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Jun 1, 2018 15 tweets 4 min read Twitter logo Read on Twitter
In terms of economic challenges, the national debt isn’t our biggest problem. Sure, it needs to be sorted out, but at only 80% to GDP by the most conservative measure, it’s manageable and we can service it w/o resorting to messing around w/ public finances and assets.
The US’ govt debt is 105% of GDP; UK 88%; SG 110%-these measures tho, don’t take into a/c contingent liabilities like the recently announced @MOFmalaysia numbers. If they did, the % would be far higher.
From a balance sheet perspective, our problem is not on the liabilities side, it’s on the assets side. Thanks to crap like #1MDB some of this debt is sitting on overvalued or worse, non-existent assets #bitchbetterhavemymoney
Anyway, the debt isn’t the biggest problem. Our biggest problem is sth that’s been brewing for the past 20 years and may take as long to fix, but we really have to start fixing it. Our problem is the C word: Competitiveness.
I like to say that Msia likes to waste a good crisis. Take the 1997 Asian Financial Crisis: we escaped relatively unscathed, unlike South Korea, which got clobbered, but the escape also meant that unlike SK, we didn’t have to clean up our house as much - institutions stayed weak.
We also have an economic crutch: commodities. It was no accident that the most intense phase of our industrialization happened when commodities prices took a hit in the 80s and 90s and then tapered off during the commodities super-cycle in 2000-2014.
In those yrs, we basically reverted to being a commodities-based economy, and this commodities-led growth masked a whole mess of problems, not least of which was the fact that our productivity growth has been stagnant over the past 2 decades
This is Twitter, not a thesis, so here’s a laundry list of possible causes for our low productivity growth:
1. Nearly 50 yrs of education being used more as a political tool from the primary to the tertiary level, rather than a means of developing manusia yang boleh berbakti...
...culminating in a labour force ill-equipped for the 21st century where softer skills like adaptibility and critical analyses are more valuable than “hard” skills.
2. A rents-based economy that doesn’t incentivize businesses to invest and innovate, propped up by... institutions and other regulatory hurdles hampering competitiveness. You know you have a problem when businesses keep having to ask the govt to protect them from competition.
Going back to my fave comparator country, 한국, while GDP per capital in SK has always been a bit ahead of ours from the 1980s, the real divergence began in the late 1990s. We had pretty much the same E&E based manufacturing sector but theirs obviously went way up the value chain
...while ours didn’t. Sure, not apple to apple - they basically leveraged on the chaebols and defence industries + tech transfer + reverse engineering etc but our E&E could have gone that way. Why didn’t it? Well, maybe partly bcos of the same issues relating to low productivity
The point is this: we have a chance at a reset now. Dr. @maszlee is making all the right noises when it comes to our education system so at least we can start fixing the rot there. It’s not too late to fix our institutions. And hopefully our businesses will be more competitive.
TL;DR - the national debt isn’t the biggest problem for our economy; our biggest problems are low productivity and competitiveness.
If anyone wants more info, ask @econsmalaysia - he has charts and stuff, hahaha.

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