Malaysia has announced that all foreign workers are to surrender their jobs and return home. The details of just how this exodus is to be accomplished equitably is not revealed.

There is no unemployment in Johor Baru, so say the state ministers. These glad tidings are very welcome. There is, however, the minor consideration of the 12,000 citizens of Johor Baru who are to lose their jobs next Monday.

Singapore has solved their unemployment just like Malaysia, by sacking Malaysian workers. Thus come Monday there may be unemployment in Johor Baru. The state ministers will have another chance to re-evaluate the situation. Based on their past record, officially, there will still be no unemployment in Johor Baru. This coincides with a recent finding that there is no unemployment in Penang.

Economists employed by the Malaysian government have the task of collecting relevant information on recent economic activity in order to make an assessment of economic trends. It is important that they report their findings accurately, and that the public be given access to the truth of the situation so that prudent decisions may be made in preparation for any eventuality.

Collecting economic information takes time, and there is always some delay in making an analysis. Then projections must be prepared based on reliable models. There is further delay in making the findings public, requiring consideration by the ministers of the anticipated political consequences of telling the bare truth. Media editors must be counseled in order that any information likely to affect consumer confidence is filtered out. Many findings of reduced economic activity are re-interpreted to soften the disappointment. There is a failure to present the whole untinted picture to the public.

The prime minister now admits the present slowdown is somewhat more than anticipated. The Malaysian Institute of Economic Research (MIER) has gently reduced the expected GDP for 2001 from 5% to 4%. Forecasting always has some element of uncertainty, and one naturally hopes for the more positive outcome. This optimism is transmitted to the public in an effort to present a picture of stability.

What does the present picture actually show? The data tell us that the present GDP for the first quarter is low, perhaps even negative. The 4% figure given is an optimistic pie-in-the-sky projection based on a significant improvement to come in the second half of the year. One notes the realistic expectation that the second quarter will also be low to negative. MIER states that the economy has taken a sharp nosedive. The Business Conditions Index indicating consumer confidence has fallen from 60.7 in the first quarter of last year to 46.3 this year. That is a significant [23.7%] downturn.

The prime minister has begun to hedge on his earlier statement that Malaysia could maintain its economy without consideration of what might happen in Japan and the US. His reputation as an economic guru is in tatters. Future statements that he makes will be heard with this failure in mind.

Alan Greenspan, head of the US Federal Reserve Board, has just reduced the interest rate by half a percent, following closely an earlier reduction. The obvious reason for this is the seriousness of the situation in the US. Japan continues to fight stagnation, and even with a zero interest rate the Japanese economy is not responding. What does this mean for Malaysia?

The present situation is a serious one, and there are no signs that improvement will come soon. The hopeful projections given by the government are based on what happens in other countries, which is completely beyond Malaysia's control. There is no guarantee that conditions will improve, either in the US or Japan.

Read carefully a press conference given on Tuesday by Dr Mohamed Ariff, executive director of the Malaysian Institute of Economic Research (MIER). It is presented here in the form of an interview, necessitating minor editing.

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Speaking to Dr. Mohamed Ariff, executive director of the Malaysian Institue of Economic Research:

Q. Dr. Ariff, what is the 4% GDP projection for Malaysia based on?

"It is based on the expectation that the United States GDP will not exceed 1.5 percent."

Q. What if the US GDP is lower than 1.5%?

"If there is lower growth than that, it would have a negative impact on Malaysia."

Q. What does the first half for Malaysia look like to you?

"First half GDP growth is expected to be far below 4.0%. First quarter GDP is very, very low and could be close to zero or negative compared with last December."

Q. Then what is the 4% figure for the year based on?

"It is an [estimated] average for the whole year, based on our projection for a [very substantial] recovery in the second half.

Q. How does the first half of this year compare with the last half of 2000?

"GDP growth in the first two quarters of 2001 will be much lower than the last two quarters of last year."

Q. What is the Business Conditions Index for the first quarter?

"The BCI fell to 46.3 points."

Q. Is this a significant decline?

" Yes, it is a decline of 6.9 points, to 46.3 from 53.2 recorded in the last quarter."

Q. Is this a problem for the future?

"Yes. Because the slower pace of economic recovery over the past two quarters is showing signs of further slowing."

Q. How does it look compared to the same period last year?

"The difference is even more acute when compared with the 60.7 level registered in the corresponding period of last year." [a 14.4 point decline, or 23.7%]

Q. Are these the final figures from your official report?

"Yes. The data is taken from an executive summary prepared to report both the Business Condition Index and the Consumer Sentiments Index to the government for the first quarter.

Q. What is the worst case senario?

"While the forecast for 2001 is 4.0%, at worse, the growth could be at 3.5%."

Q. Is your projection a dependable one?

"Malaysia's ability to record 4.0% GDP growth depends on [positive] developments in its major trading partners -- the United States and Japan.

Q. Why is there no reason for concern?

"Malaysia is still one of the better economies in the region, although there are strains."

Q. What information is the MIER projection based on?

"This was based on two quarterly surveys. The MIER interviewed 600 manufacturing firms for the Business Conditions Index and 1,200 households for the Consumer Sentiments Index."

[end of interview]

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The "strains" mentioned by Dr. Ariff have been apparent for a long time. Previously it was possible to take things more lightly, making allowances for cruelty of the Umno-BN leaders. Sadly this is no longer the case. The time for personal sacrifice nears.

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