Economic Crisis May Take 2-4 Years To Recover, Says Nor Mohamed

2-4 years...lama tu kan..the problem is many still not sure how bad it is...japan pun dah enter into recession..dgr2nya local financial institution pun dah start offering sesapa yg nak lompat2 keja tu...wont be a gud time to do that..last in first out kan

KUALA LUMPUR, Nov 19 (Bernama) -- While the current global economic crisis may continue two to four years, its negative effects will not be as bad as that of the Great Depression in the United States during the 1930s, said Second Finance Minister Tan Sri Nor Mohamed Yakcop.

Compared with the 1997 regional financial crisis, the present situation however is bigger as in 1997 it was a banking and currency crisis involving countries in the region and therefore at the sideline of the world financial system.

This time around however, the crisis involves world financial centres in the US and Europe and it cannot be easily resolved as it involves the erosion of the world financial system.

It will take a long time to regain the confidence that has been lost, he said.

Referring to concerns raised by Malaysians, he said the rate of unemployment in the country was still low at three percent and even if goes up it will not exceed four percent.

Malaysia also has a high level of savings at 37 percent compared with the US which has between zero and one percent and the US government has to now borrow US$4 billion every working day to take care of its needs.

Nor Mohamed said Malaysia's banking system was also solid and that the government was proactive in taking measures to resolve the problems including taking measures that were unorthodox like what it did during the 1997 crisis.

Meanwhile, on concerns of a lower income from oil revenue, he said that in the 2009 Budget, the taxes from petroleum and the dividends were based on the price of oil during 2008, and given this, there was no issue actually.

Only from the 2010 Budget onwards there may be a need to relook at the oil revenue considering the fast falling oil price.

He also said that the country's high deficit of 4.8 percent was not a problem as the Malaysian government was highly disciplined in its financial management and was capable of paying back.

He also pointed out that in 1997, the budget deficit was 5.5 percent, adding that a high deficit for one or two years was not a problem.

On concerns regarding foreign banks in the country, he said it was mandatory for foreign owned banks in the country to establish their operations locally using their own capital equity and not as a branch to their holding banks in their respective countries.

Therefore, there is no risk whether the parent banking company is from the US or elsewhere, he said.

On the good that has come out of the financial crisis, he said the western leaders were now beginning to use the advice given by Malaysia 10 years ago on the weakness of the international financial system.

Now, they too are seeking for a more fair and stronger financial framework, he said.

The situation has also given the opportunity to economic experts to gather and put forward their views to strengthen the existing system and from this lesson, the country will come out stronger to face the challenges in the world based on knowledge and technology.

There are also many Malaysians working outside the country coming back either because they have lost their jobs or it has become difficult to work overseas, he said.



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