Malaysia Needs To Manage And Adjust To Higher Cost Economy,

[Tizona]

This is one of the best articles I've read all year.
While you doom-mongers wail about our 'lack of economic competitiveness' in comparison to Asian economies, those very same Asian economies are aspiring to our higher cost of living economies! While you lot are advocating a 'race to the bottom' in wages - the Asians are planning to push up wages as fast as they can! While you are moaning about inflation - they are seeking to build it into their economies.

Read this article, it quotes Dr.Mahathir Mohammed, the recently retired Prime Minister of Malaysia. A man who is highly regarded for having guided his countries Tiger Ecomomy to great success in the last decade. Obviously a man with a bit more practical experience of the requirements for a thriving society than you blinkered Keynsians.

KUALA LUMPUR, Aug 8 (Bernama)

Tun Dr Mahathir Mohamed, the architect for Vision 2020 s aid Malaysia can achieve the target by managing and adjusting to a higher cost economy.


"The world trend today is towards higher cost of everything. Our cost must increase anyway.
"But since high cost goes with prosperity, why not rise above the tide by actually creating and managing a higher cost economy. That way we can achieve our 2020 target," said the former Prime Minister.

He said this in a speech entitled "Approaching 2020 - Major Trends that will impact Malaysian Business" at the Perdana Leadership Foundation CEO Dinner Lecture 2008 here, Friday evening.

While there is no talk about deliberately increasing and managing cost, he noted that unconsciously, this was what the government has been doing all these years.

"And we have been successful at it. Otherwise, with our high cost, we would be poorer than our low-cost competitors. But we know we are more prosperous than them," he said. Mahathir said Malaysia's costs are already higher than it was 30 years ago, and higher than those in other Asean countries except Singapore. Yet, he noted that the country had remained attractive with political stability and consistency in government cited as one of Malaysia's greatest assets.

He said there were other things which made Malaysia attractive too, and if the country improves on these assets, the increase in cost (not just labour but transport and materials) would not make Malaysia any less attractive or the products less competitive.

"We must also remember that the pressure of increasing prices will be felt by our competing neighbours as well. They too will have to increase their cost of production.

"So our cost will not be, comparatively speaking, so high as to make us totally uncompetitive," he said.

Mahathir also stressed that Malaysia should systematically raise wages, which would result in higher purchasing power that would prosper businesses and in turn earn the government more income.

"I don't often admire Singapore or what it does. But when Singapore gained independence, it carried out a programme of steadily increasing wages every year.

"If we manage wage increases carefully enough, the wage spiral would not be too damaging. In time, it would settle and we would adjust to a high cost environment while our living standards also improve. Even our poor people will be less poor," said Mahathir.

The former premier explained that Malaysia cannot any longer offer itself as a cheap labour country.

He explained that with Malaysia's population expected to hit 35 million by 2020, a mass consumer market would make local manufacturing more viable.

"Against this, expect increased and less restricted imports. We must be more competitive and develop skills in hi-tech products and we must pay higher wages.

"The days of low labour costs would have been over before 2020," he said.

He noted that local workers must then be highly qualified and be trained in higher skills. Training of workers must be done at specialised training centres with computer programmes needed to carry it out.

"What all these means is that specialised education and training would become big business. The training centres would also cater for foreign students if we use English as a teaching medium," he said.

But chances are, the local highly trained workers would still cost less than similarly trained workers in the developed countries, which could mean a shift of some middle range hi-tech industries into Malaysia.

He added that although the country's present advantage was still the ability to take instructions in English, there would be a spread of the English language capabilities in China, Vietnam and other competitors.

"I hope the teaching of science and mathematics in English would continue.

"But I am not sure. If the decision is made not to, then the hi-tech industries are going to bypass us," he said.

-- BERNAMA
http://www.bernama.com/bernama//v3/news ... ?id=351664

[20000miles]

Malaysia Needs To Manage And Adjust To Higher Cost Economy,

Because economies need management now?

This is one of the best articles I've read all year.
While you doom-mongers wail about our 'lack of economic competitiveness' in comparison to Asian economies, those very same Asian economies are aspiring to our higher cost of living economies! While you lot are advocating a 'race to the bottom' in wages - the Asians are planning to push up wages as fast as they can! While you are moaning about inflation - they are seeking to build it into their economies.

OK, I finally concede inflation is a good thing. Sure it hurts people on the bread line the most, not to mention savers, and it allows the government to fund its expenditures without taxing people. But lets not worry about that.

"Higher cost economy"...what gobby-goo. Sure prices are going up accross the board. Let's just accept it and pray to the almighty Keynes in the sky that we can adjust to it.

"We must also remember that the pressure of increasing prices will be felt by our competing neighbours as well. They too will have to increase their cost of production.

"So our cost will not be, comparatively speaking, so high as to make us totally uncompetitive," he said.

[/quote][/quote]

So we don't need to worry if prices rise in our own country, just as long as others have higher price levels? Wonerful!

[Tizona]

Because economies need management now?

Certainly! Is this news?
What do you think is the purpose of a budget, or a Finance Ministry?

OK, I finally concede inflation is a good thing. Sure it hurts people on the bread line the most, not to mention savers, and it allows the government to fund its expenditures without taxing people. But lets not worry about that.

I'm guessing you are too young to remember the 80's well?

I bought a house for 78K in 1985, with a 80% mortgage.
By 1992 inflation had pushed my wages up so much that the mortgage repayment was half what it had cost me in 1985. My house was worth double what I'd paid for it, and 78K no longer seemed like a lot of money. Thanks to inflation.
I like inflation. Just like Mr.Mohammed.

"Higher cost economy"...what gobby-goo. Sure prices are going up accross the board. Let's just accept it and pray to the almighty Keynes in the sky that we can adjust to it.

Yeah, I think his terminolgy is a bit wacky too - he's talking to a Malaysian audience though, and english is used a bit differently there (have you been?).
However, we get the drift, eh?

So we don't need to worry if prices rise in our own country, just as long as others have higher price levels? Wonerful!

Thats it in a nutshell.
He sucessfully ran a country on these principles.
What country have you run?

[Mazzy Maz]

It's horses for courses. What's good for Malaysia might not necessarily be good for Ireland.

There's no such thing as a one-size-fits-all economic plan, even the IMF and World bank have cottoned on to that in recent times.

What's said in the article is interesting, but that's not to say that it bares (bears?) any relevance to our own situation.

[Tizona]

Funny you should mention the IMF and World Bank Mazzy.
During the 1997 Asian financial crisis, he was strongly criticized by the international financial community for contravening IMF policies by keeping interest rates down and braking the outflow of foreign capital. Mahathir blamed currency speculators for the crisis, foremost among them George Soros. Critics said his accusations were "tinged with anti-semitism." Banks were forced to merge and to write off bad debts, consolidating the financial system. The Ringgit, which stood at RM2.50 to the US Dollar prior to the crisis but plunged to RM4.97 during the worst part of the recession, was pegged at RM3.80. Initially this was seen as a move to keep the currency from falling further, but is now seen as keeping the currency artificially low in order to boost exports. As a result of these policies, Malaysia's economy recovered much faster than comparative countries which did follow IMF prescriptions, the repercussions of which are still felt in those countries, and more prudent fiscal and monetary policies have ensured that the Malaysian economy, while not growing yet as spectacularly as before, is well balanced and not built on rotting foundations. As the Malaysian economy recovered, the IMF and George Soros released statements saying that Mahathir's policies had indeed been the right ones.

Now, do you think we have a leader in Ireland with the balls to do what Mahathir did in 1997?
Unlike Malaysia in 1997, we will buy into the IMF/EU regulation of our struggling economy. Interest rates will rise, counter to common sense. People will lose their jobs, their homes, their livliehoods - and we'll be told its all because we are 'uncompetitive' and 'must keep inflation under control'.

Fasten your seatbelts.

[Van Damme]

I'm so sick of this neo-liberal bull************************ and morons spouting on about the need to be "competitive"

What competitiveness really means is taking wage cuts and working longer hours so that profits will be higher for investors.

Not until the workers of the world end the race to the bottom and unite together in co-operatation will we see the end of this thatcherite rampant individualism that is destroying our world in the name of profit.

[Tizona]

Don't worry Van Damme - the worm is turning.
But not in Ireland.
We are led by donkeys who will follow the 'conventional wisdom' to the bitter end.

Thank goodness for maverick thinkers like Mahathir.

[20000miles]

Because economies need management now?

Certainly! Is this news?
What do you think is the purpose of a budget, or a Finance Ministry?

OK, I finally concede inflation is a good thing. Sure it hurts people on the bread line the most, not to mention savers, and it allows the government to fund its expenditures without taxing people. But lets not worry about that.

I'm guessing you are too young to remember the 80's well?

I bought a house for 78K in 1985, with a 80% mortgage.
By 1992 inflation had pushed my wages up so much that the mortgage repayment was half what it had cost me in 1985. My house was worth double what I'd paid for it, and 78K no longer seemed like a lot of money. Thanks to inflation.
I like inflation. Just like Mr.Mohammed.

[quote:3sjctm73]"Higher cost economy"...what gobby-goo. Sure prices are going up accross the board. Let's just accept it and pray to the almighty Keynes in the sky that we can adjust to it.

Yeah, I think his terminolgy is a bit wacky too - he's talking to a Malaysian audience though, and english is used a bit differently there (have you been?).
However, we get the drift, eh?

So we don't need to worry if prices rise in our own country, just as long as others have higher price levels? Wonerful!

Thats it in a nutshell.
He sucessfully ran a country on these principles.
What country have you run?[/quote:3sjctm73]

The worst economic pathology is inflation. Most of the problems come from not understanding the nature of inflation. You say that your wages and your house price went up because of inflation. Then why don't we just have higher and higher rates of inflation, so our homes will be worth 10 times what they were before. If everyone woke up with twice as much money under their pillows, everything would cost twice as much.

I'm glad your house has appreciated in value so much. Unfortunately, because of poor monetary and fiscal policy your children probably won't be able to aford a home in their lifetimes. Oh, well. That's the other side of the coin.

Also, inflation withers away your savings. If you work for 40 years and accumulate 100k, that money will definitely be worth less and less as time goes on. All your gut-busting efforts are being slowly withered away.

Lastly, inflation doesn't just happen, its created by none other than the central bank. "Too much money chasing too many goods" as it were. I'm not going to throw in the towel and say there's nothing we can do about inflation...unlike the Malaysian PM.