Thursday, October 27, 2016

ICYMI: Malaysia’s Pension Crisis

My latest (excerpt):

Challenges of a pension system

ONE aspect of an ageing society is obvious to everyone – care for the elderly will take on greater importance. How adequate are Malaysia’s pension systems?

In western societies, most countries have achieved universal coverage, with net income replacement values ranging from 29% in the United Kingdom, to 96% in the Netherlands (based on OECD data)….

…The challenge in these western economies is one of sustainability. The problem with DB schemes is that they are based on the principle of pay-go – current workers’ contributions pay for the pension entitlements of retirees. This is not an issue if the demographic profile of the country is relatively stable...

Click the link for the rest.

Tuesday, October 25, 2016

Assessing Budget 2017

Today’s the first chance I’ve had to sit down and really think about the budget, past the first impressions we all got on Friday.

Overall, it somewhat exceeded my expectations. Granted, my expectations were undemandingly low, which is what happens when you commit to a hard limit on public debt and promise to cut spending over the medium term. But within those constraints, there was still some nice ideas in the budget speech.

Friday, October 21, 2016

Budget 2017: Going Live

…but not in the usual way. I’ll be running around like a headless chicken for most of today (apologies to all headless chickens, by the way), so live bloggin the budget as I’ve done over the last few years won’t be possible.

However, I’ll try to put something up when the budget speech ends, and more importantly, you can catch me on NTV7’s post-budget show at 8pm.

Further analysis by next week (the weekend’s going to be pretty hectic too).

Thursday, October 20, 2016

Alternative Budget 2017

It’s that time of the year again!

I’m not going to comment extensively about the Alternative Budget (you can download it here), especially on the numbers. I’ve already spotted one whopper of an error, and another biggie that can be put down to lack of info (more on this later). Given the assymmetry in information between government and opposition, I’m not going to be too critical over these.

Rather I want to touch on the broad themes raised in the document. As an aside, I’d also note that mainstream media coverage on the Alternative Budget is far more widespread than it used to be. There was a time when barely anyone wrote about it.

Wednesday, October 5, 2016

Explaining Inflation…Again

I had some input into an article the Malay Mail published last month:

Is there really a gap between the official inflation rate and reality? Well, yes and no

KUALA LUMPUR, Sept 5 — As Malaysia’s urbanites begin to feel the bite of soaring living costs, there is growing suspicion that the official inflation rate does not quite reflect the economic reality….

…So is there a gap between real consumer experience and official data? The explanation itself is quite technical but in short, it’s a yes and no.

On one hand, economists worldwide have long decried the method used to measure inflation—the consumer price index (CPI) — saying it is far from reliable.

Domestically, there have been debates about whether or not the CPI model accurately depicts the reality on the ground....

They only used some of my reply (because, as usual, it was long-winded), so I thought I might take the liberty of publishing my remarks in full:

The Population Bubble

Came across this tweet this morning:

How very true.

Wednesday, September 28, 2016

ICYMI: Growth and Ageing on BFM

I was on BFM this morning talking about growth in the long run:


Monday, September 26, 2016

Demand For Housing

My latest column in the Star (excerpt):

Danger of dip in demand lurks

RECENTLY, the Urban Wellbeing, Housing and Local Government Ministry proposed allowing housing developers to extend loans to homebuyers. One common refrain in support of this policy and for house buying in general is that “house prices only go up”.

In one sense, this is rational. Land is the biggest single input into house prices and land isn’t being made anymore (bar the occasional land reclamation or undersea volcano eruption). Global warming is raising sea levels, which reduces available land even further. But this is entirely a supply side argument.

Historically, there have been periods where house prices have not gone up or even gone into retreat. There is nothing inherently special about the housing market in that respect. The global financial crisis was partly triggered by a US housing bubble that burst, as house prices fell over 20% from their peak in 2007 and took eight years to recover.

Wednesday, September 21, 2016

ICYMI: Economic Growth Over The Very Long Run

I keep meaning to post on this topic, but what with work and all, it’s been on the back burner. In any case, I wrote an article published in the Star last week that covers the main points (excerpt):

Economic growth in an ageing world

MOST people take growth for granted. We expect living standards to increase over time and that our children will enjoy a better quality of life than us.

But growth is not a given and it is driven by economic processes that can and do change. There has been a gradual slowing in global growth over the past couple of decades, and some of this can be pinned on structural factors that form the very foundation of growth itself....

It’s partly secular stagnation, but more in the Hansen sense than in Summers new formulation, and over a larger scope than just what’s going on in developed economies.

Have a read and let me know what you think in the comments.

Dear God, I dearly hope I’m wrong on this.

Affordable Homes: Finance Is Not The Problem

In a rather unusual move, BNM issued a statement yesterday on the current hot topic of housing (in full, emphasis added):

Responsible lending guidelines ensures borrowers' affordability

This is with reference to a media report on requests for Bank Negara Malaysia to review the lending guidelines in relation to the extension of the loan repayment period from 35 to 40 years.

Bank Negara Malaysia wishes to state that financial institutions will continue to lend to individuals who can afford to take on a housing loan, including for the purchases of their first homes. In July 2016, outstanding housing loans extended by financial institutions continue to grow at 10.1%y-y and totalled RM460.2 billion. About 75 per cent of borrowers (approximately 1.5 million borrowers) with housing loans are first time house buyers.

Access to financing is not the main problem confronting potential buyers of affordable houses. The fundamental issues that require resolution are affordability and the shortage of supply of reasonably priced houses.

Tuesday, September 13, 2016

Wages, Productivity and Growth

I’ve been meaning to write about this, but life and work kept getting in the way. Makes for a good story, except its almost totally wrong (excerpt):

High wages flash recession warnings in Singapore

...Indeed, while the city state's economy is expected to grow between 1-2 percent for the year, analysts say the wage-cost pressures are flashing warnings of a recession.

At roughly 43 percent of gross domestic product - though below the 55 percent world average - wage costs in Singapore are now at levels which historically had preceded recessions in 1985, 1997 and 2001.

The trouble is that the higher wages are raising business costs at a time when export-oriented Singapore has been hard hit by a cooling China, subdued domestic consumption, a downturn in commodities and global uncertainty due to Britain's vote to leave the European Union....

How To Make Housing Affordable In Malaysia

Read this.