Malaysia's economy more stable than Singapore's, says ruling BN party


PETALING JAYA - Malaysia's economic stability is better than Singapore's, says Barisan Nasional.

In a statement on Saturday, the ruling party said although Singapore had always done better in Gross Domestic Product (GDP) growth, this trend had now changed.

"The reason why Malaysia has been more resilient post-2009 is a deliberate effort by Datuk Seri Naib Tun Razak's Economic Transformation Program (ETP) for Malaysia to not to be overly-dependent on world commodity prices, international trade and on foreign investments as we were in the past.

"There was a deliberate rebalancing to the domestic economy," it said in a statement.

It added that among efforts taken in the ETP was to reduce reliance on petroleum-related income.

"Hence, the slump in oil prices did not affect Malaysia as much as Singapore, which is the oil hub of Asia.

Read also: Singapore the new "sick man of Asia": Economists

Graphic: The Star/ANN

"The Malaysian Government's reliance on petroleum-related income has dropped from more than 41.3 per cent in 2009 to 14 per cent now, a remarkable achievement," it said.

It added that the move by the Government to redistribute income and development to rural economies had also increased domestic demand.

"The Government had focused on raising income levels of the bottom 40 per cent and reducing income inequality with deliberate policies such as minimum wage, BR1M, rural development aid and a specific focus on development projects for the rural economy," said the statement.

It pointed out that the government placed larger focus on the growth of Gross National Income (GNI) as opposed to GDP, which includes foreign owned firms in Malaysia.

The impact of the falling ringgit on Singapore

  • The Malaysian Ringgit (MYR) has slumped to an all time low at RM3.12 to the Singapore dollar (SGD).
  • This sounds like an excellent chance to head to Johor Bahru (JB) and make all the purchases while it lasts. The already cheap food and groceries just got cheaper and fuel is about a third of Singapore's price.
  • But while we might be rejoicing now that the MYR has spiraled downwards, but in the mid to longer term, the ones that would be suffering the most may be Singaporeans.
  • Many often forget that Malaysia is the third largest economy in South East Asia, and within the top three largest export destinations for Singapore's goods and services.
  • If Singapore's currency becomes too strong, there will be a reduction in Malaysian demand for Singapore's exports which will ultimately reduce Singapore's earning power.
  • The short term benefits may be apparent but in the long term, any weaknesses in the economies of our major trading partners will not be good news for Singapore.
  • But there are ways to take advantage of the weaker ringgit. As individuals, we can head to the moneychangers and buy up some MYR.
  • Singaporeans should definitely consider visiting JB for their delicious food and other goods.
  • JB has other attractions too, like Legoland, where a combo adult ticket, which allows you entry to the theme park and the water park, costs RM175 while the child and senior option costs RM140.
  • An entry ticket to the Hello Kitty Town costs RM75 for both adults and children.
  • Singaporeans can also consider investing in Malaysia. If we were to invest in the KLCI Index at Dec 31, 2006, we would have made a handsome return on about 48.6 per cent.

"There was a focus on increasing the level of domestic investments to be higher than foreign investments and now Malaysia's growth is less volatile and more robust compared to our neighbour.

"Current and future projects such as the East Coast Rail Link, Pan Borneo Highway and Central Spine Road is a testament to this commitment to develop regions and communities that have lagged our west corridor," it said.

The statement by the strategic communications team by Barisan then said this could only mean that Malaysia's economy will be more resilient, more equal, more sustainable and less volatile than before.

Read also: Malaysian PM Najib might go if ringgit drops further: Academic