DAP calls for national economic summit of  all political parties, economists, representatives of business, industry and finance, academia,  trade unions, consumer groups and NGOs on the quadruple economic whammy after the presentation of the economic stimulus package next Wednesday

 launching of the DAP Veterans Club
by Lim Kit Siang

(Kuala Lumpur,  Sunday): Although the  RM3 billion to RM5 billion economic stimulus package is finally set for announcement by the Prime Minister and Finance Minister, Datuk Seri Dr. Mahathir Mohamad next week, with  Reuters reporting that it would be unveiled on Wednesday, its four-month delay reflects a government which has lost confidence as to how to address the quadruple whammy which has hit the Malaysian economy, viz:

  • global economic downturn; which had rendered the 6 to 6.5 per cent  economic growth forecast for this year in the 2003 Budget last September irrelevant even before the end of last  year;
  • Iraq war;
  • Severe Acute Respiratory Syndrome (SARS) epidemic; and
  • Terrorism.

The repeated delay has also raised questions about its ability to have a positive impact on the economy, or as the executive director of the Malaysian Institute of Economic Research (MIER), Dr.  Mohamed Ariff, recently wrote:

“It is uncertain what difference the  stimulus package will really make.  Arguably, much would depend on ‘how soon’ and ‘how much’ – if it is too little or too late, the impact is likely to be insignificant.

“Experience has shown that stimulus packages everywhere take time to work themselves out. Seen in these terms, there is a sense of urgency, as one-third of the year has gone already.  Conventional wisdom should likewise suggest that the ‘size’ of the package also matters: the smaller the package, the weaker the impact.”

Other questions have also been raised about the stimulus package, such as:

  • The impact  of the  stimulus package to fuel economic growth through increased consumption, when  one reason why consumers are not spending now is because of their fear  of SARS , keeping them at home; and
  • The effect of the stimulus package on the country’s credit ratings and the government’s credibility if it pushes the budget deficit  this year to over five per cent of the gross domestic product and derails the government  plan to balance its budget by 2005 as it had been in deficit for the last five years.

Economists have been warning that the economic effects of SARS is far more damaging than the war in Iraq, causing the further downward revision  of growth forecasts by a  full percentage point – in effect halving the government’s original 6 to 6.5 per cent growth forecast for this year.

It has to be seen whether Mahathir, when presenting the economic stimulus package, will also announce the government’s new  GDP growth forecast, as   the 4.5 per cent forecast for this year announced by Bank Negara less than two months ago had  also been overtaken by events, with MIER for instance,  slashing its earlier 5.7 per cent to 3.7 per cent, based on a number of assumptions, including a credible stimulus package.

This week, however, international terrorism has reared its ugly head with a new spate of terrorist attacks linked to al-Qaeda,  from Riyadh to Casablanca together with travel advisories by various Western governments raising terrorism alerts in Southeast Asia, including Malaysia.

There are two questions here: firstly, whether there is any basis for Malaysia to be included in the travel warnings; and secondly, the economic impact of a new wave of international terrorism, which could be  even worse than  SARS, with Malaysia’s image as a centre of international terrorism implanted after the September 11 events.

Mahathir had denounced the United States when it issued an advisory after the Rifyadh attacks warning its citizens against visiting Malaysia, especially Sabah, accusing it of being “afraid of its own shadow” because its cruel actions against many innocent people were now haunting them.

However, Mahathir was conspicuously silent when Germany issued a travel warning the next day  naming Malaysia as a country where German visitors should exercise extreme caution.  Yesterday, Britain, Australia and New Zealand have issued similar warnings in their travel advisories about  Malaysia.

After the Casablanca terrorism attacks on Friday night, which killed 41 people including at least ten “suicide bombers”  and injured 100, Mahathir  was quick to blame the United States for being the cause of the Morocco attacks when it was not yet clear about the motives and targets of the attacks.  It is now reported that Jewish, Spanish and Belgian targets were struck but no US government facility  -   with  three French nationals, two Spaniards, an Italian, and the rest Moroccans, as the casualties and victims. 

At the end of the day, Mahathir may be proved right about the Casablanca blasts. However, there is a need to review the government’s handling of  Malaysia-United States relations, as while Malaysia is right in taking a strong and principled stand against the United States-led unilateral war against Iraq without United Nations sanctions, and continuing to be  consistent and critical of the United States foreign policy and hyperpower hegemony in the international arena, the question is whether Malaysia should make an enemy of the United States or the  Bush Administration. 

The two countries are important trading partners, with  Malaysia’s exports to the United States last year  totalling US$22.09 billion or RM84 billion mainly in electrical and electronic products, textile and apparel, rubber, furniture, wood, toys and sports equipment while imports from the United States totaling  US$9.62 billion. 

This does not mean Malaysia should betray our principles or national sovereignty but it also does not mean that we should allow unrestrained language and emotional outbursts to unnecessarily mar bilateral relations, whether between the two governments or on a people-to-people basis.

DAP calls for national economic summit of  all political parties, economists, representatives of business, industry and finance,  trade unions, academia,  consumer groups and NGOs on the quadruple economic whammy after the presentation of the economic stimulus package next Wednesday, and to discuss a national consensus on Malaysia-United States relationships, whether  on economic, international or terrorism issues.


* Lim Kit Siang, DAP National Chairman