THERE are many reports on the Malaysian
economy based on specific areas like debts,
which can be misleading and give a skewed
It would be a simplistic argument, like
looking at someone's total debts, but
ignoring the person's earnings or earning
potential. Reports that emphasise on the
country's debt should take into account the
gross domestic product or GDP, which is the
total value of all goods and services
produced by a country in a year.
We should look at the country's debt in
relation to its GDP, meaning, the GDP ratio.
This ratio would give a clearer picture of
the economic health of the country.
Malaysia's public debt as a percentage of
its GDP is 53.50 per cent for last year's
estimate and is ranked 54 out of more than
150 countries (source: CIA World Factbook).
The definition given is the cumulative total
of all government borrowings less repayments
that are denominated in a country's home
currency. As a comparison, Japan is more
than 200 per cent, Singapore is more than
100 per cent, the United Kingdom is about 89
per cent and the United States is about 74
The same source puts Malaysia's last year's
GDP estimate at US$307.2 billion (RM921.6
billion), GDP real growth rate at 4.5 per
cent and for country comparison with the
world, Malaysia is ranked 72.
Malaysia's unemployment rate last year is
stated as 3.2 per cent, and as a country
comparison, we are ranked 27 in the world.
That would essentially put Malaysia as one
of the countries with a low unemployment
rate. Malaysia's inflation rate (consumer
prices) is stated as 1.9 per cent, and in
comparison, we are ranked 30 in the world.
An International Monetary Fund (IMF) report,
dated Feb 28 states that Malaysia's
expansion is led by strong domestic demand,
particularly investment, has a robust
financial sector with high levels of
capital, and wide ranging reforms should
support higher, more inclusive growth.
The IMF report is consistent with the CIA
World Factbook report, as the IMF estimates
a growth rate of about five per cent for the
year spearheaded with low unemployment and
The World Bank ranking of economies across
the world (benchmarked to June last year)
ranks Malaysia as number 12 in terms of ease
of doing business. This means that the
regulatory environment in Malaysia is
conducive for the starting and operating of
This ranking goes across 10 different
categories and Malaysia is ranked number one
in terms of Getting Credit and ranked number
four for Protecting Investors. We are ranked
11 for Trading Across Borders and number 15
for Paying Taxes. Malaysia's lowest ranking
across the 10 categories is for Dealing With
Construction Permits where we are ranked 96.
This ranking encompasses 185 countries and
our lowest score of 96 for Dealing With
Construction Permits still puts us at just
above 50 per cent for that category.
Overall, Malaysia has a good report card.
This is where Malaysia is today.
Let's backtrack 16 years to the Asian
Financial Crisis in 1997 and how it had
In 1997, Malaysia was a large investment
destination and our stock exchange, the KLSE,
was one of the most active stock exchanges
in the world. Our turnover sometimes
exceeded that of some of the larger bourses
like the New York Stock Exchange.
In the early part of 1997 the KLSE composite
index was above 1,200 points and the ringgit
was trading at 2.50 to the US dollar. In mid
1997, within days of the Thai Baht
devaluation, ringgit was attacked by
speculators. By the end of 1997, the KLSE
had lost more than 50 per cent, and the
composite index was below 600 points. The
ringgit was trading at about 4.50 to the
dollar in early 1998 from 2.50 to the dollar
in early 1997.
Tun Dr Mahathir Mohamad, the prime minister
then, imposed strict capital controls and
pegged the ringgit at 3.80 to the dollar.
The ringgit was also no longer a legal
tender outside the country -- trading of the
currency overseas was invalid.
This put the lid on many speculative
transactions that could have damaged the
economy further. Furthermore, Malaysia
refused assistance from the IMF. Many other
restrictive economic measures were
implemented that saw the country float and
not sink during a difficult period that
affected many countries more badly than it
All the macro economic policies formulated
by the government would in some way directly
or indirectly benefit the micro economies or
small businesses of the country. A supply
and demand chain has to be established for
them to complement each other, as having one
without the other is not going to complete
the cycle and produce results.
D.K, council member, Gerson Lehrman Group
Inc, New York, US
Source: NST, 22 May 2013