Asia Sentinel

Christmas In Kuala Lumpur

The uncertain nexus between politics and the economy

Despite a relatively calm start compared to the political upheavals of 2008, the coming year looks set to be another booby-trapped obstacle course for Malaysia’s citizens and politicians. The impact of a catatonic global economy, with sharply reduced commodity prices and sluggish demand amid a banking and credit apocalypse is already being felt. Factories have cut overtime and dropped contract workers.

Most recently, Western Digital, a hard-drive manufacturer listed on the New York Stock Exchange, announced just before Christmas that it would shut one of its plants in Sarawak, putting 1,500 jobs at risk.

The impact of these growing economic woes on the political process is becoming a major preoccupation of the country’s politicians and analysts, and not just for the general welfare. The widely held view is that Najib Tun Razak, having been nominated nearly unanimously to become the president of the United Malays National Organisation, will want to call national elections as soon as possible after the UMNO elections in March. He is seeking to legitimize his rule and rescue his battered reputation after having passed the first hurdle to replace Abdullah Ahmad Badawi, who is in effect being driven out by his own party as prime minister.

But given the growing economic problems, it is questionable whether Najib will want to take on an election. Although most factories have not laid off large numbers of workers, many have seen their incomes halved after factories cut overtime. Although Zeti Akhtar Aziz, the governor of Malaysia’s central bank, Bank Negara, said in November that domestic demand would continue to drive growth, forecast at 5-5.5 percent for 2009, it is hard to see how that figure can be met. According to the Malaysia Industrial Development Authority, exports of manufactured goods, particularly semiconductors, hard drives, audio and video products and air conditioners, make up 74.8 percent of total exports. The manufacturing sector accounted for 30.3 percent of the economy in 2007, according to MIDA.

And, if Singapore, just across the causeway, is any yardstick, Malaysia’s exports-driven economy faces trouble. Friday, the Singapore Ministry of trade and industry forecast that the island’s republic could contract by up to 2 percent, the worst performance in nearly 50 years. Singapore is Malaysia’s biggest export partner, taking RM84.3 billion (US$24.2 billion) in exports in the first nine months of 2008.

Malaysia’s exports fell year on year by 2.8% in October, after rising by 16 percent over the first nine months of the year. Industrial production also fell after September. Commodities, on which the country built decades of earlier prosperity, have cratered. Crude oil, now US$38.1 per barrel, is 73.8 percent down from its cyclical high. Palm oil, at US$1,553 per tonne, is down 63.1 percent down. Tin is 60.4 percent off its cyclical high, and rubber is down 54.1 percent.

However, inward foreign direct investment totaled a comfortable US$8.5 billion in 2007 and foreign currency reserves were near US$100 billion at the end of November, giving the government room to pump-prime

Nonetheless, “From working 7 days a week and 10 hours a day, we now just get our basic pay and allowances,” Sheila, a 29-year-old factory worker in Negeri Sembilan told Asia Sentinel. With much more free time on her hands, she started attending political talks at the Hindu temple in the Sime Darby estate where she lived. “Before this, where got time? By the time I am back, it’s already 8pm,” she said.

Estate workers with fixed salaries are much better off than smallholders as even with less overtime, they have a roof over their heads in the rather pleasant rustic countryside to enjoy poverty in a kind of bucolic paradise. Smallholders are more hard hit. “I used to get about RM1,000 or more, depending on the weather from my small lot of rubber trees. But now, the price is about RM1.20,” said Shahrizal from Rembau in Negeri Sembilan.

Crude palm oil prices have dived from a high of over RM4,000 per tonne early this year to RM1,800 per tonne. The price of Malaysian rubber has dropped by 62 per cent from RM10.51/kg on July 3 to RM3.98/kg in the middle of this month while the ex-farm price of coagulated rubber is at its lowest level now at RM1.39/kg, the state-owned Bernama national news service reported on Nov. 27.

Nevertheless, Kuala Lumpur celebrated the year end season with packed street parties. Bukit Bintang, the main shopping district, was dressed up in all things wintry and European “Christmasy” from giant Christmas trees to Santarinas grinning with glee.

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Priority Should Be On Building Infrastructure for Broadband Services
written by biometrics malaysia , July 24, 2009

Many feel the first and foremost challenge would be the infrastructure of broadband services in the country. This is crucial for development of any nation. Few notable Asian nations have advanced in this area with great foresight about what is to come in this new millennium.

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Knowledge Economy in Malaysia
written by rfid malaysia , July 24, 2009

The local economy is affected by global economy.
It is quite a challenge to move towards knowledge economy.

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Race and Sex
written by Mahathir , January 08, 2009

The only tangible results of the nexusbetween parochial racial politics and economic developments is more racial divide and the less than optimal development for example, Malaysia was ahead economically compared Korea and Taiwan but now is woefully behind.

Hence we have more unhealthy developments of Sex, Drugs and Robbery Crimes although our statistics have been fudged to show otherwise. The police has routinely advised public not to report so as not to inflate our wonderful statistics.

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Looking forward to a snap election
written by Eric , January 08, 2009

I think all Malaysians look forward to a snap election to put the National Front where it deserves: the Opposition. This would enable some house-cleaning to weather the coming economic shock. The National Front is still in denial as to the latter as shown by the Central Bank's growth forecasts.

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Sexpliots
written by Mamak , January 07, 2009

Even teens wearing Tudongs are proud of their sexpliots.

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Sex, Drugs and Murder
written by mahathir , January 07, 2009

Becos of the UMNO cronyism and parochial politics, Malaysia has more than its share of sex, drugs and murder in recent history.

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