Our economic forecast

Depending on how you view it, GE12 would have been a euphoric experience, or a downright disaster. One thing is certain, investors and the flow of money are neither ethical nor are they unethical. It simply flows to stable markets and a growing and productive economy. Malaysia in my opinion is neither growing nor is it stable at this moment. Though we all may have done the ethical thing of denying BN 2/3 majority, thus stopping and putting the brakes on mismanagement of funds and corrupt practices of the Barisan Nasional.

The iShares MSCI Malaysia Index ETF (EWM) dropped significantly and has not recovered since.


Our so-called business 'allies' - the Gulf nations of UAE and Saudi Arabia are making beelines to Singapore and China. Does Islamic solidarity counts in the language of money ? Or does prudent financial management and a booming economy booms louder than the call of the Azan ?

Forbes published a list of the Worlds top 2000 global Companies
http://www.forbes.com/business/2008/04/02/worlds-largest-companies-biz-2000global08-cx_sd_0402global_land.html

Below is the list for Singapore


And here's the Malaysian list


Total Asset for Singapore companies on that list totalled US$426.94 Billion and Total Asset of the Malaysian companies totalled US$278.68 Billion

So the top Singaporean companies in toto are worth 2x that of the Malaysian companies.
In terms of GDP growth, Singapore's GDP (PPP) for 2007 is US$31400 as compared to Malaysia's US$12900.




Source : indexmundi.com

But before you wipe your brow, and heave a sight of relief that we're not too bad. Consider this :
From The US Energy Information Administration



Malaysia has had a good run of crude oil production since 1980, and since 2006-2007crude oil production has been declining. On the contrary, domestic consumption has increased dramatically.


Many thanks to our expansionist policies and energy intensive infrastructural economic policies. These infrastructural policies bears little long-term returns. A clear example is Proton, a car company, who's days are numbered even as the company tries to compete domestically against cheaper imports. The Sepang Formula 1 circuit, Pork Klang Free Trade Zone and Perwaja Steel to name just a few. Hence, the bulk of Malaysia's GDP or economic prosperity has thus far been generated by our crude oil exports or cheap access to crude oil.

Looking at Singapore from the same parameters paints a different picture


Crude Oil production is ZERO

Crude oil consumption is close to 900,000 barrels per day. Much higher than ours.

Singapore has been able to maintain good GDP growth within an framework of zero production with increasing domestic demand.

Malaysia on the other hand, has depended on crude oil for much of it's GDP growth, rising domestic demand have been eroding exports and it is expected that Malaysia will be a net oil importer by 2009.

Does it augurs well for this country ? Malaysia has a total landsize 474 times larger than Singapore and a net oil production country for the past 20 years, and yet the country has a GDP of 3x smaller than Singapore with a total asset of it's top companies 2x smaller than that of Singapore.

The damage of the past 30 years will be hard to undo. Until we all move in a concerted fashion rebuilding the nation brick for brick and instilling prudent spending coupled with robust economic growth - it is going to be a long road home.