May matham musings

In this article , we would like to pursue the need for people to do some analysis of current situation and for having a certain degree of paranoia for the benefit of future prospects.

Last weekend, we had back to back social invites in both the north and south of Malaysia to attend to.

The drive & mingling experience was rewarding for the wide barrage of expectations and information that we received whilst conversing with the differing social groups and viewing their thought patterns.

Talking to a retail business owner as well as a senior production manager in the north, the impact of future changes in monetary evaluations for the ringgit seems prescient.

Looking at the cost of doing business here in Malaysia today, we were told that the current policies do not seem as inviting for capex investments as recent (sudden) high operating costs of running a business is prohibiting new capital expenditure within the private sectors.

There seems to be consensus that the share markets  and money trade markets today were far more profitable and lucrative as a earnings component than actual service, retail or manufacturing concerns.

This was due to the fact that operating a business these days required a high starting cost as well as high maintenan've cost when factored in ringgit valuations.

Also, many existing big and middle income companies now have to rely on external funding opportunities to continue to operate & expand as the value of ringgit diminishes.

The complain today is that current R.O.I and bottom line calculations are markedly lower now than how it used to be.

There seems to be a resignation in their expectation that the current devaluing properties of the ringgit will remain in the short term.

This situation, if allowed to continue unchecked however, will lead to a down ward spiral in future FDI and eventually to a  general economic malaise for the forseeable future due to knock on effect.

On the other hand, down south with the middle class govt servant populace, the ambivalence towards any future turmoil (in the monetary sense) seemed far away from their plate as they bask in their middle class zone of comfort and monthly salary expectations.

There seems to exist a wide gap in the fear & paranoia of the professional and  business owning groups and the servile population in this country.

What do we mean?

The past 36 months of Company Earnings being in doldrums here  seems to be pushing the move towards automation and mechnanisation in many industries.

There is clear evidence now that more and more companies are looking towards fintech and automation to increase their bottom lines.

One can see this evidence here in Malaysia in the banks, back of room operation in manufacturing and service industries including the hypermalls and even in the smaller retail services as more and more self service ticket vending machines in theatres to car park paying machines & retail kiosks that have vending machines for fast food and beverages pop out..

Many still seem  unawares but the world has evolved towards automation and mechanization, and it's going to keep evolving, but the speed is increasing exponentially.

(We predict the coming changes to our lifestyle would be very drastic and socially catastrophic).

Being an export oriented economy, this country will see itself adapting to the changes happening outside the country as our manufacturing and service industries cope with these eventual changes that are coming.

As a precaution, in the short term, we need to focus our sights on the internal and external inflation rate and currency exchange to be able to cope with sudden depreciation and value loss of our hard earned savings.

The country's long term monetary outlook however is strong given that we are a commodities and oil & gas exporter.

However, from a societal viewpoint, for certain individuals the coming short term changes can seem too big to handle ( if not realised early) as I remember well the many families that fell wayside in the late 90s and early 2000s here in Melaka as the business world started changing its reliance on human capital in back room operations to more computer based operations and archives.

Those workers who could not adapt to the systems and interface change in their working environment soon become obsolete and out of a job.

This was a necessary change to cope with the outside demands of the business environment.   But unfortunately, that's not how families and responsibilities of a human being work.

These groups of middle class and upper middle class workers who could not adapt still had financial responsibilities to maintain and this change in business perspective caused their families to suffer a drop in income and eventually expectations and social mobility.

Today, we can see another round of forced changes happening in the country and world environment.

The employers are looking to regain better bottom line results and are looking at cost cutting measures that can improve their operating costs.

Thus the move towards more automation and mechanization in the business world.

Most times, these changes occur spontaneously and quickly but in small doses....so much so we seem to believe they were always there.

In the most obvious environment change, todays' young shoppers are devoting bigger shares of their wallets to entertainment, restaurants, and technology and spending less on clothing and accessories.

This subtle change in shopping habits will see HUGE changes In the way hyper shopping malls are laid out within a decade as the softline aisles and hard line aisles in a supermarket gets reconfigured to cater to changing spending patterns.

Which means in the short term supply chain disruptions on what and how and when food and groceries are stored and retailed.

This also means a change in the way workers are needed within the supply chain.

E Commerce and internet shopping will grow exponentially within the next 10 years to change the landscape of shopping as we currently know it.

This will again bring about changes to the way the human resources are required within these service employment sectors as more and more human jobs become automated to meet with the 24/7 needs of the internet economy.

As we've said earlier,  there is a need to be a little paranoid about the future as the future is here now and it's  not what we expected it to be.