Malaysia in Recession already?

November 05, 2008

Malaysia Will Not Slip Into Technical Recession Next Year, Says Najib

KUALA LUMPUR, Nov 5 (Bernama) -- The Government is confident Malaysia will not slip into a "technical recession" next year as the RM7 billion stimulus package is sufficient to support the projected 3.5 percent growth next year, Deputy Prime Minister Datuk Seri Najib Tun Razak said today.

A technical recession means two consecutive quarters of negative economic growth.

Besides ensuring the 3.5 percent growth, the stimulus would maintain the 4.8 percent fiscal deficit, said Najib who is also Finance Minister.

Hmm...How about now?

Recession: The Newspaper Definition

The standard newspaper definition of a recession is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.

Recession: The BCDC DefinitionThe Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) provides a better way to find out if there is a recession is taking place.

This committee determines the amount of business activity in the economy by looking at things like employment, industrial production, real income and wholesale-retail sales. They define a recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. When the business activity starts to rise again it is called an expansionary period. By this definition, the average recession lasts about a year.
Meanwhile...

Puncak Niaga Executive Chairman's Pay Package

Puncak Niaga Holdings Bhd (PNHB) Executive Chairman, Tan Sri Rozali Ismail gets paid RM5.1 million in director's fee/salary as per the 2007 Puncak Niaga Holdings Berhad annual report. It's well within the Top 10 highest paid directors in Malaysia.

According to Malaysian Business, he's also the 33rd richest man in Malaysia, after successfully securing the water privatisation deals in Selangor, under its subsidiaries, Puncak Niaga Sdn Bhd and SYABAS Sdn Bhd.

When asked by reporters about his pay package, he had only this to say, "...If they want professionals to run the company, they will have to pay." Ooooh....ouch!

Now he wants the Federal Government to pay much more for "his" water concession which was granted to PNHB for a song (he rejected Selangor Government's offer), while at the same time, also asking the Government to take over all the companies' bond and loan obligations amounting to RM4.1 billion in total due to ever increasing cashflow problems. (Note: PNHB incurred a quarterly loss (for the first time?) for its most recent Oct-Dec 2008 results.)

RM64 Billion Toll Compensation For PLUS

RM63.83 billion.That's the approximate amount which needs to be paid in terms of compensation PLUS Expressways Bhd between 2008 to 2038 (when the concession ends), should the Government for one reason or other decide to maintain the tariffs at the current rate.

That works out to an shocking average of RM2.1 billion a year, and an incredible strain on taxpayers and the Government's finances.For 2008, the Government has agreed to pay (or have paid) PLUS more than RM731 million in toll compensation (compared to RM698 million in 2007) . With toll rate hikes of 10% scheduled every 3 years, this amount will just keep increasing over the next 30 years.

For example, a Kuala Lumpur - Penang return trip costing RM86.60 today will cost an exhorbitant RM247 by 2038, if the tariff structure is fully complied with. And based on existing compensation terms in the agreement, the Government will have to pay for all loss of revenue from actual traffic volume, which is estimated to increase by 5% annually.