Sunday, October 26, 2008

More Bad News

Just arrived at the Washington DC and checked into the Marriott hotel. En route here, there are more corporate bad news. Both Sony and Samsung have lost more than 15% stock value. The second biggest electronics giant, Sony, expects sales growth to slow down by almost half from next year 2009.

In the US, some automotive companies are badly hit too with car sales staggering lower. A number of companies including GM are expected to announce job cuts in the coming month or two. This is sending US unemployment rates up to more than 7.5% to 8.5% for the first time in more than a decade.

Malaysia should take cognisance of these news. The government should reconsider using the RM5 billion from EPF to prop up the stock market. Despite the announcement, the CPI continues to slid to below 860 points. Counters such as IOI Corporation, Maybank, Genting, Commmerce and other substantial blue chips have lost more than 40 percent of their stock value since 13th October 2008.

The government should instead work out measures to protect small-medium businesses and jobs. SMEs provide 56% of total employment in the country. These companies will be facing severe credit crunch and lower sales in the coming 3 months. Close to 25% of these 560,000 registered companies face a possibility of closure. If this scenario materialises, Malaysia's unemployment rates will go up to more than 4.5% since 1997 financial crisis.

Consumer demand is expected to remain cautious and most consumers will focus on essentials, mortgage and loans. Another aspect which requires immediate attention is the dramatic growth of credit care usage. In the last two years, it has registered almost 500% growth and credit card loans stood at RM250 billion in the country. This does not augur well for the country. Bank Negara should impose on banks tighter regulations on consumer credit especially credit cards.

Only two days ago, the ex-US financial supremo Alan Greenspan admitted his oversight on the ability of banks to self regulate. Malaysia and the rest of Asia may be facing similar tendency too. Loans to car buyers have been quite lax too in the last two years with buyers obtaining up to 100% loan.

Next, it is pertinent for the government to use this opportunity to look at ways and means to help strengthen our economy and skills base. The most important thing for the government to do is to review the education system to ensure it helps to create a more competitive workforce.

Unfortunately, our focus on inculcating the 'social contract' as a subject of study at the schools and tertiary institutions may turn out to be totally counter productive if those writing the syllabus are more interested to impose race superiority and special rights on others.

I have helped to review the Race Relations Module to be used at the universities and was shocked at the extend of facts manipulation and misinterpretation of history.

Until and unless our policy makers wake up to the urgency of being more professional, competent and transparent to face the global economic crisis, we are not so sure if this country is going to survive unscathed. History has shown us that no single country is immune from an economic crisis of this magnitude.


Anonymous said...

The past sins are now catching up with the BN govt. This new economic
Tsunami will show what the civil service and policy makers are - a mediocre elite of Jalan Alor name changing and nobel prize banning.

We will be in for a difficult time.

wandererAUS said...

More bad news are good news for the UMNO-BN govt. In the confusion of global financial crisis, the corrupts in power will be actively use these as an excuse to rip more from the country reserves. Like the recent plan, taking a loan of 5bil from EPF to prop up companies that are experiencing difficulties, owned by the ruling party in the share market. Stay alert, many more similar cases will surface.

Samuel Goh Kim Eng said...

We are all in the same global economic market
Weighed down by the same or similar monetary basket
When we don't watch out for the political racket
Many will be heading straight for the poverty casket

(C) Samuel Goh Kim Eng - 261008
Sun. 26th Oct. 2008.

Anonymous said...

Why do you think Pakatan does not want to take over the govt now, according to inside information and what MB khalid did not want to say,is this, If pakatan takes over in the middle of the credit crunch, and depression that is coming, people will not remember this was all DUE bN MISMANAGEMENT, PAKATAN WILL BE ASSOCIATED WITH BAD TIMES IN THE RAKYAT'S MIND, Pakatan can afford to sit and wait for BN, TO CONTINUE TO SCREW THINGS UP, and this will lead to the total collapse of the economy. why should Pakatan take over a can of rotting worms, something not of its fault, BN WILL COLLAPSE ON ITS OWN, THIS TIME IT WILL NOT BE LIKE THE ORGANISED BERSIH RALLY, THIS TIME MILLIONS WILL COME OUT TO OVERTHROW THE UMNO DICTATORSHIP, JUST WAIT AND WATCH.

Anonymous said...

Well said. The fall of both golden oil will hit the country's economy very badly in months to come.I am wondering why those in charge of the economy are still in the denial syndrome. Already, millions are being paid to the Felda settlers, what about other small holders who do not get any payment from the DPM? Can they survive the onslaught of falling commodity prices? What about the massive retrenchment in the coming months among the private sectors, especially the SMI? Have anybody thought about it? What will happen to the banks if the South Korean Credit Card catastrophe repeats itself in Bolehland? People out there, be prepared for the worst scenario. This can be many many times worst than the 1997 financial crisis.

Anonymous said...

1-umnoputra-i dont care what will happen to the rakyat.i am busy counting the nomination of umno are not effected by the turmoil.because we are financially sound.our bank is ok,our fdi very good,our politic is stable...bla...bla.i just worry counting my nomination..and think how much commission i get from the investment of valuecap,maybank bii,eurocopter,second bridge,petronas ..bla..bla.

Anonymous said...

While the whole world is worrying about the financial difficulties except the barisan government or rather UMNO government of Malaysia. They are the 'superior people of the superior race' in Malaysia that is able to make Malaysia superior than others in dealing with this world economic turmoil. Only the rakyat will suffer and this has nothing to do with them. So why should they bothered ?

Anonymous said...

Seems to me, the Malaysian government is waiting for a reality check.Denial will not keep recession at bay.As this phenomenon is global, it will surely come and visit Malaysia in terms of trade, tourism, declining demand for commodities (palm oil )and returning M,sians retrenched abroad ( Singapore ).

The next two quarters will show up how prepared we were for this global slowdown.

As for credit /debit cards, it is an issue of driving the debtor into the poor house. Who is to blame? The man who cannot manage his credit position or the facilitator of the credit?


GobloKing said...

Everyone with a job, a mortgage, a car loan and living from paycheck to paycheck,

Everyone on a pension, even landlords

Be Afraid
Be very Afraid

No news is TRULY bad news

Will your hard earned money still be there when you most need it?

These are questions not answered by our government

NOT talking about it doesn't mean it's not happening

I want my government to ensure our EPF is spent, our resources are not plundered because in the end my burdens are many, my income is limited.