How to avoid being another Greece

Ramon Navaratnam laments the lack of 'good hard news' about the Malaysian economy.

KUALA LUMPUR: Economist Ramon Navaratnam has urged the government to take measures that would produce enough good news about the Malaysian economy to boost investor confidence.

He said Malaysia should learn a lesson from the Greek experience.

“I can see that structurally, from an economic point of view and even the socio-political point of view, there is no good hard news which will stimulate confidence,” said the Chairman of the Centre for Public Policy Studies in an interview with FMT.

“With the steady outflow of private capital, with the steady brain drain, I don’t see what can give confidence to boost the exchange rate, boost our investment and consumption and keep our presently strong fundamentals sustained on a longer term basis.”

He recalled Bank Negara Governor Zeti Akhtar Aziz saying that the fall of the ringgit was temporary, but he noted that the currency had been on a downward trend over the last few years.

“I don’t see any good reason why the currency should suddenly pick up after a temporary phase and move on,” he said.

Navaratnam likened economic health to a person’s constitution. “You can be strong one day. And then you get a little chill and then neglect it. If you don’t take the necessary medicines or remedies, you can deteriorate very fast,” he said.

“Malaysia is at a watershed. We can go up or we can go down.”

Ominously, he drew a comparison between the Malaysian and Greek economies.

According to him, Greece was probably as economically strong as Malaysia is today, but has since gone downhill because it did not heed the “warning signs”.

“It kept borrowing more and more, overspending and not doing enough on fiscal and financial discipline. As a result, it deteriorated and came to the stage of no return.”