14Ogos2020

Agenda Daily

WHEN NO NEWS IS BAD NEWS

While things seem to be improving economically in the West, the state of our very own economy is still uncertain, or rather vague. What can help is better-managed news flow from the government to the public. But sadly, this isn't the case. So, what gives?

 

THE GOOD NEWS COMING OUT OF WASHINGTON in the last couple of days suggests that the worst of the recession is over and it may soon end.

Some forecasts suggest that it may end as early as next month, thereby paving the way for a modest recovery.

A better-than-expected unemployment report on May 8 suggested that job losses declined to their lowest level in six months while house sales are firmer, consumer spending is reviving and there is fresh optimism about the improving health of the United States' biggest banks.

But as the latest wire reports from the US capital suggest, the pain won't be over for some time. In the US, some 13.7 million people are unemployed, pushing the jobless rate to 8.9%. And according to the most recent report, it may still be heading towards 10%.

Pointing to recent improvements, President Barack Obama said on May 8: `The gears of our economic engine do seem to be slowly turning once again.'

According to wire reports, the plunges in economic activities and rising waves of layoffs, seen from the end of 20o8 through the start of this year, seem to have subsided.

`The winds are still howling, but I think we can see the sunlight on the distant horizon,' said Mark Zandi, chief economist at Moody's Economy.com.

While welcoming these positive developments, we must be mindful that there is always a four- to six-month time lag between the US economy and ours.

Even if the US economy is heading towards a modest recovery, our own economy might still shrink for another couple of months.

It will take some time for inventories in the US to decrease and for new orders to come in. Since we depend heavily on exports to the US, Europe and Japan, only a strong and sustained recovery in consumer demand in these economies will see demand for our products rising.

Dwindling numbers

THE effects on our exports have been devastating. International Trade and Industry Minister Datuk Mustapa Mohamed told reporters recently that exports dropped for a sixth straight month in March by as much as 15.6% to RM43.65 billion from a year earlier.

According to a report in The Star newspaper, compared to February, however, March exports expanded by 10.3% in line with a trend, which showed that the fall in exports was easing.

Imports dropped 28.7% in March to RM31.14 billion compared to a year ago, resulting in a trade surplus of RM12.5 billion — the 137th consecutive month of trade surplus since November 1997.

Total trade for March decreased 21.6% on a yearon-year (y-o-y) basis. For the first quarter of this year, exports fell by 20% to RM121.47 billion while imports declined by 28.9% to RM88.8 billion. Total trade dropped 24% to RM210.27 billion, leaving a surplus of RM32.67 billion.

Warned Mustapa: `The situation is still tough out there. The monthly trade figures, however, for the first three months showed an encouraging trend.'

The Paris-based Organisation for Economic Cooperation and Development (OECD) reported last month that the fall in trade was slowing down.

The merchandise trade of the Group of Seven (G7) took an unprecedented fall in the last quarter of 2008 compared with the previous quarter.

However, provisional monthly data for January and February 2009, measured in value terms, suggests a slowing down in the rate of decline.

In volume terms, merchandise trade of G7 exports fell 9.5% while imports were down 5.6% quarter-onquarter in the final quarter of 20o8. Y-o-y exports dropped 7.9% and imports fell 6.4% in the fourth quarter.

In the US, export volume growth dropped 7.8% and imports fell 5.1%. Compared with the previous 12 months, exports declined by 2.3% for the first time since the last quarter of 20o6. The 8.4% fall in import volumes accelerated the downward trend from the

first quarter of 2008.

Japan's exports plunged 19.3% in fourth quarter 2008, about twice the rate of the G7, while imports fell 4.6%. This pattern was also reflected y-oy with a 20.1% drop for exports and a 6.8% decline in imports.


But the New Straits Times on May ii quoted a Federation of Malaysian Manufacturers' survey as showing rising overseas demand for manufactures, especially in the electrical, electronics and chemical categories, giving fresh hope of an uptrend.

`It's very encouraging to report that export figures have gone up, demand has increased compared with, say, August and September last year,' said its president Datuk Mustafa Mansur.

Misplaced priorities

STILL, despite official assurances and the fact that Bursa Malaysia has been staging a steady recovery, we are generally unsure about the true state of the economy.

Two stimulus packages have been launched but the real measure of their effects has yet to be felt and known. This could have something to do with the way the government manages the flow of information.

Unlike during the 1997/98 crisis, when the National Economic Action Council (NEAC) regularly issued instructions and situation reports, there appears to be no such mechanism now. The NEAC was disbanded during the reign of the last Prime Minister, Tun Abdullah Ahmad Badawi.

The experience of past economic crises suggests that well-managed information flows were important in building public confidence and giving direction to investors and consumers.

With the government still battling to gain control over politics, as highlighted by the fiasco in the Perak State Legislative Assembly on May 7, the handling of economic matters appears to the people to be taking' a backseat.

Only on May ii did newspapers report that some 42,000 projects worth RM5.6 billion had been awarded under the two stimulus packages, citing the head of the project management unit, Datuk Mohamad Othman Zainal Azim.

Of these, 39,316 projects worth RM3.4 billion are under the first package and 2,745 projects valued at RM2.2 billion under the second.

Given that the first RM7 billion package was announced more than six months ago on Nov 4, one wonders if the RM3.4 billion contracts represent a satisfactory performance, bearing in mind the urgency of the situation.

The second and more ambitious package which was tabled in Parliament on March io, called for an allocation of RM6o billion.

Mohamad Othman said in a statement that Prime Minister Datuk Seri Mohd Najib Abdul Razak `monitored every aspect of the stimulus packages on a weekly basis'.

Such an impression, coupled with the lack of positive information coming out of Putrajaya, may not help boost public confidence, which is key in encouraging investment and consumption.

I have repeatedly suggested in this column and in my blog that an NEAC-type crisis management centre should be immediately created, at least to provide regular information and guidance to the mass media.

Sadly, it would appear that the new leadership is yet to come to grips with the need to create a mechanism for efficient information flows from the government to the masses.

Instead, it would appear that some key ministries are caught in the mundane politics of political correctness in selecting and appointing press officers and press secretaries when they should be giving priority to professionalism and performance.

Given that the mainstream media, both official and private, is facing a credibility problem and is being challenged by the expanding Internet-based new media, the government is under pressure to ensure not only that official information reaches the people, but more importantly, that it is also believed by them.

Convoluted

THERE may not be a straightforward, speedy resolution to the Perak political crisis despite the Kuala Lumpur High Court on May ii granting Datuk Seri Mohammad Nizar Jamaluddin a declaratory relief that he is still and was Menteri Besar at all material times.

To begin with, the Barisan Nasional (BN)'s Menteri Besar, Datuk Dr Zambry Abdul Kadir, was granted a stay of execution by the Court of Appeal the next day, which means he remains Menteri Besar until his appeal is heard.

The High Court, in ordering Dr Zambry to show cause and give information under what policy, power or authority he allegedly held office and exercised the responsibilities, functions and duties as Menteri Besar, had, in fact, compelled him to appeal in order to fulfill the instruction.

On May 12, Mohammad Nizar wrote a letter seeking an audience with the Sultan to seek his Royal consent to dissolve the Assembly.

This, however, is in contradiction with the spirit of the High Court ruling that gives authority to the State Legislative Assembly to determine the legitimacy of his government.

The Judge, Justice Abdul Aziz Abdul Rahim, among other things, ruled that Mohammad Nizar, once appointed Menteri Besar, was answerable only to the State Legislative Assembly.

`Based on democratic practice, the vote of no-confidence should be taken on the floor of the assembly and only that way, he (Mohammad Nizar) could be forced to resign.

`(Otherwise,) how could Nizar lose confidence on the purpose of Article i6 (6) of the Perak Constitution?'

Article 16 (6) states that if the Menteri Besar ceases to command the confidence of the majority of the members of the Legislative Assembly, then, unless at his request His Royal Highness dissolves the Legislative Assembly, he shall tender the resignation of the Executive Council.

It would appear that Mohammad Nizar has no choice but to face a vote of no-confidence in the State Legislative Assembly. But with 28 members on his side against 31 on the side of the BN, Mohammad Nizar has good reason for not opting to go back to that route if he can.

A return to the Assembly may prove that he actually `ceases to command the confidence of the majority of the members of the Legislative Assembly'.

Even if he loses the confidence vote, there's no guarantee that a fresh election will take place because the BN also can go to the Assembly to seek a mandate to lead the state as it has the majority.

That's the reason behind Mohammad Nizar's insistence on seeking the Sultan's blessing to dissolve the State Legislative Assembly, which unfortunately for him, goes against the spirit of the High Court ruling.

Furthermore, will the Sultan risk making another decision after his earlier decree to allow the BN to form the government had proven to be legally problematic and politically unpopular?

Thus, the most appropriate move is for Mohammad Nizar to brave the odds and put his fate and faith in the hands of his peers in the State Legislative Assembly.

The mistake of the BN was it failed to table a confidence motion when it wrested power from the Pakatan Rakyat (PR) in February. Had that been done, the legitimacy of its rule would have been unequivocally established.

Of course, the PR could have made such an attempt impossible, as it had the control of the Assembly via its strident Speaker, V Sivakumar. The latter had done everything possible to preserve the PR government and finally his own position.

For the immediate future, it would appear that politics of `The Land of Grace' (Darul Ridzuan) may not be as graceful and blessed as it should be.

It will take a while before certainty returns, and, in this context, a fresh election may yet be the best solution to the problem.

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