Get-well-soon wish list for the economy
For so long, the country has been dependent on the manufacturing sector as well as the commodities – oil, gas, palm oil and rubber – to spur the growth of the country’s revenue, the time has come to ensure that it does not crumple under the weight of the crunch.
Muaz Omar, The Malaysian Insider
Everyone, from corporate leaders to fund managers to the man on the street is anxiously awaiting Prime Minister designate and Finance Minister Datuk Seri Najib Razak’s mini budget due to be presented on March 10.
The earlier stimulus package of RM 7 billion now looks like peanuts in the face of the huge crisis that is affecting domestic growth.
Deputy Finance Minister Datuk Kong Cho Ha hinted that the mini budget will exceed RM 30 billion and will benefit most sectors of the economy.
Analysts and economists alike have been projecting a laggard outlook ahead due to the painfully slow recovery of the US and European economies.
The lack of swift response by the government to these threats to the economy has turned off many of the market players who have demanded for more than the paltry stimulus package to reinvigorate the economy.
The government finally came to their senses and admitted that the previously optimistic GDP growth rate of 3.5 per cent will not be achieved.
In fact, analysts have pointed out that a growth of even 1-2 per cent is almost certainly out of reach and a more conservative 0 – 1 per cent looks more reasonable considering the sharp contraction of exports in December last year of about 15 per cent.
The government should also now be in the mould of class IV of the triage system, which requires extensive intervention to arrest the dire decline of our economic health and admit that recession is almost inevitable.
As the US and Europe markets look to strengthen their domestic economy, Malaysian exports are slowing almost to a halt and it is now timely for the country to strengthen the fundamentals.
There is also a need to relook and reenergize the state of the myriad of sectors of our economy.
For so long, the country has been dependent on the manufacturing sector as well as the commodities – oil, gas, palm oil and rubber – to spur the growth of the country’s revenue, the time has come to ensure that it does not crumple under the weight of the crunch.
The manufacturing industry should be infused with technology to ensure cost and labour efficiency.
However, technology requires big investments and, with capital now scarce, most manufacturers would rather fold up than reinvest. Hence, the need for substantial incentives.
There should also be a galvanisation of downstream industries of the main commodities, hence demanding a long term investment in R&D with the likes of biodiesel which hopefully will emerge as a viable and profitable product for the country.
The services sector must move up the value chain and be strengthened further.
Tourism is one sector that Malaysia has failed to fully capitalised on and create spin-offs where many other home-based industries can be expanded and turned into profit-making entities, like the vibrant medical tourism industry.
Half-hearted attempts to promote homestay programmes won’t do, and the arts and crafts industry must be well planned and promptly executed.
Small and medium industries must be given the correct incentives, technological know-how and the encouragement to grow and prosper.
There are many other sectors like the property and automotive markets and many others that need to be relooked, regulated and managed much more efficiently.
It is at times like this that we have got to go back to the drawing board and ensure that planning is done well enough to take into account extraordinary events like the current crisis, that implementation is carried out with fervour and leakages are plugged.
Critical sectors like agriculture and its related industries must not just undergo a superficial rebranding exercise but be infused with technological advances as well as well thought out marketing and promotional plan.
The country has to strive to be self-sufficient and this is dependent on a robust agricultural industry to ensure that we do not suffer from a global food crisis.
The stock market does not look like it will take off any time soon. Coupled with the lack of liquidity and with many players taking a more conservative position, the stock market is likely to be the least of the government’s concern.
However, for those few who are cash-rich, the time is ripe to buy high value but cheap stocks, companies and assets.
One thing that the government should avoid is bailing out and nationalising “sick” companies on a massive scale like the buying spree of the British government in its effort to save the diseased banks in the United Kingdom.
This type of intervention, if absolutely necessary, must be short term with the assurance that the acid tests of transparency and accountability will be upheld throughout.
This last-resort exercise must also be undertaken by a professionally managed outfit and not be seen as an attempt to rescue cronies of the politically connected.
These actions smacks of Big Government and maybe this Keynesian approach is required during these hard times but a big government that is efficiently run and prudently managed is key to a comprehensive recovery.
Infrastructural deficiencies, especially in the rural areas of Sabah and Sarawak, must be addressed on a massive scale to ensure that while government helps the many industries and big players of the market, the man on the street or in the kampung has clean water, continuous uninterrupted electricity and tarred roads that will raise their living standards.
If all these do not work, maybe there is a need for the country to start dipping into the piggy bank of the of USD100 billion in reserves to breathe life into the ailing economy.
