Category: Economics

Categories
Activism Economics

[982] Of Malaysia-US FTA talk with US Ambassador

I got this from a friend. And sharing is good. Well, not always.

Dinner Talk: “US-Malaysia Free Trade Agreement (FTA) – What’s in it for Malaysia”

The President of the MIT Club of Malaysia, Dr Christopher Shun and the Executive Committee wishes to invite you to reserve your seat(s).

Speaker: HE Christopher J LaFleur, US Ambassador

Day / Date: Friday, 15 December 2006

Venue: Renaissance Kuala Lumpur Hotel

Function Room 7 & 8, New World Lower Ground Floor, Jalan Ampang, 50450 K.L.

Other details:

7.30 p.m.: Pre-dinner drinks

8.15 p.m.: Dinner begins

9.15 p.m.: Talk by HE Christopher J LaFleur

9.45 p.m.: Q & A session

10.30 p.m.: Presentation of gift of appreciation by the President of MIT Club.

Dress code: Formal (Lounge suit for men)

Cost: RM150 per person

Payment must be made in full by Monday, 4 December 2006 for your reservation to be confirmed. Admittance is strictly by payment confirmation. No cards issued; there will be a seating plan.

Cheques payable to ”MIT Club of Malaysia”. Please mail cheques to Ms May Lim, Signium World Executive Search Sdn Bhd, Pusat Dagangan Phileo Damansara II, 306 Block A, Jalan 16/11, 46350 Petaling Jaya, Selangor. Payment can also be made directly into Maybank Current A/C No. 514196 214125, and receipt faxed to the fax no. below.

Details/Reservations: Debbie (T 03-79575882 / 79521388, F 03-7952 1399, E admin@signiumasia.com).

Thank you for your interest and kind support.

Executive Committee

MIT CLUB OF MALAYSIA

I’m thinking of going, if my trip to Cameron Highlands is canceled. Anybody interested in tagging along with me?

Categories
Economics Politics & government

[981] Of Anwar Ibrahim calls for more subsidy

Anwar Ibrahim calls for a reduction of retail prices of gasoline. I’d imagine such call would introduce greater subsidy to already heavily subsidized prices in Malaysia:

Kerajaan sepatutnya merendahkan harga runcit petrol di Malaysia berikutan penurunan harga minyak mentah sedunia, keuntungan Petronas yang meningkat dan kadar inflasi yang tinggi.

It roughly translates to:

With respect to global price drop of crude oil, rising profitability of Petronas and high inflation rate, the government should lower the retail price of gasoline in Malaysia.

There goes half of the support I had for him.

Categories
Economics

[978] Of Golden Sime Guthrie

One word: whoa!

Nov. 23 (Bloomberg) — Malaysia’s government may combine Sime Darby Bhd., Kumpulan Guthrie Bhd. and Golden Hope Plantations Bhd. into the world’s top palm-oil producer, analysts said after the companies received notice of an approach.

But if it had involved real private entities, it would’ve been this: WHOA!

Categories
Economics

[977] Of the Malaysian economy in 2007

How would the Malaysian economy perform in 2007?

It would most likely depend on several major issues.

First, in no particular order, is the spur of government spending due to the Ninth Malaysia Plan.

Second, the Visit Malaysia Year.

Third, a slowdown of demand for electronics.

I can’t think of a fourth factor but I’d be grateful for reasonable suggestions.

Here, I’d like to make a connection between government spending and the reduction in demand for electronics good.

The Malaysian government spending, which includes the second Penang bridge, a number of highways as well as a new city nearby Port Tanjung Pelepas, should provide students of economics some interesting natural experiment. Why?

It will test the Mundell-Fleming model.

According to the model, an increase in government spending has a negative effect on the net export component of the GDP. Let me explain.

A government spending increase will temporarily increase the GDP. This makes sense because government expenditure is one of the four components of GDP and as such, it directly affects the GDP. That increase however will cause the local interest rate to go above the world interest rate. Higher local interest rate vis-a-vis global interest rate will cause capital to flow into the local economy. That inflow will make the local currency, the Malaysian Ringgit in this case, to appreciate. Such appreciation will encourage import and discourage export. In other word, net export should see a reduction once the economy reaches some sort of equilibrium.

Earlier this week, the New Straits Times talk about the possibility of a bull run. In its reports, several analysts predict that the Kuala Lumpur Stock Exchange would hit 1,300 in 2007:

The KL Composite Index is expected to hit 1,300 points next year — a high last reached in 1994. Analysts say the stock market can sustain its rally on the back of a positive economic outlook, implementation of the 9MP projects and a stable interest rate…

What do I think of that?

I haven’t made up my mind yet but I’m more interested to see how the Malaysian net export component would behave in 2007 and 2008. According to Mundell-Fleming and keeping in mind that there’s a demand slowdown for electronics — Malaysia is a big export of electronics — we are set to see a reduction in Malaysian trade balance. Ceteris paribus, of course.

p/s – somebody pointed out to me that instead of just testing Mundell-Fleming, it would also test a variety of other things. True. But here, I’m interested in this particular subject.

Categories
Economics Environment

[975] Of 300 MV coal power plant versus 2400 MV hydroelectric dam

Yesterday, The Star reported that there’s an opposition to a plan to construct a coal power plant in Sabah:

LAHAD DATU: A coal-fired power plant in an area earmarked for eco-tourism in Silam is yet to get off the ground but already it is stoking up anger among several groups in this part of east coast Sabah.

The most vocal opponents to the 300MW plant, said to cost between RM1.2bil and RM1.3bil, are a group of environmentalists, social activists and local businessmen in this booming agriculture town.

They fear the plant will do more harm than good for them and the environment stretching from Darvel Bay to the pristine Danum Valley forest, some 80km away.

According to officials, the power plant would utilize clean coal technology:

KUALA LUMPUR: The technology used for coal-based power plants is different compared to that used previously, Deputy Energy, Water and Communications Minister Datuk Shaziman Abu Mansor said.

There has been a lot of talk of clean coal technology for the past few years in Malaysia but I’m still skeptical on how clean the power plants, including the one in Sabah, would be. Furthermore, I’m unsure how the power plant plans to store the carbon byproduct, i.e. waste.

Regardless the technology used, I wonder though, why do we need a 300 megawatts power plant when we are going to have a 2,400 megawatts Bakun hydroelectric dam soon? Why do we need another 300 MV coal power plant when most output of the 2,400 MV dam would not be used?

Not too long ago, the Sarawak state government wanted to build a metal smelter plant as an economic justification of the construction of the mightily huge Bakun dam. Without the smelter, the state government believes that the construction of the dam wouldn’t be justified, especially when the plan to connect the Malay Peninsula with Borneo via an underwater cable was scrapped due to the Asian financial crisis of the last decade. If the operator of dam really couldn’t find a buyer for its electricity, surely the Bakun dam could accommodate whatever the Sabah coal plant would accommodate. By the way, the Bakun dam is expected to become operational by mid-2009.

Perhaps, certain engineering issues regarding electricity transmission between Bakun, Sarawak and Sabah necessitates the construction of the new coal power plant in Malaysian Borneo?

If there’s none, then somebody better explain.