The Coincident Index (CI), that measures the current economic activity, rose by 0.9% in April 2009 registered at 113.7 points. The increase of the index were contributed by real gross imports (0.7%), real sales in manufacturing sector (0.4%), Index of Industrial Production (0.2%) and real contributions in EPF (0.2%). The six-month smoothed growth rate of CI in April 2009 showed an improvement to -7.1% from -9.7% in March 2009.
The Leading Index (LI) which monitor the economic performance in advance also increased in April 2009. The index grew by 2.0% to 162.5 points from 159.4 points recorded in the previous month. Main components that have contributed to the increase of index were real total trade of eight major trading partners (0.6%), real money supply, M1 (0.5%) and Bursa Malaysia industrial index (0.3%). The six-month smoothed growth rate of LI improved 4.3% in April 2009 compared to 0.6% in the previous month. [Malaysia Economic Indicators – Leading, Coincident And Lagging Indices April 2009. Department of Statistics. Accessed June 26 2009]
[2019] Of thanks MJ
[youtube]1zpTQCQEFhg[/youtube]
Wages in Malaysia are generally depressed.
Protectionists blame foreign labor as the main cause of that depression. According to them, if we are less dependent on foreign labor — low-skilled mostly — wages will go up. So, they want to kick out as many foreign labor as possible. Even all, for the extremists.
They make that assertion without considering foreign labor are active in sectors mostly different from the ones locals are participating in; there simply not enough locals wanting to participate in the sectors filled with foreign labor.
Removal of these foreigners will no doubt increase wages up as the law of supply and demand demands it, but that is largely true only in those sectors. The problem of wage depression in the larger economy will not be addressed or significantly affected with the absence of foreign labor.
In front of our eyes is a natural experiment to prove that. Indonesia has decided to stop the flow of maid into Malaysia:
JAKARTA, June 25 (Bernama) – Beginning today, Indonesia will halt temporarily sending maids to Malaysia until there are discussions on the review of the memorandum of understanding (MoU) on the matter. [Indonesian Maids To Malaysia Halted Temporarily. Bernama. June 25 2009]
I am confident that while wages for maids will rise, wages in other sectors will remain largely unaffected.
In fact, Malaysian productivity might fall because Malaysians who face high opportunity cost between housework and professional job might not be able to do what Adam Smith wrote in The Wealth of Nations: specialization.
And in economics, besides supply and demand, productivity is a major component in the determination of wages.
The proposal to form a so-called unity government between PAS and UMNO finally finds its rightful place — in a dustbin. Nothing guarantees any PAS member from rummaging through the trash to rejuvenate the idea however. If the dream still lingers, I am here to offer a dire possibility. If PAS-UMNO unity comes true, PAS may break up as internal and external forces pull the political party in different directions.
Why is it a possibility?
PAS-UMNO unity will significantly affect the status quo balance of power. It will grant BN a proper majority in Perak. Selangor will suffer from a hung assembly. Other notable changes include the weakening of the opposition in many states and the absence of one in Perlis.
In sum, PAS-UMNO unity will be a major setback for Pakatan Rakyat.
That scenario has one caveat: it assumes all PAS members will remain united if the party defects from Pakatan Rakyat to work with UMNO. Given the kind of rift caused by the PAS-UMNO unity talks, that is a big assumption.
It is not every day one can expect Nik Aziz Nik Mat as the leader of PAS to tell off one of his prominent party members — Nasharuddin Mat Isa — to quit the party and join UMNO after Nasharuddin spoke warmly of the possibility of PAS-UMNO unity.
Later, 10 PAS members of Parliament went out to support Nik Aziz and to oppose any pro-UMNO activity within PAS.
The action of the 10 MPs is particularly revealing. For the more liberal members of PAS, or the Erdogans as they have come to be known, they have every incentive to not associate themselves with a pro-UMNO PAS. Many of the Erdogans contested in areas where voters come from diverse backgrounds. These Erdogans understand that they won on March 8, 2009 because they appealed to inclusive politics. They campaigned by convincing voters that PAS is for all and not just for the Muslims or the Malays, i.e. exclusive politics.
To have PAS working in concert with UMNO — as Onn Yeoh writes in The Edge[0] — amounts to betrayal of these voters. The very notion of unity between PAS and UMNO is based on the idea of exclusive politics, running contrary to the kind of campaign the Erdogans ran in the last general election. By the next election if the Erdogans are still part of a pro-UMNO PAS, these voters will not vote for the Erdogans. Hence, the future holds very little prospect for the Erdogans.
These Erdogans can of course undergo a rebranding exercise to adjust to exclusive-based politics that a PAS-UMNO coalition is expected to play. Notwithstanding the very appropriate accusation of hypocrisy that may come, these Erdogans will face stiff competition from the real conservatives within PAS as all compete for smaller pool of seats any exclusivist politician can expect to win. Furthermore, it is unrealistic to expect UMNO to surrender their seats to PAS in order to accommodate the Erdogans-turned-conservatives.
If PAS-UMNO unity happens, the only way for the Erdogans to secure their future is for them to demonstrate their commitment to inclusive politics and, inevitably, Pakatan Rakyat. This may translate into having the Erdogans or more generally the pro-Pakatan Rakyat members of PAS to either eject pro-UMNO members out of PAS, leave PAS in favor of PKR or even form a new party that DAP and PKR can work together under the banner of Pakatan Rakyat. In any case, the result will leave PAS utterly broken.
Only through this can they hope to secure their political future. The existing seat distribution formula within Pakatan Rakyat can continue to be used to accommodate these Erdogans, as long as they remain loyal to the coalition even as PAS finds itself in cahoots with UMNO.
For DAP and PKR, the stake is simply too high that both parties cannot allow PAS to defect so easily. It will in the best interest of PKR and DAP to embolden the Erdogans to mount a revolt against any movement towards PAS-UMNO unity, possibly leading to a breakup as described earlier.
The breaking up of PAS will limit any gain made by UMNO. It may prevent Selangor — the jewel of the crown — from experiencing a hung assembly. If Pakatan Rakyat is lucky, the maneuver can even prevent BN from gaining the coveted two-third majority in Parliament.
For PKR especially, there is an extra motivation to break PAS apart in case PAS-UMNO unity becomes a reality. PKR may enjoy an influx of high-quality members from PAS, especially if the pro-Pakatan Rakyat members of PAS decide to leave the party and not form a new party. PKR may need high-caliber individuals to strengthen its ranks and the Erdogan MPs do just that, if ever the Erdogans have a reason to part from PAS.
But, at the end of the day, the most preferable solution for DAP and PKR is to have PAS as a committed member of Pakatan Rakyat. Both DAP and PKR will want work to keep PAS within the young three-party coalition to build on the existing momentum. As we have seen, this is exactly the path taken by DAP and PKR.
As long as the most preferred option works, there is no need to resort to the second most preferred option. This is something everybody who wishes to see a strong PAS must understand.

First published in The Malaysian Insider on June 24 2009.

[0] — The much-hyped, but now abandoned, unity-government concept, first touted by PAS President Datuk Seri Hadi Awang in March, and welcomed by all and sundry within Umno is a betrayal.
From Pakatan Rakyat’s perspective, it is a betrayal of voters’ trust. Malays who voted for PAS did so because they preferred it over Umno. Non-Malays who voted for PAS didn’t do so because they wanted PAS but because they rejected Umno. In either case, PAS teaming up with Umno is the last thing these Malay and non-Malay voters want. [Unity govt a betrayal all around. Oon Yeoh. The Edge. June 22 2009]
I do not pretend that the most unlimited use of the freedom of enunciating all possible opinions would put an end to the evils of religous or philosophical sectarianism. Every truth which men of narrow capacity are in earnest about, is sure to be asserted, inculcated, and in many ways even acted on, as if no other truth existed in the world, or at all events none that could limit or qualify the first. I acknowledge that the tendency of all opinions to become sectarian is not cured by the freest discussion, but is often heightened and exacerbated thereby; the truth which ought to have been, but was not, seen, being rejected all the more violently because proclaimed by persons regarded as opponents. But it is not on the impassioned partisan, it is on the calmer and more disinterested bystander, that this collision of opinions works its salutary effect. Not the violent conflict between parts of the truth, but the quiet suppression of half of it, is the formidable evil: there is always hope when people are forced to listen to both sides; it is when they attend only to one that errors harden into prejudices, and truth itself ceases to have the effect of truth, by being exaggerated into falsehood. And since there are few mental attributes more rare than that judicial faculty which can sit in intelligent judgment between two sides of a question, of which only one is represented by an advocate before it, truth has no chance but in proportion as every side of it, every opinion which embodies any fraction of the truth, not only finds advocates, but is so advocated as to be listened to. [On Liberty. Chapter 2. John Stuart Mill. 1859]