Thursday, March 25, 2010

NEM: Pandering To Short-Term Investors

Stockbrokers and fund managers, no matter how they style themselves, are short-term investors based on long-term views. Investors with short-term views are called speculators.

I do not understand why the Prime Minister of Malaysia has to go to Hong Kong to talk to stockbrokers and fund managers about the New Economic Model for Malaysia. It is none of their business.

The rightful audience for the NEM are the local people, the citizens of Malaysia, who must be convinced that the NEM is the best thing that can happen to Malaysia and Malaysians such that the NEM will create the greatest confidence and pride that the people of Malaysia can have in their own country - so much so that they will sink in all that they have - the wealth their parents left them (if any), the wealth they have made in Malaysia, the wealth they have made abroad, their current savings, and their current efforts - and build on what we have new structures and systems that will improve social and economic life in Malaysia.

The last thing you want to do with the NEM is to convince short-term investors and speculators in Hong Kong that Malaysia is the place for you to take a quick punt - of at most nine months - by ordering that government agencies cut down on their holdings of listed companies so that these foreigners can do that punt.

I think the Prime Minister is being ill-advised in this case to pander to these opportunist investors. What we want in Malaysia are proper investors who will sink in their capital into machinery and work to produce output to serve the world.

In this world of excessive liquidity, liquidity is not the problem for the economy. It is the lack of good ideas for real investment in Malaysia that is hampering Malaysia from getting out of the middle-income trap into a high-income economy. It is the unwillingness to do the hard work of building a business that is the problem.

If you then mix in politics along racial ground, then you really are caught in a mental trap that is dragging down the economic strength and resolution.


Hang Tuah said...

Hands down i agreed with you brother

Anonymous said...

The Malaysian government has been mixing politics with economics since 1970 when the NEP was introduced.

Do we need a new policy to reverse the damage of the NEP or just simply remove it? That is the question which all investors , whether short term or long term are looking at.

That is also what the average citizen who is the longest term stakeholder in the nation wants to know.

Who are we to look down on short term investors when we have short term mentality among politicians who plan for winning the next elections by hook or crook?

walla said...

We have been having flimflam politics overshadowing serious economics for too long in this country.

Now we are trying to wake up. I say trying because there are still groups who think they know best.

We will never know how many investors turn away each time these groups raise their ante. And we will never know how many locals forfeit a chance to improve themselves from listening mindlessly to them.

And it's impossible for the present administration to sequester them because the people running this country are too chicken to stand up to them rationally.

This situation is not likely to change anytime soon. And time is what we don't have.

If we look back the entire history of our country, we cannot escape the conclusions that:

- things are costing too much for the substandard quality we are getting;

- our currency has weakened but we don't have competitive products to sell;

- our basic infrastructural software is fast becoming irrelevant to what the world markets are looking for;

- real investments have tapered off alarmingly;

- our genetic brain pool has weakened one year to the next and without any learning curve to show how and why we should do things; it has become one step forward, two steps backward;

- services are substandard and static in raising bars;

- people who are in positions to right wrongs or improve situations don't care, can't do and haven't a clue;

- we wasted and squandered billions, and continue the plundering by sickly implementation, gray-area transparency and zero accountability;

- and we continue to practice double standards in everything, from politics to economics.

If these fundamentals are not even achieved after half a century of so-called nation-building, what can the citizens expect in the next fifty?

There are only three roads for everyone to take:

one, make the change in GE13;

two, ignore the government and do your own independent thing;

three, prepare to exit the market.

All three are happening now. The govt not only doesn't know best. It also doesn't do best. And best is what was needed yesterday.

We are going to be one of those self-marginalized half-way parking lots. People who are progressive and longer visioned will not nurture any feeling of loyalty or attachment to this place. Their minds will survey the world for best deals. They will mind an address here but move their productive assets all over the globe. Their charges will learn from elsewhere and mobilize their futures in tune to a wider and more appreciative framework. Here the roots of yesteryear will grow dimmer in memory with each year and each new generation.

Unless this country makes one massive and comprehensive change to the way things are done and to the complexion and structure of our market and society, it's impossible to bridge the gap between what we need in order to advance and what we are chained to by the cheap thrill of a skewed political economy.

That's all i want to say.