Monday, February 16, 2009

2nd Economic Stimulus - The Right Focus?

Deputy Finance Minister Husni Hanadzlah said the focus of the second stimulus would be on both infrastructure and human resource development. Second Finance Minister Nor Mohamad Yakcob had asked Penang to focus on workers' retraining.

I would like to urge the government too reconsider such a narrow focus. Both infrastructure development and human resource development may not be the right remedy to reverse the economic slowdown and lost of jobs.

Infrastructure development takes a longer period to have an impact on the economy. At least 6 to 12 months. Moreover, this sector uses more than 90 percent of foreign workers. Just days ago, the Ministry of Human Resource has proposed a more relaxed levy to send foreign workers home. The lack of foreign workers to work on infrastructure development projects does not immediate translate into more locals taking up the job.

The directive from the Ministry of Human Resource may create yet another human rights problem for us in our management of foreign labour/migrant workers. Malaysia is already being criticised for its poor record in handling the welfare of migrant workers who had contributed much to the nation's solid economic growth in the last 2-3 decades. This discussion will not be further explored here.

Back to the stimulus, the government should instead go for direct stimulus by injecting the cash into the domestic economy. Ambank Research has voiced out similar concern that the second stimulus might be too small to make an impact. It has asked the government to channel the stimulus directly to the system via cash coupons or tax rebates. A number of analysts, including myself, have voiced similar suggestion in the past.

The workers' retraining programme will not contribute much to keep people employed. The main problem with our economy is not skill misplacement but job lost. Jobs are lost and new positions are freezed because exports have slowed down considerably. Our exports in January (m-o-m) have slowed down by almost 17 percent.

Instead of spending the stimulus on retraining, the government should focus on creating new jobs e.g. food production, public transport, hospitality, community work, agriculture and import substitution sectors. It is pointless to retrain workers if they are going to continue to be jobless after the training period.

The stimulus package must address 3 key areas:

1) Keeping jobs
2) Creating new jobs
3) Enhance or sustain domestic demand

Hence, it is important for the second stimulus to be well directed. This is the time for right minded politicians to put down their differences and help to address the impending economic crisis.


Anonymous said...

Tell me will benefit from the stimulus package, nobody than the sucker UMNO, the money the take from the rakyat is then trasfer back to their own account in the name of development or simulation country economic. In fact their own pockets are stimulated to become bigger and bigger. Do they really care of economic growth of the country, just for the sake of their own multiple digits growth of the Swiss bank Acount. Yes they said they will try to provide job for everyone but They will provide job with salary only enough to buy dog food that for feeding their dogs! Ultimately, they only care about themselves.

Anonymous said...

utter rubbish

Anonymous said...

totally agree not only with your assessment but also concern with the implimentation as well.

I am not at all surprised these monies will flows back to thier own pocket in the name of sustaining malaysia economy.

Duration of the injection is too long. Also will be wondering where the monies will come from. Hope not from our EPF monies which is far insufficient for our own retirement.