Malaysia' trade ..Aug 2009

Wednesday October 7, 2009
Economists still cautious on external trade
By FINTAN NG

PETALING JAYA: Economists remain cautious on Malaysia’s external trade position as restocking continues to be a factor in boosting exports from the country and elsewhere in the region, despite the more positive economic data streaming in from abroad.

Prominent economists Nouriel Roubini and Joseph Stiglitz have in recent days expressed doubt over the sustainability of a faster and more durable global economic recovery.
Furthermore, the US jobless rate in September rose to a 26-year high.

The Statistics Department is expected to release external trade data tomorrow.
Citigroup Inc senior economist Kit Wei Zheng expects improvement in both month-on-month and year-on-year external trade figures for Malaysia.

However, he told StarBiz that the country continued to be a “big laggard” where electrical and electronics (E&E) exports were concerned, compared with Singapore, South Korea, Taiwan and the Philippines, due mainly to supply bottleneck issues that were only now being addressed. E&E products constitute 40% of Malaysia’s exports.

“There’s still some scope for cyclical catch-up to the end of the year and orders have been coming back since late June which, in turn, has given a boost to factory production and exports,” Kit said.

He said the domestic front would play a much bigger role in the country’s economic growth, going forward, with RM4bil to RM5bil already spent in the quarter ended September, mostly in the construction sector.

“This spending added another 0.5 to 0.7 percentage points to gross domestic product growth,” Kit noted.

Both United Overseas Bank Ltd economist Ho Woei Chen and Forecast Pte Ltd economist Joanna Tan said exports could turn positive in the last two months of the year.
But Ho said the improvement in factory output in recent months was largely due to inventory rebuilding.

Tan said the verdict was still out on the sustainability of the rebound, especially in the global E&E sector.

“The rebound could be due to inventory restocking, so we’re still quite cautious,” she said.



Focus on domestic consumption without neglecting world tradeBy Azlan Abu Bakaralan@nstp.com.my2009/10/07

The government wants domestic consumption to drive Malaysia's economic recovery but will not neglect international trade, a minister said yesterday.

Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop said measures to increase domestic consumption will be among those to be highlighted in Budget 2010, which will be tabled in Parliament on October 23."We are not saying international trade is not important. In fact, it has grown by more than 200 per cent against our gross domestic product (GDP)," he said, noting that the economic environment is significantly better compared with the first half of 2009.

Nor Mohamed said the government at the same time prefers to increase domestic sources of growth, with contribution from private consumption and private investment to spur the local economy.

He said Malaysia's new economic model will see a reduction in dependence on trade because of its vagaries

.Nor Mohamed said as an open economy, the country is vulnerable to changes in external demand like what is seen now amid the global economic slowdown.

"We want to see domestic demand spur significantly and be our most important economic driver," he told reporters after attending the Statistics Department's Hari Raya Open House in Putrajaya yesterday.

Nor Mohamed noted the government's pump-priming efforts will continue to support growth.The indication is that the public sector's deficit spending will remain a feature of the local economy throughout the 10th Malaysia Plan from 2011-2015.He said as part of efforts to further grow the local economy, the government is looking for a formula how to increase consumer spending.

"It is the government's aspiration to ensure the people are able to enjoy a higher salary, thus help grow the economy."We are looking for a suitable formula as we don't want to chase investors away thinking Malaysia being expensive," he said.The formula will focus more on increasing productivity based on a knowledge-based economy, research and development, and innovation