GLC Economist Privately Says Economy Is Tanking

Some folks were talking today. Including a GLC fellow. The GLC fellow said that the economy was tanking.

He cited a few reasons :

1. Gomen Concession Agreements are not attractive anymore to banks and financiers to raise funds. They have less faith in the gomen. Bond issues backed by CAs need higher interest coupons.  Otherwise bond investors are not interested.

2. In the old days if you had a gomen contract  suppliers were willing to extend immediate credit. Supply barang first, collect money later. Well not anymore. The gomen does not pay on time any more. So the suppliers are not extending credit even with signed gomen supply  contracts. They want cash upfront. Pay money I supply. No more credit or advances.

3. Businesses closing. This is an increasing phenomenon. Today I was at Lucky Garden  in Bangsar.  A few shops are closed for business. Permanently. This is unheard of in Lucky Gardens. Bangsar is the centre of the KL universe. It used to be so difficult to even rent a shop here. Bangsar gave birth to Giant, a public listed company. Business is tanking, even in Bangsar.  In our jewellery business, we had a Chinese craftsman  (tukang emas) who has been doing stuff for us since 1998. 20 years ago. He was in his 20s. Now he is in his 40s. Recently he quit and balik kampong to Perak. He went back to work in his father's old kedai runcit. At over 40 years of age. He says there is no more business to sustain him in KL. This is the 21st century and he has to balik kampong to work in his father's kedai runcit.

4. High gomen debt - the gomen debt is over RM800b. Debt servicing alone is over RM30b a year. Income tax collection is about RM29b. Not enuf to service debt. Minus GST, the gomen will be bankrupt. Some say gomen debt will hit RM1 trillion soon. Where is the money for new developments? All the money is used either for salaries or debt servicing. 

5. The Ringgit may depreciate further. If so imports will become  more expensive. Inflation will spike if the Ringgit depreciates. Foreigners  can buy up the country for small change. 

6. Incompetent Civil Servants - Especially at the senior levels. The level of incompetence is staggering.