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Wednesday, September 25, 2013

A Short Note on the Future of Economics of MY Malaysia Tanahairku

Econs...never my best subject and yet when I think of my beloved country, Malaysia, I am inspired to write this article - so that we may all be focused on the main issues that affects us in our daily life. As a commoner (one of the many Rakyat), perhaps this is all that I will do as I'm sure governing a country and to lead its people forward is no simple task...

To move forward as a nation, we need to know and determine the factors affecting our nation's health and whether anything can be done for its betterment.

To simply "put it" - we need to know just how much risk Geopolitical instability is to our nation's growth. Say what?

According to an online dictionary, Geopolitic is defined as the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation.
 
A good example of a governmental policy employing geopolitics: The Nazi doctrine holding that the geographic, economic, and political needs of Germany justified its invasion and seizure of other lands (I add - people's rights inclusive).

You see, Malaysia is considered a still developing country (rated just above Third World). While our optimism for our economy is increasing, it is anticipated that future growth will come from developed markets that are less plagued by geopolitical dilemmas. 

So what's our biggest hurdle? Geopolitical instability.
 
Attacking and addressing this hurdle is made simple by looking at the common examples* of Geopolitical dilemmas,

_1. Slow growth of the GDP / Low demand for Exports;
_2. Low returns from savings and investment;
_3. An inflation rate that is higher than rate of returns from savings and investments;
_4. Sociopolitical instability from a highly combustible cocktail of politics, religion and race;
_5. Unemployment; and
_6. Exchange Rates.

* such a broad range, are we exempted and able to escape at all? Sigh!

So how do we renew and boost our optimism for our nation's future economy?

First things first, we need structural policy and regulatory reforms that are aimed at increasing consumer confidence and greater social and political stability.

By the way, rationalizing subsidies is not one of them as it will only "fuel" inflation (pun intended) - besides, the only major good I see is the elevation of the nation's credit standing for other nations to approve better terms for lending to Malaysia!

Increased foreign investment (not in terms of loans) are a great way to boost our economy and is only attainable when the rate of return on investment is enticing to the investor. 

A Contrasting Example for Investors:

Would you yourself invest in a business where the cost of operations leaves you next to nothing profits? You hire and/or pay less. Then you decide to invest in machinery as automation reduces manual labor, hence less workers to be paid. Then at the end of the day you realize you are paying for power at a premium too. Booyah and I haven"t even mentioned other business factors viz. cost of capital, property and rent, etc!

In fact any other actions that will address the above listed dilemmas in earnest will fair well but please bear in mind that not ALL action is better than NO action.

I rant, I rave and life goes on... 

Footnote:
Breaking news! Still reeling from its aftershock and again, why? Appended today September 26, 2013 - price for RON95 petrol is poised for 'another' increase in near future and this time it's supposed to also 'help' curb petrol smuggling. Way to go - we will never learn.

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