Recession - Malaysia In Denial

I seriously believe the government is in denial of the state of the economy.

Please read here, Muyiddin's confidence that Malaysia will not slip into technical recession, despite the negative prediction by analysts, local and foreign. Even MIER has lowered the expected growth rate for Q1. Rating Agency Malaysia (RAM) agrees that we may slip into recession in the first quater itself.

There are also other analyst who are quite upbeat how Malaysia would end the year, here. While former Finance Minister, Tengku Razaleigh has this to say, which i agree on many counts.

The reality on the ground is not reflective with what government is trying to potray. My friend's company in Pasir has already cut production hours and days to 4 days a week from 7 days operations few months ago while he says that there are plans to futher reduce the working days months ahead.

This company produces various components for computers for major brands and reduced demands from almost all computer makers forced them to cut production hours.

Another company in Pasir Gudang went on step ahead to retrench worker by the hundreds. As usual, a mix of foreign and locals were retrenched, rather than retrenching all foreign workers. No one will want to retain expensive locals, those foreign workers retrenched are just for a show to the government that foreigners are first to go.

And we already know about Western Digital.

I also heard and confirmed that Lenovo ((IBM's distribution arm) regional centre's employees, based in Kuala Lumpur have been offered VSS.

Most Banks and financial insitutions has freezed recruitment of staff. They have been told to 'make do with what you have'. Some even started on initiatives such as pay cuts for top executives.

Singapore has been more honest about the economic situation there and this may result in many retrenchment exercises forcing Malaysian, mostly Johoreans returning home only to find that factories and industries in Pasir Gudang, Senai, Skudai, Masai and Kulai are not recruting anymore.

Johor state government claimed that Iskandar Project would offer employment to returning Malaysians from Singapore. I find the statement off the mark, as returning Malaysians, mostly from factories in Singapore, are not likely to be suitable for jobs available in the Iskandar Project.

I think we need not remind Muyiddin on how much does manufacturing contribute to the economy and that bulk of our products are exported to EU and US, the same countries hardly hit by the crisis.

In simple terms, people there are not buying what they can do without, that's the same products that we are selling to them.

There were several statements here and there by the Human Resources Ministry on handling retrenchments, but nothing concrete appear to be in place.

And we have ministries being informed that the 7 Billion stimulus package must be spent by end of the year. How ridiculous can this be. The package was anounced way back in August and respective ministries should have had adequate time to plan the spending. The amount should have been spent by end of the 1st quarter 2009 and maybe before 1st half of the year, only then we will be able to feel the impact of the stimulus package within the same year.

Is the government waiting for things to get worse before they act? Already, revenue from Petronas are expected to dwindle and we know that the expected revenue from Petronas stated in 2009 budget is no longer realistic.

While other countries have been quite nervous, honest and open about possible recession, our leaders appears to be not so worried. We have to expect the worse, only then we will be more prepared. Having confidence remains just that, confidence and nothing else.

We have to act quickly and decisively as time is certainly running out. And we have ministers, especially the Finance Minister spending weeks on a non critical event, the Kuala Terengganu by-election..