CORRECTION: The headline should read '2010', not '2011' as originally stated. Pakcik tersasul.
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The 2010 Budget presentation by PM Najib Razak, also the Finance Minister, will make for a very interesting event.
After the go-go years of Dr M, followed by the so-so years of Abdullah Badawi, it is Najib's turn to show his hand at running the country's finances.
Can he do it?
He will unveil the budget on Friday, Oct 23.
The days of mega projects ala-Mahathir are over.
The days of mega corridors under Pak Lah are over also.
The Malaysian budget has been in deficit for a decade or more (I lost count).
No, having a deficit for some years is NOT a problem because sometimes you need to spend more - like after 9/11-Afghan war, Iraq war, and SARS of past years - to prevent the economy from collapsing.
But now, the budget has gone beyond 'uh-oh' level of 5 per cent.
The deficit was at 7.6 per cent last year, and expected to be even higher this time around.
With Petronas financing some 40 per cent of government revenue in recent years, the government has better watch its spending.
How long will this oil-and-gas flow go on to keep the economy strong?
We shall therefore see how PM Najib plans to tackle this.
The 2009 economy is expected to contract (not expand) by 3.3 per cent this year. Next year, it should grow 3.7 per cent, says MIER.
From what I understood, Indonesia, not Malaysia, is now the darling of investors in Southeast Asia among the developing economies.
Vietnamese and Cambodian salaries are still lower than Malaysia's, and Indonesia is the one seen with the stronger growth.
Thailand is kind of unstable right (its politics as well as the ailing king); Singapore has too high costs (good perhaps to base regional HQ operations and keeping your millions, but not to build mass-production factories).
Indonesia has targeted an average 7 per cent economic growth a year, over the next five years.
With President Susilo Bambang Yudhoyono in his second and final presidency, and with former central bank governor Boediono as his Vice-President, he will want to push hard for this.
Dr Yudhoyono will name his Cabinet next week. Good names are being floated.
Malaysia, it seems, is not so enticing not because of the race-religion altercations between politicians and the Pakatan-Umno issues, but because it does not have a 'sexy' story to tell.
Investors like to hear a good story before they will plunk their money.
In past years, Malaysia was saying it had mega projects coming up, growth was going to be 8 per cent a year, the middle-class is growing and the country wants to keep growing fast to become a developed country by 2020.
And then there was the Multimedia Super Corridor.
So as a foreign player, whether you bought into construction, toll-road, utilities, high-tech or crony stocks, you would've made money.
Or maybe you come in as foreign architects or foreign contractors, you still made money. Or as mat salleh or jap foreign consultants to these big projects or to Maxis and Digi and MAS, you would've made money also.
Or since the country was growing fast, you can come in as Carrefour and Tesco, or open up your hotel chain, or sell your big foreign cars here.
So PM Najib will have to sell a sexy story to entice investors all over again.
Here is Indonesia's story:
1- Democracy has grown in the past decade since Suharto. A new level of confidence in government has set in. Like Malaysia in the 1980s and 1990s, a very stable government will produce more middle-class, middle income citizens - those who can spend on second cars, buy bigger houses, own two handphones, go to supermarkets, pay for toll roads, travel abroad or airlines, eat in hotel restaurants, put aircons in their homes, buy Ikea furniture.
2- The cost of setting up factories remain low, salaries are very low. There are plentiful workers.
3- Indonesia has some 230 million people (versus 27 million for Malaysia). This means more workers, and more poor people who will grow in wealth and want what many Malaysians already have - see Point 1 above.
4- The terror threat has diminished. Dr Azahari and Noordin Mohd Top are dead and so are their disciples. And just as important, when the twin bombings of top hotels occurred in Jakarta two months ago, instead of panicking, Jakartans picked up their lives within days. The stock market did not collapse.
5- Yes, the Jakarta stock market is indeed strong. The rupiah has been rising and rising, killing my Sing dollar (and I am sure, my ringgit too). Sure signs of foreign confidence.
6- The downside to Indonesia is the rampant corruption, to the point that top judges can be allegedly bought. But like China and India, foreign investors are willing to look another way if they thought they could make money, even with local weaknesses. It is the same story with Malaysian corruption, or the lack of media freedom in Singapore.
All in all, I am not saying that Malaysia's economy is going to collapse, or that there will be zero investments into Malaysia.
I am saying that as a Big Picture, Malaysia needs to tell a sexy story all over again to entice investors.
It still is a stable country compared to quake-prone Indonesia (even Jakarta now is not so safe any more eh?).
And property costs are still low compared to Singapore and Hong Kong, and comparable to Thailand.
English is widely used still (I hope).
It is seldom said, but Malaysia has actually managed to become a global centre (albeit to lukewarm success) for Islamic finance - issuance of bonds and debts. Until a certain red dot in the south catches up.
Anyway, Malaysia wants to be a high-income economy, says Husni Hanadzlah. How?
Dr M came out with mega projects and MSC.
Abdullah with his corridors of growth.
PM Najib will have to paint a nice Big Picture that will excite investors.
1Economy.
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