The IMF Report on Malaysia 2024/2025

8/05/2024

I PRESENT OUTLOOK

The International Monetary Fund (IMF) has revised the outlook for Malaysia’s real gross domestic product (GDP) by a notch to 4.4 per cent this year from its earlier prediction of 4.3 per cent, (IMF 17 Apr 2024), whilst Bank Negara Malaysia projects 4%-5% GDP growth in 2024 when global growth is expected to rebound in 2024, driven by the technology upcycle, tourism recovery, and low base effects in 2023, (Bank Negara in its annual report released on 20 Mar 2024), primarily underpinned by continued expansion in domestic demand and improvement in external demand.

The IMF growth estimation for the country is based on its World Economic Outlook, April 2024 which is to be Steady but Slow: Resilience amid Divergence. That the baseline forecast for the world economy is to continue growing at 3.2 percent during 2024 and 2025, at the same pace as in 2023. Also, it is based on an expect real (inflation-adjusted) U.S. economic growth of about 2% in 2024, higher than its initial estimate of about 0.5%.

II YEAR 2022 GLOBAL

The present year has a better forecast than whilst in the midst of the COVID-19 pandemic year of 2022 when there were many encountered economic turbulences.

The first headwind is a global financial tightening. The Federal Reserve was then much more aggressive in tightening monetary policy as U.S. inflation remained stubbornly high. This was translated to tighter financial conditions for Asia. Sovereign yields had also risen, and capital outflows in emerging market Asia leaked as voluminous as in past stress episodes, even though they remained limited to a few economies.

The second headwind was the continuing conflict in Ukraine, which inevitably led to a spike in commodity prices. Most countries in Asia had also seen a deterioration of their terms of trade. This situation was an important factor behind currency depreciations insofar as in 2022.

The third headwind was the sharp and uncharacteristic slowdown in China. The IMF have had thus marked down Chinese growth for 2020 with 3.2%, its second lowest level since 1977. This reflected the impact of the zero COVID lockdowns on mobility and the crisis in China’s real estate sector. The slowdown was then estimated to have important spillover to the rest of Asia through trade and financial links. Zee

During the 2022, the headwinds were contributing to a global slowdown compared to the April World Economic Outlook. As such the IMF has had downgraded its forecast for growth in Asia and the Pacific by 0.9 percentage points in 2022 and 0.8 percentage points in 2023. So, the growth was at 4% in 2022 and 4.3% in 2023 while inflation grew more modestly in Asia in 2021. This change follows the sharp volatility in global commodities since the war in Ukraine. This increase reflected both rising food prices, particularly in Asian emerging market and developing economies, but also higher core inflation as region recovered and output gaps had loss. Indeed, core inflation had once again exceeded central bank target in most Asian economies and in most cases by a wide margin. It was argued that there should be a need for further tightening of monetary policy to ensure that inflation returns to target, and inflation expectations would then remain well anchored.

At that time, it was expected that fiscal policy would have to complement monetary policy to fight inflation around the world in Asia. Fiscal consolidation was also advised to be incorporated to stabilize public debt. Asia is now the largest area in the world and so comes at high risk of debt. It was further felt that distress positions and rising interest rates could possibly pose financial volatilities from high leverage and unhedged balance sheets and further risks increases in public debt ratios.

The challenging conjuncture then was aggravating the medium-term economic scars opened by the pandemic, which was expected to be aggravating worsen in Asian. Also, it was assessed that much of the shortfall in growth in Asia relative to other regions could be further explained by lower levels of investment, employment and productivity following the pandemic. While exact policy responses at that 2022 period would expected to depend on country specific circumstances, tackling corporate debt overhang and mitigating human capital losses would also be important for a wide range of countries in the region.

During this period, the prospect of greater geo-economic fragmentation was also a significant risk to the region. In the report, it was stated that worrying early signs of fragmentation and consequences of a destruction of global trade links. One such sign of fragmentation pressures emerged from the crises was elements of trade policy uncertainty. In fact, the spiked in 2018 amid tensions between the United States and China and had further accentuated amid Russia’s trans-border war in Ukraine as sanctions created uncertainty around future trade relations. The IMF analysis at that time had indicated that a typical shock to trade policy uncertainty like the 2018 build up of China-U.S. tensions somewhat reduced investment in the region by about 3.5% after two years. It had also projected a decreased gross domestic product by 0.4% and raised the unemployment rate by 1 percentage point.

In addition to rising uncertainty, the prevalence of harmful trade restrictions was stated to have increased since 2019. The sectoral decomposition of trade restrictions had also been shifting. The shared restrictions that target high tech sectors had also been steadily increasing since the global financial crisis. Since the war in Ukraine, restrictions targeting the energy sector had also increased sharply, while those aimed at high tech sectors had also remained high. During that period, the IMF team had considered the long-term risks of deeper fragmentation scenario, and as such have had articulated the consequences of a purely hypothetical global economy divided along the lines implied by the votes cast on March 2nd, 2022 United Nations General Assembly motion to condemn Russia’s invasion of Ukraine. It was evisaged then if the world would to be demarcated into two separate blocs, then the losses could become significant. Global losses were then expected to be of 1.5% of GDP. Whereas, those in Asia were slightly over 3%, with losses forseen to be especially large for countries with a high level of openness and that have production structures that straddle both blocs.

III 2025 FUTURE

The IMF has earlier raised this year’s gross domestic product growth outlook for the region to 4.5% from the previous 4.2% estimated in October, with China’s figure upgraded by 0.4 percentage point to 4.6%.In the latest regional outlook released, the IMF pointed out that fiscal stimulus enacted over the past several months helped buoy the economy. It added that its China growth forecast for 2024 “may be revised upward,” as the country’s first-quarter growth came in stronger than expected. But it warned of several challenges for Asia’s largest economy. “Chief among risks for Asia’s economy remains a protracted property sector correction in China,” it said in the report, expressing concern that this may weaken demand and make continued deflation more likely. In addition, the IMF raised the issue of industrial overcapacity weighing on industries from steel to  automobiles recently. “Policies that boost supply, such as investment subsidies to specific companies and industries, would worsen overcapacity, reinforce deflationary pressures, and potentially provoke trade frictions,” the IMF said. China’s official purchasing managers’ index released had shown the country’s manufacturing activity grew for the second consecutive month in April.

As for Malaysia’s outlook, in its latest World Economic Outlook (WEO) entitled Steady but slow, resilience amid divergence, IMF predicted the GDP growth to remain at 4.4 per cent in 2025. It projected Malaysia’s current account balance at 2.4 per cent in 2024 and 2.7 per cent in 2025.

By ensuring such growth prospects

Characteristic Gross domestic product:

2025: US$477.83 B
2024: US$445.52 B
2023: US$415.57 B
2022: US$407.03 B

would be determined by the GDP growth in the United States which is projected to be 2.6% in 2024, before slowing to 1.8% in 2025 as the economy adapts to high borrowing costs and moderating domestic demand. According to Wang and Tyler, the economic data should “give more confidence that the US economy is recovering in additional sectors” and that “recession fears for 2024 are likely to be pushed into 2025.” On the other hand, GDP in China is expected to reach 18825.00 USD Billion by the end of 2024, according to Trading Economics ( TE) global macro models and analysts expectations. In the long-term, the China GDP is projected to trend around 19673.00 USD Billion in 2025 and 20617.00 USD Billion in 2026, according to TE econometric models.

On Malaysia, the stock market rallies in early May 2024 has given a momentum to the country’s economic wellbeing.

Malaysia’s FBM KLCI climbed to a two-year high on 7th May 2024 as gains of consumer and banking stocks extended the benchmark index’ rally to its fourth straight day.

The KLCI rose as much as 12.93 points or 0.8% to 1,610.32, its highest since May 5, 2022. The index closed at 1,605.68, still up 8.29 points or 0.52%, with 24 out of 30 constituents posting gains. 

These gains also propelled Malaysian stocks’ market capitalisation to RM2 trillion in for the first time ever. The gains appear sustainable and on track to hit 1,755 by the end of this year, CGS International has stated. The aggregated 12-month target for the KLCI stands at 1,683 points  where Bloomberg data have indicated.

By paying more attention to domestic-driven sectors, it is expected that the domestic economy will be picking up with an improved growth regime in both private consumption, and more importantly better gross fixed capital formation in the country’s economy.

Further, on the the 50th anniversary of diplomatic ties and foster deeper economic collaboration between Malaysia and China, it is envisaged that with the Malaysia’s Madani initiative, launched in January 2023, aligning with the values and principles of the Community Shared Future (CSF) advocated by President Xi Jinping since 2013, Malaysia foresees significant potential for deepened collaboration with China, notably in infrastructure, the digital economy, green development, new energy vehicles, and the rare earth industry – whereby and thereby, the Malaysia Madani economic framework will be able to strengthen her national competitiveness by focusing on fiscal sustainability, excellent governance, and effective service delivery thenceon by 2025.

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Related References

STORM August 2023, structuring the Madani model

Malaysianewleft, February 2024, geoeconomic challenges for the Madani model

Firestorms, May 2022, geopolitics in a multipolar world

csloh.substack, June 2022, IMF’s Malaysia

Artificial Intelligence in collaboration with Techno-Capitalism and Digital Labour colonisation

26/01/24

PROLOQUE

Malaysia is at a juncture in its politico-economic path crashing into fractious politics headlong on an inequity route with an expanding B40 lower-income class, (mef.org 2023). The socio-economic situations are becoming precarious. This is because of a stagflation risk arising amid sharp slowdown in growth that is accompanied by an accelerated inflation runaway globally, (World Bank, Global Economic Prospects, June 7, 2022) as confirmed by the Bank of International Settlements in its Annual Economic Report, 26 June 2022, and amid subdued external demand could only edge up to 4.3% GDP in 2024 (World Bank Malaysia Economic Monitor 2023), though Standard Chartered gave a favourable 4.8% of GDP; while the Madani Malaysia model is trekking slowly along an uneven economic development track that is strewn with global geoeconomic uncertainties and internal socio-economic instability.

Could and would the enlargement, and deepening, of the infrastructural platforms accompanying an artificial intelligence regime therein salvage the state of a nation or the adoption of such advance technology savages the country with further neo-imperial penetrative wounds while accompanying digitalised colonisation process?

I] INTRODUCTION

Standing at a crossroads of techno-capitalism and neo-imperialism, artificial intelligence (AI), with its potential promise though has profound existential problems to the Global South because advances in AI originated in wealthy nations of the Global North — developed in those countries for local users, using local data. Over the past several years, Columbia’s Daniel Björkegren and Berkeley’s Joshua Blumenstock for Finance & Development have conducted research with partners in low-income nations, working on AI applications for these countries, users, and data. However, AI systems require investment in knowledge infrastructure, especially in emerging and developing economies, where data gaps persist and the poor are often, if not, always digitally underrepresented. Besides, developing nations typically ill-afford such expensive large-scale deep neural networks infrastructure using expensive AI-driven application software.

Afterall, Artificial Intelligence (AI) leverages computers and digital machines to mimic the problem-solving and decision-making capabilities of the human mind.

Frequently, the techno-optimism in the advanced economies (Goldman Sach 2023; and, according to a Bloomberg’s  PwC Report, AI would boost the global GDP to US$15.7 trillion by 2030) is at odd with Global South economic development outcomes, (Daron Acemoglu Simon, IMF); where AI technology is in likelihood to destroying jobs and displacing workers, (Andrew Berg Chris, IMF); or where the building block for AI governance is weak (Ian Bremmer, Mustafa, IMF) on system design, project implementation and subsequent operational processes. Indeed, Artificial Intelligence could well widen the gap between rich and poor nations, (Alonso, Kothari and Rehman, IMF Blog Dec 2, 2020; IMF 2018).

Then, on this understanding, to duly acknowledge that in emerging markets such as India, where agriculture plays a dominant role, less than 30 percent of employment is exposed to AI. Brazil and South Africa are closer to 40 percent. In these countries, the immediate risk from AI may be reduced, but on the other hand, there may also be fewer opportunities for AI-driven productivity boosts, (Gopinath, Harnessing AI for global good).

Secondly, Silicon Valley corporations are taking over the digital economy in the Global South with little notice, or for those encouraged by the World Bank – but short-circuiting the rakyat2 – as in Malaysia,(WB 2021; MEM 2023), the domestic infrastructural platform ecosystems are already consolidated by the Global North monopoly-capital Big Tech, (STORM 2023). In case country South Africa, Google and Facebook dominate the online advertising industry, and are considered an  existential threat to local media. Uber has captured so much of the traditional taxi industry that drivers have been petrol bombed in the “South African taxi wars”. Similar battles have broken out in Kenya, (al jazeera, 2019).

Netflix is not only pulling subscribers away from local television services, but are buying up content in Africa. While in India, Facebook was forced to cancel its “Free Basics” programme that gave the social media giant control over the Internet experience on mobile phones,  she was able to retain its influence in countries like Kenya and Ghana.

This is known as digital colonialism where once former Colonial powers deployed their infrastructural domination in ports, waterways, and railroads across their vast empires, only that at present day neo-colonialism is continued through digital routers and data servers.

The digital infrastructural platforms are not unlike colonial ‘forward movement’ activities where lands are waiting to be discovered and conquered. Whoever gets there first, and holds fast and tight, shall get their information server-riches. The infrastructural platform kings (colonial-feudal lords) positions themselves above users (the colonised), and their data surfing activities (serfs’ farm cultivation), thereby giving them overwhelming privileged access (lordship) to record and retrieve (dictate and dominate) endusers (the serfs) as and when demanded (as surplus value expropriation) under an information-commodity chained monopoly-capital environment (via routers and cloud servers) .

Thirdly, tech capital flows unencumbered trans-borders where new ecosystem of digital platforms has emerged over the past decade that is transforming the very structures of capitalism. This new business model of large monopolistic digital platforms are capable of extracting immense amounts of data overwhelming legacy enterprises and suppressing labour empowerment, (see Paul Langley and Andrew Leyshon,  2020). This is “netarchical capitalism” , where infrastructure is “in the hands of centralized privately owned platforms”, (Nick Srnicek, Platform Capitalism, 2017).

Information and infrastructural platforms have empowered a new kind of ruling class. Through the ownership and control of information, this emergent class dominates not only labour but capital. It is  not just tech companies like Amazon and Google; even Walmart and Nike can now dominate the entire production chain through the ownership of brands, patents, copyrights, and logistical systems – all “soft” elements than physical end-products, all accumulated through financialization capitalism through a neo-imperialism monopoly-capital pathway.

Digital technology has already indeed transformed the world economy; the decade leading up to 2019, the largest 100 firms in the world had increased their total market capitalisation by US$12.7 trillion. A third of that increase (US$4.2 trillion) can be accounted for by just seven firms: Facebook, Amazon, Apple, Alphabet, Microsoft (the famous quintet ‘FAAAM’), Tencent and Alibaba. The aggressive rally of tech stocks during the COVID-19 pandemic had given due recognition that an entirely new model of value creation was enabled, and primarily all enhanced, by digital technology.  Tech companies are the new empires of today: Alphabet revenue surpassed Hungary’s GDP, Facebook  employs over 15000 content moderators around the world, and Microsoft has built data centers in nearly every corner of our planet, with Google global dominating the infrastructural platform corporate businesses.

Hidden from view, but the most vital part of this Techno-capitalism identity is the convergence of fibre-optics under the strategic blue waterways and sea corridors around the world that connected the various routers and artificial intelligence neural-networked database in a singularity ecosystem:

Since raw data, processed information and uninterrupted communications are of prime importance in a globalised geoeconomic environment, the installation, repairs and maintenance of the underwater cables in the country are with these infrastructural platform players of tech giants such as Google, Amazon and Microsoft, and the national internet exchange body, Malaysian Internet Exchange. However, the conflicting battle between national sovereignty and Global North financialised monopoly capitalism only accentuate the brute reality of intrusive Techno-capitalism and its digitalised colonisation process, (STORM 2023, marine-cabotage-under-netarchical-capitalism; whereas, the neo-imperialism aspects on 5-Eyes, Unmanned Underwater Vehicles, USVs, and the geopolitics involving AUKUS and QUAD are covered in firesstorms, August 2022).

II] TECHNO-CAPITALISM

With the emergence of new capital, the capital-endowed new ruling class extracts the content capacity of information to route around worker and social movements to barricade labour participation and involvement. The emerging ruling class is the digital feudal lords overseeing a common of digital infrastructure where bands of peasantry-labour are the digital gig-slaves to be exploited. In this digitalized business model, returns do not diminish as businesses scale up but increase exponentially. Geared towards the exploitation of digital-dehumanised workers (Yanis Varoufakis) whence they are mere interfacing intermediary conduits to big data storage and retrieval by infrastructural platforms powered by artificial intelligence nowadays that are so overwhelmingly powerful in exploiting surplus value of labour relentlessly, and with brutal efficiency, it is the accumulation of capital, through and thoroughly (Ursula Huws, Labor in the Global Digital Economy: The Cybertariat Comes of Age, 2014; read a case country of digital knights in a kingdom of infrastrutural thrones, in STORM 2020; Big Tech and Large Gig-Labour: STORM, June 2022 and Digital Labour: STORM, December 2020 ; and a related essay on Techno-feudalism, in STORM, August 2022).

It is also becoming but unbelieving for foreign investors – specifically Global North monopoly-capital corporates – not wanting to partner local expertise to provide support and services from their financialised capital. These Global North entities insist on retaining their monopoly investments, especially on the infrastructural platforms varied ecosystems.

As an instance, the country needs local expertise to ensure our national undersea cables are well maintained and not to be wholesomely dependent on Global North monopoly-capital corporations on an unequal economic and inaccessible technological exchanges. That the international infrastructural platforms had once threatened to withdraw in cooperating with the national digital economic aspiration is uncalled for.

At a time of an epidemiological-economic-ecological polycrisis, many national banks accelerated the monetary flow – and the resulting wave of liquidity – leading to substantial increases in corporate wealth in many developed and advanced economies, whereas the emerging and low income economies face external debt distress compounding poverty of the global poors, (World Bank 2022; STORM, 2022, Wealthy Rich, Poverty Poors). As a result of falling income levels, widespread employment losses and widening fiscal deficits, (UNCTAD 2020) – a rakyat-oriented  governance should not allow appearance of vulture-capitalism in the guise of infrastructural platforms be roaming the waves of high blue waterways as predatory pirates, (STORM, January 2023) when there is a sea of opportunities for the country in laying submarine cables, too:

And even as the Covid-19 pandemic coursed through the world’s population,  Apple, Microsoft, Alphabet, and Meta Platforms – were able to rake in US$255.7 billion in profits in 2022, or  16.4% of the Fortune 500’s total earnings for the year, (Fortune, June 2023). Their capital accumulation revealed grotesque class and racial inequalities and the gross lack of public investment and preparation, (monthlyreview).

To compound developmental efforts, transnational corporations (TNCs) exploit legal loopholes in low-income countries (LICs) to avoid or minimize tax liabilities by applying a practice known as ‘base erosion and profit shifting’ (BEPS). Under such circumstances, tax havens collectively cost governments US$500–600B yearly in lost revenue. Low-income countries will lose some US$200B – more than even the foreign aids of US$150B that they received annually, (Jomo, June 2022). Indeed, TNCs-supported agents, and lobbies, have blocked the International Tax Cooperation initiative, (Anis Chowdhury and Jomo Sundaram, June 2021) to ensure tax equity and revenue intake equality, (see also STORM 2023, International Corporate Taxes – issues of misdeeds).

And whatever financial assistance as rendered, the World Bank category of aid only encourages governments to enable illicit financial outflows to offshore tax havens – where such tax havens could cost countries US$4.7 trillion over the next decade, (icij 2024) – reducing capital controls, thus draining further precious foreign exchange and government resources, (KS Jomo, 2024).

III] DIGITALISED LABOUR

Nested in the platform capitalism model is the software component and the associated IT infrastructural platforms’ solutions. Unlike in the manufacturing sector where labour is kept within borders while capital moves freely, in Big Tech there is this process ability to intrude into a target country to install infrastructural platforms as well as troll the planet for cheap labour in any part of mother Earth at any time.

The resultant, and a transformed economy, is the gig economy, also widely defined as “platform economy”, “on-demand economy” or “sharing economy”, synchronises to the demand and supply of short-term or task-based work activities, and as a part of the national economy where freelancing workers use digital platforms to participate in the national economy, including their connections with the traditional yet formal businesses. According to Emir Research, about four million people in the Malaysian workforce which is about 26% of the labour force work in the gig economy; this is almost double the global average.

This business model is what technology guru Azeem Azhar names as the ‘AI lock in loop’ where, as the tech companies deploy products and services, they also collect data about their consumers’ use of those products and services. Through machine-learning processes performed on those collated data, these business entities envisage in presenting opportunities towards the development of better products and services. It is by integration of multiple data-rich digital assets into a single platform that gives such tech companies access to the entire vertical product chains (examples like Google or Grab siphoning off personal biodata and geographical locations) and the supply-chain capacity to expand horizontally into new products and services with relative ease and effectiveness. For examples:  Google,  Facebook, WeChat or  Grab becoming cloud-servers,  WhatsApp  as a communications medium and Instagram an media aggregator, (Social Europe, Gig Workers Guinea Pigs of the New World of Work, February, 2021 where ‘bogus’ self-employment workers are left outside of the regulatory framework;  Foundation for European Progressive Studies,  Governing Online Gatekeepers: Taking Power Seriously, 2021;  see also ILO 2021 report on the states of precarious digital labour.

In case country Malaysia, the adoption of digitalisation only deepen the stronghold of the monopoly-capitalised infrastructural platforms that support artificial intelligence domain, in the digital frontier and defranchised digitilased zero-hour gig-labour, (STORM 2023). This informal employment sector not only occupies a sizeable segment of the country’s workforce but inevitably it is without adequate social security safety provisions in place, (read csloh, 2022: Workers; Emir Research: Brain Drain; bernama: gig-economy  and Khazanah Research Institute 2020, Shrinking “Salariat” and Growing “Precariat”?):

For AI to bind adhesively within a national economic development initiative, not only must the monopoly-capital-compradore-capital eIements be done away, but the labour exploitation factor be eliminated, too. Labour superexploitation conceptually captures the real condition of the working class in Africa, Asia and south America. It involves three elements: low wages, long hours, and intense work leading to due strenuous exhaustion. Above all, it is characterised by “the greater exploitation of the worker’s physical strength, as opposed to the exploitation resulting from increasing his productivity, and tends normally to be expressed in the fact that labor power is remunerated below its real value.” Ruy Mauro Marini.

An AI class analysis can be by way of applying Nicos Poulantzas concept of class [places] as existing at each of levels of society: economic, political, and technological.
The class [positions] of the capitalist fundamental class processes are productive endusers (performers of data entry) and productive capitalists (extractors of processed data in the form of information).

The class relationship  where dominating [power] ensues would be identified, therefore, through the stronghold of infrastructural platform [place] which has allied with financialised capital providers [positions] in the provision, control and ownership of software, hardware and process [power].

Capitalists appropriate surplus value from the consumption of enduser’s labour activities during the generation of data into processed information. The surplus (monetary and or metadata of say geographical locations in an e-hailing process) is distributed as extracted among beneficiaries of subsumed class positions like the state-enabler, IT vendors, financiers and compradore monopolies.

In essence, historical politico-economic development of a country comes from social practice, the struggle for production, the class struggle, and scientific work.

For the SCRIPT in Madani Malaysia to be successful, in term of implementation and sustainability of an AI-driven progressive politico-economic developmental praxis, working-class unity has to be consolidated. It can only be further solidified if the tenet of divisive divisions by capitalism is better understood both in theory and in practice. Hence, we argue for a comprehensive yet bold project that is based on TAPAO that goes beyond its ethos as a renewal of an socialist ideal with Malaysian characteristics in order to take full account of the struggle of the labour movement.

EPILOGUE

What are the remedies to limit infrastructural platform capitalism dominance, the AI perversion and the digitalised colonisation process?

A global tax on capital or the implementation of the Wealth Tax at the national level, is one way to allow for the creation of a “social state” meeting social needs, (Piketty, Capital in the Twenty-First Century).

Taggling digital labour by putting the most essential needs of people and the environment before profits where provision “jobs…for the unemployed, food for the hungry, houses for homeless, adequate health care and income security and a decent environment for all of us” whereby the highest priority is an implementation of these collective human goals to which all special interests would then be subordinated. (Magdoff and Sweezy,   Stagnation and the Financial Explosion, 88–90).

Towards furtherance in  engaging union activity and an unity to fight for a higher share of income to build transnational solidarity allies with the national considerations in  outreaching, mobilising  and organising mass of gig- workers in the country;  see the manifesto proposal  in  Towards a post-2020 political economy and in an edition of the journal newleftmalaysia,  Renewal of a Socialist Ideal, and TAPAO towards a truly national economic development initiative on the sharing of common wealth.

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A conversation with the MADANI Economic Narrative

1st August 2023

PREAMBLE

The cacophony on orchestrating the Madani Economic Narrative ( MEN) is overwhelming loud, with the Malaysia Institute of Economic Research (MIER) not likely to hold the baton too soon.

The symphony of disagreements on MEN has stretched from the theological aspect within a secular society (Bakri; Tajuddin; Hunter) with an uncertain economic Islamic impact upon non-muslims (Ignatius; Ramakrishnan), to the complications of managing complexity in developmental execution (UNICEF; World Bank, 2022; and World Bank, 2019); STORM; Ramesh Chander, Murray Hunter, and Lim Teck Ghee) while trying to achieve a post-ABIM script (Mohktar).

Whether the Madani precepts alone can serve as the pillars of a grand nation-building project when a rumah in a kampung built on a capital-muddied stilted foundation likely to collapse at any time under a neoliberalism policy regime, is due for a conversation.

This is appropriate time because even an neoliberal institution – which was in the country prior to her independence as the International Bank for Reconstruction and Development (IBRD precursor to the World Bank) – has once again expressed the multifaceted problems facing the economic state of a nation:

These uncomfortable situational conditions are further decimated by the MIDF Research data which maintained its forecast that Malaysia’s GDP growth will moderate at 4.2% in 2023 (2022: 8.7%), weighed down by uninspiring external trade performance as real export of goods is predicted to contract by 2.8% (2022: +11.1), reflecting weakness in regional and global demand.

The 2nd August 2023 economic brief indicated that Malaysia’s S&P Global Manufacturing PMI recorded at 47.8 in July 2023 (June 2023: 47.7), marking 11 straight months of contraction which was mainly attributable to a significant dip in new orders, as demand has consecutively paced down for the last 11 months, (theedgemalaysia 2/8/23

I] THE POVERTY PROBLEMS

The successful implementation of Madani depends on reaching of targeted area poverty alleviation objectives (TAPAO) which shall rest upon the genre of structural changes to be adopted, the availability of debt financing in economic development, the wholeheartedly adherence to sound economic developmental praxis and a faithfulness to the core MADANI implementation principles

The Madani Challenges facing this state of nation were familiar issues covering +65 years in the development of underdevelopment of a nation where poverty, inequality, and marginalisation are predominant. As late as 2015, the Malaysia poverty rate was 4.80% which is the percentage of the population living on less than US$5.50 a day, (World Bank).

This is ardently expressed by Khalid research paper at the London School of Economics and Political Science, where presented, the disparity among the Malay community – the top 1% – is very much acute then as it is likely to be accentuated:

The most important implication is that although the middle 40 per cent and the bottom 50 per cent benefited significantly from economic growth, the Bumiputera in the top income groups (the top 1 per cent and the 10 per cent) benefited the most from economic growth. In sharp contrast, the income of the Chinese in the top income groups deteriorated. In a way, the strong growth in high-income Bumiputera occurred at the cost of a decrease in Chinese and the slow growth of Indians in the top income groups; Khalid,  Income Inequality and Ethnic Cleavages in Malaysia: Evidence from Distributional National Accounts (1984-2014), World Inequality Database, working paper No. 2019/09.

The World Bank Report has this to say:

“The bulk of inequality today can be explained by differences in socio-economic factors within ethnic groups rather than differences across groups. It is time to bring all Malaysians within the ambit of greater economic opportunity.”

The need to update Malaysia’s inclusiveness strategies reflects both new realities and new challenges. The new reality is that poverty is no longer the key issue when thinking about inclusive growth. Poverty still exists—and pockets of poverty remain deep and concentrated—but inequality is now in the spotlight and is presenting a tremendous challenge. The other new reality is that inequality is no longer what it was four decades ago. Nowadays over 90 percent of the level of inequality is explained by differences  within ethnic groups  rather than differences between these groups. Individual socio-economic characteristics, such as activity status, sector of employment, urban versus rural stratum, and educational levels in different geographical locations are despairingly displayed.

II] REQUISITE STRUCTURAL CHANGES

This leads to the next step that demands structuring the economy for sustainable development.

To undertake this task, according to Philip Schellekens, lead author of the Malaysia Economic Monitor, (World Bank, 2010).

“The dual approach in the Economic Transformation Program of combining cross-cutting policies with private sector-led projects provides an excellent platform. The proof of the pudding, however, will be in the consistent execution of policy reforms,” he said. “Also, until solid implementation of policy reforms is seen there is unlikely to be a groundswell of positive sentiment of foreign investors towards Malaysia.” (World Bank 2010, ibid).

The November 2010 issue of the Malaysia Economic Monitor offered another analysis of where Malaysia is today and where it could go tomorrow by updating its inclusiveness strategies. “Our recommendations on this highly charged topic do not come out of the blue — they are based on a detailed analytical study of the latest household income, labour force, and enterprise surveys, which the authorities have made available to our team. We are also leveraging on the experiences of other countries around the world, who have addressed or are coping with similar challenges.”

The implementation of an economic development plan requires the proficiency and professionalism of the public sector. This is where the effectiveness from the public service is under constant, and continuous, doubts.

At a time when the emoluments and the retirement charges of the public sector constitute  31.2% of the RM$372.340 million Budget 2023 announced on 7th. October, 2022 (which excludes  contingency reserves yet-to-be disclosed) in the operating expenditure which are equivalent to the 32.8% of development expenditure for socio-economic programs and projects, including subsidies and social assistance – there is more than much concern on the performance and productivity of our civil servants whom,some alluded, to performing  money-laundering.

This is heading a grueling question on total government debt and liabilities as of June 2022 which is estimated to be at RM$1.42 trillion and will rise further; indeed, it was announced on 17th. January 2023 that the national debt including liabilities has reached RM$1.5 trillion. Total debt and liabilities are already  82 per cent of GDP, (read STORM October 2022, Underdevelopment of Development – consolidation of financial monopoly-capitalism).

As a share of revenue, a review done by the World Bank as far back as in 2011 has had found that Malaysia was spending about 27 percent of its revenues on salaries and wages/personal emoluments in 2009, significantly more than in some of the higher-income countries it aspires to emulate such as Canada (13.7 percent); Norway (12.5 percent); Australia (10.6 percent); and South Korea (9.6 percent).

In fact, by 2018, this percentage has increased to 34.3 percent for Malaysia, (see World Bank (2019).  Malaysia Economic Monitor: Re-energizing the Public Service).

This is an extract from the World Bank 2019 Report on the challenges Malaysia has to confront to fulfill rakyat2 expections:

Can productivity performance objectives be executable or even achievable?

The second major restructuring requisite is the generation of government revenue to implement economic development programmes whilst supporting a top heavy, and inefficient, public sector – at a time when national fiscal revenue space is narrowing:

III] FINANCING ECONOMIC DEVELOPMENT

With those underlying facts, the key task is to source funds for economic development. This is well explored in (STORM 2023, Debt financing towards progressive economic path) where the nuances of the conversation are that since expenditures are already at high levels; and secondly, other operating expenditures components such as supplies and  services, and grants and transfers have been on a declining trend or are already at low levels, therefore, the  government’s current fiscal consolidation plan would have to include – besides restructuring Petronas, Khazanah and the GLCs -a higher revenue collection target that should coverage of a windfall tax on industries , according to Khazanah Research Institute senior advisor  Professor Dr Jomo Kwame Sundaram.

“This is precisely the time when you must reform taxes as you have it (windfall tax) all the time amid extraordinarily high petroleum prices or palm oil prices.” 

This is concurred by Institute of Malaysian and International Studies research fellow Dr Muhammed Abdul Khalid who pointed out that policy-makers tend to ignore the imposition of capital gains tax when it comes to the issue of tax reform.

Even Bank Negara Malaysia (BNM) assistant governor Dr Norhana Endut noted that the government’s tax collection capacity had not kept pace with the economic growth, at a time when the manufacturing sector is moderating on its p erformance:

IV] PRAXIS IN ECONOMIC REJUVENATION

The economic development of a nation demands that its goal to attain high-income and developed nation status while ensuring that shared prosperity is also sustainable.

As one of the many Global South countries, Malaysia is one of the most open economies in the world with a trade to GDP ratio averaging over 130% since 2010. Openness to trade and investment has been instrumental in employment creation and income growth, with about 40% of jobs in Malaysia linked to export activities.

A government is always confronted with difficult decisions about appropriate measures under unforeseenable situations or in a crisis: what restrictions to impose and when to loosen them, where money will be spent and how it will be raised, and how to coordinate tasks between states and enable community cooperation.

These decisions have to take into account public health recommendations, economic considerations, and political constraints. Just as the policy responses varied  – from the 2007–08 Global Financial Crisis, the dotcom 2002 burst and the Asian Financial Crisis in 1997 –  so do national policy responses to the COVID-19 pandemic should differ for health, economic, and political reasons.

Play Politics

Why does the advice of independent consultants, analysts, and the academic go so often unheeded?

Political economy is about how politics affects the economy and the economy affects politics that Governments try to prime the economy before elections. However,  business cycles are also creating ebbs and flows of economic activity and the circuitry of capital distribution around elections whence economic conditions have a powerful impact on elections. Politicians would manipulate these economic parameters to woo voters to gain political advantages, and contesting capital tries to support politicians.

Where are we now?

There is a cohort of powerful interests in favour of international trade and foreign investment. The world’s transnational corporations and international banks depend on an open flow of goods and capital. These are the monopoly-capitalists and the financial capitalists. This is especially the case today, when the world’s largest companies depend on complex global supply chains. A typical transnational corporation produces parts and components in dozens of countries, assembles them in dozens more, and sells the final products everywhere. Trade tariffs create barriers with these supply chains, thus the world’s largest companies are biggest supporters of freer trade.

That is why there is a need for perpetuating the mass of special and general interests in society so that these social institutions play a major role in national policymaking. The ways in which societies organize themselves – through and by economic sector, ethnicity, and importantly at this juncture of our political awareness, the class factor, shall affect how we would like to restructure our politics.

Definitely, political institutions have to mediate the pressures constituents bring to bear on them;  even oligarch rulers have to pay attention to at least some part of public opinion. Political economists call this the “selectorate,” that portion of the population that matters to policymakers. In an authoritarian regime, this could be an economic elites or the ruling class or the armed forces. In an electoral democracy it would be voters and interest groups. No matter who matters, policymakers need rakyat2 support to stay in office.

In building an equity society with socialism as the dominant foundation, we must do all we can to develop the productive forces and gradually eliminate poverty, constantly raising the people’s living standards. Only when this outcome is achieved and there is significant prosperity for all will it become possible to begin the shift to advanced stage of an economy that is highly developed and where there is overwhelming material abundance. Only by this process that we shall be able to apply the principle of from each according to his ability, to each according to his needs.

To achieve this process, there is a need on genuine planning and genuine democracy where these are through the constitution of power from the bottom of society. It is only in this way that a progressive socioeconomic society, and its healthy and well-being domain, becomes irreversible.

Towards this process in striving the Socialism with Malaysian characteristics goal, there shall be a combination of planning and markets forming the basic socialist economic system. Second, we need to keep in mind the dialectical relation between ownership and the liberation of the productive forces that shall entail, then 

(1) the system contains a multiplicity of components, but public ownership remains the core economic driver, with corporate capitals supplementing capital formation but without undue surplus value extracted from labour; 

(2) while both state owned and private enterprises must be viable, their main objective is not profit at all costs, but social benefit that meets  ‘people-centred’ needs from appropriate shelter, education equity to community-base healthcare, harnessing modern technologies towards social needs;

(3) it employs the primary socialist principle of from each according to ability and to each according to work, limiting exploitation and wealth polarisation, and ensuring common prosperity and wealth sharing for every rakyat2  wellbeing;  

(4) the primary value should always be ‘socialist collectivism’ – gotong royong community-based than bourgeois individualism and inflicted neoliberalism ethos.

Therefore, as applied under a TAPAO approach, it would be sizing and averaging rural per capita income besides focusing on the country’s hinterlands, especially the mountainous interiors of Sarawak and Sabah.

Refining the geographical target of poverty reduction programs is a necessity. The TAPAO needs to shift from daerah² to  kampung²  including more likely
some outside the list of poverty-stricken daerah, too. Collectively, those designated kampung²  (villages) may cover
a certain high percent of the country’s rural poor. Designated villages could then apply for projects to support local production and infrastructure (including makan-pada-kerja : food-for-work programs, worker training, and agribusiness development comprising technology extension services; not to be neglected, government-linked investments in social infrastructure (schools, clinics, community and recreation centers), with a particular strong participatory community-based self-help gotong-royong approach.

V] MADANI IMPLEMENTATION PRINCIPLES

For the SCRIPT in Madani Malaysia to be successful, in term of implementation and sustainability of a progressive politico-economic developmental praxis, working-class unity has to be consolidated.

It can only be further solidified if the tenet of divisive divisions by capitalism is better understood both in theory and in practice. Hence, we argue for a comprehensive yet bold project that is based on TAPAO that goes beyond its ethos as a renewal of an socialist ideal with Malaysian characteristics in order to take full account of the struggle of the labour movement.

Within the context of Malaysia development of underdevelopment – glaringly as in the cases of northeastern states in semanjung  and the Borneo states of Sabah and Sarawak, and the many urban poors in the country as documented by the World Bank and  UNICEF, we are witnessing the relational inequality generated. This is further reproduced by labour superexploitation and relational surplus value whence labour superexploitation is the essence of capitalism as neoliberalism is imperialism, too.

For Malaysia politico-economic model to be successful, and sustainable, the core issue of contradiction between capital and labour needs to be resolved with a Madani trustful outreach.

More so, after ethnocapital has owned, controlling and dominated the Malaysia resources, it is appropriate period of a new era under an unity governance to present a new narrative on Malaysian labour working cohesively and collaboratively – at this particular junction of a historical period – with capital to a shared prosperity domain under a common wealth practice for labour, too.

For one main obvious reality of capitalism is that massive poverty across the Global South is not the result of some local insufficiency (resources or skill talent) but rather due to the functioning of neocolonialism perpertuated by liberal economic policies as neoimperialism where the ongoing effects of  dependency on financialisation capitalism need to be tamed.

The haemorrhage to present economy is the resulting outcome  of those extractive institutional forces since post-independence, accelerated by succeeding regimes in governance with odious practices, and as articulated by Prof  Kamal Hassan  in Corruption and Hypocrisy in Malay Muslim Politics while Khalid’s London School of Economics and Political Science research has pinpointed the class structure-laden beneficiaries to their enduring enterprises.

The trust between labour and capital has to be firmed up solidly in fulfillment of a Madani Malaysia – more so when 98.5% of businesses are the SMEs contributing 36% of the national GDP where labour is important as capital because it provides employment for 7.3 million people – nearly half of the country’s workforce.

EPILOGUE

In short, we need to modify, adapt, and contextualize a conversation with our preceding political-economic reform agenda, and while trying to calibrate the sequence of, and the dimensions for, economic reforms – we seek to ask the pertinent question: have we really restructured the stagnated, and a doomed, national economy, ever ?

We need to be in the threshold of a new sovereignty re-imaging a New Malaysia positioning an entity adhering a New Narrative to perform New Politics for the generasi muda.

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RELATED READINGS

SIRED

TAPAO

PRAXIS

Renewal of the Socialist Ideal

Financialisation capitalism ramifications

Economic Development with sustainability

The political-economy of MADANI in a fractionalised geoeconomy

collective on geoeconomics

30/07/2023

I] THE MALAYSIAN ECONOMY

The national economy grew at a bouyant pace of 5.6% year-on-year (y/y) during the first quarter of 2023, indicating a continuous and fast-paced expansion after an annual economic growth rate of 8.7% in 2022 which was the fastest annual GDP growth rate since 2000.

However, the pace of expansion is expected to moderate during 2023 due to a number of geoeconomics headwinds, including the impact of high base year effects and sliding down of merchandise export growth.

The Malaysian economy is able to maintain a positive momentum during the first quarter of 2023 is due to a strong domestic demand where the services sector continued to show rapid growth of 7.3% y/y in the first quarter of 2023. The pace of expansion in the construction sector also remained strong, growing by 7.4% y/y in the first quarter of 2023. However, growth in the manufacturing sector has moderated in recent quarters, growing by 3.2% y/y in the first quarter of 2023, not dissimilar to the 3.9% y/y pace in the fourth quarter of 2022.

According to the seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) was unchanged at 48.8 in April, indicating that business conditions remained challenging for firms.

As mainland China is Malaysia’s largest export market, accounting for 15.5% of total exports, the continuing rebound in mainland China’s economy during 2023 may help to mitigate the impact of other softening merchandise exports to the US and EU.

The main products exported from Malaysia to China were Integrated Circuits (US$11.2B), Petroleum Gas (US$3.27B), and Blank Audio Media (US$2.23B). During the last 26 years the exports of Malaysia to China have increased at an annualized rate of 12.2%, from US$2.42B in 1995 to US$47.9B in 2021.

China and Malaysia witnessed frequent and close high-level exchanges in 2022 with bilateral trade between the two countries reaching a record high of US$203.6 billion (US$1=RM4. 42), according to Chinese Ambassador to Malaysia Ouyang Yujing, (MIDA, 17 February 2023).

The IMF July Report 2023 says that under its baseline forecast, growth will slow from last year’s 3.5 percent to 3 percent this year and next – a 0.2 percentage points upgrade for 2023 from its April projections. Global inflation is projected to decline from 8.7 percent last year to 6.8 percent this year – a 0.2 percentage point downward revision, and 5.2 percent in 2024.

The slowdown is concentrated in the developed economies, where growth will fall from 2.7 percent in 2022 to 1.5 percent this year and remain subdued at 1.4 percent next year. The euro area, still reeling from last year’s sharp spike in gas prices caused by the Ukrainian cross-border special military operation, is set to decelerate sharply.

By contrast, growth in emerging markets and developing economies is still expected to pick-up with year-on-year growth accelerating from 3.1 percent in 2022 to 4.1 percent this year and next.

As our national economic vitality is dependent on China’s economic performance, we shall present the following excerpts from the ASIA TIMES – taking into various assessments and analyses from academic think-tanks, commercial consultants and China-watchers – as to what implications thereon shall affect the MADANI economy praxis and consequential development performance.

II] STATE OF CHINA’S ECONOMY

China’s anti-Mario Draghi moment surprises markets

by William Pesek

Jul 28, 2023

China is eschewing the former European Central Bank chief’s pledge to ‘do whatever it takes’ to stabilise via monetary easing.

For weeks now, global markets have ricocheted between excitement over a Chinese stimulus boom and disappointment that Beijing was taking its sweet time to jolt a slowing economy.

It’s now clear that Xi Jinping’s team has settled on a strategy somewhere in between. And for the global economy, the signals from this week’s meeting of the Politburo, the Communist Party’s top decision-making body, seem short-term negative for world markets – but long-term positive.

As Bill Bishop, long-time China-watcher and author of the Sinocism newsletter, sees it, the policy direction being telegraphed seems “fairly dovish,” but “doesn’t seem to signal much more significant stimulus incoming near-term.”

That’s bad news for bulls betting on a new Chinese stimulus bonanza that lifts markets from New York to Tokyo. Under the surface, though, there are myriad hints that the arrival of Premier Li Qiang in March is putting reforms on the front-burner once again. In other words, Beijing cares more about avoiding boom/bust cycles going forward than just mindlessly fuelling a 2023 boom.

As “no fiscal expansion plans have been revealed so far, the impact will only be felt very progressively,” says economist Carlos  Casanova at Union Bancaire Privée.

Economist Wei He at Gavekal Dragonomics added that “the Politburo’s meeting on the economy shows that officials recognise weak demand is an issue. But the meeting mainly called for ‘precise’ policy adjustments.” As such, it “remains far from certain whether those can deliver a near-term turnaround in growth. The conservative stance points to, at best, a stabilisation or weak recovery” in the second half.

Instead of aggressive plans for massive monetary easing and fiscal pump priming — as markets had assumed — the chatter is about prudent policymaking with an emphasis on lower taxes and fees and incentivising increased investment.

Rather than sharp drops in the yuan to boost exports, Li’s reform squad is focused on catalysing greater scientific and technological innovation and giving the private sector more space to thrive and create new good-paying jobs.

In lieu of scores of top-down decrees or public jobs-creation schemes, the zeitgeist is that developing a thriving micro, small and medium-sized enterprises (MSME) sector is a more forceful way to address record youth unemployment than large-scale stimulus.

What Xi and Li are telegraphing might be best called the “anti-Mario Draghi” approach to enlivening Asia’s biggest economy.

The reference here is to the former European Central Bank president’s infamous pledge “to do whatever it takes” to stabilise the financial system via powerful monetary easing.

A year later, Draghi’s liquidity onslaught inspired then Bank of Japan Governor Haruhiko Kuroda to follow suit.

On Draghi’s watch, the ECB unleashed stimulus on a level that would’ve been unfathomable to Bundesbank officials of old. In Tokyo, between 2013 and 2018, the Kuroda BOJ’s balance sheet swelled to the point where it topped the size of Japan’s $5 trillion economy.

Neither monetary boom did much, if anything, to make the broader European or Japanese economies more competitive, productive or, broadly speaking, more prosperous. Instead, executive monetary support generated a bubble in complacency.

Draghinomics — and Kurodanomics — took the onus off government officials from Madrid to Seoul to loosen labor markets, reduce bureaucracy, incentivise innovation, tighten corporate governance or invest big in strengthening human capital.

China, it seems, is determined to go the other way. In the months since Xi started his third term — and Li arrived on the scene as his number two — Beijing has confounded the conventional wisdom on Chinese stimulus.

The start of this week’s Politburo is no exception. Markets were betting on major stimulus moves. Instead, China unveiled a 17-point plan to attract more private capital its way.

In a note to clients, analysts at Capital Economics said that “the absence of any major announcements of policy specifics does suggest a lack of urgency or that policymakers are struggling to come up with suitable measures to shore up growth.”

One possible interpretation was that Xi’s inner circle wants to put some actions on the scoreboard before next month’s annual huddle in the resort of Beidaihe to discuss long-term policy direction. Yet the tenor of steps seems more about supply-side reforms than fiscal and monetary pump-priming that might squander progress in reducing financial leverage.

Instead of talking about reaching this year’s 5% growth target, the government said the priority now is that “good foundation is laid for achieving the annual economic and social development targets.” Officials admitted, too, that “economic recovery will show a wavy pattern and there will be bumps during progress.”

In other words, the instant gross domestic product gratification that investors came to expect in Xi’s first two terms has been replaced with a more pragmatic approach. While there will be “prudent monetary policy” and at times an “active fiscal policy,” the bigger objective is to “extend, optimise, improve and enforce tax cuts and fee reductions.”

Stimulus will indeed emerge when, and where, needed. The Politburo said, for example, that it would “accelerate the issuance and use of local government special bonds.”

This means it’s entirely possible that local governments may be allowed to “dig into” remaining special bond quotas, including from previous years, says economist Yu Xiangrong at Citigroup, who estimates the quota to be about 1.1 trillion yuan (US$154 billion).

But there was far more discussion of ways to “adapt to the major change in supply-demand relations in the property market,” and, in timely fashion, to “adjust and optimise real estate policies.”

That, Beijing says, means steps to “increase construction and supply of low-income housing,” and “revitalise all types of idling properties.”

To economist Zhiwei Zhang at Pinpoint Asset Management, “this is an interesting signal as the property sector downturn is arguably the key challenge the economy faces now.” As such, “it seems the government has recognised the importance of policy change in this sector to stabilise the economy.”

Just as important, arguably, is the government saying it’s committed to “effectively prevent and resolve local debt risks, make a package of plans to resolve the debt.” The same goes for commitments to “concretely optimise private firms’ development environment” and “build and improve the routinised communication mechanism with companies.”

Furthermore, the party’s latest phraseology includes pledges to “firmly crack down on excess fee and fine charging, resolve the receivables governments owe to companies” and “accelerate the fostering and growing of strategic emerging industries.” The plan, the party notes, is to “strengthen financial regulation, steadily push for the reform and risk resolution at small and medium-sized financial institutions of high risks” as a means to “stabilise the basic market of foreign trade and investment.”

Such language is more the stuff of Adam Smith and Milton Friedman than Mao Zedong. More Hans Tietmeyer of Bundesbank fame than Draghi or Kuroda. One possible area of optimism is that Xi’s government is finally serious about fixing the underlying troubles in the property sector – not just treating the symptoms.

Casanova points to the Politburo’s statement that authorities would recalibrate property policies based on the “local property market situation” and consider developments related to “demand and supply imbalances.” To him, “that last point is new, suggesting a change in the macroprudential regime, as the government now sees a structural shift, requiring bottom-up measures to better reflect local conditions.”

That’s not to say Xi and Li won’t support demand where needed.

“We expect the government to roll out modest fiscal support in the second half of 2023, but no aggressive fiscal stimulus,” says economist Ning Zhang at UBS AG. Even so, Zhang says, “some policy room may be kept to support economic growth in 2024.”

Additional stimulus measures that Zhang expects Beijing to prioritise: an acceleration of special local government bond sales; a resumption of policy banks’ special infrastructure investment funds; Beijing providing credit to clear up local governments’ arrears to corporate suppliers; modest property policy easing and credit support for stalled property projects; a modest credit growth rebound; and perhaps a small official rate cut.

There also could be “some small-scale and targeted support” for selected consumption categories as well, Zhang says.

Mostly, though, the signals coming from Beijing this week suggest a greater emphasis in increasing confidence via reform and more vibrant safety nets than runaway stimulus.  Bottom line, China’s Draghi days seem over – and that’s a good thing.

first published: ASIA TIMES  July 26, 2023.

III] IMPLICATIONS

Just as there shall be a subdued growth path in China, but with targeted support and selective structural changes, the unity government in Malaysia will pump in more than RM$5 billion to kick off its Madani Economy Framework to enhance the economy and improve national competitiveness.

1. The framework has lofty ambitions of positioning Malaysia as one of the top 30 major economies around the globe within 10 years,
2. Placing the country in the top 12 of the Global Competitiveness Index,
3. Increasing participation among women in the country’s workforce to 60 per cent,
4. Placing the country in the top 25 nations in the world in the Corruption Perception Index,
5. Boosting the nation’s fiscal strength with fiscal deficit of three per cent or lower, and
6. Positioning Malaysia in the top 25 of the Human Development Index,
7. Additional allocation of RM400 million for micro financing under SME Corporation Malaysia, National Entrepreneurial Group Economic Fund’s (Tekun), Majlis Amanah Rakyat (MARA) and Bumiputera Agenda Steering Unit (Teraju). This fund is aimed at providing entreprenuerial opportunities, trainings and financing for the marginal groups including women and youth,
8. Another new major funding assistance announced under Madani Economy Framework is a financing worth RM$200 million under Agrobank to facilitate the application of technology in farming,
9. The country could record a six per cent growth if everyone “initiates change”. 
10. The successful reaching of targeted area poverty alleviation objectives (TAPAO) will thus dependent on the genre of structural changes to be adopted, the availability of debt financing in economic development, the wholeheartedly adherence to sound economic developmental praxis and a faithfulness to the core MADANI implementation principles.

Then, only thence, shall the country shares a common wealth destiny with our rakyat².

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