Holding back the tide
Finance Minister Datuk Seri Najib Razak unveiled the RM7 billion stimulus package in November and funds were channelled to the relevant ministries in January, but civil servants have been painfully slow in disbursing the money and getting projects off the ground. The result: the RM7 billion will not flow down to industries, contractors and businesses by the first quarter and the 1 per cent GDP growth the stimulus package was expected to generate this year is looking like a difficult target to achieve.
THE MALAYSIAN INSIDER
Whether Malaysia's economy grows this year or slides into negative territory rests on the shoulders of one man.
Datuk Mohamad Othman Zainal is largely anonymous outside Putrajaya but he has the unenviable job of cracking the whip and making sure that the cumbersome government machinery ensures that the billions of ringgit under the first and second stimulus packages reach the ground.
Barely a month into his job as the head of the newly set up Project Management Unit in the Finance Ministry and he is learning one of the facts of life here: best laid-out plans and implementation in Malaysia often travel on different roads and at different speeds.
Finance Minister Datuk Seri Najib Razak unveiled the RM7 billion stimulus package in November and funds were channelled to the relevant ministries in January, but civil servants have been painfully slow in disbursing the money and getting projects off the ground. The result: the RM7 billion will not flow down to industries, contractors and businesses by the first quarter and the 1 per cent GDP growth the stimulus package was expected to generate this year is looking like a difficult target to achieve.
Government officials worry that the RM10 billion mini-Budget to be announced on March 10 will suffer the same fate if nothing is done to speed up implementation.
Behind the scenes, Mohamad Othman — who was selected by Najib for the job — and his officers have been seeking and finding out the reasons why funds are trickling down. The main culprits: over-elaborate Treasury procedures, timid and apathetic civil servants and public works projects which take time to launch.
The Malaysian Insider understands that as a result of investigation by the PMU, a decision has been taken to slash Treasury procedures and processes for the duration of the economic crisis. By removing the layers of approvals needed, the administration is confident that projects will be approved faster and the multiplier effect on a slowing economy will be evident sooner.
Mohamad Othman and his officers have been reporting back to Najib on the laggard government agencies. There appears to be some sense of urgency to push and even take punitive action against the laggards, an approach made necessary by the realisation that economic growth forecast for 2009 is perilously close to zero.
Further delays in implementing the RM7 billion stimulus package and the mini-Budget could result in Malaysia facing a recession.
Already, some commentators are saying that the pump-priming is too little and too late. Datuk Dr Mohamed Ariff, the executive director of the Malaysian Institute of Economic Research, said that whether the stimulus packages work depends on its various components.
He noted that tax cuts tend to have a more limited impact on the economy than government spending, because not all the increase in disposable income will be spent, as some may choose saving over spending. Also, public works projects can spur more robust impulses, but they take time and tend to arrive too late.
"Experience has shown that many projects launched during a downturn see the light of the day only after the economy has bounced back, inadvertently contributing to the next bubble in the making, in which case they would constitute a problem, not a solution. Speed and efficiency are of the essence, '' he wrote in the New Straits Times.
It is Mohamed Othman's job to ensure that billions of ringgit are channelled to the ground with speed and efficiency. If the former senior official of Putrajaya Holdings fails, the economy's slide into negative territory will be faster, the stay in recession mode will be longer and the pain felt on the Malaysian street will be more severe.
