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New Budget 2015 and 1998 crisis

Has everyone read at least 20 articles online or on newspaper about the revised Budget 2015? I am very sure you know the details by now? Main points include a cut of RM5.5 billion, deferment of electricity tariffs, getting more Chinese visitors from China and a revision of fiscal deficit from 3 percent to 3.2 percent for 2015. It includes many other stuffs too but I guess many would be either on this side or that side as usual here in Malaysia. For this side, they remain pretty okay, nothing too bad has happened at this moment. For the other side, everything is not okay, in fact with this revised budget it meant that very soon Malaysia will reach the 1998 economic crisis level!
For those who have gone through or anyone who has studied economics from year 2000 onwards, perhaps some might have studied about the huge 1997/1998 crisis which ‘destroyed’ the few seemingly unshakeable economies in the South East Asian region. If you have studied and you know just a little bit of details, do you know the what’s the difference today? The difference is major. Back then, everything was in a disarray. The banking was in trouble, majority of all the seemingly healthy companies became sick overnight and there was virtually NOTHING that can be done beyond going to IMF and beg for funds and cut whatever they ask you to cut and sell whatever they ask you to sell, at fire-sale prices OR you introduce capital control, get a breathing space and quickly restructure, recapitalise and reopen the economy gradually. Remember terms like Danaharta? Which was heavily criticised but then followed by some strong economies which criticized us then? Actually, it’s okay even if you do not remember but I can tell you that 2015 is definitely nowhere near 1998 levels. UNLESS the whole world goes into crisis once again.
Okay, what if you insist in believing that 2015 is an unfolding 1998 all over again? First, don’t think of buying any property or you will be trapped. This is true even if you think you are buying affordable ones. Reason? The currently expensive ones will be affordable soon. Please wait. To any friends buying properties, warn them. Second, don’t buy stocks. During crisis, the first to show is the never ending falling prices in the stock market, even for healthy companies of today. I am not joking. Please refer to the 1998 KLSE (now Bursa) charts again. Google for them. Third, keep cash, lots of cash and in different banks. If you seriously think Public Bank or CIMB bank or Maybank is not strong enough, by all means keep them in foreign banks.  Fourth, don’t even think of buying a new car, you will literally ‘die’ for it soon enough. Fifth, it’s ok, I think I will stop here.  You can ask any economist whether these are good measures to take if you believe a crisis is coming. I think majority would agree.
However, if you think perhaps during this tough times, we can help the country a bit? (sorry, nothing to do with the government of the day). Well, you can do following, try to buy local goods first. Even the local fruits help a lot if everyone can do the same. Just a 10% reduction in food imports would save the country more than RM1.5 billion. Second, support the local economy, travel within Malaysia first for 2015. You can travel overseas in 2016 but for 2015, imagine if just 100,000 Malaysians skip their overseas holidays? Third, please start to use your money wisely. If certain hawkers are way too expensive, buy from cheaper ones, buy from two hawkers if you want, then you are supporting two hawkers instead of one. Fourth, encourage your friends and relatives from overseas to visit you this year. After all, Ringgit is so low, they would be having super-spending power for 2015.
My thoughts? I believe the government must do more to cut the deficits faster than their current plans. Even if it means they will lose more popular votes. I also believe the opposition must do more than just simply opposing. Give really constructive ideas and not popular ideas please. Many dislike the government of the day and everyone should have their own opinion but why destroy your country to win more popular votes? Hmm.. I think both sides are thinking about votes yeah. Well, votes are with you and me then. Happy voting then.
written on 20 Jan 2015
Next suggested article: Not such a good news for property market, Malaysia

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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