Thursday, February 12, 2009

Economic Woes and Stimulus

With global trade numbers continue to show dismal results, down by almost 45% vis-a-vis same period last year, it is time for the federal government to look deeper than merely approving additional budget to be used through the ministries.

Dr Mahathir has pointed some crucial points on what can be done. He said that Malaysia needs to find its niche. To do so, the country must assess its own strengths and weaknesses. The economic solution must include a relook at Malaysia's economic structure and industrial processes.

Mahathir said "It is not just giving money here and there... giving it to this school or to this area, that area... that is not the way. We have to structure the whole economy and structure which part needs support.”

One area is to tie government assistance with a compulsory internal restructuring to ensure higher adoption of technology and processes to improve productivity and enhance quality.

There are some crucial areas for the government to ponder:

  1. Use the stimulus to create new industries and new jobs e.g. food production, import substitution industries, public transport, agriculture, hospitality services and related cottage industries
  2. Assistance for the SMEs to ensure job lost and retrenchment is minimized. Lost of jobs will translate to lost income and lower consumer demand
  3. Review the role of the GLCs to support the local economy. GLCs play a significant role the domestic economy. It is time for GLCs to look at broader areas of capacity building for local suppliers and extending support to SMEs.
  4. Revise and review archaic economic policies which are hampering economic development
  5. Revise and review our human resource policy. Malaysia must not continue to depend on low-to-medium skilled foreign workers. This is an disincentive for local companies to hold back technology adoption and innovation
  6. Consider the setting up of retrenchment support funds. SMEs and local companies can be encouraged to reduce retrenchment if the government can support part of their labour cost. It is important to keep workers at work. Workers supported by the funds can be utilised by the government on separate socio-economic programmes including community works
  7. PM Abdullah has asked political parties to keep their differences away and work together to safe the economy. This statement no longer holds any credibility with the recent debacle in Perak. But the federal government should refrain from using public funds, in the guise of development allocation, to serve its own political purposes. Federal government MUST allocate additional funds to all states FAIRLY. It is UNPATRIOTIC for BN to do otherwise.
  8. Finally, we need to look at economic centralisation critically. The centralisation of economic planning and implementation is no longer relevant and is open to abuse and corruption. We need to explore the need for economic decentralisation through proper power sharing between the state and federal governments and their respective agencies.
I would like to encourage views on this issue. Any delay of a swift and calculated action from the federal government is going to put our economy in jeopardy. Aggregate demand will continue to fall if jobs are lost and government economic stimulus not rightly directed.


Mr. Smith said...

You are asking Najib Copperfield to fix the leaking pipe.
He is busy making people disappear.

Chris Leong said...

I believe that the government should follow one of obama's footsteps. Which is to boost the green economy. Our oil won't last long and it is important that we look at how efficiently we use our energy.

Give grants for company to improve its production by using state of the art technology. By doing this, we can also be less dependent on illegal foreign workers. My 2 cents

Anonymous said...

Well, the government announced the first stimulus package in Nov-08 but I understand that only RM400m has been spent so far. So, the impact has yet to trickle down to Rakyat.

I also wonder why it took so long for the government to slash electricity tariff. Inefficient!!

The funnier thing is that credit cardholders can also enjoy a reduction in outstanding interest rates effective March 31. Firstly, why there is a need to make such announcement so early? Secondly, why can't the implementation start on effective Feb 28 or even March 1??

K L said...

But with one by-election comes after one another, the bulk of the so-called stimulus package has to go into the buy-elections already !