World Bank: Don't Exit Too Quickly!

The World Bank warned today that Malaysia should not exit its fiscal pump priming as it could choke off the country's economic recovery.

However, the bank also cautioned that extending fiscal support for too long "may hamper the credibility of medium-term fiscal consolidation, reduce room for future stimulus, increase the risk of asset price bubbles and constrain the private sector once demand picks up," the World Bank said in a country report on Malaysia.

Malaysia is expected to rack up a budget deficit of 7.4 per cent of gross domestic product this year, its biggest in over 20 years, in part due to two fiscal stimulus packages worth a total of RM67 billion.

The extra spending was aimed at offsetting a slump in global demand that has hit Asia's third-most export dependent economy hard.

The government expects the Southeast Asian country's economy to shrink 3 per cent this year and to grow by 3 per cent next year, although the World Bank was more optimistic.

"With East Asia leading the recovery and advanced economies showing progressive improvement, the Malaysian economy is projected to grow at 4.1 per cent in 2010, following a contraction of 2.3 per cent in 2009," the World Bank said. —

MCA: Feel the Force of Incumbency

The Malaysians have a word for this. It's called 'pusing-pusing'. One day they are enemies. The next day,they are friends. Such strange bedfellows these politicians really are, particularly in MCA.

Throughout the first 9 months of 2009, the Presidential Council and the Central Committee had nothing on their minds but on how to get rid of Dr. Chua, their Deputy President. To them, Dr. Chua was one huge liability because of his notorious sex scandal which was conveniently filmed on DVD and readily available on the Internet.They sacked him as Deputy President and terminated his MCA membership which they later converted to a suspension.

At the infamous Double Tenth EGM on 10 October, to the dismay of many, Dr. Chua got back his membership in MCA. To make matters worse, the Registrar of Society subsequently decided thet Dr. Chua was still the Deputy.

In the face of an impending revolt from other members wanting his blood, party president Ong Tee Kiat, conveniently reinstated Dr. Chua back to his original position.

As expected more fall-out took place. That is what I called 'pusing-pusing'. Liow Tiong Lai (Vice President and also Deputy President for a brief moment), Wee Ka Siong (Youth chief)and Chew Mei Fun (Women Wing chief) got caught in the middle as they showed their hands 'too early' for wanting to get rid of Ong Tee Kiat.


Today at a Central Committee sitting, Wee Ka Siong and Chew Mei Fun, among others were booted out unceremoniously from the Presdiential Council. Wee and Chew weeped unabashedly.



Such is the MCA wayang at this stage. We shall see some more on 28th November when the so-called illegal EGM takes place.

MRCB: RM 10 million Profit in 3rd Q,2009

MRCB managed to turn around in 3Q 2009 with a credible RM10 million profit on the back of higher revenue.This compares favourably against a net loss of RM26.8mil in the corresponding quarter last year.

Revenue for the period jumped 43.3% to RM257.1mil. Accordingly, net asset per share increased to 72.7 sen as at Sept 30 against 70 sen as at Dec 31 last year.

According to MRCB, the group’s higher profitability was mainly contributed by better profit margins from the completion of existing projects and the consistent recognition of profit from its ongoing work progress.

“The higher revenue was a result of higher contribution from all business segments except property development, which enjoyed relatively higher revenue recognition in the preceding period from a one-off land sale,” it said.

MRCB expects to be continually engaged fully with its ongoing construction projects and property development of more than six million sq ft of hotel, retail and office space.

The spokesman added that MRCB was leveraging on economies of scale and innovative value engineering to improve future performance.

“Additionally, the group is investing resources into design and development of sustainable buildings complying with international and Malaysian standards.

“Our on-going landmark office developments within KL Sentral that includes 348 Sentral, NU Sentral and KL Sentral Park will meet the Leadership in Energy and Environment Design, BCA GreenMark and Green Building Index standards.

“Barring unforeseen circumstances, the board is confident the group will continue to post growth in revenue and profit this year,” he said.

Will this whet the appetite of investors to buy into MRCB?

Malaysia: Moving Up the Rungs of Corruption

When it comes to a nefarious activity such as corruption, international perception is important. On the long term, it can seriously erode our capability to attract FDI as the cost of doing business will be unnecessary higher because of it.

For 2009, the Anti-graft global watchdog Transparency International based in Berlin has this to say about Malaysia. In their latest 2009 global corruption perception index launched today,it has stated in no uncertain terms that Malaysia has sunk deeper into corruption.

From a 47th placing with a CPI score of 5.1,sadly Malaysia now ranks 56 out of 180 countries in the world with a corruption index score of 4.5 out of 10, where score 10 indicate being the least corrupt.

The three least corrupt countries in the world are, in order, New Zealand, Denmark and Singapore.
So, what has our government to say to this? What amended KPRA should be instituted by PM Najib to ensure that we improve our image comes 2010?

Aren't These Great Pics?

Once in a while, you come across such fun pictures. I think just watching the world go by as a passive observer is great if we get to see these in our everyday lives. The human spirit-such joys it can bring to us.


To life! To life! L'chai-im!

Asian Tigers To Roar Again?

An economist opines that Asian tigers like Malaysia, China and India will be the next growth engine for world economic development, when the recession ends.

Dr Robert F. Baur, Principal Global Investors' chief global economist said emerging markets, as one third of the global economy, are playing a bigger part in it.

"This is a syncronised global economy with not only growth in Malaysia but also posting double-digit growth in South Korea and Singapore," he told a media briefing on the side of a seminar, "Whatever Happened to the Apocalypse?" on 16 November 2009.

He added that industrialisation and urbanisation would continue in the emerging markets and going forward, there would also be continuous development in Asian urban areas.

He said the global recession is likely to end as the housing and auto sectors in the United States are showing some improvement, adding to the country's economic growth.

"We are hoping that both sectors will continue adding to growth into the fourth quarter," he added.

He pointed out that the deterioration of unemployment in the United States is over and job losses would be moderate.

He said countries like Canada, Japan, China and Australia are showing jobs improvement.

When asked how the Doha Round, when concluded, would contribute to the growth of the United States, Baur said: "It would be very helpful. I think free trade theoritically increases productivity as countries can concentrate on producing what they do best in a relative sense.

"I hope the Doha Round will get ramped up again. We have had several attempts to get it going," he said.

Baur said while economic recovery is underway, the risks remain.

According to him, businesses finds no incentives to expand when taxes are raised along with the unintended consequences of government policy.

"Can this recovery be sustainable? It is sustainable because consumer spending is improving. By the fourth quarter 2010, consumer confidence will return and move into 2011," he said.

Baur said both savings and spending can go up together in order to achieve sustainable growth.

This is one great optimist of an economist, don't you think?

Japan: Rising Sun Again?

This is an latest indicative report on the state of the Japanese economy.

Reuters reported today that Japan’s economy grew at the fastest pace in more than two years in the third quarter as stimulus lifted consumer spending and capital spending rose. However,analysts cautioned that growth will slow as falling wages reduce the lure of subsidies on cars and electronics.

Most economists say there is little chance of Japan’s economy, which extended its rebound to a second quarter, returning to recession as stimulus spending overseas should be enough to support a gradual rise in demand for Japanese exports.

The outlook for domestic demand is less encouraging because even though subsidies and tax breaks enacted by the previous government will remain in place until next year, an expected fall in year-end bonuses and a soft labour market mean households will have less to spend. This also means corporate spending will struggle to accelerate.

Japan’s economy grew 1.2 per cent in July-September from the previous quarter, faster than the median estimate for 0.7 per cent growth. It was the largest gain in gross domestic product (GDP) since a 1.4 per cent rise in January-March 2007 and compares with a revised 0.7 per cent expansion in April-June, which was the first growth in five quarters.

“With weakness ahead in private consumption or public spending, a slowdown is unavoidable in the January-March and April-June quarters,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo.

“The one bright spot is that capital spending turned positive. However, while this signals that capital spending is starting to rise from the bottom, the size is still not enough to promise the kind of speed that would be required to prevent a slowdown in the first half of 2010.”

The new Democratic Party-led government’s measures to support households will eventually help, but they may not make an impact until the second half of next year, economists say.

The Democrats are already mulling an extra budget to support growth, but Japan’s large debt burden means options are limited. Should other signs of weakness in the economy emerge, that could open the Bank of Japan (BOJ) to government pressure to ensure monetary policy and corporate funding measures remain supportive of growth.

National Strategy Minister Naoto Kan said that the economy remained severe despite the pick-up in GDP and that he saw signs Japan was entering deflation. He said the government wanted to work closely with the BOJ to avoid deflation from deepening.

“The economy is expected to continue to recover as overseas economies improve,” Kan told reporters after the GDP data were released.

“At the same time, the employment situation remains very bad and downside risks exist in overseas economies.”

Kan, who has previously said an extra budget may total ¥2.7 trillion yen (RM101 billion), also said today that the better-than-expected GDP data wouldn’t lead to a smaller budget.

December 10-year JGB futures eased to 138.74 after the GDP data, but later reversed course and climbed to 138.93 on concern that the economic growth will lose traction.

The yen held steady at about 89.60 per dollar but slipped about 10 ticks to 134.05 per euro.

The GDP figure translates into an annualised rise of 4.8 per cent, bigger than a 2.9 per cent expansion expected by economists. That follows 2.7 per cent growth in April-June and a 12.2 per cent contraction in January-March.

Private consumption rose 0.7 per cent, better than a forecast for a 0.5 per cent rise but slower than a 1.0 per cent increase in the previous quarter.

Domestic demand contributed 0.8 percentage point to growth, the first positive contribution in six quarters.


In an ominous sign for the manufacturing cycle, inventories of goods started to increase, contributing 0.4 percentage point to growth in July-September, the first positive contribution since October-December 2008.

“Companies have been increasing production for about a year now, and inventories are likely to start piling up toward year-end and around the Chinese New Year,” said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo.

“This could lead to a slowdown in Japanese production and Japanese growth in April-June 2010.”

The domestic demand deflator fell 2.6 per cent in the third quarter from a year earlier, the largest drop in 51 years.

Capital expenditure rose 1.6 per cent, the first gain in six quarters and faster than a 0.1 per cent increase forecast by economists.

External demand contributed 0.4 percentage point, much slower than the 1.5 percentage point contribution in the previous quarter.

Economists polled by Reuters expect Japan’s GDP to grow 0.3 per cent in October-December and then slow to 0.1 per cent growth in January-March 2010.

It's still early dawn but the sun will rise over Japan,albeit slowly.