Ong, quit blaming the world for Malaysia’s rotting economy

Following is an article published by The Star Online complete with responses by TTF (in blue):

KUALA LUMPUR: Five manufacturing companies involving foreign investors closed down during the May-September period, involving investments worth RM308.7mil, said Deputy Trade and Industry Minister Ong Kian Ming.

Subsequently, 362 local workers were also laid off following the closures which were due to business decisions and not because of the transition in the government, he said.

“Other factors which led to foreign investors withdrawing their investments from Malaysia include the contraction in the global economy and market volatility resulting from the decline in demand and sales,” he told the Dewan Rakyat yesterday.

TTF: Actually, this isn’t true.

On the 5th of October 2018, Nikkei Asian Review reported:

Malaysia’s August trade surplus narrowed the most in nearly four years as increase in imports outpaced exports growth, official data Friday showed.

Trade surplus contracted to 1.61 billion ringgit ($388.3 million) in August, down 83.7% on year and 80.7% on month. The surplus if the smallest since November 2014.

Exports in August totalled 81.81 billion ringgit ($19.75 billion), shrinking 0.3% from the same month last year due to lower shipments of petroleum products and palm oil, the Statistics Department said in a statement. That compares with July’s 9.4% year-on-year gain.

A day earlier, the same media reported:

The World Bank Thursday sharply cut its 2018 economic growth forecast for Malaysia to 4.9% from 5.4% and said the expansion pace could steadily decelerate through 2020.

Gross fixed capital formation is expected to expand “modestly” with lower-than-expected public spending dampening growth prospects, the World Bank said in East Asia and Pacific Economic Update report. Exports growth rate will likely slow to 3.7% each in 2018 and 2019 from nearly 10% in 2017, it said.

On a month-on-month basis, exports contracted 5% in August.

Unlike the current DAP-led Pakatan Harapan (PH) administration, in 2017, Dato’ Seri Najib Tun Razak steered the economy through a 5.9 per cent growth exceeding the previous year’s 4.2 per cent mark.

Then, for unknown reasons, PH undid what Najib did by looking away from China, the world’s largest economy by purchasing power parity.

That was a huge mistake.

In 2017 alone, China’s economic growth was $23.12 trillion, 6.8 per cent more than in 2016.

The target for 2018 is 6.5 percent.

The People’s Republic is able to accomplish such feats despite the global slowdown due to domestic demand from its 1.37 billion-strong population. 

Even if Chinese consumers were to suddenly spend less, it would be very difficult for its economy to suffer a serious crunch.

Its population growth has long been on steroids thanks to its extraordinarily huge base and relatively low mortality rate.

What this means, is that every other month, you have this huge increase in the number of Chinese who make the transition from being non-spenders to breadwinners.

Thus, should PH have worked to improve bilateral relations with China, we would have benefitted immensely from Chinese demand of our products – particularly those Oil Palm based – and not suffered the effects of the so-called “contraction in the global economy” Ong spoke of.

Basically, the DAP-led Government of Malaysia (GoM) is squarely to blame for the multibillion contraction in our FDI and the negative effects it’s having on our economy and ringgit.

He was answering a question from Datuk Seri Ikmal Hisham Abdul Aziz (BN-Tanah Merah) on the number of foreign investors who had withdrawn their investments from the country and the value involved.

Ong said the reasons for the closures included rising operational costs and lack of demand for products, forcing the investors to restructure their companies and business strategies, with some deciding to withdraw their overseas investments, including those in Malaysia.

TTF: Again, this isn’t true.

Based on the explanation I provided above, the closures had to do with bad government decisions and diplomatic bombs that greatly reduced the demand of domestic products abroad.

He said Malaysia’s increasing focus on quality and high-tech investments, the technological shift towards digitalisation as well as rising labour costs had left investors, especially those involved in labour-intensive projects, unable to adjust their operations.

TTF: Of course.

Unlike China, we tend to rely more on foreign demand as we do not have the 1.37 billion-strong population China does. 

As such, they faced difficulties in continuing their operations while maintaining their long term profits in the country. Ong said local workers who were laid off were offered sufficient compensation packages by the companies, which also cooperated with the Federation of Malaysian Manufacturers and other companies to rehire those about to be terminated.


TTF: That’s besides the point.

Source: The Star Online

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