ID :
32162
Tue, 11/25/2008 - 14:49
Auther :
Shortlink :
https://oananews.org//node/32162
The shortlink copeid
CAN M'SIAN COMPANIES WEATHER STORM CLOUDS AHEAD?
by Alan Ting
KUALA LUMPUR, Nov 24 (Bernama) -- The first wave of repercussions from the
financial crisis in the West may seem to have hit Malaysia, with commodity and
equity prices falling of late.
And with the slump in the price of crude oil, a major income earner
for Malaysia, all these seem to be a perfect recipe for added pressure on the
government as its ability to collect revenue is impinged upon.
But the government has been quick to spring into action by introducing
pre-emptive pump priming measures with a RM7 billion (US$2 billion) stimulus
package.
As things stand, the impact on Malaysia may be minimal, given that the
government had taken steps to ensure that the economy chugs along, although at a
slower pace.
The major markets for Malaysian companies like the United States, Japan and
Europe may be down at the moment but the bright spots could be markets like
China, India and the Middle East.
Can Malaysia weather the storm ahead? RAM Consultancy Services Chief
Economist, Dr Yeah Kim Leng, thinks the country will be able to do so.
The government, he said had done the right thing to prop up the local
economy and offset any adverse impact from the contracting global
economy.
And Malaysian firms are also likely to withstand the storm clouds because
for the past six years, they had registered strong growth and accumulated some
wealth, which will help them to get through any downturn for between one and
three years, he said.
"Some may need to lay off some workers but I don't see that to be a major
trend," he said, adding that some companies had already adjusted to the softer
demand by reducing production shifts.
Based on RAM's assessment, the country's estimated unemployment will be
about 4.0 to 4.5 percent from the current 3.5 percent, Yeah said. In terms of
numbers, it would be about half million people, with half of them new entrants
to the job market.
He said labour-intensive sectors would be mostly affected by the economic
downswing if companies were to downsize.
"But since most of them hire foreign workers, the impact on Malaysians are
expected to be minimal. With 2.2 million foreign workers in the country, they
would be the first ones to go if retrenchment exercises are carried out," he
said.
Second Finance Minister Nor Mohamed Yakcop recently said the unemployment
rate in the country would be at four percent or below this year and would be at
same level next year as he was confident that the RM300 million (US$85 million)
training fund under the stimulus package should minimise unemployment besides
upgrading workers' skills.
"The most testing challenges for the government in any crisis would be to
make sure the government can find jobs for the people and business credit is
flowing. We've to ensure the employed now remained employed and graduating
students can find jobs later," he said.
Human Resources Minister S.Subramaniam said the government has formed
two committees to help those being retrenched so that they can be absorbed by
sectors in need of workers.
Two committees, comprising representatives from employers, trade unions,
government ministries and agencies, would meet monthly to track job terminations
and potential retrenchments, and to provide assistance for retrenched workers
through re-skilling and retraining.
"We hope it (economic downturn) will not happen but looking at the other
countries, this is already happening. We have to be prepared to address it," he
said.
Recently the government announced a RM5 million (US$1.42 million)
allocation to re-train retrenched workers under Pembangunan Sumber Manusia Bhd
(Human Resource Dvelopment. Some 750,000 workers from small-and medium-sized
enterprises will benefit from this programme.
Dr Subramanian said the government would top up RM1 (28 cents)for every RM1
spent by employers for retraining and to upgrade workers' skills and from Nov 1
this year, 100 percent financial aid would be given to all skills upgrading
retraining programmes held locally.
In terms of domestic demand in Malaysia, it is unlikely to suffer despite
some surveys painting a bleak picture of consumer sentiment in the region, thus
sparking fears that consumption, as an engine of economic growth, is under
threat.
The Malaysian Institute of Economic Research said that "signs of consumer
moderation are becoming more apparent" after its consumer sentiment survey for
the third quarter plunged nearly 30 points year-on-year.
However, there are still bright spots: retail sales, which totalled US$67.1
billion last year, are still expected to rise 7.0 per cent to US$71.8 billion
this year and consumption is still expanding.
Private consumption grew 9.0 per cent in the second quarter, after 11.7 per
cent in Q1 2008. One forecast puts the 2008 consumption growth at 7.4 percent,
down from some 11 percent last year.
Consumer spending is expected to remain significant as the government has
announced a number of fuel price cuts, discounted highway toll rates, reduced
prices in hypermarkets and allowing contributors to the Employees Provident
Fund to voluntarily contribute less to the pension fund so that they would have
more disposable income.
The EPF is expected to inject at least RM2.5 billion (US$0.7 billion) a
month into the economy even if only half of its members take up the
incentive.
In terms of consumer credit, Yeah said as long as consumers had access to
financial credit, there would not be any credit crunch although many banks had
tightened their loan procedures as a result of the financial mess in the
West.
He also believed that the Malaysian economy was diversified enough to
ensure that domestic demand could be sustained.
Dr Yeah said even if the GDP contracted by 0.5 percent next year compared
to the projected 3.5 percent, the Malaysian economy was still not in a serious
situation but cautioned that the government needed to ensure the availability of
funds in the market.
In addition, he said the government must continue adopting pro-active
measures like reducing taxes, improving its efficiency and introducing greater
liberalisation to make Malaysia more competitive.
"This crisis may put Malaysia in a stronger position. If they (the
government) put these reforms into place, we would be able to recover much
faster, very much faster or be resilient to further shocks," said Dr
Yeah.
Dr Yeah said the government must pay more attention to help small and
medium-scale entrepreneurs (SME), especially those who were export-oriented and
unable to find new markets during this trying period.
International Trade and Industry Minister Muhyiddin Yassin recently
said that easing the financial burden of SMEs would be looked into and that the
Finance Ministry and Malaysia's central bank Bank Negara Malaysia would be asked
to help ease the burden on borrowers.
-- BERNAMA
KUALA LUMPUR, Nov 24 (Bernama) -- The first wave of repercussions from the
financial crisis in the West may seem to have hit Malaysia, with commodity and
equity prices falling of late.
And with the slump in the price of crude oil, a major income earner
for Malaysia, all these seem to be a perfect recipe for added pressure on the
government as its ability to collect revenue is impinged upon.
But the government has been quick to spring into action by introducing
pre-emptive pump priming measures with a RM7 billion (US$2 billion) stimulus
package.
As things stand, the impact on Malaysia may be minimal, given that the
government had taken steps to ensure that the economy chugs along, although at a
slower pace.
The major markets for Malaysian companies like the United States, Japan and
Europe may be down at the moment but the bright spots could be markets like
China, India and the Middle East.
Can Malaysia weather the storm ahead? RAM Consultancy Services Chief
Economist, Dr Yeah Kim Leng, thinks the country will be able to do so.
The government, he said had done the right thing to prop up the local
economy and offset any adverse impact from the contracting global
economy.
And Malaysian firms are also likely to withstand the storm clouds because
for the past six years, they had registered strong growth and accumulated some
wealth, which will help them to get through any downturn for between one and
three years, he said.
"Some may need to lay off some workers but I don't see that to be a major
trend," he said, adding that some companies had already adjusted to the softer
demand by reducing production shifts.
Based on RAM's assessment, the country's estimated unemployment will be
about 4.0 to 4.5 percent from the current 3.5 percent, Yeah said. In terms of
numbers, it would be about half million people, with half of them new entrants
to the job market.
He said labour-intensive sectors would be mostly affected by the economic
downswing if companies were to downsize.
"But since most of them hire foreign workers, the impact on Malaysians are
expected to be minimal. With 2.2 million foreign workers in the country, they
would be the first ones to go if retrenchment exercises are carried out," he
said.
Second Finance Minister Nor Mohamed Yakcop recently said the unemployment
rate in the country would be at four percent or below this year and would be at
same level next year as he was confident that the RM300 million (US$85 million)
training fund under the stimulus package should minimise unemployment besides
upgrading workers' skills.
"The most testing challenges for the government in any crisis would be to
make sure the government can find jobs for the people and business credit is
flowing. We've to ensure the employed now remained employed and graduating
students can find jobs later," he said.
Human Resources Minister S.Subramaniam said the government has formed
two committees to help those being retrenched so that they can be absorbed by
sectors in need of workers.
Two committees, comprising representatives from employers, trade unions,
government ministries and agencies, would meet monthly to track job terminations
and potential retrenchments, and to provide assistance for retrenched workers
through re-skilling and retraining.
"We hope it (economic downturn) will not happen but looking at the other
countries, this is already happening. We have to be prepared to address it," he
said.
Recently the government announced a RM5 million (US$1.42 million)
allocation to re-train retrenched workers under Pembangunan Sumber Manusia Bhd
(Human Resource Dvelopment. Some 750,000 workers from small-and medium-sized
enterprises will benefit from this programme.
Dr Subramanian said the government would top up RM1 (28 cents)for every RM1
spent by employers for retraining and to upgrade workers' skills and from Nov 1
this year, 100 percent financial aid would be given to all skills upgrading
retraining programmes held locally.
In terms of domestic demand in Malaysia, it is unlikely to suffer despite
some surveys painting a bleak picture of consumer sentiment in the region, thus
sparking fears that consumption, as an engine of economic growth, is under
threat.
The Malaysian Institute of Economic Research said that "signs of consumer
moderation are becoming more apparent" after its consumer sentiment survey for
the third quarter plunged nearly 30 points year-on-year.
However, there are still bright spots: retail sales, which totalled US$67.1
billion last year, are still expected to rise 7.0 per cent to US$71.8 billion
this year and consumption is still expanding.
Private consumption grew 9.0 per cent in the second quarter, after 11.7 per
cent in Q1 2008. One forecast puts the 2008 consumption growth at 7.4 percent,
down from some 11 percent last year.
Consumer spending is expected to remain significant as the government has
announced a number of fuel price cuts, discounted highway toll rates, reduced
prices in hypermarkets and allowing contributors to the Employees Provident
Fund to voluntarily contribute less to the pension fund so that they would have
more disposable income.
The EPF is expected to inject at least RM2.5 billion (US$0.7 billion) a
month into the economy even if only half of its members take up the
incentive.
In terms of consumer credit, Yeah said as long as consumers had access to
financial credit, there would not be any credit crunch although many banks had
tightened their loan procedures as a result of the financial mess in the
West.
He also believed that the Malaysian economy was diversified enough to
ensure that domestic demand could be sustained.
Dr Yeah said even if the GDP contracted by 0.5 percent next year compared
to the projected 3.5 percent, the Malaysian economy was still not in a serious
situation but cautioned that the government needed to ensure the availability of
funds in the market.
In addition, he said the government must continue adopting pro-active
measures like reducing taxes, improving its efficiency and introducing greater
liberalisation to make Malaysia more competitive.
"This crisis may put Malaysia in a stronger position. If they (the
government) put these reforms into place, we would be able to recover much
faster, very much faster or be resilient to further shocks," said Dr
Yeah.
Dr Yeah said the government must pay more attention to help small and
medium-scale entrepreneurs (SME), especially those who were export-oriented and
unable to find new markets during this trying period.
International Trade and Industry Minister Muhyiddin Yassin recently
said that easing the financial burden of SMEs would be looked into and that the
Finance Ministry and Malaysia's central bank Bank Negara Malaysia would be asked
to help ease the burden on borrowers.
-- BERNAMA
