Malaysia's GDP Growth 5.1% in 2011, pretty okay?

Malaysia's growth beats consensus

By FINTAN NG fintan@thestar.com.my

PETALING JAYA: Malaysia's gross domestic product (GDP) expanded by 5.2% in the fourth quarter of 2011 despite the challenging external environment as domestic demand continued to support growth.

Bank Negara said in a press statement that full-year growth came in at 5.1% after expanding 7.2% in 2010 as domestic demand conditions remained favourable supported by both private and public sector spending.

The fourth-quarter GDP figures came in slightly higher than the 4.8% median estimate in a Bloomberg survey while the full-year growth was largely in line with a separate survey, where the median estimate was 5% and in line with official estimates of 5% to 5.5% growth.

“Domestic demand expanded by 10.5% during the quarter, driven by the continued expansion in household and business spending, and public sector expenditure,” the central bank said.

Private comsumption increased by 7.1% supported by favourable income growth while public consumption rose by 23.6% following higher expenditure on emoluments and supplies and services.

Gross fixed capital formation, which measures the net increase of fixed or physical assets, increased by 8.5% supported by continued expansion in capital spending by the private sector and the non-financial public enterprises.

“The federal government development expenditure during the quarter was mostly channelled into the transportation, trade and industry sectors,” the central bank said.

The services sector grew by 6.4% for the quarter (6.8% for the year), manufacturing expanded by 5.2% (4.5%), construction rose 6.4% (3.5%), agriculture expanded by 6.9% (5.6%) while the mining sector's pace of decline narrowed compared to the third quarter, falling by 3.3% and declining 5.7% for the year.

The headline inflation rate, as measured by the annual change in the consumer price index, declined to 3.2% in the fourth quarter with inflation in the transport category ower at 3.2% reflecting the absence of further adjustments on prices of RON95 petrol, diesel and LPG in the quarter.



“Inflation in the food and non-alcoholic beverages category, however, rose to 5.3% during the quarter, mainly due to higher prices in the fish and seafood subcategory,” Bank Negara said.

Economists said the latest data confirmed earlier reports of the country's growth being on a slower trend largely due to the drop in external demand as global growth slowed.

They said this trend would continue into the first half of this year before recovering gradually in the second half as conditions globally improved with more clarity on the issues surrounding the eurozone sovereign debt crisis.

CIMB Investment Bank Bhd economic research head Lee Heng Guie told StarBiz that the main drag to growth in the fourth quarter and the whole year was the volatile external environment which resulted in stagnant demand for consumer electronics.

He said domestic demand would continue to sustain the economy although there was “a slight let-up” in consumer spending. “The question is how sustainable is consumption going to be and this will depend on key drivers such as commodity prices and income,” Lee said, noting that the Malaysian Institute of Economic Research consumer sentiments index was trending down.

“In summary, we see quite uneven growth in the first half of this year before the economy picks up in the second half,” he said, expecting full-year GDP to come in at 3.8%.

AmResearch Sdn Bhd director of economic research Manokaran Mottain said the latest data showed that the “fear factor” was rising with households becoming more cautious about spending.

However, he was more sanguine compared to his peers where exports were concerned, pointing to the export growth in goods and services (where the current account suplus, although narrowing in the fourth quarter, stood at RM22bil for the year) but said the data showed the economy was geared to domestic activity with government handouts playing a crucial role in supporting consumption.

“Going forward, well-crafted domestic strategies and the timely rollout of the Economic Transformation Programme projects will now be more urgent as they will create multiplier effects especially in the services sector,” Manokaran said.

He added that the data clearly showed that the economy, while experiencing moderating growth, was not “falling off the cliff” with full-year growth in 2012 coming in at 5%. “The worst-case scenario is global growth dropping to below 3% and project implementation delays at home, which means growth of around 4%,” Manokaran said.

Meanwhile Affin Investment Bank Bhd chief economist Alan Tan said growth this year would still be affected despite signs of nascent recovery in the United States and the improvement in global purchasing managers' indices.

“For this year, the first half will still show signs of moderation in exports as consumer electronics demand slows down,” he said, adding that growth for the full year would still be a healthy 4% considering the challenges.

For Bank Negara statements click here

Malaysia should do pretty okay

Making a Point - By Jagdev Singh Sidhu

THE report card for the economy in 2011 is out and by all accounts, Malaysia did pretty okay.

With the official forecast of growth at between 5% to 5.5%, there was much scepticism throughout 2011 whether that could be achieved. Who can blame the tea-leave readers out there whose job is to forecast where the economy is heading?

There was so much external fear with Europe on the brink, America seeing greater economic trouble and China teetering on a bubble bursting that expectations were slashed, and on average far less than what the Government had predicted.

As it turns out, maybe after the gravity-defying performance in the third quarter where the gross domestic product (GDP) expanded by 5.8%, people began to say “hold on. Maybe things aren't so bleak.”

As it turns out, they were mostly right when the GDP data was released yesterday.

The economy expanded by 5.2% in the fourth quarter and for the whole year, growth was 5.1%. There are numbers where things could be better. Industrial production and export growth isn't the best.

 

But what drove the economy upwards was domestic demand, basically what the Government, people and companies spend and invest.

Domestic demand jumped 10.5% in the fourth quarter compared with 9% in the third. Capital investments surged 8.5% compared with 6.1% in the previous quarter and higher investments will mean more production, jobs and better economic strength.

The troubles of Europe might have lost its fear factor and America appears to be repairing itself steadily. There are reasons to be more optimistic but the official tune has turned, surprisingly, a little sour.

Bank Negara in its statement said; “Growth prospects, however, have become increasingly uncertain with the emergence of greater downside risks.”

The warning calls for more caution but there is still enough policy measures to keep domestic demand intact.

There are policies of putting cash in the hands of the people through direct cash handouts. There is a base effect from the consumption boom to worry about and whether that can continue into 2012.

But there are indicators out there to suggest domestic demand might still do well but maybe not at the same breakneck speed.

First, there is the stock market. Yes, people might say its not a perfect barometer of what an economy is doing but it does show there is confidence in how corporate Malaysia might be performing.

With direct investments abroad by Malaysian companies jumping to RM14.4bil in the third quarter from RM12.9bil previously, it shows Malaysian companies are taking advantage of growth opportunities outside Malaysia. That can point to higher profits and maybe salaries in the future.

The other is property. We might have been cautious last year about property prices falling off the cliff at some point in 2012 but there is no indication that might happen. Prices might soften but if we were to see our neighbours down south, it might not freeze the market.

For January, Singapore registered the highest sales of private homes in the past 14 months, despite increasing clamps on foreigners buying homes there.

With jobs steady and likely to increase with more investments being made, the stock market doing alright and property prices holding firm, these are ingredients that will allow people to continue spending.

If the Private Sector Retirement Age Bill gets passed, that should create more consumption by people whose earnings lifespan will increase by a further five years. The mass rapid transit system which is kicking off will also boost construction and the GDP.

Economists do wonder if the growth forecast of 5% to 6% for 2012 will be maintained given the risks and challenges. There might be a revision downwards in March but whatever the case, Malaysia like last year, should do pretty okay.

● Deputy news editor Jagdev Singh Sidhu is lapping up the Linsanity! Jeremy Lin's play for the New York Knicks has been a fantastic story. Hope that continues until he meets the Detroit Pistons. 

Japanese Occupation survivors tell their stories

IN 1942, the Japanese invaded Malaya, and thus began three-and-a half years under the rule of a nationalistic and iron-fi sted army. This year is the 70th anniversary of the fall of Malaya to the Japanese. Stories abound of how Malayans at that time were treated and how many escaped the suffering and torture under the Japanese. MICHELLE CHUN speaks to four people who lived to tell their stories. 

Chye ... I will never forgive the Japanese>>

Seow ... my mother’ssacrifi ce saved my life 

HE was only six years old when the Japanese came. Now, 70 years later, Seow Boon Hor remembers clearly what happened the day the Japanese came to his village in Parit Tinggi, Negri Sembilan in search of informers.

His entire family was massacred that day but he managed to survive, all because his quickthinking mother – who was heavily pregnant at that time – shielded him with her body.

It was her act of sacrifice that saved his life. “My mother threw herself on top of me, and as the soldier stabbed her, the knife went through her and into me too. After the third stab, which was to my side, I fainted.

Zainul ... did not suffer much from the occupation

 “When I woke up, an old man from the village who had found me told me to follow him, so I turned to my mother and pulled her arm, telling her it was time to go.

 “But the old man said, ‘Your mother is dead, we must leave her’,” he said with glistening eyes.

Clad in a patterned shirt and black trousers, Seow sat on a plastic stool next to his mixed rice stall in Section 19 as he recalled the events as if they had happened just yesterday. Of the 600 villagers bayoneted that day, only five survived.

 “We wanted to make a run for the hills, but suddenly heard the footsteps of Japanese soldiers, and quickly played dead until they left.”

 Tay ... hid in a jungle for three months.

Another survivor who lived to tell his tale is Chye Kooi Loong, who was 12 years old when the war broke out.

“It seemed like a dream when we heard the Japanese had reached Malaya, we always thought the war would stay in China. My father was an accountant, a rare profession in those days, so we were evacuated to the hills of Kampar,” the 83-year-old said in a phone interview.

He attended a Japanese school because all students who attended were given weekly rations of rice, sugar, and coconut oil.



“In school, we were taught that people from the Land of the Rising Sun were very courteous, but it was the exact opposite – there was a lot of violence and killing. One thing I cannot forget is when a village ‘aunty’ objected to Japanese soldiers taking her chickens, and was killed. Killed over chickens!” he said.

However, not all Malayans experienced the hardship Chye and Seow faced at the hands of the Japanese. One of them is Datuk Zainul Aziz, who worked as an assistant at the Japanese Naval Hospital in Penang.

“At that time, all of us had to attend Japanese school, and everybody had to work otherwise there would be no food on the table.

“I went for an interview at the hospital, and even though I was 13 the doctors employed me to help treat the wounds of Japanese soldiers and learn about medicine,” the 84-year-old said in a phone interview.

Zainul said that he has no ill-feelings towards the Japanese because he did not suffer much at their hands, having been given food and rations while working in the hospital.

“My family members also did not suffer much as they went to work for the Japanese,repairing ships and such.”

Another survivor, Elijah Tay, 79, also did not bear the brunt of the Japanese army’s violence throughout the occupation period.

“The Japanese invaded Malaya when I was about eight; we hid in a rubber estate for three months before coming out,” he told the Sun in his Malacca home on Feb 4.

“My mother would play the piano in my father’s Chinese school, which had closed down, and a Japanese soldier heard her playing one day and came in to listen.

 “He became a friend of my father’s, helping him to open a private school in Labis, where my mother taught the students Japanese songs for the annual concert,” he said.

When the Japanese army heard the students sing, Tay recalled, they were so impressed the captain ordered that no one was to enter the school without his permission.

 “Elsewhere, the Japanese were killing, looting and raping.

“What happened to us was nothing less than a miracle,” Tay said.

 It is because of the atrocities committed by the Japanese that forgiveness is difficult for many survivors, even today.

 “I will never forgive the Japanese; I cannot be friendly with them because I cannot forget what they did,” Chye said.

Seow, on the other hand, said today’s eneration cannot be blamed for the acts of those in the past.

 “I have forgiven them, I suppose. We cannot blame the Japanese today for what was done before, and many have shown remorse. When I visited Japan, four ex-soldiers who were part of the Japanese army to Malaya knelt in front of me and begged for forgiveness,” he said.

But for Chye and many others, an official apology from the Japanese government is a necessary first step towards closure.

 “The Japanese need to formally acknowledge and admit they committed atrocious crimes during the Japanese occupation of Malaya, and not that we were treated well as is currently written in their history books,” he said.

 For the first time ever, eyewitness accounts of the events that occurred in Malaya during Japanese rule have been preserved in a video documentary, produced by History Asia in conjunction with FINAS, Novista and Primeworks Studio. The documentary, Rising Sun over Malaya, will premiere on History Channel (Astro Channel 555) on Feb 15 at 10pm.

NEWS WITHOUT BORDERS

theSun ON MONDAY | FEBRUARY 13, 2012

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China and the US: the princeling and the professor

Barack Obama should strive to create conditions in which Xi Jinping, the presumed next leader of China, can play reformer 

Editorial guardian.co.uk, 

If Russia is a country with an unpredictable past, spare a thought for Jia Juchuan, the historian entrusted with the official biography of the father of the next presumed leader of China, Xi Jinping. The story of Xi's father – a member of the first generation of Chinese revolutionary leaders – is a bear trap for the fifth. The elder Xi was both a pioneer of the People's Republic who rose to the rank of vice-premier and a victim of Mao's cultural revolution.

This was not without consequence for the son who may shortly inherit the leadership. Xi junior exchanged his gilded cage in Beijing for a cave home in the impoverished northwestern province of Shaanxi. The first volume of Xi the elder's life was published without problems, but the second volume, covering the purge, has been shelved for three years, ever since the son's destiny became clear. 
Everybody wants a hand in writing it, the historian complained to the Washington Post. If only China's collective leadership could have followed Churchill's advice to Stalin and Roosevelt.



Xi's own biography is a major political asset as the Chinese leader-in-waiting tours America this week on what everyone is taking to be a pre-coronation visit. It gives him the ability to be all things to all men. He is both the princeling confident and authoritative enough to speak his mind, and a man with first-hand experience of rural China. Xi is the modern entrepreneur, not only at ease with China's coastal wealth but the creator of much of it, especially in Shenzhen. And he can also present himself as the man of the people – frugal, down to earth, pragmatic, eating dressed-down in government canteens, a modern politician at home with big business but uncorrupted by it. Supporters of Tibet have scoured Xi Jinping's past for any signs of a shift away from Beijing's growing clampdown. Xi's father was an interlocutor for the Dalai Lama's special envoy Lodi Gyari. But these are straws in the wind. Read what Xi said in a speech celebrating the 60th anniversary of Tibet's "peaceful liberation" last year – that China should fight against separatist activities of the Dalai group and "completely destroy any attempt to undermine stability in Tibet and the national unity of the motherland". As the US ambassador candidly observed, Xi seems personable, but US officials "don't really know much about him".

Perhaps that is why Xi was given the red carpet treatment on Tuesday in Washington. His day included a stop at the Oval Office, lunch with the vice-president and the secretary of state, and a highly unusual visit to the Pentagon – all after a dinner with Henry Kissinger and Brent Scowcroft. Xi remains number two, and his succession – although heavily scripted, with all members of the standing committee of the politburo except Xi and Li Keqiang set to leave – is not yet complete. The choreography of Tuesday's events left little room for doubt. These were the two most important world leaders getting a sense of each other for the first time.

For an America that has consciously turned its diplomatic firepower away from Europe and the Middle East – the former in economic decline, the latter convulsed by revolution to which Washington is a bystander – the Asia Pacific region represents a more fruitful arena. Not only as the economic powerhouse of the world, but an area where US power projection is positively sought – by its traditional allies Japan, Australia and the Philippines, but also by lesser nations emerging from China's shadow. If China and America can deliver mutually assured economic destruction – as the holder of $2tn of US treasury and mortgage-backed debt, China would suffer disastrous capital losses if it spooked the markets – in military terms China and America are regional powers. What more important task than they understand each other's red lines?

Obama should not read too much into Xi's arrival. He should strive to create the conditions in which Xi could play the reformer. If not, the US might find that Xi is equally at home with a more traditional role.

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