Malaysia Takes Measures If Global Economy Worsens

Malaysia to Take Extra Measures if Global Economy Worsen

In theSun today (Thursday, 26 March 2009), Tan Sri Zeti, Governor Bank Negara Malaysia said Malaysia has the capacity to take additional measures if the global economy worsens and financial conditions fail to stabilise after the second half of the year.

She commented that most of the measures are in place and Malaysia has further measures that she can undertake in promoting growth in new areas as well as entering into arrangements with other countries where Malaysia can have mutually benefit. Malaysia has implemented stimulus measures and she believe, Malaysia has every opportunity to resume growth. And, she added, if in 3 months these conditions not stabilised, then Malaysia has to review the situation, includes to give out a new set of forecast.

My Comments

I expect there is no economy growth for this year. World economy indicators do not show promising outlook especially US economy and Japanese economy. Both are Malaysian big customers. US is still struggling hard to improve its economy, includes United States Federal plan to buy US$300 billion in treasury securities in which would affect world interest rates and change reactions from other countries.

Japanese economy is also in a bad condition. In theSun today, it mentioned that Japanese economy is in the worst recession since World War II. Japan announced a record fall in exports as the global downturn pummels demand for cars and high-tech goods.

What Malaysia should do is to focus on monitoring on the implementation plan of the stimulus economy package recently announced, and do corrective measures. This includes follow-up results from the latest monetary policy (reduction of OPR and SRR). It is easy to announce as compared to implement it!

Set KPIs for implementor
KPIs must be clear to everybody, from the Prime Minister, Federal Ministers, Chief Minister down to ADOs (Assistant District Office). Since economic target is clear, monetary and fiscal policies were announced, we need KPIs for all ministers down to ADOs. Then we know what are stumbling blocks and the problems are!


BNM should monitor the local banks
For the monetary policy, BNM should exercise it power under BAFIA and DAFIA in ensuring the local banks are committed in providing loans to retail customers and companies especially funds related to development purposes. It doesn't make sense banks announced they have reduce BLR, but reluctant to give financing because of uncertainty of the economy!


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