COMMENTARY
NOV 5 - Tried and tested is probably the best description for the stimulus package announced by Prime Minister in waiting Datuk Seri Najib Razak yesterday. The package is unexciting overall but an extra RM7 billion is nothing to sneer at in times like these.
Similar measures have helped soften past hard landings for the economy -- boost the infrastructure and construction sectors, increase disposable income, keep the property sector afloat.
These helped Malaysia muddle through the aftermath of the Asian financial crisis ten years ago, and will probably work to some degree now.
But if the stimulus package is food for the body, the question that follows is what will Najib offer as food for the collective Malaysian soul?
When the Budget was unveiled in September the world was a much different place. People were bracing for more expensive fuel and dearer food, wondering how they were going to make ends meet in the face of rampant inflation.
Seven weeks later, the spiralling global financial crisis has cast different shadows on the immediate future. Falling house prices and toxic financial instruments have wreaked havoc in the US and UK, and threatened the stability of banks and insurance companies and roiled currencies around the world.
The price of oil has plunged, which has helped moderate inflation. But prices of commodities that Malaysia exports such as palm oil and rubber have nose-dived too.
Malaysia has been spared the worst so far, but confidence here is nonetheless low. The stimulus package offers the prospect of some immediate relief, but does little to alleviate a sense of "coulda, woulda, shoulda".
Now is probably not a good time to address some long-standing, deep-seated issues, but if we had done it when times were better, we might have built up some fat reserves against the lean times facing us tomorrow.
If only we had set a 10-year deadline in 2001 to reduce fuel subsidies to zero, we would probably have more than RM7 billion today to spend our way out of the approaching economic difficulties.
If only we had faced head on the protection for the national car Proton five years ago, we'd have cheaper cars now and more disposable income.
Years of high automotive tariffs on non-national cars has extracted a high cost in consumer welfare foregone and taken a toll on the economy.
Between 2001 and 2007, car buyers paid more than RM30 billion in duties and tariffs on the vehicles they bought. They forked out between RM9,000 and RM16,000 on average in taxes on each car purchased. And those who took car loans paid interest on those taxes.
Additional disposable income injected directly into the economy has a higher multiplier effect, so that money would probably have had a far bigger impact, in helping create jobs, say, than as development expenditure spent by the government. It would have more than made up for higher pump prices.
And it's probably too little, too late for Proton to say now it is ready to seek a foreign partner, when the world's car makers are slashing sales forecasts and seeking capital and financing.
If only the burden of the New Economic Policy on the economy could be addressed, and the ability of the country to compete on the global stage and attract foreign investment. But as recent events have shown, a thorough discussion on that issue is probably some way off.
If only we had made the most of opportunities as they came along, the country could perhaps have entered 2009 without a budget deficit which hampers attempts to spend our way out of a slowdown or recession.
Yesterday's stimulus package means the deficit will grow by a third, to 4.8 percent of gross domestic product, from the 3.1 percent announced in the Budget in September. And if a recession does strike, expect the deficit to swell further.
If only there was something that Najib could offer -- by way of commitment, of promises of a better future -- so Malaysians can see their way clear, not just for one year or the next, but for a long time to come.
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By asking employees to reduce the EPF contribution by 3% isd like asking the poor to generate economic activities to keep the rich, rich or to make the rich, richer.
Again this RM7 billion is not going to help the poor get by during this depressing time but to enable the UMNOputras to stay afloat.