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sirgalahad2010
14-11-2005, 05:03 PM
Read S Jayasankaran's piece ("Why M'sia needs to raise interest rates - now") in today's SingaporeBusiness Times (http://business-times.asia1.com.sg). It makes for real depressing reading, folks.

Key points:

(1) M'sia has negative real interest rates, also, possibly, negative real wage growth. This is profoundly disturbing for the average M'sian saver and wage earner. FD rates (2%-odd) lag behind cost of living.
(2) Inflation, especially in the Klang Valley, is really running at close to 8% (official take on the inflation rate is 3.3%).
(3) Every other Asian capital, from Seoul to Singapore, has raised interest rates. The "brains" at BN have been reluctant to do so. This is to maintain business confidence and to deter "hot money" from investing in ringgit assets like bonds and shares.
(4) The M'sian stock market has been, and is, the worst-performing market in the region.
(5) BN is still keeping the ringgit artificially low, causing foreign portfolio investors to pull their funds out and put them in better-performing, more transparent stock markets.
(6) More damning, the continued protection afforded M'sian exporters by the ringgit's artificial weakness gives them no incentive whatsoever to boost productivity or become globally more competitive. It gives foreign investors and fund managers the impression that M'sian companies, and by extension, the M'sian economy needs continued protection. From whom? Maybe those nefarious parties bent on "re-colonialising" the country?
(7) The longer BN prevaricates on interest rates and the wider the interest differential between KL and the US, the greater the danger of a mass selldown on the ringgit (and ringgit-denominated assets). Then BN will have to resort to using its reserves to defend the ringgit.

One hopes that the professional economists in the NEAC or the think-tanks like MIER or ISIS can get the government's thinking straight on this matter instead of leaving it to the inscrutable phoenixes that populate the echelons of BN.

And that is why Singapore's policy makers are privately dismissive of any upcoming economic challenge from M'sia!

GreenBug
14-11-2005, 05:56 PM
After reading the article in the Singapore Straits Times, it gives me the chill....geez.... another 'financial crisis' but this time only Bolehland alone? Ha Ha this time borrow USD10 billion from Indonesia or Thailand.... :cool:

VeeJay
14-11-2005, 06:01 PM
GB, could you please post the article here, I bet many of us dont have the subscription to read online…many thanks

wAISEKMAo
14-11-2005, 07:20 PM
After reading the article in the Singapore Straits Times, it gives me the chill....geez.... another 'financial crisis' but this time only Bolehland alone? Ha Ha this time borrow USD10 billion from Indonesia or Thailand.... :cool:

The "borrow from Indonesian" is funny lar...considering we always bully indonesia. and "borrow from thailand" is also funny considering we always kiasu thailand will be better than malaysia.

However, I doubt we will ever borrow from indonesia or thailand considering our face so thin.

Besides indonesia can't even produce USD1 billion for pinjam kat malaysia not to mention USD 10 billion.

But it not impossible...we'll see.

cskok8
14-11-2005, 07:31 PM
I do not have much faith in BN since they saw it fit to award a RM 200+ million contract (for their training centre) to the same cuntpany which screwed up the Royal Malaysian Navy recruit training centre in Johor. :mad:

Ski
14-11-2005, 07:32 PM
GB, could you please post the article here, I bet many of us dont have the subscription to read online…many thanks


Here you are..you ask for it :D


MALAYSIA'S central bank should get its act together. It says it does not want to raise interest rates because it wants all the 'hot' money out first. In any case, the bank says inflation, at an official 3.3 per cent or thereabouts, is completely manageable if not on the low side.


Meanwhile, the ringgit is a recluse in the name of stability.

The outcomes of such sanguinity have been manifold and altogether depressing. You don't have to take my word for it. Listen to Simon Ogus, a strategist based in Hong Kong who was in Kuala Lumpur recently.

'Now you not only have negative real interest rates, you are probably looking at negative real wage growth as well,' he told BT.

This is profoundly disturbing news for the average Malaysian saver and wage earner. Even if we take the central bank's official inflation numbers as gospel, savers are still being penalised as deposit rates (2 per cent-odd) lag behind the cost of living.

But is inflation really that low? Recent reports have suggested that inflation especially in places like the Klang Valley is really running at levels closer to 8 per cent. At those levels, money does talk but only to say goodbye.

In any case, the world is passing us by.

Every other Asian capital from Seoul to Singapore has raised interest rates. Malaysia's central bank is reluctant to follow suit as raising interest rates could dent business confidence and, worse still, prompt a resurgent interest in the ringgit that would only reward those pesky foreigners expecting just such an outcome by being long on ringgit assets like bonds and equities.

One wonders if the central bank has noticed the Malaysian stock market, which has been in such a state of torpor that no analyst has detected its pulse for some time now.

Letting the ringgit appreciate might be good for everyone. For one thing it would almost immediately address imported inflation which makes up almost a third of the cost of living index.

Since its de-pegging in July this year, the ringgit hasn't strayed far from its pegged rate of 3.80 units to the greenback. Left to market forces, most analysts suspect that the ringgit would have strengthened much further and conclude that the less-than-invisible hand of Bank Negara was behind the non-event.

The micro-management has certainly depressed foreign portfolio investors who have left the market in droves leaving the stock exchange as Asia's worst performer to-date.

More insidiously, the continued protection afforded Malaysian exporters by the ringgit's artificial weakness gives them no incentive whatsoever to boost productivity or become more globally competitive.

It gives foreign investors the impression that the Malaysian companies and, by extension, the economy needs continued protection.

That certainly is one reason why the stock market is bearish amid an exodus of foreign funds. One hopes it doesn't get too bearish, however. The longer the central bank prevaricates on interest rates and the wider the interest differential between Kuala Lumpur and the US the greater the danger of a mass selldown on the ringgit.

Then the cat will be among the pigeons and the central bank will have to resort to using its reserves to defend the currency.

OK, it's unlikely but markets are fickle creatures. If anything can go wrong, it will.



Who is this reporter?? he should get employed in our MOF..brilliant guy.

GreenBug
14-11-2005, 08:25 PM
The "borrow from Indonesian" is funny lar...considering we always bully indonesia. and "borrow from thailand" is also funny considering we always kiasu thailand will be better than malaysia.

However, I doubt we will ever borrow from indonesia or thailand considering our face so thin.

Besides indonesia can't even produce USD1 billion for pinjam kat malaysia not to mention USD 10 billion.

But it not impossible...we'll see.wAISEKMao, you're under-estimating the potential of a well-governned and well-managed Thailand and Indonesia... their potentials are staggering if they ever get 'organised'. Look at Thailand's automobile industry (Ford, Chrysler, Toyota etc) now and wait till Bapak Yudhoyono gets into his 3rd g(y)ear in Indonesia.

The last time I was in Jakarta and Surabaya last month, officials (customs and immigration) in both airports said "Selamat Datang" and "Terima Kaseh"! Now, thats potential for you! instead of drawing piglets on tourists breakfast vouchers! or stripping people's wives in the police stations and grabbing their breasts! not to mention taking RM10 each from the detainees' wallets! :mad:

sirgalahad2010
15-11-2005, 08:26 AM
Ski

S Jayasankaran is one of the KL-based reporters for the Singapore Business Times newspaper. I think he formerly worked as the KL-based reporter for the Far Eastern Economic Review and has an excellent network of contacts in Putrajaya and the M'sian corporate world. Certainly his reports in the the Singapore paper are thought-provoking, well thought-out and often carry the stamp of "insider" information.

Sometimes I think that the Singapore Straits Times and Business Times papers have a better coverage of affairs M'sian than their M'sian tabloid counterparts - NST and The Star ! But maybe the Singgies have their own agenda in reporting on developments in M'sia???

Ski
15-11-2005, 08:33 AM
Ski

S Jayasankaran is one of the KL-based reporters for the Singapore Business Times newspaper. I think he formerly worked as the KL-based reporter for the Far Eastern Economic Review and has an excellent network of contacts in Putrajaya and the M'sian corporate world. Certainly his reports in the the Singapore paper are thought-provoking, well thought-out and often carry the stamp of "insider" information.

Sometimes I think that the Singapore Straits Times and Business Times papers have a better coverage of affairs M'sian than their M'sian tabloid counterparts - NST and The Star ! But maybe the Singgies have their own agenda in reporting on developments in M'sia???

Then if he is sincere he should also contribute his writings to one of our medias for us Malaysians.

EricK
15-11-2005, 04:13 PM
Ski

Sometimes I think that the Singapore Straits Times and Business Times papers have a better coverage of affairs M'sian than their M'sian tabloid counterparts - NST and The Star ! But maybe the Singgies have their own agenda in reporting on developments in M'sia???

Exactly what i was thinking off... sometime i wonder if i am living in the same malaysia as what is reported in newspapers and magazines overseas? :rolleyes:
or is it i'm just a frog under the tempurung. or maybe i'm in the matrix under the creation of BN :confused:

newbies
15-11-2005, 09:22 PM
Exactly what i was thinking off... sometime i wonder if i am living in the same malaysia as what is reported in newspapers and magazines overseas? :rolleyes:
or is it i'm just a frog under the tempurung. or maybe i'm in the matrix under the creation of BN :confused:

we all know how KIASU singgies are......

perangai macam budak2, tired of playing with themselves in the kiasuland, had to go and disturb other ppls land.......hmm, sungguh sungguh sedih

GreenBug
15-11-2005, 10:32 PM
Ski

S Jayasankaran is one of the KL-based reporters for the Singapore Business Times newspaper. I think he formerly worked as the KL-based reporter for the Far Eastern Economic Review and has an excellent network of contacts in Putrajaya and the M'sian corporate world. Certainly his reports in the the Singapore paper are thought-provoking, well thought-out and often carry the stamp of "insider" information.

Sometimes I think that the Singapore Straits Times and Business Times papers have a better coverage of affairs M'sian than their M'sian tabloid counterparts - NST and The Star ! But maybe the Singgies have their own agenda in reporting on developments in M'sia???I fully agree. I subscribe to the Singapore Straits Times here in Brunei and I read it for the Malaysian news usually not published in our own mainstream media. And, the artciles are well-researched, thought-provoking and usually have 'inside' sources....

I do not think this is 'kiasu' thing on the side of our southern neighbor, it is just that some of these news are important but too sensitive to be reported by our local media....