theSun | MONDAY MARCH 16 2009
speak up!
Second stimulus
package – When,
who and where?
WHETHER the second stimulus
package unveiled by Finance Min-
ister Datuk Seri Najib Razak will
soften the impact of an impending
recession and lay the foundation
for more rapid growth in the long
term will depend on the answers
to three critical questions.
First, when will the funds be
spent? Second, who will actu-
ally benefit from the initiatives
in the second stimulus package MakingSens
announced last week? Third,
by Tan Siok Choo
where is the Malaysian economy
heading?
Judging by past performance, the likely
answer to the first question is worrying.
According to the Project Management Unit,
RM6.5 billion of the first stimulus pack-
age worth RM7 billion, announced last
November, has been disbursed to ministries
and government agencies.
That 92.9% of the first stimulus pack-
age has been handed out is gratifying. The
problem is only RM1 billion has been spent.
If so, this pace of spending is mortifyingly
slow. One gauge of the stimulus package’s
effectiveness isn’t how much has been
allocated or disbursed but how fast the
money has been spent.
Given the economy’s rapidly eroding
growth prospects, the need for speedy imple-
mentation is far more urgent. Fourth-quarter
growth last year was a lacklustre 0.1%,
exports plummeted by 27.8% in January this
year and most analysts forecast growth in
the first half of 2009 will be negative.
Furthermore, although the second
stimulus package totals RM60 billion, the
federal government will fork out only RM13
billion in cash this year, a report by CIMB
says. Actual spending in the two stimulus
packages could amount to RM20 billion this
year, CIMB adds.
In other words, cash handed out by the
federal government this year is just under
30% of the two stimulus packages. This
suggests the federal government’s role is to
jump-start the stalled economy while the
private sector acts as the engine of growth.
Any delay in government spending means
the economy will remain a non-starter.
As for the second question, perception is
as important as the reality. If a significant
number of entrepreneurs believe they are un-
likely to benefit from the stimulus packages
because they are not Umno-putras – regard-
less of whether their belief is well-founded
– they are likely to be passive bystanders
rather than committed participants.
Another related issue is whether states
ruled by the Pakatan Rakyat (PR) will benefit
significantly from the two stimulus packages.
Given the fact that PR controls Selangor and
Penang, the two most developed states in the
country, any attempt to marginalise PR’s role
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Worry over cost of essential items
UNDER the second stimulus package, RM674
million has been allocated to subsidise prices of
necessities, such as sugar, bread and wheat flour.
But seeing today’s prices, there is much more
that the government needs to do to help the poor
and those with fixed incomes.
Over the weekend, I found the prices of
various items – including powdered milk, cook-
ing oil and bathing soap – had not come down.
Items that cost more included vegetables and
many varieties of cooked and uncooked food.
Roti canai has shrunk in size, though it costs 90
sen in most places.
The government must act promptly. I am in
agreement that poor consumers be given cash
15
could retard Malaysia’s pace of
recovery.
Politically, allocating de-
velopment expenditure on the
basis of political affiliation has
proven to be a failed strategy. In
the recent by-election in Kuala
Terengganu and in last year’s
general election, a significant
number of voters appeared
singularly tone deaf to Barisan
Nasional’s appeal for support
based on its strong track record
in development.
To energise the private sector, top policy-
makers must signal their commitment in
addressing the third question – where is the
economy heading? Although the stimulus
package was silent on this issue, in an
interview last week with Financial Times,
Najib, who is also the deputy prime minister,
offered an intriguing prospect.
Not only did he suggest greater empha-
sis on the services sector, he indicated its
contribution to the economy should be
raised to 70%. In 2007, the services sector
accounted for 46.4% of Malaysia’s gross
domestic product (GDP) – a proportion
virtually unchanged from the 46.2% share
recorded 20 years ago.
Given bleak prospects for growth based on
exporting manufactured goods amid rising
protectionism in the US and given Malaysia’s
growing lack of comparative advantage in
manufacturing due to high costs and short-
age of labour, a dynamic services sector
offers the prospect of more rapid growth.
That Malaysia’s services sector has failed
to outpace growth in manufacturing suggests
this country has neglected to give priority to
developing its human resources. Because the
biggest assets of a dynamic services industry
is people, accelerating the sector’s growth
could require a radical overhaul in two
major areas – education and foreign labour.
In education, the emphasis – particularly
in universities and colleges – must shift from
quantity to quality. Meanwhile, the policy of
welcoming unskilled foreign labour while
restricting the employment of foreign
professionals is economically moronic and
should be revamped.
Whether Malaysia views the eco-
nomic crisis as an opportunity for reform
– as former Assistant Governor of Bank
Negara Datuk Seri Panglima Andrew Sheng
suggested to the Economic Council recently
– will determine whether this country is
relegated to the ranks of economic has-beens
or becomes Asia’s latest success story.
Opinions expressed in this article are the per-
sonal views of the writer and should not be
attributed to any organisation she is connected
with. Comments: schoo@noordinsopiee.com.
to help pay for their monthly necessities.
And consumers must report errant traders
to the Domestic Trade and Consumer Affairs
Ministry’s toll-free number. Do not suffer in
silence. Speak up when you see overpriced goods,
faulty goods and misleading advertisements.
I suggest we reward the good traders but take
on the not-so-good ones.
Look for alternatives when the price of one
product goes up. Have a budget and keep within
it. When shopping, carry a list of what you need
and stick to it.
Bulbir Singh
Seremban