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TJ FEER: Out of the Woods (Budget 2001)
By Kapal Berita

5/11/2000 8:43 pm Sun


Umumnya rencana FEER ini kurang menyengat. Namun ada dua perenggan yang agak menarik untuk diterjemahkan:

"Sistem kewangan sudah stabil, ekonomi saudah pulih, tetapi ia masih memerlukan rangsangan polisi fiskal" mengikut P.K. Basu, ketua ekonomi Credit Suisse First Boston di Kuala Lumpur.

Stimulasi ini perlu kerana kepulihan Malaysia masih bertampal-tampal dan ekonomi sedang bergerak pada dua landasan.

Walaupun ekspot sudah pulih dan berprestasi baik, ekonomi domestik masih tidak bersinar. Sebagai contoh yang khusus, industri pembinaan masih dihantui oleh bangunan2 yang bermasalah sejak sebelum krisis. dan ia masih terumbang ambing. Kadar pertumbuhan industri ini cuma 3.1% sahaja tahun ini selepas menguncup 5.6% tahun lepas. Permintaan pula telah merosot bila ia meragam lari dalam tempoh separuh penggal tahun.

Pengurus dana CMS Dresdner Asset Management di Kuala Lumpur pula berpendapat pelabur tidak boleh mengharapkan sesuatu yang berlebihan dari belanjawan pra krisis ini:

"Ini bukannya satu belanjawan ringgit dan sen ekonomi; tetapi semuanya adalah kesamaran belaka yang berfokuskan sesuatu yang lembik, mewacanakan pembangunan modal buruh, dan mengelak dari krisis".

From The Far Eastern Economic Review
Issue cover-dated 9th November 2000

Out of the Woods

Malaysia's first post-crisis budget projects new directions and robust economic growth

By Lorien Holland/KUALA LUMPUR

HAS MALAYSIA emerged ahead of neighbours Indonesia, Thailand and the Philippines and consigned the Asian financial crisis to its past? Malaysian Finance Minister Daim Zainuddin seemed pretty sure that's the case as he unveiled his 2001 budget, entitled "A New Malaysia," on October 27.

In a 90-minute address to parliament, the political veteran who was brought back into government in 1998 to deal with the economic crisis said solid, long-term growth was back on the radar screen. "The Asian financial crisis almost derailed us from our goal of achieving developed-nation status. We have lost precious time," he said as he boosted the economic growth forecast for this year from 5.8% to 7.5% and unveiled new plans to push Malaysia into the IT fast lane and "a new economic era."

But analysts weren't all so certain that Malaysia, which is benefiting this year from high world oil prices and strong demand for its dominant export, electronic goods, is entirely in the clear. While Daim's 91-billion-ringgit ($23 billion) budget is in the black for operational expenditure, there's a significant allocation for government infrastructure spending aimed at stimulating economic growth, which is forecast to create a budget deficit equal to 4.9% of GNP.

"The financial system has been broadly stabilized, and the economy has recovered, but it still needs a stimulative fiscal policy," says P.K. Basu, chief economist at Credit Suisse First Boston in Kuala Lumpur. That stimulation is necessary because Malaysia's recovery remains patchy and the economy is still moving on two tracks. While exports have recovered and are doing well, the domestic economy is lacklustre. In particular, the construction industry is stuck with a huge glut of pre-crisis buildings and remains in the doldrums, with growth of only 3.1% expected this year after a 5.6% contraction last year. Consumption, too, has weakened following a spurt of spending in the first half of the year.

Tax cuts to boost consumption and fresh incentives to boost flagging foreign investment would help bolster domestic markets, says an economist at one of Kuala Lumpur's government-sponsored think-tanks. While both measures were anticipated by the financial markets, neither materialized (save a modest tax cut for low-income families), leading the Kuala Lumpur Stock Exchange composite index to drop 2.9% on October 30.

In fact, the only concrete concession to the markets was a further loosening of the capital controls imposed in September 1998. Now, only portfolio funds that remain in the country for less than a year will be subject to a 10% profit levy; the rest are exempt.


"There is some mild irritation that the levy hasn't been abolished entirely, but it is clearly a good start, as this puts Malaysia back onto a level playing field for a lot of institutional investors," says Dominic Armstrong, head of research at ABN Amro Malaysia in Kuala Lumpur.

The finance minister's hint of a more open policy toward foreign talent and investment also got a cautious vote of approval, especially in light of Kuala Lumpur's longstanding protective policies toward key industries and prickly relationship with foreign managers. Daim called for "the best brains" from Bangalore to California to invigorate Malaysia's fledgling IT sector and "smart partnerships" with investors in energy, ports, vehicle making, airlines and financial services.

But the absence of clear undertakings to promote foreign investment led to a strong attack from Lim Kit Siang, chairman of the opposition Democratic Action Party, who said investors were looking for a regime that is predictable and credible and not subject to vagaries and policy flip-flops.

"The Budget 2001 afforded Daim with the opportunity to address the fundamental issue of rebuilding confidence. He has failed to meet that challenge . . . and to acknowledge that current nontransparency in decision making is seriously impeding a revival of confidence and credibility," Lim said in a media statement.

Scott Lim, fund manager for CMS Dresdner Asset Management in Kuala Lumpur, cautions on expecting too much from Malaysia's first post-crisis budget. "This was never going to be a budget focusing on the dollars and cents of the economy; instead it is all very vague and focused on the intangibles, on building human capital, and on stepping away from the crisis."