FEB 10 — CIMB Group Holdings Bhd Group chief executive Datuk Seri Nazir Razak recently pointed out that the Economic Transformation Programme (ETP) progress has been slowed down because of the general election. In fact, it is not only slowing down, but the objectives and principles of the ETP have also been forgotten.
Minister in the Prime Minister’s Department and chief executive officer of the Performance Management and Delivery Unit (PEMANDU) Datuk Seri Idris Jala said at the Subsidy Rationalisation Lab Open Day in May 2010 that the national debt had soared to RM362 billion in 2009, or 54 per cent of Gross Domestic Product (GDP). If the huge annual subsidy bill was not wiped out, we would be a bankrupt nation by 2019.
The goal of the ETP is to achieve an annual economic growth by 6 per cent and gradually reduce the subsidy, saving RM103 billion in five years. However, instead of reducing, government subsidies and allowances have been increased over the past few months. For example, the government has increased the subsidy for sugar from 20 sen to 54 sen per kilogramme since January this year.
In addition, the government has also distributed various allowances and aid, including spending RM2.6 billion for the RM500 BR1M aid, RM530 million for the RM100 student allowance and RM260 million for the RM200 book vouchers. The government has also allocated RM40 million of subsidy to open the Kedai Rakyat 1 Malaysia (KR1M) retail outlets and the grocery store transformation plan also costs RM40 million.
We cannot say that the government does not have the intention to rationalise subsidy. It has at least reduced diesel subsidy for fishermen earlier. However, it lacks determination and has now resumed the practice of money distribution.
Recently, the government has allocated some resources to housing programmes, including the 1 Malaysia Housing Programme ( PR1MA), People Housing Project (PPR) and My First Home scheme. Under the My First Home scheme, each household will receive RM20,000 of allowance and 100 per cent loans. Also, the Employees Provident Fund (EPF) has announced to channel RM1.5 billion to finance the special funding scheme under the PPR, and successful applicants will also receive 100 per cent loans.
The focus of the ETP is on innovation and structural reforms. How are we going to develop new value-added areas and projects if resources are allocated to large-scale projects and unproductive housing programmes? Spending resources on construction will inevitably reduce funds needed for human resources training, as well as research and development.
Currently, there are many ongoing housing programmes and the government’s intervention will certainly increase the housing supply. Housing prices have been pushed up by wealthy buyers. Some people are holding a few houses and once the bubble bursts, it will bring a huge setback to the country. Such an economic mode is in fact a bubble economy that repeats the mistake in the 1990s.
The ETP is also colour-blind and stresses only on capacity to enhance national competitiveness. However, Proton continues to enjoy subsidies even after being sold to private enterprise DRB-Hicom Bhd, because it is a Malay company.
In addition, there are also racial quotas for the Skim Amanah Rakyat 1 Malaysia (Sara 1 Malaysia), with 50 per cent for Bumiputeras, 30 per cent for Chinese, 15 per cent for Indians and 5 per cent for other racial groups.
The national debt increases because of the money distribution schemes. The economy remains on the old road while economic transformation is still in the far distance. — mysinchew.com
* This is the personal opinion of the writer or publication. The Malaysian Insider does not endorse the view unless specified.
