Few months ago, when our leaders were still saying that Malaysia would not be affected by the world’s economic woes, I have figured that Malaysai would go into negative growth. As an amateur in economy, I feel vindicated that a notable agency, Asian Development Bank, in the latest report , predicted the same thing that Malaysian economy is going to shrink this year.
The first waves of the economic tsunami had not affected us much.. That one was about the failure of financial institution and the derivatives market, simply because we did not have much money to invest in these, unlike SIngapore which suffered as a result of failure of financial instituitons in which Tamasek has invested lots of money.
But the second wave will hit us hard. The second wave is the failure of businesses overseas, and as a result, the demand for commodities as well as goods from exporting nations like ours will decrease steeply.
We are a trading nation. Our trade is much more than our GDP. Logic will tell us that there is no way that we can escape the crunch given that our exports will not find any markets. If our goods and commodities cannot find any markets, then our manufacturing industry will be affected.
The bulk of our export,besides petroleum, is in electronics. We are not the ‘original’ manufacturers , but rather we are just a centre of off-shoring for those multinational trying to find a cheaper labour market. When these mother companies fail, they are not in the charity business and they will just simply wind up or pack up.
Our domestic market is simply too small to support a strong industrial base.
Our car industry is not efficient.. Our heavy industry( like iron and steel) is not efficient . We depend on commodities such as petroleum , palm oils etc which have seen prices getting a beating for the past few months. The cost for sourcing petroleum from the sea is now higher than the market prices, how are we not to be affected?
The best indicator to see whether recession has set in is to see the medical or dental clinics. If the crowd in government clinic is increasing and the crowd in the private clinics is decreasing, recession is invariably here, even if the leaders say otherwise, and even if the figures might show positiove growth..This is because medical profession, supposedly recession-proof, is one of the few professions that would be last hit in a slow down. And this is the case now.
Retrenchment and unemployment is going to go up. Expanding civil service to take in these unemployed people is not a good solution. It will lead to lower productivity as more people will be doing the same amount of work. Rather, what should be done is to try to provide skill training for the unemployed.
What can we ordinary folks do? Hope for the best; tighten the belts; cut overhead… Meantime, pray very hard , whatever faith you may be following…