Asian Saving Habit
October 5th 2006 14:37
Found this article while doing a harddisk spring cleaning. A piece which was published in a Malaysian English-language newspaper, The Star, back in 2003.
Difficult to change Asian saving habits (The Star, 6th June, 2003)
I AGREE with Chris Yong, “Spend more, save less to boost economy” (The Star, May 31).
However, it is easier said than done. This is because Asians generally tend to save more than spend.
Asians tend to save for rainy days as the fear of chaos, economic turmoil and unexpected outcome of future events is always on their minds.
Telling people to spend more is difficult. They just cannot start spending more overnight as those “fears” would be on everyone’s mind for quite some time – at least for the current generation.
The hope for Asian countries to turn their economic dependency to consumer consumption lies with the younger and future generations, which, due to the effect of globalization, tend to spend more and save less.
As for Malaysia, consumer consumption cannot fully sustain the economy because of one factor: large consumer spending only happens in Kuala Lumpur, Johor Baru and Penang.
When one talks of our consumer market, it means the consumer market of these three cities. Consumer spending in the rest of the country is too small.
Depending on these three cities for consumer consumption is simply not enough, for their combined consumer market cannot even match that of China’s Shenzhen city alone.
Maybe we should develop more vibrant and larger cities all over the country to increase consumer spending. Only then can we depend on our consumer market and less on exports and foreign direct investments, which are subjected to external economic factors.
In another four years, Malaysia celebrates its 50 yeas of independence but it is very likely that we would not be celebrating 50 years of economic independence.
Benkaiser,
Kuala Lumpur.
Spend More, save less to boost economy (published on The Star on 31/5/2003)
The recently announced stimulus package will definitely give a boost to the country’s economy.
However, what the country really need is for the people to spend more and save less.
If you look at the Asian economies, virtually none is consumer driven. They are export or investment driven.
Asians, including Malaysians are saver (average 35% of their income) and not net spenders. Japan is a net exporter and its people are great savers, yet its economy is weak.
In comparison, the United States’ economy is consumption driven and its path to growth is to consume. Better still if other people lend money to spend because Europe and Asia have a huge appetite for US treasury bills.
Year after year, the US imports more that it exports and it even spends into the future by credit debt; its consumption sucks in good to support other economies.
The suggestion to save less is not a bad idea.
The question is: will people spend or save and will the people’s behavior change, because habit does not change overnight?
The Japanese save even when the saving interest rate is very low and even when the government charges them for saving.
Chris Yong,
Subang Jaya.
Market Update
Following the lead from Wall Street, the ASX S&P 200 benchmark index defied gravity today by gaining 1.49% despite sluggish commodities prices. The lead was further boosted by Telstra's anticipated release of its strategic review tomorrow and the release of T3 sales on Monday. Analysts believe the market is set to follow Telstra's lead for the coming trading days. The US economy is futher expected to be on a weaker scale and perception holds for interest rates to be maintained.
Meanwhile the Portfolio 1.5 - EW remained steady at valuation of 12.78% with an unrealised profit $4,451.
Difficult to change Asian saving habits (The Star, 6th June, 2003)
I AGREE with Chris Yong, “Spend more, save less to boost economy” (The Star, May 31).
However, it is easier said than done. This is because Asians generally tend to save more than spend.
Asians tend to save for rainy days as the fear of chaos, economic turmoil and unexpected outcome of future events is always on their minds.
Telling people to spend more is difficult. They just cannot start spending more overnight as those “fears” would be on everyone’s mind for quite some time – at least for the current generation.
The hope for Asian countries to turn their economic dependency to consumer consumption lies with the younger and future generations, which, due to the effect of globalization, tend to spend more and save less.
As for Malaysia, consumer consumption cannot fully sustain the economy because of one factor: large consumer spending only happens in Kuala Lumpur, Johor Baru and Penang.
When one talks of our consumer market, it means the consumer market of these three cities. Consumer spending in the rest of the country is too small.
Depending on these three cities for consumer consumption is simply not enough, for their combined consumer market cannot even match that of China’s Shenzhen city alone.
Maybe we should develop more vibrant and larger cities all over the country to increase consumer spending. Only then can we depend on our consumer market and less on exports and foreign direct investments, which are subjected to external economic factors.
In another four years, Malaysia celebrates its 50 yeas of independence but it is very likely that we would not be celebrating 50 years of economic independence.
Benkaiser,
Kuala Lumpur.
Spend More, save less to boost economy (published on The Star on 31/5/2003)
The recently announced stimulus package will definitely give a boost to the country’s economy.
However, what the country really need is for the people to spend more and save less.
If you look at the Asian economies, virtually none is consumer driven. They are export or investment driven.
Asians, including Malaysians are saver (average 35% of their income) and not net spenders. Japan is a net exporter and its people are great savers, yet its economy is weak.
In comparison, the United States’ economy is consumption driven and its path to growth is to consume. Better still if other people lend money to spend because Europe and Asia have a huge appetite for US treasury bills.
Year after year, the US imports more that it exports and it even spends into the future by credit debt; its consumption sucks in good to support other economies.
The suggestion to save less is not a bad idea.
The question is: will people spend or save and will the people’s behavior change, because habit does not change overnight?
The Japanese save even when the saving interest rate is very low and even when the government charges them for saving.
Chris Yong,
Subang Jaya.
---
Market Update
Following the lead from Wall Street, the ASX S&P 200 benchmark index defied gravity today by gaining 1.49% despite sluggish commodities prices. The lead was further boosted by Telstra's anticipated release of its strategic review tomorrow and the release of T3 sales on Monday. Analysts believe the market is set to follow Telstra's lead for the coming trading days. The US economy is futher expected to be on a weaker scale and perception holds for interest rates to be maintained.
Meanwhile the Portfolio 1.5 - EW remained steady at valuation of 12.78% with an unrealised profit $4,451.
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