Tuesday, 26 February 2019

OK FOLKS! WE CONSUMERS NEED TO SPEND A BIT MORE

This morning I had a chat with an old friend, a veteran business and macro-economic writer about the implications of deflation and he explained that deflation is the opposite of inflation, where prices of goods and services decrease, instead of increase - the results of which for businesses are that manufacturers often end up very likely having to sell their goods at a loss, whilst property developers and speculators end up having to likely sell their properties at a loss.

I responded, adding that whilst the implications of deflation will no doubt delight consumers and property buyers for a while with bargains to be grabbed, however when businesses begin to cut back on costs in order to continue to make a profit, unemployment will likely rise, with retrenchment of staff staff or they close shop altogether, further adding to unemployment and then it won't be such great "fun" for consumers, with this situation possibly even leading to a vicious cycle of further deflation, more businesses closing down and even higher unemployment.

However, three economists believe that the effects of Malaysia's current deflation will not be all that bad, and one of them suggests that Malaysian consumers can help Malaysia overcome deflation by going out and spending a bit more but not too much, as Free Malaysia Today of 26 February 2019 reports. 





Stay calm and keep spending just a bit more, economist says on deflation

Predeep Nambiar - February 26, 2019 12:04 PM

GEORGE TOWN: An economist has urged Malaysians to remain calm over recent reports of a deflation, following the drop in consumer price index (CPI) with rates reminiscent of the 2009 global financial crisis.
Ramon Navaratnam said the development was an "aberration" that would not last long, taking into account external factors.

Deflation or falling prices does not bode well for the economy as buyers put off purchases, thinking that prices of goods will go down. The end result is less spending which retards economic growth.
A moderate inflation number is good for the economy as it spurs investments and purchases.

Ramon said to say that deflation was good or bad at this stage was arguable, as when consumer prices go down, people might be encouraged to spend more again.
He said while it was natural to think that people might begin spending more, most Malaysians were caught in a bind.

"On one hand, we need to spend a bit more but not too much. On top of that, we have a debt problem, not critical but big enough.
"And we have a deficit to contend with, so we can't be spending too much either. It is a very tricky balance to maintain.

"This might be just an aberration. It is important not to be over-alarmed. We should stay alert and watch the developments closely," he told FMT.

Ramon said if deflation continues, counter-cyclical measures should be introduced to encourage spending. He said this was where the economic skills of policymakers could be put to good use.
"Hopefully, the Economic Action Council will know what to do, which is to strike a balance, short-term, medium-term or long-term."

Meanwhile, Universiti Sains Malaysia senior economics lecturer Law Chee Hong said the current deflation would likely go when the high base effect disappears.

According to Investopedia, base effect is the distortion in a monthly inflation figure that results from abnormally high or low levels of inflation in the same month a year ago.
A base effect can make it difficult to accurately assess inflation levels over time. It diminishes over time if inflation levels are relatively constant.

"In other words, there is no clear indication that the recently announced deflation suggests that Malaysia is heading towards a recession.

"The bigger risk for a recession at this moment is the possible trade war between China and the US, but the probability of this happening has reduced following recent positive developments," he said.
Law said if the core inflation index were to be observed, Malaysia had experienced inflation of 0.2% year-on-year in January, as per Department of Statistics data.

The core index excludes prices of goods which are volatile, such as food and energy-related items like fuel.

Law said moderate inflation was good for the economy as it would promote investment and consumption, that is, more buying. He said ideally, a stable inflation rate would be good for the country in the long run for higher production and consumption, compared to a volatile inflation rate.
Meanwhile, ING Asia economist Prakash Sakpal said Malaysia's deflation was not permanent and would be "short-lived" as it would return to inflation levels this quarter.

"Global oil prices are creeping upwards and will transmit into domestic fuel prices, but there is unlikely to be a significant pick-up in inflation until the goods and services tax impact moves out of the base by mid-2019.
"We see inflation rising to 2% in the second half of 2019, though the full-year average rate is likely to be shy of the central bank's 2.5-3.5% forecast for the year.

"It will take a significant thrust from either the demand or the supply side to hit the central bank's forecast, and neither of these scenarios is our base case," he said in an article on Think, ING's economic and financial analysis site.
Prakash said the negative CPI numbers were due to the cut in fuel prices, with the government likely unable to do much through monetary policies.

"A counter-argument to ease policy would be the lack of demand-side pressure as can be seen from the wage growth – manufacturing wage growth has been running around 10% year-on-year on the back of steady employment in the sector.
"We believe the central bank will see through the latest CPI data and leave policy on hold this year," he said.

Yesterday, the government dispelled any fear of deflation following the 0.7% year-on-year decline in the January 2019 CPI for the first time in 10 years.

Finance Minister Lim Guan Eng said this was supported by Malaysia's strong economic growth numbers, with the economy expanding by 4.7% in 2018 and likely to reach 4.9% this year.

He said the January CPI decline was not the result of any weakening in consumer demand. Instead, it was largely caused by supply factors in the form of cheaper input costs, specifically cheaper fuel, he said.

Bank Negara has said Malaysia does not face serious deflationary pressures. Headline inflation, which came in at 1% in 2018, is likely to average higher this year, the central bank said last week.


Well, let's see who turns our right.

Yours truly

Politischeiss



Monday, 18 February 2019

SO WHO WILL BE RIGHT COME 1 JANUARY 2020 ???

Following media reports that the Malaysian Employers Federation estimates that 30,000 Malaysians will lose their jobs this year, Human Resources Minister M. Kulasegaran dismisses that and says that there will be more jobs instead. So who will be right come 1 January 2020 ???


30,000 workers to be laid off this year, says MEF
Kong See Hoh / 14 Feb 2019

MALAYSIAN Employers Federation (MEF) estimates that 30,000 workers will be laid off this year, citing the increasing cost of business as the main reason for the big jump in retrenchment.

Last year, about 21,000 people lost their jobs.

Given the bleak outlook for the job market, MEF urged the government to help employers retain their workers so that both employers and employees can benefit soonest when the economy recovers.

MEF executive director Datuk Shamsuddin Bardan (pix) pointed out that the economy both within and without Malaysia was on the downward trend, posing a big challenge to employers in maintaining their current level of profitability.

"Employers' main concern is the increasingly higher input costs.

"In Peninsular Malaysia, employers are not only affected by the 10% hike in minimum wage but also the new policy requiring them to pay Socso for their foreign workers.

"We can expect some employers to revamp their business model, resulting in retrenchment."

Shamsuddin said this when asked by Nanyang Siang Pau for his take on the economic outlook for Malaysia and the challenges facing employers.

He said last year, which saw some 21,000 employees retrenched, was not too bad compared with 2017 in which about 30,000 were laid off.

But the situation will take a turn for the worse this year, to the extent that smaller companies might not be able to survive.

What employers need most during trying times is government assistance, he said, and urged the new Pakatan Harapan government not to introduce measures that will increase the input costs.

He suggested that the government provide incentives for employers to retain their employees instead.



HR Minister dismisses MEF claim 30,000 people to lose jobs this year
18 Feb 2019 / 20:38 H

PETALING JAYA: Human Resource Minister M. Kula Segaran today dismissed a claim by the Malaysian Employers Federation that about 30,000 people will lose their jobs this year.

"On the contrary, with less than 24,000 unemployment (positions) recorded last year, there are actually more jobs readily available for them.

"The unemployment rate shows nothing unusual, nothing frightening," he told reporters after witnessing the signing of the collective agreement (CA) between Continental Tyre Malaysia Sdn Bhd (CTM) and the Continental Tyre Malaysia Sdn Bhd Staff Association (COMSA) here today. CTM director and chief financial officer Hoe Loo Fee was also present.

MEF executive director Shamsuddin Bardan said recently he estimated that 30,000 workers would be laid off this year, and cited the increasing cost of doing business as the main reason for the big jump in the retrenchment number.

Shamsuddin had said that the economic environment both within and without Malaysia was tough, posing a big challenge for employers in maintaining their profitability.

Meanwhile, the CA signed today offers additional remuneration and a benefits package to CTM employees, including the opportunity to work from home and flexi hours. — Bernama



Some years ago, blogger OutSyed the Box predicted that 20 years from then (around 15 years from now plus or minus), Malaysian woman will be working as maids in Indonesia.

Now this article of 19 February 2019 predicts that more Malaysians will be working as labourers abroad and this is an aspect of the much touted and glorified globalisation.

Malaysians had better get their faces out of their smartphone screens and learn to say "Yes boss", "Sure boss", "Right away boss", "Anything you ask boss" to their Myanmar, Indonesian or Bangladeshi employers.
Expect more Malaysians working as labourers overseas, say experts
Ainaa Aiman - February 19, 2019 12:18 PM

PETALING JAYA: Experts warn that more Malaysians may have to work overseas as migrant workers and maids if the economy does not improve, following the detention and release of 47 Malaysians duped into working in Cambodia.

Oh Ei Sun, senior fellow at the Singapore Institute of International Affairs, said this included Malaysians working overseas as legal and even illegal workers if the economy worsens.

"We have to take grim lessons from some regional countries which were very well-to-do compared to us half a century ago. They now have to send many of their nationals overseas to work, including to Malaysia," he said.

Oh said Malaysians selling their labour overseas was nothing new, citing the exit of many who lost their mining jobs in the 1970s who left to work menial or semi-skilled jobs in the US and Europe.

"What is surprising is only that it happened in Cambodia, which is considered to be lagging in development compared to Malaysia," he said.

He believes it is only a matter of time before a large number of Malaysians end up working as maids or low-skilled workers overseas.

He added however that people were free to migrate elsewhere to improve their personal well-being.

"If the economy grows, the outflow (of labour) will naturally drop. As we create more high-paying jobs by liberalising the economy, people will stay," he said.

Meanwhile, Patrick Ziegenhain, an expert in Southeast Asian regional economics, said there were already many Malaysians working as immigrant workers in countries like Australia and Korea.

"Many people in Malaysia make a sharp distinction between the 'original Malaysians' who do not do cheap and hard labour in plantations, etc, and the 'immigrants' who do this," he said, adding that this was a negative development.

"Malaysians tend to look down on other allegedly less developed countries like Indonesia – in this case, Cambodia. Why is it so impossible to imagine that Malaysians would become immigrant workers there?"

Madeline Berma, an economist who specialises in rural development, said this was a globalisation phenomenon.

"Among the features of globalisation are international migration, human trafficking, borderless work, and free flow of resources including labour," she added.

She said the Malaysians who were stuck in Cambodia had not received proper information about their employers before leaving.

"They took up the offer to work with limited information on the employers. They took the risk without understanding the legal implications," she said.

She also noted that the majority of the detainees were from rural Sarawak, showing that rural youths were particularly vulnerable to human trafficking and exploitation.

She suggested that schools and NGOs hold awareness programmes to educate youths about human trafficking.

The 47 Malaysians were picked up by police in Phnom Penh after reportedly being hoodwinked by a recruitment agency which promised them high-paying jobs.

They were released by the Cambodian government following negotiations with Wisma Putra.


Time will tell. Meanwhile, let's stay tuned and see who is right.

Yours truly

Politischeiss



Wednesday, 13 February 2019

OUTSYED THE BOX COMMENTS ON - OH WHAT A "WONDERFUL" MESS!

It was a pleasant surprise when a friend WhatsApp-ed me with a link to OutSyed the Box's re-post of my last blog post on my blog Politishies, with his highlights and comemnts.


I list below in blue, OutSyed the Box's comments at the bottom of my blog post.

My comments :

Indeed Kadir Jasin is quoted saying :

A Kadir Jasin, who is the prime minister's communications and media adviser, said it was no longer a secret that Pakatan Harapan (PH) had failed to live up to people's expectations.


"In reality, after eight months, the PH government has not been able to show tangible results to the masses," the PPBM Supreme Council member wrote on his personal blog today.

That is the PM's own communications and media adviser.  Ini bukan saya cakap tau. Jangan marah saya.  
Ini Kadir Jasin cakap.

It does not matter whether the Cabinet is made up of oldies or young freshies. Same with the new Economic Action Council.

It does not matter whether they are old, young, male, female, Malay, Chinese, Indian, Dayak etc.

What matters are two things :

For the oldies, look at their past track record.  The rakyat have most correctly just kicked out 63 years of their presence. These people are failures. It has been proven. The rakyat have no more confidence in them. Why re-appoint all these failures back into the NEAC?

For the freshies - again youth or inexperience is not fatal. What is more important is talent, common sense, hard work, commitment and honesty. (The list can be longer). But we are not seeing too much of that either.

There is a new Super Moron in town. His name is Khalid Samad. I hope to say something about this Super Moron's latest escapade soon.

Going back to the news report above, please listen to the MEF saying that while business is shrinking, the input factors (largely caused by bad government policy) are becoming more expensive for businesses.

That Minimum Wage is a real killer. It has gone up 10% in January. So it is now RM1,100. 

Please believe me when I tell you that many, many kedai runcit cannot even make RM3,000 a month for their owners.  How are they going to pay RM1,100 to their workers? They will not be able to employ any workers at all. Unemployment will certainly increase.

Every year less than 0.5% of our 32 million population enter higher education - diplomas and degrees.  Many of these become unemployable graduates.

What about the balance school leavers who do not qualify for university ? They become the masses - the entry level super dumb masses who cannot compete with the half educated Banglas, Indons, Myanmars and others. 

(Let me share  a secret - many Chinese businesses are now employing Banglas to do executive level work already.  I can show you Chinese businesses where the Bangla is practically the manager. To the ketuanan folks - do you know why? The Bangla comes to work on time, he really works, no teh tarik breaks, no sembahyang breaks, they are cheerful, they provide good customer service without looking at agama, bahasa, bangsa etc. They are obviously more trusted, otherwise they will not be put in charge.)

Then you have the constipated unworkable government policies - especially the left over policies from the previous government.  

Nothing has changed.

A Kadir Jasin, who is the prime minister's communications and media adviser, said it was no longer a secret that Pakatan Harapan (PH) had failed to live up to people's expectations.

"In reality, after eight months, the PH government has not been able to show tangible results to the masses," the PPBM Supreme Council member wrote on his personal blog today.  

Obviously the same incompetents and the inepts are now in the Cabinet. 


You can read my original blog post over here:-


Meanwhile, a friend told me that a head of a Malaysian listed corporation had told him that the economic problems, abuse and mismanagement inherited from the previous Barisan Nasional government could take up to 15 years to resolve (assuming the Pakatan Harapan government gets re-elected in the 15th and 16th general elections) and during that period, we could see heightened inter-ethnic tensions, resulting from the economic stress.

Hopefully, that does not happen.
Yours trully

Politisheiss

OH WHAT A "WONDERFUL" MESS!

I suppose that with the world economy heading towards the shitter, we cannot blame all of Malaysia's economic woes on our "New Malaysia" government, the top leaders of which are currently paying more attention to politicking and horse trading members of parliament, arguing over whether or not PAS received an RM90 million donation or bribe from 1MDB funds, accusing ministers and deputy ministers and heads of GLCs of having degrees from unaccredited universities or claiming to have professional qualifications, bringing up issues of race and religion, filing reports to the Malaysian Anti-Corruption Commission or to the police over alleged wrongdoings of others, suing each other over allegations of defamation and so forth, antagonise China, antagonise our neighbour Singapore and so forth.

And all the above, when we have bigger issues such as this issue below, reported in The Sun of 13 February 2019.


MALAYSIAN Employers Federation (MEF) estimates that 30,000 workers will be laid off this year, citing the increasing cost of business as the main reason for the big jump in retrenchment.

Last year, about 21,000 people lost their jobs.

Given the bleak outlook for the job market, MEF urged the government to help employers retain their workers so that both employers and employees can benefit soonest when the economy recovers.

MEF executive director Datuk Shamsuddin Bardan (pix) pointed out that the economy both within and without Malaysia was on the downward trend, posing a big challenge to employers in maintaining their current level of profitability.

"Employers' main concern is the increasingly higher input costs.

"In Peninsular Malaysia, employers are not only affected by the 10% hike in minimum wage but also the new policy requiring them to pay Socso for their foreign workers.

"We can expect some employers to revamp their business model, resulting in retrenchment."

Shamsuddin said this when asked by Nanyang Siang Pau for his take on the economic outlook for Malaysia and the challenges facing employers.

He said last year, which saw some 21,000 employees retrenched, was not too bad compared with 2017 in which about 30,000 were laid off.

But the situation will take a turn for the worse this year, to the extent that smaller companies might not be able to survive.

What employers need most during trying times is government assistance, he said, and urged the new Pakatan Harapan government not to introduce measures that will increase the input costs.

He suggested that the government provide incentives for employers to retain their employees instead.


What are our "New Malaysia" government's priorities?

Bloody useless government, I'd say. Like Neros fiddling, whilst Malaysians burn.

Don't you have anything better to do for Malaysia and Malaysians at large?

Oh yeah! You guys plan to set up an Economic Action Council to deal with our economic woes. Well, let's see how that pans out.

The Prime Minister's own communications and media advisor does not think too much about the reasons for this Economic Action Council:-

"New economic council a message to 'selfie-taking', underperforming ministers, says Kadir"

Then the Pakatan-friendly Parti Sosialis Malaysia's Environmental Bureau organises a forum on 13 February 2019 (which was subsequently postponed) on whether or not Malaysia needs to adopt nuclear power stations.
 


Now where the hell is the Rumah Attap Library & Collective?

I suppose they expect everyone who receives this notice to do a Google search to find out the address of this Rumah Attap Library & Collective.

I did and found it to be at 84C, Jalan Rotan, Off Jalan Kampung Attap, Kuala Lumpur but even then, locating the venue in realspace was quite a chore and when I walked in, there were some people there who were puzzled about this event having been scheduled to be held there that night.

Meanwhile, in a white paper of 23 August 2008, the Malaysian Nuclear Society presents its arguments in favour of Malaysia having nuclear power for our energy security, and I had expected that its speaker Dr. Mohd Syukri Yahya would have argued in favour of Malaysia having nuclear power at the forum, had it not been cancelled.


On the other hand, I had expected that Malaysia's veteran environmental activist Ir. Gurmit Singh would have argued against nuclear power.

But why all this when Malaysia currently has no nuclear electricity generation plants nor has indicated any intention to have nuclear power plants, well for now at least.

Meanwhile, consumption of now very much more affordable solar power has ramped up dramatically in the Asia-Pacific (especially China), North America and Europe.

So too are investments in solar and wind power worldwide ramping up dramatically.

The above figures are from a You Tube video of a presentation made by energy analyst Marin Katusa of Katusa Research presentation – San Francisco  21 Novemeber 2017.

According to Wikipedia - "The levelised cost of energy (LCOE) is a measure of a power source that allows comparison of different methods of electricity generation on a consistent basis. It is an economic assessment of the average total cost to build and operate a power-generating asset over its lifetime divided by the total energy output of the asset over that lifetime."

With LCOE of wind and solar electricity generation utility (excluding rooftop solar installations and home wind generators) being about half that of nuclear and coal powered electricity generation plants, why not look forward and explore how Malaysia can tap wind or solar power instead of nuclear power to achieve energy security?

Whilst the world is moving on, representatives of two NGOs were to debate on whether or not Malaysia needs to have nuclear power, when early in his presentation, Katusa displayed a pie chart showing that the sahre of consumption of nuclear generated electricity remained at 18% of all electricity consumed in North America in 2007 and 2017, whilst the share of consumption of green-generate power (wind, solar and geothermal) increased from a mere 3% in 2007 to 14% in 2017, mostly replacing the consumption of coal and natural gas generated electricity, the share of which feel from 66% in 2007 to 55% in 2017. 

To be fair, perhaps Gurmit would have argued for wind or solar power instead but the forum did not happen as originally planned. Perhaps he will mention something about wind and solar energy if the forum is eventually help.

Meanwhile, I've not heard about any proposals for wind and/or solar electricity adoption by the current Malaysian government.

As for Malaysia's energy security, whilst nuclear power may enable Malaysia to reduce our reliance on petroleum and other fossil fuels, however in times of war, the more centralised nuclear power plants will be more vulnerable to being take out and rendered inoperative in an attack, such as a missile attack, with all the consequences of leaking radioactive material and so forth. On the other hand, more geographically distributed solar and wind electricity generation facilities are less vulnerable to being completely taken out in event of an attack.

Oh yes! So are big data centres vulnerable to military or terrorist attack, which would disable the data centre and disrupt all the Internet-based services, such as shared services, Internet banking, e-mail and so forth hosted on the hundreds or thousands of servers within them. We already know how many of our e-mail services hosted on servers in the United States were disrupted by earthquake off Taiwan on 26 December 2006, which severed the submarine cables carrying Internet traffic between Malaysia and North America. Even with mirror sites located elsewhere, the loss of a site from which we get our fastest Internet responses from will slow down our Internet access significantly. 

Yours trully

Politischeiss