Friday, February 20, 2009

Najib's Economic Plan

It worries me to see the state of the economy at the moment. Thousands of workers in manufacturing factories, production plants, electronic firms, banking sectors, equity groups, and the financial sector are badly affected.

Lack of assignments and projects occur not only in small players but among the largest firms in Malaysia as well.

Fresh graduates also face unfavourable responses from many companies - "We are freezing employment temporarily. Do come back to us in the future when times are better".

Malaysians are feeling the effects. But are we at the lowest yet?

Najib's economic plan 1
Najib Tun Razak will takeover as the 6th Prime Minister of Malaysia. His first big involvement in Malaysia's economy was when he announced the 3% EPF contribution cut for all.

A Piece of My Mind disagreed with Najib's policy with a simple economic model as explanation back then.

However, as an Economist, I have to agree that the EPF policy was implemented to improve consumers' liquidity and money circulation of the economy in the short run.

The EPF cut policy will end 2 years from the date of implementation. It will and it must. Read more on why I think the 3% EPF cut must not be a long term tool.

Najib's economic plan 2
In view of the global economic crisis, Najib launched a RM 7 billion stimulus package.

Malaysia's economy is a RM 500 billion economy in constant year 2000 prices and a RM 640 billion economy in current year prices (2007).

If RM 7 billion or any of those small stimulus packages can transform a bearish market into a bullish one, then Malaysia's economy is really unique (or should I say weird?).

The mini-budgets and small scale stimulus package will not be sufficient. Najib needs to look into things deeper and perhaps take Dr Mahathir's idea into consideration. [Mahathir: Govt can inject another RM 28 billion].

Economists and the business sectors feel that the stimulus package is insufficient and Najib has yet to announce anything big. The 'delay' will cause a massive problem for Malaysia because stimulus packages are not instantaneously felt by the people but a lagging period exists.

I understand that something big will be announced on March 10th. I hope it is big enough to move the RM 640 billion economy. [Najib: Second Stimulus Package To Be Stronger]

I am also worried after reading this news report - Malaysia's budget transparency: Surprised and embarassed.

Najib's administration
Even though many bloggers stopped attacking the Fourth Floor of PM's Dept, the No. 1 blogger of Malaysia did not.

I suggest that Najib increases the participation of the Finance Ministry, Transport Ministry, Works Ministry, MITI and EPU in decision makings to move Malaysia from a Contender country to the Developed status. [Malaysia is not a developing but a contender country]

Najib Tun Razak will takeover a leadership which is facing a strong Opposition. He has successfully shut out Anwar's crossover threats for the next four years.

The people are angry about crossovers and party hopping. Anwar will not be able to threaten Najib with crossover claims to PR. Otherwise, Anwar will face the anger of the people.

With Anwar's wings clipped, Najib Tun Razak must focus on rebuilding the Government system and developing Malaysia or lose the support base not only among Malaysians but also inside UMNO with several leaders waiting to takeover the leadership at the sidelines.

(Credits to MStar, NST and TheStar for the photos)


Jimmy Tham said...

Does he currently knows what's going around in the world?

Just touched down from shanghai yesterday and the mere sight of their development brought awe and oooh. But I felt grateful of 1 thing, Malaysia is a kinder lot in term of driving in Asia in general and I dare to vouch, a few notch better than Korea too. Pedestrian crossing and traffic lights are there as a deco and it serves no real purpose there.

When people size matters, itu memang betul punya. I used to be in awe and speechless looking at the gross development values of the condominiums being built in M'sia, but when I saw how the same block of buildings are being built by the dozens and not 1 or 2 blocks, I was left speechless. Mainland chinese in general only get to experience the luxuries and extravanagces of life in the past 8 to 10 years and as such you see great income disparity and reckless spending i.e luxury goods and food consumption. On one hand, my family and I felt great disgust at such utter wastage of food and arrogance, but on the other hand, it is that very thing we called consumption that drives the economy. Export economy are bound to be affected by sneezes and flu caught by other countries and a consumption economies are at much better shape to withstand it. Having met 1 of the provincial officer, she amdmitted China's planned economy is designed at such to appease the population in general, giving them enough money to survive but not make them rich just so to keep the production cost down and forces company to move production inland as time progresses.

What I'm trying to surmiss is, Malaysia can't survive being a contender to China. Less we want to be pushed back into being an agricultural economy (china doesn't has the right climate (ex-hainan)to plant palm oil, cococnut and rubber on a large scale). What if 1 very day they found a GM plant that are suitable to their arid weather. I'm thinking the top echelons themselves doesn't know where they should lead malaysia to, exporting oriented economy? electronic based export or agricultural exports? consumption driven? All we see is news of economy stimulus package, but what are there left to stimulate? Micro credit to coop and SMEs? Who are gonna buy their goods? Housing? How to buy when you're facing job uncertainty?

p/s: I don't quite agree with khalid's suggestion on nationalising Syabas. 2 words, cheap politic. When we took so much effort to privatise it, I wouldn't want to nationalise it again. Sure, some would argue those cronies are pocketing large gains from contracts but let me pose this question to those people, will you be able to guarantee a GLC would be able to run any better than what we have currently? Besides, the loan given are from the federal government and not from Selangor government anyway. But I would say it's a good move to push the ball to BN's ballpark and blame it on them knowing that those cronies would not give up so easily.

Anonymous said...

Compete with China? Don't even dream!

50 years back we were top of the pack among South Korea, Taiwan, Hong Kong, Singapore.

20 years back they have become first world countries. Now, we get to compete with Vietnam :)