Thumbs-up for ‘Najibnomics’

Saturday September 12, 2009

KUALA LUMPUR: Prime Minister Datuk Seri Najib Tun Razak has covered good ground since taking office on April 3 with a number of positive policies and actions.

They include liberalising the New Economic Policy, ensuring greater transparency, speeding up the award of government infrastructure pro-jects and improving ties with Singa-pore to draw more foreign direct investments into Iskandar Malaysia, a development region in Johor twice the size of Singapore.

Aimed at stimulating the local economy, attracting foreign investments and foreign talent, reducing bureaucracy, tackling crime and corruption, effecting greater accountability and promoting national unity (through the 1Malaysia concept), Najib’s policies have been impressive.

CLSA Asia-Pacific Markets, an independent brokerage and investment group headquartered in Hong Kong, described Najib’s positive economic and social reforms as “Najibnomics”, given his economics background.

With his background on industrial economics from the University of Nottingham, CLSA said Najib had been quick to effect various fiscal, government and structural reforms.

In its special strategy report on Malaysia, CLSA said: “Although he has until March 2013 to call for the next general election, we believe he has little choice but to work quickly as the clock is fast ticking.

“Najib not only has to implement new policies to reform the government and turn around the economy simultaneously, he has to deliver some decent results to ensure that the ruling Barisan Nasional coalition performs better than in the last general election in March 2008.”

On the economic front, CLSA said it expected the Malaysian economy to recover in 2010 while consumer sentiment was also improving.

In view of Malaysia’s high savings rate at 43.3% of the GDP which would support private consumption while the impact of weak imports from Western countries would not be too severe, it pointed to an economic recovery next year.

Malaysia’s 2009 GDP has been forecast to decline by 4 to 5% this year compared to a growth of 4.5% last year.

CLSA’s expectations are in line with that of Bank Negara Malaysia, which indicated that the country’s growth outlook for the second half of 2009 was expected to improve after the economy contracted at a slower rate of 3.9% in the second quarter of 2009 following a 6.2% contraction in the first quarter of the year.

The central bank said there were increasing signs that conditions in the global economy were stabilising as the pace of the decline in economic activity was moderating in advanced countries.

CLSA said that its recent contacts with Malaysian companies revealed that most were cautiously optimistic and were coping fairly well with the economic downturn.

“There has not been any high-profile debt default while non-performing loans in the banking system remain benign. Companies have merely been hit by shrinking revenues, thinning margins and higher receivables, while corporate governance issues have been sporadic.

“Most companies believe that the worst is over. Having said that, they do think the way forward will remain challenging as unemployment continues to creep up,” CLSA said.

The investment group also conducted a survey among 300 respondents, two-thirds of them from Kuala Lum-pur, and ascertained that Malay-sians were coping well with the downturn, with only 22% of them saying that their employment had been affected.

In terms of household income, 44% said they experienced a decline in income while 10% experienced an increase.

About 70% said they had changed their spending patterns, reducing expenditure on food, clothing as well as leisure.

Essentials like mortgages, utilities, transport, children’s education, healthcare and communications have been largely unaffected by the downturn.

CLSA said these simple surveys and feedback from companies and consumers seemed to tie in with the findings of the Malaysian Institute of Economic Research. — Bernama