Stimulus packages should not be about resorting to popular policies or handing out cash. And they should not target one group or area but benefit the whole country, said Deputy Prime Minister Najib Abdul Razak.
It is about achieving maximum impact, added the incoming premier and finance minister in an article he penned for the Wall Street Journal which was published today.
When economic crises hit, Najib said, one has a choice.
“Those steering national economies can either stand aside or use public capital to take the place of private capital that has gone into hiding, thereby investing in the country’s human capital.
“In the short term, this kind of action provides jobs and opportunities. In the long run, it provides the foundations for recovery,” he added.
With the global economic crisis still unfolding, he said, Malaysia has focused on boosting investments and credit flows while providing government guarantees and infrastructure expansion.
Foreign investment in Malaysia is expected to fall by 50 percent to RM26 billion (US$7 billion) in 2009, he noted.
“That means we must either respond domestically or allow our country to waste precious years during which we should be working to build a better society,” he said.
RM60 billion stimulus package
This is why, explained Najib, he announced a first stimulus package of RM7 billion and a second ‘historic’ stimulus package and mini budget of RM60 billion.
Accounting for nine percent of Malaysia’s gross domestic product, the RM60 billion alone is the biggest stimulus package in our history, he pointed out.
“Some may say this is too much. But with our low foreign debt, large international reserves and ample banking sector liquidity, we have the capacity to fund it.
“Given the magnitude of the still evolving global crisis, I am convinced the risk isn’t that we do too much, but that we don’t do enough,” he said.
“We know that ultimately the world will recover, and normal trade levels will resume. When it does, we want Malaysia to be best positioned to take advantage of that recovery. That is why we have decided to balance short-term requirements with building for the future,” he added.
He said the mini-budget is designed to provide a quarter of the stimulus funds as a boost to meet people’s immediate needs, with the remaining 75 percent for medium and long-term development goals.
“It is vital for countries to remain competitive. Malaysia’s corporate tax of 25 percent is comparable with others in the region. However, taking into account the many incentives offered to investors, the country’s effective tax rate is between three percent and seven percent,” he added.
Underscoring the importance of efficient implementation in ensuring the success of any country”s stimulus package, Najib said the government has set up a technical committee to monitor this.
“It will meet regularly and report to a steering committee that I will personally chair. I will then report to the ultimate beneficiaries of the effort, the Malaysian people. They are the appropriate judges of the mini-budget”s success,” he added.
‘We’re remaking Malaysia’
Najib, who is slated to take over the leadership reins later this month, also noted that Malaysia has learnt fundamental lessons from the 1997 financial crisis.
“Our financial sector and corporations realigned as a result. We are fortunate today to have good national infrastructure, technical know-how, a diversified economy and a quality workforce. Overall, post-1997 we are far better placed to weather this new storm.
“Yet in the long run, further transformation of the Malaysian economy is needed. We will use the current downturn to forge a new economic model that puts knowledge first,” he said.
He said the government will invest in education and technology to further strengthen Malaysia”s capacity to lead in information technologies, renewable energy and emerging sectors of the new economy.
Our goal, he stressed, is to harness the talent, energy and drive of all of our people.
“We will be aided in our efforts to provide lasting prosperity by working to spread mutual tolerance and respect between genders, cultures, races, religions and nations.
“We will champion inclusiveness not just because it is a foundation for political stability and economic growth, but because it is right,” he said
“As a nation in a hurry, with millions dependent on its development and progress, Malaysia is picking itself up and moving on. We are remaking Malaysia once again,” he added.
In view of this, Najib said, when the G-20 leaders meet in London next month, he hopes others will take similar positions.
“It is time to turn words into deeds. The world’s economic recovery will depend on concerted and coordinated efforts by economies large and small, and we in Malaysia will play our part,” he added.
Â Source : Malaysiakini