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Watch out for the economic slide

Translated by DOMINIC LOH
Sin Chew Daily

Thanks to MH370, the arrival of a pair of giant pandas from China has been slightly delayed, and this could also signal possible changes to the close relationship between our two countries.

If debris or black box from MH370 could not be located in the very near future, it remains questionable whether China would further delay the delivery of the giant pandas. May 31 marks the 40th anniversary of the establishment of Sino-Malaysian diplomatic ties, and further delays beyond this date would make the event less meaningful.

As a matter of fact, it is very difficult to locate and recover the black box lying at the bottom of the 4,500-meter deep sea bed, and any effort to do so could take months if not years. As a result, China should not delay the delivery of giant pandas just because no pulse signals have been detected over the past few days.

Such a deferment will only add to the misery of the country after Chinese tourists have threatened to boycott Malaysia. As we know, May and October are the busiest vacationing seasons in China (including the May Day and National Day golden weeks) but the number of outbound tours to Malaysia have suffered a whopping 70% plunge year-on-year.

According to outbound tour statistics from China, almost 100 million Chinese nationals traveled overseas last year, spending a total of US$102 billion.

Many local travel agencies, restaurants and tour guides specializing in the Chinese market have suffered tremendously from the sharp decline in Chinese tourist arrivals. The consequences could be grave if this situation is allowed to go on for several more months.

The international trade and industry minister Datuk Seri Mustapa Mohamed clarified recently that the government had set up an Economic Impact Committee (EIC) to explore the current economic conditions of the country while mapping strategies to strengthen Malaysia-China bilateral trade and gain back the confidence of Chinese investors in Malaysia.

This committee must be put into action immediately for any delay to the effort would only take its toll on bilateral trade and investment, especially at a time when the local economy lacks the momentum to forge ahead.

With the petrol price going up by 20 sen last year and electricity tariff by 15% this January, inflationary pressure has made a comeback, with the February CPI up 3.5%. The actual situation could be much worse than this.

Thanks to rising prices, the market has remained largely sluggish after the Chinese New Year, and the disappearance of MH370 on March 8 dealt an additional blow on consumer sentiment. Some have refused to spend because of the depressed market sentiment while others have simply canceled or deferred their travel plans because of phobia.

The Associated Press conducted a survey at Jakarta airport in response to the MH370 incident, and found that a female passenger had made her will just before boarding the flight while another student had decided not to fly again over the next two years.

Such invisible and intangible sentiments could do unimaginable damages to the Malaysian tourist and consumer markets.

With a depressed consumer market and sliding ringgit, prices of goods and services have nevertheless remained aloft. Beginning May 1, price for non-commercial natural gas will go up by 20%, and milk powder and Milo products by 5-10%. Meanwhile, family debts soared to RM854.3 billion last year, equivalent to 86.8% of GDP, while housing prices rose to historical levels. More worryingly, further deterioration would burst the property bubble and bring the national economy to a collapse.

Although we have seen an oversupply of commercial office spaces in the city, large scale development projects continue to be launched, such as the mammoth Bandar Malaysia project at the Sungai Besi air base site, and the 118-storey Warisan Merdeka tower. These mega projects could be reduced to white elephants in the absence of foreign investments.

What Malaysian politicians should do now is to dump their resources into the development of this country, but unfortunately PAS has been insistent in implementing the hudud law in Kelantan, exacerbating the fears of non-Muslim foreigners towards this country.



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