Malaysia’s New Economic Model – Challenges and Response

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A critical look at Malaysia’s New Economic Model

Please click on the link below to view report:

Malaysia – Economic Outlook

2 Responses to “Malaysia’s New Economic Model – Challenges and Response”
  1. hishamh says:


    My comments, as promised:

    1. I would not call the past recession as being due to the crash in US housing – that was just the trigger. Note that defaults in the sub-prime market were just as high during the 2000 US recession, but without the knock-on effects on the global (or even US) financial system. Best I think to just call it a financial crisis, or the Great Recession as some economists are referring to it.

    2. I love your analysis of household income, very useful and appropriate. Research is about adding value to data that everyone else sees, and turning it into <i.information. Well done!

    3. I don’t agree with the common viewpoint that the Ringgit was (and continues to be) undervalued. On a trade-weighted basis, any undervaluation basically disappeared by 2002, because of USD appreciation and the peg. I think structural factors (demographics, greater tradables versus non-tradables output, emphasis on low-skill manufacturing, high savings rate) were really at the root of our current account surplus. There’s a good article on this and exchange rate valuation at (focuses on China, but comments are relevant to Malaysia as well):

    4. Factually, Singapore has been Malaysia’s biggest trading partner since 2007. Current trade with the US is about on par with China and Japan, and slightly ahead of Europe.

    5. pg 16 again on currency – capital controls were fully abolished with the lifting of the peg in 2005, save for international convertibility. Second, while undervaluation is debatable, its against developed world currencies, not regional currencies as these have tended to move together.


  2. The main character is a man named Daniel. When you look at his eyes, you’re looking into the eyes of a man who has seen Hell. There are moments when he looks like he’s about to begin screaming at any second, and never stop. The first time you see this is in episode one, when he’s about to leave the prison. The guard is treating him like a human being, and it’s evident this hasn’t happened in an extremely long time. You see the confusion on his face as he wrestles with suddenly being treated decently by the same people who have treated him like an animal for years. He can’t quite process it. I know that look well. As he’s about to leave the prison, the guard helps him tie his necktie, as he can no longer remember how to do it himself.

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