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ATimes: Malaysia's Electronics Fuse Is Blown [Recession]
By Anil Netto

20/7/2001 4:30 pm Fri

[Malaysia terlalu bergantung kepada sektor elektronik dan IT untuk menggerak ekonomi seolah-olah ia tidak mungkin terjejas satu ketika nanti. Kini penguncupan pasaran IT menyebabkan beribu-ribu rakyat kelas bawahan tergugat hidup mereka. Bukan itu sahaja, ia kini telah memberi kesan yang amat dahsyat kepada ekonomi sehingga MIER memotong lagi kadar pertumbuhan. Bayangkan tahun lepas 8.5% tapi kini 2.2% sahaja. Itu kemerosotan hampir 4 kali ganda!

Kerajaan amat lambat bertindak dan sentiasa merasa optimis sedangkan fenomena ini sudah lama diramalkan oleh analis ekonomi. Kita telah lama merakam perkara ini di KM2 tetapi Mahathir tetap berkeras dengan kedegilannya itu. Kawalan matawang Mahathir menyebabkan pengilang di negara ini semakin sukar untuk menjual barangan mereka kerana nilai matawang serantau/saingan lebih murah. Patutlah ada kilang yang gulung tikar terus atau berhijrah sahaja ke China. Mahathir tidak memperdulikan rungutan mereka sedangkan merekalah yang menolong Malaysia ketika krisis ekonomi dulu.
- Editor

Malaysia's electronics fuse is blown

By Anil Netto

PENANG - The hidden underclass are feeling the brunt of the current Asian slowdown, which has afflicted countries that rely heavily on electronic exports.

The Malaysian Institute of Economic Research has announced that it is slashing Malaysia's economic growth forecast for 2001 to 2.2 percent from its previous estimate of 4 percent made in April. Last year, the economy grew by 8.5 percent. The scaling down of growth forecasts marks a trend that is repeated across East Asia as the slowdown in the United States bites into the region. The United States accounts for 25 percent of East Asia's exports - a trend that was a plus in good times, but has now become a weakness.

Throughout East Asia, first-quarter growth rates have fallen in countries like Singapore, Taiwan, South Korea, the Philippines and Hong Kong, as growth prospects in electronic and related exports fade.

Since 1989, the United States has accumulated a trade deficit of US$2 trillion, and some three-quarters of this is with East Asia. Analysts say the flight of East Asian current account surpluses to the United States since 1998 fueled a liquidity boom that enabled the information technology (IT) bubble to build up. This in turn led to increased IT spending with East Asia a key beneficiary. But the rapid expansion in IT capacity also trimmed margins and frightened investors from lending more money to these firms, triggering weaker demand and lower earnings.

Unless demand for electronics picks up, the region is headed for difficult months ahead. Beyond the trimmed-down growth estimates, this means low-income workers bearing the effects of the region's slump.

A trade union leader has predicted that 90,000 Malaysians could lose their jobs this year. "At least half of that figure is likely to come from Penang," says Toh Kin Woon, a ruling coalition politician who heads the state government's economic recovery task force. So far, in Penang alone, 10,000 jobs have been lost. At last count, 53 firms in the state had frozen salaries, waived staff bonuses, shed workers, shut down plants temporarily or folded completely, according to Toh.

"A lot of multinational companies are holding on and not retrenching workers, and instead resorting to cost-cutting measures, hoping that the pick-up will come by the end of the year or early next year," observes Toh. "If the pick-up does not happen, we will have to brace ourselves for the worst."

No companies are recruiting workers, and if at all they are, it is on a very limited scale. Toh estimates that unemployment in Penang has already reached 4-5 percent, which is unusual for a place accustomed to full employment. The figure is likely to climb.

Much of the problem stems from Malaysia's heavy reliance on electronics, which account for 60 percent of total exports, despite a fairly diversified economy with strong agricultural commodities and petroleum sectors. "But the weak external demand [for electronics] is beyond our control," says Toh, noting that consumption spending and foreign direct investment have also dipped.

Penang, the "Silicon Island" state of Malaysia, so-called for its dozens of electronic multinational giants and their supporting industries, has become one of the epicenters of the regional slowdown. Among the working class, jobs have been lost, salaries cut, bonuses trimmed, and overtime work slashed.

Angelina Khoo, a human resources manager with a multinational electronics firm, works a four-day week now, while production workers lose one week's work every month. "It's especially bad for the production workers," she says, pointing out that many of them are now in debt and are struggling to pay even house rents and hire-purchase installments.

Most workers had based their personal budgets on gross income including overtime and production target incentives, which have now evaporated. Some workers who used to earn 800 ringgit (US$211) monthly are now taking home just 200 ringgit, notes Khoo. The bad times have forced many workers to return to their home villages to work in the fields, she says.

In Butterworth on mainland Penang, Krishnaveeni Ramiah is jobless. Like a growing number of Malaysians bearing the brunt of the Asian economic slowdown due to a dip in overseas demand for electronic and technology goods, Krishnaveeni has just been thrown out of work. For 15 years, she was a quality control employee at a moulding firm that made the casings for personal computers and radios. Then she received notification that the firm had been placed under receivership and that her services were no longer required.

There was no compensation. The letter added that her remaining accrued wages and compensation would only be paid once the firm's assets had been disposed of. To make matters worse, the money that her employers had deducted from her wages for monthly statutory contributions to the state-run retirement savings fund had not been credited to her retirement savings account for the last eight months.

"I have inquired at so many factories," the mother of two young children says, "but there are no vacancies."

(Inter Press Service)