Monthly Archives: January 2013

Pursuing a Growing Economy While Avoiding the Pitfalls That Befall to Many Middle Income Countries

This article provides some interesting data on the Malaysian, Indonesian and Thailand economies.

Malaysia’s High Real Yields Mean Flows Top Peers in Southeast Asia

Foreign ownership of the local-currency notes [in Malaysia] rose by $8.4 billion in the first 11 months, compared with a full-year increase of $4.9 billion in Indonesia and $6.6 billion in Thailand, according to official figures. Malaysia is rated A3 by Moody’s Investors Service, three levels above Indonesia and one step more than Thailand, while its 10-year bonds pay 2.3 percent after accounting for inflation, versus 0.9 percent and 0.1 percent for its respective peers.

Bhd. Malaysia has the lowest inflation in Southeast Asia even as the central bank kept borrowing costs on hold since May 2011, while limiting ringgit appreciation to 0.6 percent over the past two years.

Malaysia exempts foreign investors from paying income tax on bond earnings to boost investment in the $289 billion economy, Southeast Asia’s third largest. Thailand imposed a 15 percent levy in 2010 to stem gains in the baht, while Indonesia, the biggest of the three in terms of gross domestic product, introduced a similar tax of 20 percent in 2009.

Overseas investors held $42 billion of ringgit-denominated government bonds as of November 2012, central bank data show. That compares with $17 billion of baht securities in December and $28 billion in rupiah notes as of Jan. 21, according to data from the Bank of Thailand and Indonesia’s finance ministry.

Malaysia’s worsening fiscal deficit and high household debt, if not addressed, may add downside risk to the sovereign credit rating, said Wong.

Gross domestic product in Malaysia will increase 4.5 percent to 5.5 percent this year, compared with the 5 percent estimated for 2012, according to a government forecast in September. Indonesia’s GDP will rise 6.6 percent to 6.8 percent, Finance Minister Agus Martowardojo said Jan. 14, versus the central bank’s projection of 6.3 percent for last year. Thailand’s economy will expand 4.9 percent, compared with 5.9 percent in 2012, Bank of Thailand Assistant Governor Paiboon Kittisrikangwan said on Jan. 18.

There are some significant strengths in each of these economies and Malaysia has some distinct advantages including a strong natural resource base and fairly small population along with a strong current accounts surplus (exporting more than they are importing).

The biggest worry in Malaysia is the large government debt even after the advantages of selling natural resources. The lower population is an advantage in trying to rapidly increase median income. Malaysia has been doing well at this, but continuing it is not easy and perils have far too frequently interrupted other countries success at doing so. Balancing fast enough growth without tipping over into unsustainable bubbles (often with high leverage) is tricky. Malaysia will have to find a way to decrease the budget deficient while continuing the many things they are doing right to continue to succeed.

Balanced growth is important. Growing numerous strong economic sectors (say health care, manufacturing, natural resource, tourism, education, finance, housing) is critical to creating a robust economy that can grow over the long term even as individual segments suffer. It seems to me the housing sector is a bit over invested in which is a risk. Making sure to develop an economy that provides many good jobs is the key (as a strongly diversified economy will – for all different types of workers, highly education, technically skilled, vocational trained, even unskilled). Lots of expensive houses people can pay for has created many problems recently all over the globe, Malaysia hasn’t experienced that yet but it seems to me there is a risk of that problem. Avoiding that drain (overbuilding housing) will be key to how rapidly median income can increase in the next 20 years.

Related: Malaysian Economy Continues to Expand, Budget Deficits Remain HighCIMB Takes Aggressive Investment Bank ActionsManufacturing in Malaysia: Bahru Stainless Starts Production

Annalakshmi Indian Restaurant in Historic JB

photo of the elaborate doorway entrance to the Annalakshmi restaurant

Entrance to the Annalakshmi restaurant in Johor Bahru

The Annalakshmi is a vegetarian, Indian restaurant that offers good food in an inviting environment with friendly service. Annalakshmi restaurants exist in several other cities including Singapore, Kuala Lumpur and Chennai. They offer a interesting policy of letting you decide what to pay.

The restaurant is located in historic Johor Bahru near many other attractions: Salahuddin Bakery, Masjid India Mosque, Bangunan Sultan Ibrahim, Sri Raja Mariamman Temple, Johor Bahru Old Chinese Temple, Tiong Hua Chinese Heritage Museum, Sikh Gurdwara Sahib and a pleasant stroll from City Square Mall.

photo of the interior of the Annalakshmi restaurant

Annalakshmi is the culinary arts section of Temple of Fine Arts (TFA), an artistic and cultural organization dedicated to serving the society through arts, music and dance. This heritage is seen in the very nice decor.

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Galleria Mall @ Kotayara – Johor Bahru CBD

exterior view of the Galleria @ Kotaraya

The Galleria @ Kotayara is a newly completely refurbished mall in JB town (Johor Bahru CBD). It is across the street from the Sikh Gurdwara Sahib and Sri Raja Mariamman temple and (on the other side of the mall) Bangunan Sultan Ibrahim.

The food court has been open for a few months but the rest of mall is still mainly empty. Still the food court already has almost no seating (I went at lunchtime this time but another time, even in the middle of the afternoon the food court was very full).

photo of the food court area

The food stalls (probably about 15 with mainly Malaysian dishes) offer very good food at great prices (the two times I have tried it so far anyway). Main courses are about 5-8 MYR ($2-3 US).

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Best Retirement Options: Ecuador, Panama, Malaysia

The MarketWatch web site (connected to the Wall Street Journal) provides a list of top international retirement destination and places Malaysia in the 3rd spot, after Ecuador and Panama.

The article notes the benefits of Malaysia as

  • Good and reasonably priced health care
  • English as the unofficial “first language” (it is a bit of a stretch to claim this, in my opinion, but you can get by in English).
  • Good weather with beaches, islands and jungles to enjoy.
  • Good food
  • Affordable prices

I would add the MM2H visa and the ability to buy property.

The list is packed with Central and South American options along with 2 in Europe and 2 in Asia. Rounding out the top 10 are: Mexico, Costa Rica, Uruguay, Colombia, Spain, Thailand and Malta.

Related: Retiring Overseas is an Appealing Option for Some RetireesMinimum Housing Prices for Foreigners Investing In Malaysia Rise to RM 1,000,000 (lower for MM2H participants) – Penang Condo MarketHotels and Accommodations for Travelers in Malaysia

Online Plane Reservations

I made some plane reservations online with Tiger Airways. First the web forms failed, and contacting by Twitter and the online form them provided (which in a very bad design required 12 fields to be completed) didn’t result in a reply. So I called them. They answered in less than 5 seconds with a person that was polite and knowledgeable (airlines can’t come close to meeting this standard).

On the phone, I was told with Firefox you need to clear your browser history. As a software developer, I have to say you are feeble if you deploy production code that fails to accept customer money because you can’t deal with the cookie you created for the user.

I don’t like all the ways many of the airlines now try to take your money. Just charge honest fares don’t have all sorts of hidden fees 🙁 That is bad customer service. I do like being able to book my seats in advance and am fine being charged for that option. And providing seats with more room at a higher price is a good economic tool.

It is interesting to me how far advanced the credit card security is in Asia. The USA is way behind in several things (cell phone technology in general – due to monopolistic cell phone providers without effective over-site – also internet access in the USA is pitiful). The banking system in the USA (including credit cards) is highly corrupt with too big too fail institutions holding back innovation to an alarming degree in the USA. So it isn’t really Asia being ahead as much as the USA being behind everywhere else (Europe, like Asia is far ahead in credit card and cell phone systems).

Placing the credit card order with my Malaysian credit card required 2 factor authentication (which is a wise security practice) – they sent a one use code to my phone. If you haven’t setup 2-factor authentication for your email account you really should. Internet security is becoming a much bigger problem, being paranoid online now makes sense.

The airline web site (as nearly every site does) failed basic usability guidelines by masking the one time use approval code for that specific purchase. Even if they posted that code on the bill board on times square in New York City (or along the news crawl on Channel NewsAsia) it would have no negative consequence. But by masking it you greatly increase input errors as the user can’t verify they typed in correctly. This is basic stuff that is really pitiful that huge corporations still routinely mess up (masking one time use codes).

The airline travel system is much better in SE Asia than the USA. The airlines are decent at customer service, which given how atrocious the service in the USA is puts them far ahead. Prices are also good. Airports are much better. Huge security theater waste is missing (there is still a fair amount of security of course, due to the risks).

Related: Paying Bills Using Online Banking in MalaysiaTips for using your credit cardSE Asia Travel: Siem Reap, Cambodia