Press Statement by Charles Santiago in Klang on
Monday, 15th December 2008:
Malaysia's fiscal stimulus plan:
too little, too late
While the Chinese, Japanese, US and
regional economies going into a tailspin will have disastrous
implications for Malaysia's exports, revenue, employment and business,
the government's response has been slow and lacklustre.
Let's look at some data and statistics - The Malaysian Institute for
Economic Research (MIER), a government-linked think tank, has indicated
that unemployment will increase one percentage point from 3.5% in 2008
to 4.4% in 2009.
These figures could be potentially higher as the country is yet to
experience the full extent of the severity of the global economic
downturn.
The Statistics Department reported that the country's industrial
production fell for a second month in October largely as a result of a
decrease in demand in electronics factory output. Malaysia's palm oil
sales decreased in the same period. Exports dropped for the first time
in 15 months.
The drop in global demand for electrical and electronics sector will
have negative consequences for employment, survival of small and medium
industries and growth of the manufacturing sector.
MIER also speculates Malaysia has a 40% chance of falling into a
technical recession in 2009 and 30% chance of experiencing a real
recession.
Despite the gloomy economic outlook for the country substantiated by
facts and figures, the UMNO-led government is happy to sit back and
paint a rosy picture after revealing its RM 7 billion stimulus package.
This stimulus package is simply too small to bolster the impending
economic disaster. Malaysia needs to boost its stimulus package to avoid
a possible recession in 2009, insulate the economy and sustain national
economic growth.
Analysts are not convinced that the multiplier effect of the stimulus
package will be felt in the short run.
The RM 7 billion should be the first
step in a much larger fiscal stimulus package to deal with the enormity
of the problem facing the people and economy.
In fact, it should have been implemented in the last quarter of 2008 as
a strategy to cushion the economy from further contraction in 2009,
especially with negative economic data pouring in.
But the ruling coalition government injected RM 10 billion into Valuecap
to prop-up undervalued stocks - a strategy which was poorly thought-out
and misguided.
This shoddy move amounted to throwing good money into a bottomless stock
market. The money would have been better invested in the real economy.
Instead of brainstorming to come-up with a bold, imaginative and
effective fiscal stimulus plan for 2009, UMNO leaders are holding secret
meetings to win votes at the party's internal elections scheduled for
March 2009.
The economy has taken a back-seat to the detriment of business, workers
and people of this country.
This is disastrous.
* Charles Santiago, MP for Klang
http://dapmalaysia.org