We call on the Malaysian Government to improve the implementation and coordination mechanism for the new economic stimulation package, so that most people will benefit from the RM7.3 billion

Press Statement
by Tan Seng Giaw

(Kuala Lumpur, Thursday): Yesterday, the Prime Minister Dato’ Seri  Dr Mahathir Mohamad announced the 7.3 billion package with four strategies and 10 measures. We hope that this package helps to maintain this year’s  economic growth at 3.5%.

 As usual, the local media carry news praising the new package, with little attempts to point out the need to overcome weaknesses. The most the media would say is that this is a pork barrel for general elections.

 In fact, this package contains less fiscal spending, only RM1.7 billion, compared with RM7.6 billion for the 2001 package. In that year, RM7.6 billion were spent mainly on the construction sector. However, this sector grew by only 1%, that is 2.2%, in 2001 compared with 1.1% in 2000. It was hardly noticeable. Then, Dr Mahathir complained that the money from the package was not used effectively. Clearly, the 2001 package showed weaknesses such as defects in implementation. We must create a better mechanism for implementing and coordinating projects under the package.

 The Prime Minister’s Department has an Implementation and Coordination Unit and the Finance Ministry depends on the Finance Services Programme. These units oversee financial and fiscal measures. Revamping these units to raise their efficiency should be the priority. Even if the Government can successfully implement the package, the RM1.7 billion spending may not increase the GDP by more than 0.4%.


 Severe Acute Respiratory Syndrome (SARS) and the Iraq War have effects on the economy, such as dampening private consumption and private investment. In 2002, private consumption was 45% of the GDP and private investment 9.2%. The RM1.7 billion from the package are used for small businesses and RM200 million of which are for infrastructure and delivery system in rural areas.

 The intervention rate cut to 4.5%, the reduction in EPF contribution and the civil servants’ salary bonus are to encourage private consumption and private investment. On the one hand, we hope that civil servants will be more efficient and having less irregularities. On the other hand, we wish that private consumption and private investment will grow by over 6% respectively.


 The package provides funds totaling RM5.6 billion for entrepreneurs, hotels, food, new technology, domestic brands, tourism and small businesses. We expect better results in these sectors, including tourism.

 In 2002, development banks gave RM28 billion loans and advances to these sectors compared with RM23.4 billion in 2001. RM5.6 billion constitute about 20% of the total loans and advances in 2002. Can this be called a new stimulus? Will it have tangible effects ? We cannot deny that more efficient disbursement by development banks and government allocation benefit these sectors.

 The EPF provides much of the funds for the package. At a time when people are unhappy with the EPF dividends of only 4.25 % for 2001, we urge the Government to use EPF resources with prudence. After all, the total EPF resources of about RM200 billion are old-age pensions for its 10.3 million contributors.


* Dr Tan Seng Giaw, DAP National Vice-Chairman and MP for Kepong