Red Tape, Misconduct And Government Inefficiency May Stifle The RM7.3 Billion Economic Stimulus Package And Undermine The 4 Strategies Of Promoting Private Investment, Strengthening Competitiveness, Developing New Sources Of Growth And Enhancing Our Delivery System

Press Statement
by Betty Chew Gek Cheng

(Petaling Jaya, Thursday): The RM7.3 billion stimulus package unveiled by Prime Minister Datuk Seri Dr Mahathir Mohamed yesterday may be  regarded as an election budget with half a month bonus to civil servants, subsidised interest rates for housing loans and reductions in EPF contributions by 2%. But viewed against the entire RM7.3 billion stimulus package and RM800 million in tax deduction, the  question will be how much it will benefit ordinary Malaysian in real and comparative terms?

The reductions of EPF contributions will not cost the government anything other than depriving EPF of RM 183 million in contributions every month or an annualised sum of RM2.2 billion a year. The half a month bonus will cost the government RM500 million whilst the subsidised interest rates for housing loans and free stamping fees together with tax deductions may cost a few hundred million ringgit more. However these amounts pale into insignificance when compared to the RM7.3 billion stimulus package and RM800 million tax deductions granted by the government.

Dr Mahathir had asserted that this stimulus package is aimed at increasing consumption by putting more money in taxpayers' pockets but if we analyse the details of the 90 measures in depth, it is the big boys rather than the ordinary Malaysian the street that benefits most. The RM7.3 billion package comprise RM1.7 billion direct from government's coffers, RM2 billion from Bank Negara and RM3.6 billion from government financial institutions.

There is no doubt that big businesses and government statutory measures will be able to benefit most. Can Dr Mahathir give a detailed breakdown
how much of the RM7.3 billion stimulus package and RM800 million in tax deductions will be passed on to the wage earner or small businesses with shareholders fund less than RM250,000/-  or how many of the 90 measures benefit them?

Red tape,  misconduct and government inefficiency may yet stifle the RM7.3 billion economic stimulus package and undermine Dr Mahathir's four strategies of promoting private investment, strengthening the nation's competitiveness, developing new sources of growth and enhance the effectiveness of the public and private sector delivery system. These  four strategies requires a concerted effort by the government to change the mindset of total reliance of government handouts, subsidy mentality and political cronyism.

Too often government spending is based not on economic or social needs but on political needs. This has caused profligate and waste from excessive spending on projects which become "white elephants". A good example is the Perwaja steel plant that is projected to cost the government more than RM5 billion in losses.

How can Dr Mahathir enhance our government agencies' delivery systems when government agencies undertake projects not on needs basis but desperately to utilise the funds allocated. Or escape unpunished for fully paying out on projects which break down or are unusable immediately upon completion. A good example is the Parameswara Jetty in Melaka where RM13.3 million was spent on a project which could not be used ever since it was completed in 1995 .

How can Dr Mahathir strengthen the nation's competitiveness when certain project are reserved fully under a quota system? Free competition should be encouraged by opening some  government project for all such as the new RM200 million improvement works on low-cost flats which are only given to Class D and below bumiputera contractors. The government should reserve 50% of these to bumi contractors with the remainder open for free competition. There should be incentives to succeed which will enhance not only the nation's delivery system but also our competitiveness.

The greatest legacy for Dr Mahathir is to change the mindset of the government by rooting out corrupt practices and abuses of power. Only good governance with these values can prevent misconduct both in the public and private sector and allow Malaysia to overcome the current economic crisis.


* Betty  Chew Gek Cheng,  DAP Wanita Vice-Chair And Melaka State Assemblywoman For Durian Daun