Thailand’s economic growth more than 10% vs Malaysia’s projected 6 % ?

Posted on August 5, 2010

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Malaysia’s economic growth has averaged 4.2 percent annually since 2006, below the 6 percent targeted by the government under the previous five-year plan.  The economy shrank 1.7 percent last year. Foreign direct investment ( FDI ) nosedive by 81% in 2009, the worst in the Asian region.
Last week, CIMB group chief executive officer Nazir Razak said the massive plunge in foreign direct investments last year was partially caused by uncertainties over economic reforms, such as the implementation of the New Economic Model (NEM). He said “The whole issue with deciding the new version of NEP (new economic policy) is sensitive but we have to deal with it. My worry is that we have taken too long to deal with it.” He said the  government must now be decisive on economic reforms and execute them promptly, without being sidetracked by detractors and quoted ” “There’s Perkasa screaming in a corner and all these things are happening. This period (of uncertainty) must be cut short,” . Compared with the Minister of Trade and Industry Mustapha , Nasir had given a sensible and practical statement.

Let’s look at our nothern neighbour, Thailand. This is a news release from Bernama yesterday:

BANGKOK, Wednesday 4 August 2010 (Bernama) — Prime Minister Abhisit Vejjajiva is confident that Thailand’s economic growth will chart more than 10% for the first half of this year despite the recent political turmoil.
He said the country’s high growth in export in the first six months has contributed to the high economic growth forecast.
A 10-week street protest which turned into violence clashes between protesters and troops which ended on May 19 and left 91 people dead and 1,800 injured did not hamper Thailand’s economy.
Exports in June rose to a record high at 46.3% year-on-year, according to the Fiscal Policy Office last month.
Exports in the first half of 2010 soared 41.5% as exporters were able to establish new markets in India, China, Middle East, African countries and Vietnam, it said.
The Bank of Thailand last month forecast the country’s growth at 6.5% to 7.5% for the whole of this year.

The glaring point here is,  Thailand had achieved this despite their political turmoil and instability with several shootings, explosions, deaths, and riots. We in Malaysia is so much more stable and our achievements is pathethic , ” Malu” I’d say. Yet our politicians in the Barisan Nasional remains aloof and dismissed the declining economic status in the country.

On Jun 10 , Prime Minister Najib unveiled a RM230 billion plan ( the 10th Malaysia Plan ) intended to spur growth and attract much-needed foreign investment in view of the  increasing competition from regional neighbours. Najib is aiming for 6.0 percent growth this year and the next 5 years. Compared to Thailand, Najib’s objectives is humble and pessimistic and probably achievable.  A recent survey by independent Merdeka Centre showed 43 percent of the 1,028 respondents were not confident Najib would meet his economic targets within two years. More than half the respondents polled also felt that Najib’s reforms were  merely repackaged old ideas and would be fouled by weak implementation.
As expected, those who openly praised and support Najib’s plans were only BN political partners.

Economist Professor  Lim Teck Ghee has dismissed Najib’s projections , saying “I would like to say it is an impossible dream, but that is too harsh. However, the projected growth is just wishful thinking”

Wan Suhaime Saide,  an economist of  Kenanga Investment said ” I think the 6 percent average GDP growth on the back of 12.8 percent increase in private investment is too ambitious. That means they have to come out with solid policies to attract foreign and local investors. The government says the key component to this is FDI, which has not been encouraging in the past few years. In the 9MP we only averaged 2 percent private investment.”

Ex PM, Dr Mahathir was not enthusiastic about Najib’s projections.  On Jul 9, at the 3rd series of the “Forum RMK-10 KITA” organised by the Ministry of Information Communication and Culture at the Putra World Trade Centre, he said  “In order to achieve Vision 2020, the country must attain an economic growth of seven percent each year for a period of 30 years,” .

Centre for Public Policy Studies (CPPS) chairman,  Ramon Navaratnam said to achieve the six percent growth in gross domestic product (GDP) as targeted under the 10th Malaysia Plan, there was a need to boost the faltering level of private investments. He said “However, the policy and environment do not make it feasible to achieve the target.”

Aug 3 : Minister in the Prime Minister’s Department Nor Mohamed Yakcop said , Malaysia is expected to register a high single digit growth for the second quarter of this year. He said the indicators like improvements in trade, import and export were strong and showed a positive momentum, and this would lead the country to achieve the target. This is indeed good news temporary as the figures are just for the second quarter . We await the results of the next two quarters.

Joe Fernandez, a regular columnist for MalaysiaKini sum this up nicely : We can be forgiven for concluding, if still not in denial syndrome mode, that there’s a lot of hype going around these days in the country, especially in Putrajaya, amidst a general living on hope and wishful thinking.
Only those who suffer from the three monkeys syndrome – see no evil, hear no evil, speak no evil – will be blind, deaf and dumb enough not to see that this country is not going anywhere in any great hurry soon in the near future.