The Department of Statistics will be releasing the 2018 fourth quarter GDP statistics tomorrow.

I was wrong about expecting the 2018 third quarter GDP growth to quicken based on the faster consumption growth. Consumption growth did rise spectacularly and as stated earlier, there was no austerity. But external pressures prevented overall GDP growth from going off.

But I will repeat myself. I think we have hit the trough in the third quarter and so, we should see a rebound. Trade balance in the fourth quarter expanded slightly unlike in the previous quarter when it contracted. At the same time, consumption should grow healthily (in fact, stronger versus historical standard) albeit at a slightly slower pace. Meanwhile, pressures faced by the agriculture and the mining sectors should moderate.

But enough of me quacking.

How fast do you think did the Malaysian economy expand in 4Q18 from a year ago?

  • Below 3% (4%, 1 Votes)
  • 3.0%-3.9% (22%, 6 Votes)
  • 4.0%-4.5% (37%, 10 Votes)
  • 4.6%-5.0% (33%, 9 Votes)
  • 5.1%-5.5% (4%, 1 Votes)
  • 5.6%-6.0% (0%, 0 Votes)
  • More than 6.0% (0%, 0 Votes)

Total Voters: 27

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I rarely use plastic straws for my drinks. I am not religious about it but if I could help it, I would avoid it. I think I started doing so since at least 2010-2011, partly to allay my guilt for breaking a rule I made up when I was in college: use less paper. That is not something easy to do out there in the working world.

But reduce plastic straws is way easier than reducing paper use.

But in the past year or so, I have noticed that it is becoming a trend in Malaysia to reduce straw usage, at least in the greenwashing corporate social responsibility kind of way (don’t get me started on CSR and the tax system).

I figure it might have something to do with a video of a poor turtle having a tough straw stuck in its nostril. The footage showed volunteers struggled to pull the straw out, bleeding the turtle in the process. The turtle seemed healthy afterwards. I would, if I had a piece elongated plastic stuck up my… erm… nose. Wouldn’t you?

While the internet is a powerful tool to spread lies and conspiracy theories of no sense (like how the Ministry of Finance for somehow is banning private companies from handling haj, which is patently untrue), I suppose there are times when it is a tool to do good. Like the no-straw fad.

At McDonald’s several months back, the fast food chain ran a campaign to reduce straw use. When I first noticed it, I gave it a thumb up. But after a while after understanding the new way they give out the straws, I suspect its campaign is utterly counterproductive. Why? Because instead of reducing use, it has the potential to increase its usage instead.

Previously before McDonald’s ran its campaign, straw dispensers were placed in the dining area where customers could take the straws freely. Freely, but usually the number of straws taken would match the number of drinks. Those who would not use straw would simply not take it.

Now, I have noticed McDonald’s have removed the dispensers. What happens now instead is that the persons behind the counter preparing, serving or delivery the meals would automatically place straws into the meal tray regardless whether the consumers would want it. No question asked.

As a result of this change in method, my use of straws at McDonald’s has increased from none to at least one.

I could say no and ask the person behind to counter to take it back, but the whole procedure adds a process that makes the default position as having a straw. Ironically, the previous default position (as in the presence of straw in the tray) before the no-straw campaign began was not straw. The nudge economics here is messed up that it goes against the campaign: it encourages straw use instead by setting up a new barrier to having no straw.

One of those nights when I got off work late, with weary eyes and empty stomach at KL Sentral, I would have no mood to say, “Oh hello, sorry, I do not need the plastic straw.” I would like to just eat and go as quickly as possible. Damn the straws. I would not use it, but it would in the tray and it would go to the trash regardless of use. And this is a person who default position was no-straw: I am now encouraged to use the straw.

Now, imagine those who do not even think of not using the straws. The default yes-straw position just discourages them from not using straws. Or in other words, the default position encourages them to keep the status quo of keeping on using straws.

The economist in me wonders, how much straws are being used now versus before the campaign started. My hypothesis is, ironically, probably more just because of the change in the default position.

In absence of data, I would think to make the no-straw campaign credible, I feel McDonald’s should probably revert to a no-straw default position. That is, do not give the customers straws, unless requested.

Mohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reserved

p/s — I have received several feedbacks stating one of two cases: they agree with me about yes-straw default position being practiced, or that they contradict me by stating they would have to request for straws at the counter. Quite possible that some branches are tighter than others with its straw-dispensing default procedure. My personal experience at 3 branches (2 in KL and one elsewhere) is that of the former case.

Development in the United States, the United Kingdom and elsewhere in Europe where racist and fascist sentiments are hogging the headlines is worrying. It has been going on for some years now and it is proving to be a long-term trend rather than just an election-cycle blip.

One of many reasons why it is a concern worldwide is that major countries that used to be associated strongly with liberalism now are more reluctant in defending liberal values globally as they struggle to contain domestic problems at home. Some are even uninterested in doing so because, arguably, they no longer believe in liberal values. For instance, it is quite fanciful to think that Donald Trump believes in liberal values.

But it is not all bad news. Difference circumstances exist throughout the world. Indonesian and Malaysian societies for instance, exist in a context that is different from the one in the US and the UK.

Liberals in places like Malaysia from time to time get accused as being Western puppets or having their minds colonized by the West. When the Western world was the leader of the free world so-to-speak, the accusation had been used by local conservatives to mean that liberalism was alien to the local society and served foreign interest. When Bersih was busy protesting, the BN machinery was quick to link the movement to outside interest like George Soros. To be fair, Malaysian liberals do look abroad for help and inspiration while living in an environment that might be unfriendly to them.

I do not think such accusation is a uniquely Malaysian experience. When a large Iranian protest partly fueled by Iranian liberals erupted in 2009, one of the most popular opinions out there was for the US then led by Barack Obama to not be too vocal in their support of the protest and instead let the locals do their thing, out of fear the Iranian religious establishment would run the propaganda that the protest was fueled by outsiders, and ignore the legitimacy of the protest.

However, today, I think that accusation is starting to lose its traction.

I believe so because liberalism in the Western world – I use the West here in the general popular sense referring to the North America and Europe while keeping in mind the problematic definition as well as the fact there are places where liberal values are still held closely, like in Canada – is in trouble and as a result, the West is losing its role as the prime example of a liberal society.

As the West loses its role, liberals elsewhere get a chance to prove that they are liberals not because they look up to the West, but because they believe in principle that transcends geography and culture. And more importantly, the West does not control the local liberals. With the West in trouble and even local liberals starting to condemn the illiberalness of the West, the accusation that local liberals are Western puppets are becoming less and less relevant.

In other words, illiberal troubles besetting the West liberate liberals elsewhere.

This is the first significant protest the current government faces. And this is yet another opportunity for this government to demonstrate that it is different from the previous corrupt racist, fascist regime.

That can be shown by accommodating the protest as much as possible with a view of not being explicitly hostile to it either through speech or action, but by guaranteeing the safety of the protest participants and others while they exercise their rights to freedom of assembly and speech.

I participated in all of the Bersih protests and each time, there was always a dread feeling inside of me expecting the worst to happen. Such feeling was warranted.

Previously, government-controlled media always delivered threatening messages to the masses ahead of any large protest. May 13 without fail was the boogeyman.

My first taste of tear gas happened while I was standing amid a large crowd near the Maybank tower.

I have been chased by the police before. At one time, an officer pulled a gun near Jalan Raja Laut after chaos erupted. There was a time when I walked by a security personnel during a protest, and he verbally abused me.

And the laying out of barbwire and other actions like the conspicuous rolling out of anti-riot assets with security personnel all equipped with armor always threatened the atmosphere of the protest.

Furthermore, it was common knowledge that the party in power then sent provocateurs to create chaos, and create a reason for the security personnel to come in and break the protest.

All this should be avoided by this government. The police should hold back and not purposefully threaten the crowd. No provocateur should be sent by anybody associated with the ruling parties and the government.

It is by backing off from these provocative tactics that we can show to the world that the government is self-assured and strong.

The function of a government within the context of its citizens exercising their rights is to protect those rights and the people who are practicing it peacefully.

We can disagree with the agenda of the protest participants, however racists they are, but we should also respect their right to assemble peacefully.

We can be different and we must be different. We can show to them that there is another way. We do not need to beat our chest to show our confidence and strength.

That is the best way to blunt their message: that we are different and better.

I did not follow the ICERD debate closely until recently. I felt like the issue rose to national prominence out of nowhere, and then it died a spectacular death before I properly understood what it was all about. If you had asked me what ICERD was, I would be able to mutter some keywords like anti-discrimination before I would exhaust my time trying to be intelligent and having to google Wikipedia to understand it.

Nevertheless, as a layperson with liberal bias, I would gravitate automatically towards supporting ICERD ratification. I consider myself as a liberal, even if these days, some of those who claimed to be liberals in the past feel some kind of political reluctance to wear the label anymore, lest they become superliberals and attract the wrath of their political idols.

And so, I do feel slight disappointment how the ICERD debate has played out. Slight, because I do not think ICERD is one of the most important things in the to do list.

To be honest, while I do not believe in the eye-rolling allegations by its opponents that ICERD would require amending Article 153 of the Constitution, it is unclear to me — and even to other liberals who I have talked to and are more invested in the issues than me — what would entail after its ratification. That makes me feel that a ratification is more of a signalling exercise than anything else. The whole ICERD debate generates more heat than light, partly because the so-what questions have not been addressed, and so giving space to red herring counterargument like “Israel signed ICERD.”

In the end, I think there are many reforms that are more important and urgent that liberals should push first, like electoral reforms including local council elections, instead of ICERD.

But for liberals out that who invested more on the ICERD issue, please do not feel too discouraged. I am reluctant to use this argument but perhaps it is not the right time for it. Perhaps we should continue to do what liberals have been doing: conversations, fora, awareness, understanding, empathy on the ground on values like equality.

That kind of activism would prepare the grounds for a more liberal societal attitude than a sudden ratification of ICERD would do. After all, for changes like these to happen, it usually needs to come from the bottom-up, not from the top-down.

The Department of Statistics will release the third quarter GDP figures on November 17. To celebrate…

How fast do you think did the Malaysian economy expand in 3Q18 from a year ago?

  • Below 3% (11%, 1 Votes)
  • 3.0%-3.9% (22%, 2 Votes)
  • 4.0%-4.5% (22%, 2 Votes)
  • 4.6%-5.0% (33%, 3 Votes)
  • 5.1%-5.5% (11%, 1 Votes)
  • 5.6%-6.0% (0%, 0 Votes)
  • More than 6.0% (0%, 0 Votes)

Total Voters: 9

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Before you play the game yet again, here is some background.

The 2Q2018 GDP grew slowly at 4.5% YoY, largely due to an unexpected major gas supply disruption in west Malaysia. The relatively weak growth was enough for many economists to lower their expectations for Malaysia’s 2018 growth rate. The necessary repairs will take time and supply disruption will likely last until early next year. This can be seen from the industrial production index, where the mining component has been declining since May, diverging away from the other components.

And then of course, there was a change in government, which had affected public procurement policy, with major cleaning-up exercise relating to overpriced megaprojects. There had been some public spending slowdown due to the need to recalibrate everything towards a more transparent system, which means the use of open tender throughout the government system. But things are picking up again. More importantly, there had not been any austerity despite loose talks to the contrary. The recent budget should be proof enough.

Meanwhile, strong consumption expansion had hit the trade balance by a bit: for the third quarter, trade surplus did shrink by 4.1% YoY. But with the sales & service tax back online in September, the surplus ballooned RM15.3 billion as imports dropped amid rising exports.

But the unexpected economic stimulus the economy received in the form of 3-month tax holiday from June until August should more than balance out the supply shocks. Consumption should be expanding stronger than it did in it did in the second quarter, which was already growing at an above average rate of 8.0% YoY.

The term austerity is gaining currency in some Malaysian circles. The press and several brokers have mentioned it to describe what they think the Malaysian government is doing in light of various renegotiation or cancellation of megaprojects.

Austerity is a sexy term to pull in some eyeballs but really, I think the term has been used rather loosely to a point that it is inaccurate enough and starts to lose its meaning.

So what is austerity? How do we define austerity?

The first pass-definition should be an overall cut in absolute government spending. In other words, austerity happens when the government runs contractionary fiscal policy. A slowdown in government spending growth itself is insufficient to qualify as austerity. It has to be a cut in spending itself.

The refining factor to work with the first-pass definition is a significant tax hike that discourages spending and contributes to economic contraction. For those with knowledge in macroeconomics, I am thinking of a simple shift to the left in the IS curve in the IS-LM framework, which results in economic contraction.

Yet another refining definition is if these two contractionary policies – reduced government spending, higher tax or both – happen during a period of economic contraction. In tighter language, austerity is when fiscal policy works pro-cyclically during a downturn.

In Malaysia so far, that has not happened. Neither fiscal policy and the economy are in contractionary mode. Public data shows January-August government spending increased by 6.1% this year versus the same period last year. For the May-August period, government spending rose 1.1% YoY. From GDP perspective, public investment and spending rose in the first half of 2018 versus the first half of 2017. Meanwhile, the economy expanded 5.8% and 4.9% in both nominal and real terms in the first half of 2018 versus the same period last year.

And we must not forget, Malaysians received a significant tax cut in the form of 3-month tax holiday and the replacement of value-added consumption tax GST with the less burdensome production tax SST.

Meanwhile, the government has made public statements that Malaysia is not embarking on any austerity program, although it has committed itself to cleaning up its accounts due to years of off-budget abuses and opaque dealings.

Under this situation of continuing economic growth, public spending expansion and the absence of a tax hike, I think it is clear there is no austerity in place.

The truth is, many of the renegotiation and cancellation do not lead to absolute cuts. Rather, the changes are there to make way for other spending that are aimed to be more productive than, for instance, merely servicing overpriced debt for financially and economically unsustainable megaprojects negotiated incompetently by the previous corrupt government.

What is happening is a reallocation of resources. Not absolute cuts. Definitely not austerity.

Critics rushed to assign the new Pakatan Harapan government grades for its 100-day performance. MCA had the cheek to give the government a D grade. Others gave a B. If Pakatan Harapan had its own Pemandu, I am certain grade A+++ would have been announced in a pompous self-congratulatory parade.

I am unsure what grade I would give the government because of the subjective nature of the whole business. One could make it more objective by having a sheet tallying the weighted score, but I just won’t do that. Looking at my desk, I have many other things to do.

As I take a breather, all I can say is that I have my share of disappointment. Government action with respect to the recent child marriage case has been so underwhelming that I feel it is best for me not to think of it. Meanwhile, the official attitude taken against the LGBT community is not something I could defend. There are other problematic decisions, but all that points to the fact change does not happen overnight. It takes time, especially when it comes to culture.

In a democracy, changing the government alone is not enough. What is required is a change in the attitude of the people. At this moment, we need a leader who can make that happen without worrying too much about his or her approval ratings. But as I have been told, that is easy for me to say because I do not have to face the voters.

Yet, all those disappointments do not at all make me regret for doing what I did on May 9. In the days after it became clear there would be a Pakatan Harapan government, I think I understood early on how difficult it would be for change to happen and disappointment was something to be expected. Larger change needs time to happen.

And at the end of the day, before we rush to judge this government on its 101st day, I think it would be good to remind ourselves that at the very least, this government has a 5-year mandate. I would reserve my judgment until close to the end of that mandate.

This however does not mean the government should be free of criticism. Criticism is important to remind this government what is important, and to me, the most important agenda is the promised institutional reforms that will make sure the likelihood of past abuses repeating itself is low. The rest of the promises are secondary.

If we managed to set our institutions straight, then we would have a great foundation to build on in years to come beyond the 5-year period, regardless whichever side may come to power later. For me, that will be the true test of this Pakatan Harapan government.

I have been extremely busy and I have just realized the last time I updated this blog was just slightly more than 3 months ago.

I still want to keep this going, except this time, no real commentary. But the second quarter was quite a quarter, externally and especially domestically. These events had added significant short-term uncertainty that might have affected growth.

How fast do you think did the Malaysian economy expand in 2Q18 from a year ago?

  • Below 3% (8%, 1 Votes)
  • 3.0%-3.9% (8%, 1 Votes)
  • 4.0%-4.5% (23%, 3 Votes)
  • 4.6%-5.0% (38%, 5 Votes)
  • 5.1%-5.5% (15%, 2 Votes)
  • 5.6%-6.0% (8%, 1 Votes)
  • More than 6.0% (0%, 0 Votes)

Total Voters: 13

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We have the right to celebrate May 9. It is after all the first time in Malaysian history change at the very top happened. For years we were only chipping at the edge. Progress felt irrelevant. But now, here it is. Change.

Yet, not all or even most of the changes Malaysia needs have been instituted. It will take time and work for these changes to happen. There will be residual resistance to change and perhaps using the adjective residual understates the problem at hand. After more than six decades of Perikatan/Barisan Nasional in power – seven decades if you go all the way to the first Malayan general election in 1955 – there is a kind of deep state the new Pakatan Harapan government will need to win over and even fight.

There will be disappointments, and Pakatan supporters and sympathizers will accuse the new government of betrayal and hypocrisy.

But before any of us levels those accusations, we must understand that the government will have to pick their battles. Some will be won. Some will be lost. Pakatan and their supporters will need to be smart in which battles they want to win.

More importantly, before throwing those accusations in the future, we need to understand the long arc of history all of us have to deal with. Malaysia’s deep multifaceted history – with dimensions of race, religion, Peninsula-Borneo, federal-states, urban-rural, national origins, class, gender, etc – is the proper context to judge the new government in the next few years. No action could be judged in isolation.

And the future is just as important as the past in understanding this new Malaysia and the new government.

Our demography and culture are changing at glacial pace. It is slow but the inertia is massive: our society is set to become less diverse in a meaningful way. By 2050 the Bumiputras will form 70% of total population from about 60% in 2014. So would be the Muslims. The Malay population share will rise to 60% from 50% in the same period.

At the same time, we will be an aged society by 2050, from our low median age of 28-29 years old and low dependency ratio.

I fear the two demographic shifts could make our society less open and less progressive in our values. It is not the Malays and the Muslims per se that I fear. It is the increasingly monolithic nature of our society, and hence, the possible intolerance of differences. I fear that future where the Malaysian mind would narrow to a point that leaving is the only reasonable option for too many people.

This is the reason why the 2018 election was the last chance to change in time. The trends are pushing against us, especially against the liberals. It is not simply an election rhetoric. It is a real long-term concern about the fate of Malaysia. This is why I feel spoiling your votes or not voting is unwise: the advocates of the tactics (who wanted some kind of change) are ignorant of history and blind to demographic changes.

It was also the last chance to change because substantive changes that Malaysia needs could not be made by the same side that benefited from the closing of the Malaysian mind. Najib Razak tried it in 2009-2013 and he failed. All his attempts were in the end reduced to mere silo economic targets that stood alone outside of multifaceted Malaysian contexts, making them utterly dissatisfying as a vision. So dissatisfying that we had to go back to the 1990s to move forward.

And substantive change will need more support from Malaysians. While the Pakatan victory is the first step, we have to remember Pakatan won only plurality in popular votes, not majority. Lasting change would require Pakatan to get more Malaysians on board.

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