Mini budget

DPM announced mini budget worth RM 60 billion over 2 years.

Personally, I think Khoo Kay Peng’s post worth a read. Economic stimulus is not about just the size, it’s about the right place and right thing.

Sometimes our government has spent the money in the wrong places, which will not help in stimulating our economy. For example, RM 480 million is to pay off toll concessionaires to keep toll rates down, and not buy them over. RM 480 million will go into the rich’s pocket. Has it done any help to the middle classes or poor? It only makes the rich richer!

Furthermore, the Finance Minister has yet to touch the source of fund. Are we going to borrow money from some other country? Issuance of government bond? It is not mentioned. Further borrowing will not do any good. Remember what makes US sink into deep recession? It’s due to their over-borrowing!

Malaysia's problem remains acute. We need to achieve a higher level of domestic consumption but the economic structure is export-led. Hence, the salary scale is kept low and the industries continue to depend on low-skilled and cheap foreign labour. With deteriorating exports to our main markets such as Singapore, US, Japan, Europe, China and South Korea, our domestic market cannot be depended on to support the local economy. Our economic structure is not geared towards meeting the needs of local consumers.

It is not just the size that matters. The second stimulus must be targeted at changing the economic structure for the better. A number of local analysts have called for a comprehensive strategy to manage the economic crisis. This strategy should drive the country to improve its inventiveness, human resource development and reinvent its industrial development.

                          ---- Khoo Kay Peng