Malaysia's Economic Outlook

The following are excerpts from the article written by Khoo Kay Peng at khookaypeng.blogspot.com. It sure does make a good read.

1. Malaysia's gross domestic product (GDP) growth rate was forecasted to drop to zero percent as the global financial crisis evolved into a deepening sub-regional industrial crisis in Southeast Asia, according to the United Nations' regional arm, the Economic and Social Commission for Asia and the Pacific (Escap).

2. Escap observed that the crisis has moved rapidly from its first stage of a financial crisis emanating from developed countries and causing contagion in Asia and the Pacific, to a second stage of crisis for the real economy in the region based on plummeting exports and curtailed domestic demand.

3. The organisation believed that Southeast Asia could be among the most affected by the crisis, given its integrated industrial production base and linkages to the global supply chain, thus deepening unemployment. It expected an overall economic growth rate of 1.2 percent for Southeast Asia this year, the lowest among the developing Asia Pacific sub-regions.

4. This situation does not augur well for the country. Based on several observations, the unemployment rate is expected to climb to more than 5% by the end of this year. The economy is heavily dependent on FDIs and exports to support growth. Both of them have plummeted this year. A number of companies I have spoken too are taking precautions by averting financial and investment risks. Most of them will not make any new investment this year.

5. This will result in further reduction in jobs creation. The main problem for the country is how to generate enough jobs for the society if the economy is projected at zero growth. It will be difficult for Malaysia to create enough jobs at 3-4 percent growth, worse if it is at zero percent. Another 600,000 are expected to join the job market this year. The government has offered grants to those who are interested to pursue postgraduate degrees. However, this offer is not expected to reduce the number of new entrants significantly.

6. Another worry is policy flip-flops from the government. It has imposed a double levy on foreign workers but was told to review its decision by several BN leaders. The ministry of human resource has postponed the levy hike by another month. It will have to decide on it soon. I have argued that the issue of foreign workers will have to be analysed in a long term perspective. Sending back low skilled and cheap foreign workers will not create immediate jobs for the locals. Most of them are not willing to work in the same environment as the foreign workers.

7. The government needs a firm review on these areas:

* Address immediate economic bottlenecks e.g. technology and production gaps, skills gap, industrial development process, archaic labour, investment and trade rules and regulations etc.;
* Create new industries and new jobs;
* Address important issues on market reforms to strengthen private sector governance, rationalize the role of GLCs;
* Promote transparency in GLCs such as EPF, Khazanah and SOCSO;
* Enhance key performance indicators on public projects and announce the members of the technical monitoring committee on the second stimulus publicly;
* Pursue real process improvements in the public sector to cut and reduce wastage and inefficiency;
* Regain public confidence on the economy; and
* Rebuild the administration confidence

8. The main problem remains the lack of political discipline within the ruling coalition. We want more serious, non-partisan and non-rhetorical discourse and discussion on the economy. So far, the government has provided us with neither direction nor leadership.

9. The work is cut out for Najib but the nation's focus will be drifted again to the by-elections. After 7th April, expect Penanti and Bukit Lanjan to follow up. When can we start to focus on the economy despite the gloom?

Sabah's Consumers Woes-The Cause To The High Cost of Living

Doing away with Sabah cabotage policy 'inevitable'

LIBERALISATION by doing away with the cabotage policy for Sabah is inevitable in the long run if the state wants to be more competitive, according to the Institute of Development Studies Sabah (IDS).

IDS executive director Datuk Dr Yaakub Johari said, at the moment, protectionism for Malaysian-flagged ships was considered a short-term agenda and in principle, not healthy to continue for too long.

"We believe it's part of the global trend. Liberalisation in the long term helps to reduce cost," Yaakub said.

"Definitely, in the long run we have no choice, it's an open economy. Eventually, if we do not open up, our neighbours (countries) will do something against us," he said on the sidelines of the Gabungan Badan Ekonomi Masyarakat Bumiputera Sabah convention.

He was asked to comment on repeated calls by various local bodies here for the cabotage policy for Sabah to be abolished to do away higher shipping costs.

Yaakub, who presented a paper on "Sabah Development Corridor: Development Concept and Strategies" at the convention, said one of the challenges faced by the corridor was the cost of doing business due to high shipping costs.

He said the high cost of doing business in Kota Kinabalu was compounded by the existing cabotage policy, which was a factor impeding economic growth.

The progressive removal of cabotage policy, leading to forging of alliances with other major ports and shipping liners and liberalising shipping licences to increase competition among local operators, will contribute to lower freight costs, according to Yaakub.

The Federation of Sabah Manufacturers recently reiterated the need to abolish the policy, saying that the move could also pave the way for the Kota Kinabalu Sepangar container port to become a hub for the BIMP-EAGA region.

Its president Datuk Wong Khen Thau said if the policy was lifted, some industries would be able to compete better, with direct impact on the exports market and growth of business volume.

Sabah, he said, needed to rely on shipping for transporting goods from the peninsula due to the absence of road links and railways.

Besides the federation, various other parties have been asking the government to do away with the cabotage policy and the government last year announced an independent study to review the mechanism but so far the results have yet to be released.

Source: Business Times

BIMP-Eaga News: Transport & Logistics

Asean SRNH may be more viable than BIMP-Eaga

Expanding the local system of roll-on, roll-off ports to Southeast Asia may be more viable for an archipelagic country like the Philippines than with those of the subregional trade bloc with oil producing nations like Brunei, Indonesia and Malaysia, a logistics expert said.

According to EnricoBasilio, director of CRC Transport and Logistics Institute, expanding the country’s Strong Republic Nautical Highway (SRNH) to Asean countries can benefit the Philippines since the country is strategically located right in the middle of almost every country in the region.

“This is just a concept. We haven’t done the real analysis yet but I think this should be more viable for us,” Basilio said.

The concept of expanding the SRNH to the Asean region was brought up by Paul Apthorp of TNT Worldwide Express and presented during the Asian Development Bank’s (ADB) conference in November last year.

Aphthorp said due to the extensive road network in Mekong subregion and cross-border trade in Thailand, Vietnam, China, Laos the Philippines can also benefit in the transshipment. The operation of TNT in the Philippines is struggling as its strategy was to use road networks rather than air links that the bigger logistics firms like UPS, DHL, and Fedex have been employing for the past years.

“If the international ships pass by our country, we can earn revenues from the “pass-through” activities, benefiting our ports and trucking industry, as well as creating value adding activities,” Basilio said.

Basilio estimates that if the Philippines can only get at least 10 million of the 60 million containers carried by vessels in the region in a year. “We have so many potentials of benefiting from the overseas shipping,” he said.

At the moment, the country is a member of the four-nation BIMP-Eaga (Brunei Darussalam-Indonesia-Malaysia-Philippines East Asean Growth Area), but trade has hardly picked up after more than 14 years in existence.

Sabah Allocates RM10 Million To Enhance Skills

KOTA KINABALU, Feb 9 (Bernama) -- The Sabah state government has allocated RM10 million to develop human resources at all levels of its ministries, departments and agencies this year, said Chief Minister Datuk Seri Musa Aman.

He said the state government understood the importance of enhancing skills of its public servants to ensure good governance.

"The public sector is a very important institution to ensure administration and governance. Without that institution, a government will lose its ability to administer and implement plans efficiently and effectively. So we allocate this money to enhance skills of state employees," Musa said at a function to commemorate the Sabah state-level Public Services Day at the Tun Raffae Auditorium at Menara Tun Mustapha, here today.

Musa also called on senior state and Federal public servants to ensure that the quality of services and the public delivery system in Sabah was at a high standard.

He urged state employees to elevate the service performance as well as help to ensure the success of the state's development agenda including the Sabah Development Corridor.

The Sabah Information Department was picked as the winner of the Public Information Centre Award for this year's Sabah Public Services Day.

-- BERNAMA

SDC NEWS-Air Travel Facilities

Currently, Terminal 1 of KKIA is used for regular fare airlines, while Terminal 2 is for low-cost carriers. The upgraded Terminal 1 will be able to cater to 10 million passengers annually, and Terminal 2 will be transformed into a full-fledged cargo terminal.
KKIA will also be able to cope with the anticipated increase in cargo volume, which, in 2006, was 19.2 million kg, an increase of 10.5% over 2005 figures, while cargo loaded rose 11.1% to 18.5 million kg in the same period.
Also in the pipeline is the expansion of the Sandakan airport, currently considered a second eastern gateway to Sabah.
A new airport in Lahad Datu is also being considered to accommodate Airbus 320 size aircraft which will support the development of aquaculture and tourism.
According to officials from Malaysia Airports Holdings Bhd, KKIA is expected to attract more flights to and from Sabah, especially from the Far East, such as Hong Kong, China and Korea, and Australia.

SDC — Strengthening Sabah’s infrastructure and logistics: The Role of Sabah Ports

1. The SDC blueprint has identified strategies to make “The Land Below the Wind” a regional trading hub through modern infrastructure and logistics.
2. The logistics element is one of the strategies aimed at addressing the current high cost of doing business in the state. The strategy for cost reduction is three-pronged:
* Lowering freight and logistical costs through a progressive review of the Cabotage Policy for shipping;
* Enhancing the cost competitiveness of ports in Sabah via alliances with other global port operators and shipping liners; and
* Establishing the Sepangar Free Zone (SFZ), which is annexed to SBCP, by providing attractive incentives to potential investors to set up their manufacturing facilities and distributions in SFZ.
3. Subsequently, the new SBCP and part of Kota Kinabalu Industrial Park (KKIP) will be positioned as the main logistics hub and free trade zone to act as the catalyst and support for industrial development.

Of taxi drivers and their antics and how it will affect our tourist industry in Sabah

Not too long ago, I came across an article in a Malaysian Newspaper that says it all regarding the antics that our local drivers should refrain from doing in order not to tarnish the image of our country specially our beloved state of Sabah. The news goes like this:

The Caption: Malaysia's 'worst in the world' taxis tarnish national image

The ads promoting "Malaysia: Truly Asia" aim to welcome visitors with a warm smile to a prosperous and modern nation, so the taxi fleet branded "the worst in the world" can come as a bit of a shock.

Even the locals are not spared the shabby service of unkempt and hostile drivers behind the wheels of decrepit vehicles who refuse to use the meter, overcharge and pick-and-choose which destinations they will travel to.

At the popular KLCC mall under Kuala Lumpur's iconic Petronas Twin Towers is a typical scene, as a gang of cabbies negotiate with a young Norwegian couple just metres from a signboard warning against "taxi touts".

"Flat rate, flat rate, no metre," one driver insists as the tourists try to find a cab to take them to their hotel, less than two kilometres (1.2 miles) away.

Anxious to escape the baking heat, they agree to pay 25 ringgit (7.22 dollars) for a trip that would have cost less than three ringgit on the meter.

"Is it expensive? We don't know, we thought it is normal here," said the woman as they piled in with their shopping bags.

More frequent visitors, however, are vocal in their criticism and say that aggressive and unprofessional drivers are tarnishing the nation's image as a squeaky clean and hospitable destination.

"I first visited Malaysia in 2006 and I was impressed by everything I saw except for the worst taxi service I have endured," said Kabir Dali, an Indian tourist waiting in vain for a metered taxi at another mall.

"I paid a whopping 260 ringgit (74 dollars) from the Kuala Lumpur International Airport to town and was later told that was twice the proper amount."

Complaints about taxis are common in many countries, but in Malaysia it has escalated to an outpouring of frustration, on blog sites and in letters to newspapers.

In a survey by the local magazine The Expat, some 200 foreigners from 30 countries rated Malaysia the worst among 23 countries in terms of taxi quality, courtesy, availability and expertise.

The respondents lashed the fleet as "a source of national shame" and "a serious threat to tourists -- rude bullies and extortionists".

Salvation is in sight though, as a number of smaller, up-scale operators enter the market to provide a more expensive but quality taxi service for frustrated visitors and locals.

The uniformed drivers, behind the wheels of smart new multi-purpose vehicles and sedans, switch on the meter as a matter of course and do not refuse destinations -- surprising and delighting commuters in the capital.

Abdul Razak, operations manager for Dubai-based Citicab which launched here in January, said that even in poorer nations such as Thailand and Indonesia, taxis are smarter and the drivers far more courteous.

"I would say it is the worst in this region, undoubtedly. I have travelled to all countries in this region and our company operates taxis in many parts of the world. The situation here is the worst I have seen," he told AFP.

"The vehicles are in shabby condition, the driver will take you if he likes your face -- that is, if he agrees with where you want to go for the price he insists on."

The government has called on taxi firms to lift their standards, but various campaigns have achieved little, and many blame the lack of enforcement on rampant corruption in the police and bureaucracy.

"It is difficult for the roads and traffic department to take stern action," said a security officer at one city mall as he watched the touts swoop.

"Taxi operators and the company which hold the licences are all linked to some politician or another," he said. "Drivers here are ruthless because they are unchecked by authorities who are almost non-existent."

John Koldowski, from the Pacific Asia Travel Association, said that "less than desirable" taxi drivers have an outsize impact on a nation's image.

"The first contact a tourist gets with locals is often during airport transits to hotels and it creates a very, very strong first impression, either be good or bad," he said.

"Authorities certainly need to do their jobs and act upon any complaints strongly, quickly and visibly."

Relating this to our Sabah’s local scenario in the light of our effort of promoting Sabah through the Sabah Development Corridor programme, I shudder to think of what will the effect be to all the effort thrown in by all, including government and private sectors alike. All the hard work will just go down the drain if we do not take steps to avoid the ugly scenes as narrated above.

Surely state government departments, including federal’s must not let matters to rest and assume that this is a normal happening everywhere and saying that let the relevant authorities like the police, the JPJ’s, Customs and the port operators play their part to handle such incidences from happening. How wrong can we be by adopting this lackadaisal approach. We know we need more than enforcements to clear up the problems, but this we must do if we were to really achieve the push in my making our tourism industry very special and unique, different from other places in Malaysia or even the world at large.

It is a hard act to do but things we must do.

I am a form believer that things are not that bad in Sabah, looking at the situation at our airports and ferry ports but definitely there is that few incidences that will just provide the spark that make our tourist react as above.

Come on, if we need to spend, we must. That is the price to pay for our conscious effort to achieving the best for our tourism industry. You guys there with the Tourism Board, Hoteliers, Taxi Owners, Police and the Sea Ports and Airport Authorities, time to pull the socks. The downturn in the economy will make our effort all the more difficult but necessary.

ramli@ramgold.net