Firstly let me congratulate Prime Minister to be Najib Razak for his sensitiviness towards ailing Malaysian Economic. He finally admit the Economy need antibiotics and serious attentions. When he took over Finance Ministry in Sept 2008, we was told country will able to wade through the economic crisis.
However, I feel the second Stimulus Package too failed to meet really economic problems faced by Malaysia. Append below some of my views based on little economic knowledge I have:
1) The Fiscal expenditure for the year 2009 is only RM10billion of which RM 5 billion each goes to Operational and Expenditure expenses. Even the first Stimulus package of Rm7 billion not bear any fruit, I’m doubt the additional Rm10 billion able rejuvenate the economic root. Even if it does , the beneficiary will be those involve with Government Contracts and Procurements.
2) RM20 billion Guarantee Scheme- we have to look the beneficiary , i.e commercial bank to encourage them lend money. When bank’s principal business is to make LENDING do we need to provide them with incentives and encouragement when DEMAND is great?
We need to understand Malaysian Economic is based on Export Model i.e producing country . For example we only need about 850,000 MT of Palm oil while the rest of about 12 million tonnes exported out. Since, it’s edible the demand somehow exist but not that great extend as Industrial user might have lesser demand or switch to other alternatives. The level of stock of palm oil itself already an indication that demand diminish.
Let Commercial bank by itself , no need to BAIL THEM OUT by providing RM20 billion Guarantee. Instead, use the fund to insure all Produce of Malaysia (with exceptional petroleum ,electronic items and constructions) so that Manufacturer and Exporter able to penetrate new or even Virgin markets. The Business able to generate faster cash flow then.
They may argue we already has Malaysian Export Credit Insurance to assist exporters? This again another white elephant? Just walking in to their office and get some information on their services. They want Super A customer, premium paid upfront, 3-6 months to get customer approved and blah,blah..
Malaysian Products are well received by International Market only our Financial system made it difficult for cash flow turn around faster. How may SME’s suffering due to lack of bank’s support. Leave along SMI/SME with RM20 million capital , how about those with RM500,000 and below. How many of them can survive during this tough time?
We should also look into possibility of Introduce Export Grant as part of encouraging more Malaysian Product exports. This grant should be targeted for companies with RM500,000 paid up capital and those emerging entrepreneurs.
Another factor the package failed to stimulate is LOCAL DEMAND . Train and retrain may prepare us for future but how their family going to survive? Government should atleast consider :
a) Reduce Petrol , Gas and Electricity prices further immediately
b) Allow Industries to Import sugar, flour and other controlled item by themselves . This will reduce quantum of subsidies. The reason behind Government still holding tight import monopoly of Sugar and Flour still remain unanswered.
c) Encourage all Toll Express way to provide discount for users without time limitation
d) As part of Corporate Social Responsibility Toll Express Way operates should voluntarily forgo Government Subsidies due to non increment of Tolls. What if the economy slip further and government revenue dropped significantly?
e) Encourage hypermarkets to buy Made in Malaysia Products. Why only Proton and Perodua, how about other Made in Malaysia products, don’t they entitle for some incentives too.
f) Speed up infrastructure projects including Public Transportation system
g) As health related problem expected to raise , government should consider appoint panel of doctors nationwide to provide medical treatments.
I believe once government successfully rekindle the local and export demand , employment rate will increase thus creating opportunities for all other related industries.
Controlling Local demand is in Governments hand while Industries players with Government support may able to outshine other global competitors making product of Malaysia most preferable.
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