Home >> Perspectives >> Post-Asean Summit: What Private Sector Has to Say >> MMv
Managing Director, MM Vitaoils Sdn Bhd, Malaysia
In their concluding statement at the 14th Summit in Thailand, Asean leaders said they would welcome expansionary macroeconomic policies, including fiscal stimulus, monetary easing, access to credit including trade financing, and measures to support private sector ... to stimulate domestic demand.
1. From your experience and perspective, how significant is the government support for private sector?
It is not really effective. Government support is more towards specific industries having government-linked companies and its related companies. Private sectors have to use their own connections and strength to request for trade financing. During these economic downturn, financial institutions are tightening the conditions for borrowings and this will reduce the ability of private sector to grow.
Government should focus on export-oriented manufacturing companies as these companies are the ones that give volume businesses and multiplier effect to domestic companies and generates business activities to support other businesses. Supporting export companies increases exports to other countries and this result in the funds to flow into the exporting countries.
In Southeast Asia, Singapore is already in recession and economists believe Malaysia and Thailand are on the brink, while Indonesian growth has slowed to its weakest pace in more than two years.
2. The stimulus spending plans announced by governments across Asean may stem the economic damage to a certain extent, but what should they do to revive industries with a focus on exports which are not likely to stage a major recovery until consumers in the West start spending again? Is boosting intra-Asean trade the best solution?
Governments are revising stimulus plans specific to their own countries’ need only. In order to revive exports, Government should give support in terms of Research and Development (R&D) of products ie assist exporting companies in technology / means to value-add the existing products. Government can also pave way by bringing our products to new markets, introducing the goodness of our products compared to others. Internally, Government should impose condition to financial institutions to support exporting companies by extending facilities, besides urging them to lower the interest rates to increase companies’ spending moneys. Eventually, this will stimulate spending and the spillage will have more effect to other domestic companies and finally to end-consumers.
Intra-Asean trade may not be the best solution but one of the solutions. Support for exports can be done if Asean governments plan collectively ie effective planning on balancing exports and imports between countries. In order to boost exports, governments should relax their regulations and duties and focus on win-win situations for all Asean countries. Intra-Asean trade may be solved for basic needs such as food, fuel and energy through free movement of goods.
The 14th summit marked the implementation of a roadmap that aims turn what used to be a consensus-based group long derided as a talk-shop into a single community of 570 million people with a combined GDP of $2 trillion in six years.
3. Do you think this goal is achievable in six years? What do you think could be the hurdles?
The goal is not achievable in six years for many reasons
1. diverse resources cultivated/generated from each Asean countries
2. difference in culture and customs
3. difference in political views
4. language barrier
5. currencies issues – we do not have a single strong currency that can support each other
6. political instability
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