KUALA LUMPUR: Juwai IQI chief global economist Shan Saeed shared his thoughts on the country’s post-Covid-19 economy, recovery strategies and political development in a Q&A:
Question: You have a global perspective and strong expertise in the global economy, looking at the government’s performance as of September/October 2021. 8.9% this year from a modest 3.1% growth in 2021?
Answer: Well, in terms of economic growth, economic stability and maintaining economic confidence in the country, international investors like us (Juwai IQI) and many others, see economic stability as a priority, as the government of the (caretaker) Prime Minister ) Datuk Seri Ismail Sabri Yaakob has done.
He has been living in great wealth.
The first is policy consistency, which is also important to ensure the growth of the system. You are looking at Europe and the United Kingdom (which returned the policy within days of the announcement). Such inconsistencies can harm economic growth.
Therefore, investors prefer people who understand finance, experienced people who can manage the economy very professionally.
I think what the government has done since the first half of the year, Malaysia’s economy (GDP) was 6.95%, 5% in Q1, 8.9% in Q2, so, the GDP growth in the first half was 6.95%, which is slightly below that of Philippines.
Malaysia is ranked second in Asean, ahead of Singapore and Indonesia and other economies in terms of government performance, which we have seen since last September. As of today, the main goal has been to vaccinate people, so that 98.99% of people are vaccinated.
This is why the government was able to open up the economy ahead of its neighbors to the north and south. The others were struggling but Malaysia was the first to open up its economy and empower it and this gives a good signal to investors around the world that Malaysia is ready to do business.
Second, infrastructure has a strong relationship with GDP growth. So wherever you have sustainable infrastructure, you have high GDP growth and this is what we have seen.
The third thing is technology and the government is also looking at it.
Q: How would you explain the current government’s economic strategy in light of political risks such as the conflict between Ukraine and Russia and the global recession in developed countries. Has the Malaysian government under the leadership of Datuk Seri Ismail Sabri Yaakob gone through the global financial crisis?
A: They have done a great job. They are going through a financial crisis as you know, the world economy is on the brink of collapse and systems are collapsing.
For example, the prices of oil and coal have increased while the commercial and industrial markets have improved. Therefore, what the government has done has given confidence to local investors, When you have confidence in local investors only foreign direct investment (FDI) will come into the picture.
I am giving you the latest statistics. Sales numbers touched RM257 billion, up 31% year-to-date. So this clearly shows that the government has managed to maintain stability in the macro economy and has given confidence in the economy to local investors who have driven FDI into the country.
Last December, Intel made a large investment in the Asean region of US$ 7.5 billion (RM30 billion) and they are coming to Malaysia so that they send a good signal not only to the rerion, but also to money around the world that Malaysia is moving. This is why many investors are moving to Malaysia.
Q: Trade and commerce figures for 2022 are still on the rise as total trade registered double-digit growth in September 2022, reaching RM256.9 billion while FDI was touching a constant of RM41.7 billion in Q1 2022 compared to RM48. 1 billion in 2021. What are the main trends in trade and FDI figures?
Answer: The government has prioritized things. It has been a reaction where everyone criticized the government last year saying that it did not do well in terms of Covid-19 but you have to consider that no one had a playbook, how to deal with Covid-19.
Everyone was making efforts, but I give all the credit to Prime Minister Ismail Sabri and Minister of Health Khairy Jamaluddin (KJ). So, that gave a lot of confidence. As a foreigner living in this country for more than 10 years. I am vaccinated and I feel safe and secure living in Malaysia.
Q: On inflation, has the government or Bank Negara Malaysia done enough to contain inflation? Is it different or unusual that this is happening financially?
Answer: The reality is that inflation is not from Malaysia but from abroad. It is imported because of the strong US dollar. If you look at the Asean region, inflation in Singapore is 7.5%, the Philippines is 6.9%, Indonesia is 4.7% and Malaysia is still 4.5%.
Inflation in Europe has exceeded 10%. The UK is in the top 10% while Australia is in the top 7%. So when you compare the inflation rate, Malaysia was among the lowest with only Vietnam lower than Malaysia. Some countries are facing the problem of inflation. About 60% of the world economy is down.
So, what is stagflation? That’s when you have high inflation and low growth. Therefore, Malaysia is still fortunate because of government policies, inflation rates are low.
Q: What do investors around the world expect from the government in terms of economic policy or policy in the future?
A: We expect consistency. And the last year and a half we’ve seen before Covid-19 and after Covid-19. The government has managed to remain financially stable. They have provided the framework and allowed the private sector to run the economy.
I believe in the free market. The person who has the greatest influence on my personality is Milton Friedman, one of the greatest Nobel laureates from the University of Chicago.
I believe that the government has given the policy framework and has given financial confidence to the people. That is why you consume so much, FDI is coming into the country. Sales numbers are up. It only happens when you have a consistent schedule.
Q: Based on Ismail Sabri’s many decisions on various issues, especially on economic recovery, do you think he is a leader capable of restoring Malaysia’s economy and making Malaysia an investment hub in the region?
A: If you ask me, I hang out with a lot of people. I like people who are quiet, proactive and have a vision. There are many people who talk but never finish.
But the prime minister is a very calm person. However, he is proactive, he likes to give. He likes to lead from the front and I have seen during Covid, the Prime Minister was down. KJ was down and so was the Health DG.
One of my favorite things about a prime minister is listening to investors. And I am a member of the Hong Kong-Malaysia Business Association. They have been communicating and giving suggestions. I am also a member of the Economic Club of Kuala Lumpur. They came up with a plan before the budget, and sent it to the finance minister and the prime minister’s office.
So as a prime minister, you have to listen to all the stakeholders and once you listen to all the stakeholders, you get feedback and then you say, OK, this is the plan we have to follow. So as a prime minister, I like him because he is quiet, but he also likes to take action. They like to give financial results to Malaysians. So I think he is a good choice. So I usually prefer people with experience who can give financial results to Malaysians.
Q: Ismail Sabri is keen to eradicate corruption in his administration and his political party Umno. Former Prime Minister Datuk Seri Najib Razak is an Umno leader who is in prison for his involvement in the 1Malaysia Development Bhd (1MDB) scandal. Do you foresee this will help Malaysia regain its confidence and reputation among foreign investors and international leaders?
Answer: If you read between the lines, the prime minister has said that no one is above the law, and everyone must follow the law. As a foreigner, I also have to follow the rules and regulations.
So I think what I like about the Prime Minister, he said, you know, the law has to take its course. He said they will not interfere and this gives confidence to investors in the country. The rule of law is strong. Judges are powerful in Malaysia and judges are one of the pillars of the economy along with officials and other pillars of the economy.
So if your judges are strong, this gives a good signal to international investors as well as to local investors. -Bernama
