Tag: imports

Categories
Economics

[3020] Our surpluses are a bargaining chip we should use to address the energy supply crisis

The Malaysian government has stirred after a short period of complacency. While the charge of complacency is warranted (and the measures appear milder than it should have been in light of the severity of the problem we face), a slower-than-promptly approach does have its benefits. One of the benefits is the avoidance of knee-jerk reactions that generally arise during a panicky state. Yet another is that we get to learn from others’ successes and mistakes before carrying out our own measures.

Here, I am glad Malaysia has largely steered away from export-restrictive measures. Multiple economies have done so to prolong supply in the domestic economies. After all, shunning the export doors is a quick-and-easy solution. And looking at the domestic use chart below (produced earlier to highlight the crisis at hand), exporting might look unnecessary given the rising stress at home.

Yet, export ban is beggar-thy-neighbor policy that would make everybody worse off. This is especially so the most manufacturing products are complex involving inputs that could only be obtained through external trade. We could be a net exporter of oil and gas, but we would be a net importer of various chemicals. If we restrict our exports that other needs for their economies, it would be likely others would do the same too. This would result to a whole chain dying off in the short term (while investing takes years) and exacerbating the ongoing energy and chemical-based supply disruption.

Rather than resorting to restrictive trade measures, we should (and appear have) capitalized on our exports in return for guarantee for imported supply. Australia and Singapore have done exactly this recently where Australia promises to continue to supply Singapore with LNG and in return, the latter guarantees diesel supply for the former.[1] Malaysia appears to have the similar arrangement with Australia.

That is the way forward. Malaysia should use our surpluses in various industries as a bargaining tool to ensure our own supply security whenever possible: our surpluses are both the carrot and the stick we must use. The key is to strengthen our trade ties instead of cutting it.

[1] — In this context, we reaffirm our commitment to strengthen energy security, to support the flow of essential goods including petroleum oils, such as diesel, and liquefied natural gas between our two countries, and to notify and consult each other on any disruptions with ramifications on the trade of energy. [Joint Statement on Energy Security. Lawrence Wong. Anthony Albanese. March 23 2026.]

Categories
Economics Society

[2952] When did dates become popular among Muslim Malaysians?

Dates now feel ubiquitous on Ramadan dinner tables among the Malay (and the wider Muslim Malaysian) community. Not only that, more often than not, they break fast with the fruits first.

Just the other day, somebody spotted me breaking my fast with something else (a glass of water), and the person commented how unusual my behavior was.

I found that comment very peculiar. Contrary the person’s assertion, I feel date-eating had never been normal in Malaysia. I remember a time when dates were not even at all popular. It was not even available in the Malaysian mass market easily unlike now. The Yusuf Taiyoob trend, in particular, is really a recent phenomenon appearing in the early 2010s.

I myself first tasted dates not in Malaysia, but at a mosque in the United States in the early 2000s. There was a large Arab community—Iraqis, likely due to the Gulf Wars—and they loved their dates.

That comment made me wonder, how and when did dates start to become popular?

I know how it became popular: many would tell you it is religiously preferable to break fast with fresh dates. It is sunnah, which means extra pahala, or merit for those practicing it. And during Ramadan, Mulims believe everything good has a big multiplier assigned to it, unlike normal times when one good deed is considered one. Do not ask me about how the scorecard works.

So when?

I figured, the best way to know when dates became popular in Malaysia, and to prove whether I was right (that is mass date consumption being a relatively recent phenomenon in Malaysia), is to look at trade data over the years.

Here, two public databases are helpful. First, the International Trade Center, a body under both the World Trade Organization and the United Nations. Second, the UN Comtrade Database. Unfortunately, the best I could get was data all the way back from 1989.

So, when did dates first becoming popular in Malaysia (within the confines of Ramadan)?

I will let the graph talk.

The chart suggests date consumption grew in popularity (within its own context) over time. More supply means more could consume it: at the very least, date import volume grew at a faster rate than population growth.

Specifically, 1989 date imports were approximately 440 g/person. It rose to 480 g/person in 2000. An increase, but not too much. But it surge to 640 g/person in 2010 and then 700 g/person in 2020. There was a big jump between 2000 and 2010. I think that says something.

Things changed some time in the 2000s or the 2010s, which coincided with the rise of Tunisia as an exporter to Malaysia. Prior to that event, China, Iran and Egypt were the biggest suppliers. Both China and Egypt have fallen off the rung since the last decade.

With that, I think I can say in the 1990s, it was not that popular. That justifies my experience. It is not me that is unusual. It is the community that has changed.

I also suspect date consumption was popular among rich Malays first, way way before. The culture became popular with masses later partly due to religious exhortation/advisory (sunnah) and a version of conspicuous consumption at work: a Veblenian way of saying rich religious people eat it, and if I eat it, I would be seen as a rich religious person too. This is probably harder to prove.

Finally, it is good to put the rising popularity of dates into context. These date imports are small compared to other (foreign) fruits. For instance, nearly 170,000MT oranges (citruses really), 150,000MT apples and 50,000MT grapes and the likes were imported in 2020. Compare that to the 2020 dates imports of 22,500MT.

Still, 2020 date imports were bigger than bananas. But Malaysians do grow bananas locally. So, it is not a proper comparison.

Categories
Economics

[2896] September import figures settled some questions about the health of domestic demand

September was not a pretty month for Malaysian exports.

Exports for the month fell 6.8% from a year ago. When seasonally-adjusted, it still dropped 3.6% month-on-month. The decline was definitely caused by lower export volume, which points towards weaker global demand. But we know this already: trade war is bad for Malaysia. Once it gets bad enough, no trade diversion will be good enough to fight off reduction in global trade volume.

But what is more interesting to me is the import data and by proxy, domestic demand. September imports rose 2.4% year-on-year. Seasonally-adjusted imports were also marginally up. Imports are a proxy of domestic demand and import growth suggests a growing domestic demand. This is a good news.

There had been concerns over the health of domestic demand recently. Why? Because imports had been falling badly starting from June until August, while seasonally-adjusted figures had been giving mixed signals. From here alone, it was difficult to decide whether the June-August import decline was due to weakened domestic demand or just due to high base effect created by tax-free period. As a backgrounder, the GST was zerorized beginning June 1 and was finally replaced by the SST on September 1.

The September 2019 numbers have now given us the answer: it was largely due to the tax-free period and the high base effect it created.

If the June-August import decline was truly largely about weakened domestic demand, that decline would have persisted into September. But it did not. In fact, there was a significant break: capital, intermediate and consumption imports all had big jumps in September. This is typical of base effect that riddles year-on-year calculation every time there are big changes.

Imports are not the only proxy to domestic demand of course. Inflation is doing just fine.

Categories
Economics WDYT

[2892] Guess the 2Q19 Malaysian GDP growth

It is that time of the quarter again. The second quarter 2019 GDP will be released by the Department of Statistics next week, on August 16 2019.

How fast do you think did the Malaysian economy expand in 2Q19 from a year ago?

  • Slower than 3.6% (14%, 3 Votes)
  • 3.6% - 4.0% (18%, 4 Votes)
  • 4.1% - 4.5% (32%, 7 Votes)
  • 4.6% - 5.0% (27%, 6 Votes)
  • 5.1% - 5.5% (9%, 2 Votes)
  • Faster than 5.5% (0%, 0 Votes)

Total Voters: 22

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Malaysia’s 2Q19 industrial production growth so far has been stronger than it was in the first quarter. For illustration, April and May factory output expanded 4.0% year-on-year each. In contrast, the 1Q19 industrial production grew by 2.7% year-on-year only. The June industrial production has not been released, but it would have to be really bad before it would bring the 2Q19 growth below 1Q19 rate. There is however a minor possibility given how bad June export growth was.

Yet even with the June exports, exports for the whole 2Q19 did better than in the previous quarter.

Meanwhile, Bank Negara’s public data shows government expenditure growth is stable, with 2Q19 spending growth being about the same as it was in the previous quarter.

Another data set from the central bank does not look pretty though. Loans growth is slow. In 2Q19, total loans in the banking system grew 4.4% year-on-year, versus 7.2% in 1Q19. But there is a noticeable base effect here, possibly due to companies rushing to get their loans prior to the election. Just to highlight the importance of base effect, in month-on-month terms, loans grew 2.4% in April 2018, when the average loans growth in the January 2017-March 2018 was only 0.6% month-on-month. Loans growth is a proxy of private consumption but given the base effect, it is a difficult proxy to use for this quarter.

This is especially so when other proxies of private consumption are doing well. For instance, 2Q19 consumption imports grew 8.0% year-on-year, versus only 1.0% in 1Q19. Retail and wholesale trade statistics are also doing reasonably okay. The rate cut in May 2019 would also boost demand. The labor market is also stable.

Talking about base effect, we also have to remember that in June 2018, consumers in Malaysia faced no consumption tax. That would be a negative to consumption growth from year-on-year perspective.

Nevertheless, I am expecting a high 4%. It could even surpass 5% if Malaysia is lucky enough. Yes, I am optimistic of the second quarter, unlike for the first quarter statistics.

Categories
Economics WDYT

[2887] Guess the 1Q19 Malaysian GDP growth

The 2019 first quarter GDP will be out on May 16. Since we live in an age of trigger warning, let us play the game first:

How fast do you think did the Malaysian economy expand in 1Q19 from a year ago?

  • Slower than 3.6% (17%, 4 Votes)
  • 3.6% - 4.0% (26%, 6 Votes)
  • 4.1% - 4.5% (30%, 7 Votes)
  • 4.6% - 5.0% (26%, 6 Votes)
  • 5.1% - 5.5% (0%, 0 Votes)
  • Faster than 5.5% (0%, 0 Votes)

Total Voters: 23

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The consensus views are that growth for the quarter will be weak, possibly in the lower half of the 4.0%-5.0% range. Some are even betting on something lower. There are at least two justifications for the pessimism.

One, industrial production grew only 2.7% YoY during the quarter, largely due to contraction in mining production. Supply disruption continued to bedevil the sector after a major incident in Sabah last year. Manufacturing did largely okay, except in February. This leads us to the second factor.

Exports. Exports plunged quite drastically in February and a bit in March. While some of it had to do with supply constraints in the mining sector, manufactured goods exports also dropped, which indicated weakness in external demand. The country until recently had benefited from the trade war through trade diversion and business relocation. This could be seen from FDI and trade data. But prolonged and wider trade war would slow the expansion of global trade volume, possibly to a point where trade diversion would not overcome effects from slower trade growth. If the February and March export trend continues (exports for the quarter was down and in fact, so did export volume) in the second quarter, that might indicate we have reached that point where positive trade relocation factor is giving way to volume growth slowdown. The the escalating China and the US trade conflict is very likely the one major contributing factor to Bank Negara Malaysia cutting its policy rate by 25 basis point rate last week.

These two trends could hit the domestic economy in terms of employment. But so far, employment statistics have been going strong. It has not budged from 3.3% and anecdotally, there has been no story of widespread layoffs caused by weakened domestic and external demand. There were layoffs, but those appear directly induced by government policy, not demand per se. For instance, the non-renewal of contracts for political appointees and other politically-linked projects, which are not quite demand-driven.

There are complaints of economic slowdown among the public and in the media for awhile now, but again, that has not quite affected employment statistics by one bit. This makes the slowdown in the past few quarters puzzling to me. A pure supply-driven slowdown could explain this and there were supply problems. It is also possible that firms are hoarding labor supply, with a view of better economic performance in the near future.

From pure GDP growth statistics perspective, there might be some good news. Net exports might be doing better, or more accurately, external demand is doing better than domestic demand. Export volume index fell 2.2% YoY for the first quarter; import volume dropped 3.1%. The usual goods exports decreased 0.7% versus import drop of 2.5%. This could boost the GDP growth up by way of net exports, even if it is just math at work. If the actual GDP growth does surprise the market on the upside, I think it would come from here.

The downside is, the import volume drop suggests private consumption growth had slowed down. After all, imports are just a reflection of domestic demand. But to be honest, the consumption growth in the past several quarters have been extraordinarily high due to the changes in the tax regime. Such growth should decelerate and we would only see a “normal” growth rate for consumption in the fourth quarter of this year once the tax factor has been equalized across the relevant period (This of course is purely from year-on-year perspective and this is where quarter-on-quarter calculation offers a quicker and a better way of measuring changes).

As for government spending, it should be on the recovery mode and I think the worst should be behind us (or nearby, if it is not behind). As for gross fixed capital formation, I would want to say the same thing, but I really do not know.