YB Liew Chin Tong's piece - Five ways to save the Malaysian economy – is good but the recommendations are flawed, if not full of rhetoric.
Let's talk about numbers and not play with politics or emotions.
Because when we become emotional, we lose our ability to make rational judgement or decisions.
After my first article - Malaysians are now currency experts? - I have been labelled with all sorts of profanities when in fact the key message was Malaysia is not the only country that weakened against the US Dollars.
There are multiple factors for the weaker Ringgit which I've shown in my 2nd article ( Export-commodity prices and the Ringgit ) and the obvious factor of all is commodities prices - oil, palm oil and rubber - that crashed from their respective highs in 2011.
This is not about Government, Opposition or politics. We talk about facts, policies and numbers, and numbers don't lie.
Now, back to Liew Chin Tong's recipe to save Malaysia.
(1) Get Najib to quit as Prime Minister and (2) Name a new and competent Finance Minister
Let’s evaluate on how the Government handled this ‘crisis’.
Leave 1MDB aside for now, which let me be clear that I have slammed the Government and supporters since May 2015 in blogs and social media and I will continue to do so depending on the Auditor General's Report.
In a letter dated 26 December 2014, the Government ordered all Government departments, statutory bodies, GLCs and GICs to adhere to the following:
".. syarikat milik dan berkaitan Kerajaan serta badan berkanun dan syarikat subsidiarinya perlu memberi keutaman kepada pelaburan domestik serta menangguhkan serta merta pembelian aset di luar negara bagi mengurangkan pengaliran keluar dana"
Here's the letter:
The Government knew what was coming. Indicators were clear especially from the crash in commodity prices.
Three weeks later on 19 January 2015, the Prime Minister, Treasurer General and Governor of the Central Bank addressed the nation, analysts and media.
The Government slashed their operating expenditure and announced new measures to continue to boost the domestic economy.
As a result, look at our Q1 and Q2 GDP figures. Our economy grew at 5.6% in the first quarter, 4.9% in the second quarter.
Malaysia performed better than many other economies and we beat analysts' forecasts.
What would you have done differently, Chin Tong?
But if you ask me, if there’s something I’m unhappy about, it is the fact that some GLCs clearly ignored the Treasury Instruction and are actively scouting for, if not buying, properties and companies to acquire overseas. This puts pressure on the Ringgit, so, where’s the whip? I blame this on the weak leadership.
(3) Set GST at zero rate
GST is expected to contribute RM23.3 bil to Government. But we have abolished Sales and Services Tax that gave us RM17.2 bil last year.
We have also reduced both individual and corporate tax rates which will cost us perhaps RM1 bil - RM 2 bil in revenue.
We can expect lower revenue from the oil and gas sector of approximately RM27 bil.
So, by setting GST to zero, it will cause the Government to be short of close to RM70 bil for Budget 2016 and years to come if commodity prices stay at current levels.
Why make populist but irresponsible recommendations like this, Chin Tong?
(4) Halt big ticket crony projects
I am shocked that you want the Government to halt projects like Malaysia-Singapore High Speed Rail and MRT. We all thought you wanted better public transportation.
Of course, if Government cancels these projects that were meant for the people, it will be additional political capital for you.
You can then accuse the Government of wasting money on compensation and accuse the Government of not doing enough to improve public transportation.
By the way, which crony was awarded or won the contracts unfairly in both the projects - High Speed Rail and MRT?
You say there are other ways to boost the economy. If not infrastructure for the people, what are they?
(5) Halt intake of unskilled foreign labor
I like your recommendation that Malaysia must reduce foreign labour and push for mechanisation and automation.
But 70% of foreign labor work as maids, work in plantations, in constructions, in agriculture and services. Approximately 30% in manufacturing.
Government tried to limit the intake of foreign labour in 2010-2013 period and 'encouraged' automation in both plantations and manufacturing such as rubber gloves.
The Government communicates and work closely with the industries all the time and even gave incentives and organized international competitions just to source for ideas from the best.
But there are multiple factors that put off automation efforts especially terrain and costs.
And, we can't automate and mechanise maids, builders, or farmers, can we?
These are not excuses but innovation, mechanisation and automation are long term policies and they are already on the table, without even you suggesting them.
So, Chin Tong, any better ideas?