have said something similar, in between chiding him for not allowing the Chinese currency to shoot up.

By telling China that it has become a grown-up, Obama meant that China should now be treated just like the US or Europe in terms of international obligations – like taking on binding commitments to reduce greenhouse house gas emissions, cutting its tariffs to near zero and giving up its subsidies under the World Trade Organisation, giving aid to poor countries and letting its currency float.

This is what the US has been pressurising China to do in the recent negotiations in climate change, in the WTO’s Doha talks, at various meetings of the United Nations and at the Apec summit.

In fact, most of the important multilateral negotiations are stalled because the US (with Europe and Japan standing behind it) insists that China gives up its developing country status and takes on the obligations of a developed country.

It is not only China, of course. They also want India and Brazil to do likewise. And often also mentioned are South Africa and the wealthier or bigger Asean countries.

The main focus, however, is China. There has been growing respect for – or, rather, fear of – China, that it is growing so fast and has become so big and powerful it might swallow up the Western world in a decade or two.



So, the question is pertinent. Is China a developed country?

The answer depends on what criteria are used. In absolute terms, China is indeed a big economy. Its GNP is second only to that of the United States. It has become the biggest emitter of greenhouse gases, having overtaken the United States.

But this is mainly because China is a big country in terms of population. With 1.3 billion people, it is the world’s most populous country.

However, despite the mighty image it has been given by the world media, China looks like a very ordinary developing country once we look at per capita indicators.

Whether one is a developed or developing country is defined by the UN and by the IMF and World Bank, and the most important criterion is income per capita.

By that yardstick, China is very much a developing country.

The International Monetary Fund, in its latest World Economic Outlook, classifies China as a developing country, with a per capita Gross Domes­­-tic Product last year of US$4,382 (RM13,852), ranked a lowly 91 of 184 countries in the world.

Six African countries (Equatorial Guinea, Gabon, Botswana, Mauritius, South Africa, Namibia) had GDP per capita levels higher than China.

China’s GDP per capita was less than a tenth that of the United States, which had US$46,860 (RM148,129). Luxembourg had the highest ranking, US$108,952 (RM344,408). Ma­­laysia was No. 65 at US$8,423 (RM26,626) and Singapore No. 15 at US$43,117 (RM136,297).

Economists also use the measure of GNP per capita “in gross purchasing power” (GPP). This is to take into account the different costs of living in different countries. People living in countries with a lower cost of living could enjoy a higher li- ving standard than their country’s GNP implies.

Last year, in GDP (at GPP) per capita terms, China was lower still at No. 95 with US$7,544 (RM23,847), just below Ecuador and just above Albania, El Salvador and Guyana.

By contrast, Malaysia was at No. 58 with GPP per capita of US$14,744 (RM46,607) while Singapore was No. 3 with US$56,694 (RM179,295).

The UN Development Programme has a human development index (HDI) that measures quality of life in terms of income, schooling, life expectancy and so on.

The Human Development Report 2011 shows China at No. 101 of 187 countries with a HDI of 0.687 and in a category of “medium human development”.

What about climate change? China, again mainly because of its huge population, is the top greenhouse gas emitting country, with a total of 7,232 megatonnes of CO2 equivalent in 2005. The US is second with 6,914 Mtonnes. India was fifth with 1,859 Mtonnes.

But in per capita terms, China’s emissions level was 5.5 CO2-equivalent per person, ranked 84 in the world. By contrast, the US’ per capita emission was 23.4 CO2 equivalent, Australia’s 27.3, Russia’s 13.7, Ger­many’s 11.9, Japan’s 10.5, Singa­pore’s 11.4, Malaysia’s 9.2, South Africa’s 9.0, Brazil’s 5.4, Indonesia’s 2.7, India’s 1.7 and Rwanda’s 0.4.

Thus, as No. 91 country in the world in GDP per capita, No. 101 in human development index and No. 84 in per capita emissions, China is looking like, and is, a middle-level or even lower-middle level developing country, with not only all the developed countries ahead of it, but also many developing countries, too.

China also shares the same characteristics of many developing countries. More than 700 million of its 1.3 billion people live in the rural areas, and in 2008 there was a large imbalance, with the urban disposable household income 3.3 times bigger on average than in rural areas.

According to China’s own standard, 43 million Chinese are low-income (below US$160 (RM506) a year). By the higher UN standard, 150 million people are poor, living on less than US$1 (RM3.16) a day.

Each year, 12 million people are newly added to the job market, outnumbering the population of Greece, and it is quite a task to find them jobs.

This does not deny the fact that there are high points in China’s development: its big GNP in absolute terms, its high rate of economic growth, the foreign reserves of above US$3 trillion (RM9.5 trillion).

But the fact remains that while China has become a big economic power in absolute terms, it is still a middle-level developing country, with the socio-economic problems that most developing countries have.

And if China is pressurised to take on the duties of a developed country and to forgo its status and benefits of a developing country, then many other developing countries that are ahead of China (at least in per capita terms) may soon be also asked to do the same.

Thus China’s fight to retain its developing country status is of interest to other developing countries, for they will be next if China loses that fight.

Tuesday, October 25, 2011

Malaysia's public debt rises to RM407bil


By EUGENE MAHALINGAM eugenicz@thestar.com.my

PETALING JAYA: Malaysia's public debt level rose 12.3% to RM407.11bil in 2010 from RM362.39bil a year earlier, according to the Auditor-General's Report 2010.

National debt grew 12% to RM390.36bil in 2010 from RM348.60bil a year earlier while foreign debt grew 21.5% to RM16.75bil from RM13.79bil in the previous corresponding period, said the report released yesterday.

In 2010, unresolved public debt both at the national and foreign level grew by RM41.76bil and RM2.96bil respectively compared with 2009.

“The national debt level totalling RM390.36bil accounts for 95.9% of the Federal Government's total debt,” auditor-general Tan Sri Ambrin Buang said in the report.

He pointed out that the ratio of the Federal Government's debt to gross domestic product at the end of 2010 was 53.1%, which was over 50% for the second year in a row.


The national debt level is governed by various laws that impose a debt ceiling for the Government. Under Act 637 of the Loan (Local) Act 1959, and Act 275 of the Government Investment Act 1983, it is stated that the combined loans raised domestically should not exceed a ceiling of 55% of the nation's GDP.

Meanwhile, Act 403 of the External Loans Act 1963 limits external loan exposure to RM35bil.

The report also revealed that in 2010, the Government received revenue totalling RM159.65bil, which was an increase of RM1.01bil (0.6%) compared with RM158.64bil in 2009.

Accounts receivable for 2010 stood at RM20.37bil while the Government approved allocation amounting to RM149.06bil for operating expenditure. “However, the said allocation was insufficient to cover the expenses amounting to RM151.63bil,” said the report.



The report also revealed the implementation of a rating system based on an accountability index.

“Through this rating system, marks will be given for the compliance if regulations of six main elements in financial management, namely management controls, budgetary controls, receipt controls, expenditure controls, management of trust funds and deposits as well as management of assets and stores.

“The federal ministries and departments rated as excellent become a role model and this would motivate others to diligently improve and enhance their financial management,” it said.