Despite the fact that the BN government has been tabling people-friendly Budgets over so many years, including this year, the national economy has not been performing that well, showing that certain issues may have been neglected in the Budgets.
Given the slowing global economy and the impact of the March general elections as well as the just concluded Permatang Pauh by-election, it is well within everyone's expectations that the government will once again announce some good news in the 2009 Budget. However, there are a few things that have obviously been overlooked.
1. The management and drafting of economic strategies: The government has been introducing measures that will lessen the burden of the people from time to time, but in the end, such efforts have not produced the desired results because the national economy has not improved or strengthened. As a consequence, it is utterly important for the government to put in place effective and professional economic management policies.
Besides, the government must also map out workable economic strategies to tackle changes on the global as well as domestic fronts in a bid to enhance the country's business environment. The government has set up a 40-member economic council to deal with inflation as well as sluggish global economy. However, such a large team will not only render the operational process a time-consuming one, but will also add to the existing formalities, not unlike the many other committees which have been set up.
2. Taming inflation: Although the July CPI rose dramatically to 8.5%, Bank Negara has not made any move to increase the interest rate during its two most recent meetings. While the central bank's principal objective is to prevent the economy from slipping into recession, it must also come out with some effective strategies to curb the heightening inflationary pressure.
The ringgit exchange rate has been sliding lately owing to persistently low interest rates, political instability as well as withdrawal of foreign investments, and this will only aggravate import inflation. The PM's recent announcement to reduce the retail petrol price by 15 sen per litre does not seem to be sufficient to relieve the ever rising inflationary pressure.
If the government fails to curb inflation, then employees will have to demand pay rises or allowances, and this will only send production costs higher, resulting in eroded competitiveness.
3. Deteriorating external environment: Many European economies have already slipped into recession, while the US is trying hard to lift its head above the water. To a trading nation like Malaysia, this is indeed a grave warning sign.
Despite such hostile economic environment, we still have not readied ourselves, including better financial planning to prevent unchecked outflow of money.
For example, as oil money makes up over 40% of our government's tax revenues, the government must contemplate what it has to do if the oil money eventually dries up. The government's operational expenditure will sum up to RM154.2bn next year, or about 74% of total expenditure. The government will be in hot water if it does not cut back the size of its massive army of civil servants.
4. Enhance competitiveness: We cannot deny that the various economic sectors as well as our people have very low tolerance for any untoward incident due to poor competitiveness. The government cannot afford to keep on providing the safety net. We must open ourselves to outside competition and improve our competitiveness.
The government must pay more attention to the macroscopic scope of economy instead of the details. Only if the overall economic conditions have improved will Malaysians be able to enjoy more comfortable life.
(By LIM SUE GOAN/Translated by DOMINIC LOH/Sin Chew Daily)
MySinchew
2008.08.30
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