Sunday, March 8, 2009

The Politics of Stimulus Spending

Time and again, our politicians and so called leaders kept telling us that the country need to spending billions and billions of ringgits. This, we were told was to be the stimulus that would get the economy moving again. Lim Guan Eng after becomes the Cheap Minister of Darul Sampah, starts to  behave like he is spending Lim Kit Siang’s monies when talk about economy stimulus for the country. Guan Eng’s action smacks of allowing BN to plunder taxpayers of billions. As if it doesn't get RM30 billion of somebody else's money, the country will be in big trouble. How is the so called economy stimulus going to help the economy, as usual the power that be have no ideas how to tell us. Do you sincerely believe that spending wantonly without any worthy cause is the key to manage our economy?

Guan Eng says stimulus package should be RM30 billion

PENANG, March 6 — Penang Chief Minister Lim Guan Eng today asked Deputy Prime Minister Datuk Seri Mohd Najib Razak to adopt bold measures to manage the economy to prevent the country from slipping into a recession.

Unless the economy was managed well, the country would face a recession this year and Penang would face drastic consequences because its economy depended greatly on the export market, he said.

Lim told reporters at his office here that the RM10-billion allocation for the second economic stimulus package tabled by the Finance Ministry in Parliament yesterday was too small and insufficient to spur the national economy.

“The mini budget is actually a mini one and insufficient to stimulate economic growth because the RM10 billion can only contribute to one per cent of the Gross National Product (GNP), and RM30 billion is needed to achieve the 3.5 per cent target.

“I hope the federal government can provide a bigger allocation to stimulate national economic growth,” he said.

Deputy Finance Minister Datuk Kong Cho Ha yesterday tabled the second economic stimulus package for first reading in the Dewan Rakyat. Najib, who is also the Finance Minister, is scheduled to unveil the package in the Dewan Rakyat next week on Tuesday.

Kong said RM5 billion of the RM10 billion tabled yesterday would be for development expenditure and RM5 billion for operational expenditure. The stimulus package is the second one following the provision of a RM7-billion package last November.

Lim said Penang, which had been dependent all along on the manufacturing sector, would focus on the tourism sector to generate more revenue for the state.

Although investments in the manufacturing sector were anticipated in the near future, efforts must be focused on developing the state’s tourism sector, he said.

As part of the efforts to develop the tourism sector, Lim reiterated his request to the federal government to consider building a low-cost carrier terminal in Penang to draw more tourists. — Bernama

Now the federal government responsed with a RM50 billion stimulus plan without any concrete detail on how the money should be spent. Lim Guan Eng owes us an explanation, why a demagouge like him who fool us around with pseudo solutions should be left unpunished. Lim Guan Eng seem like he can performs better as an opposition leader, if that is what he has in mind, those who vote for change and not for same will not hesistate to make his dream come true.

Can RM50b ward off recession? Maybe not 

KUALA LUMPUR, March 10 – The Malaysian government is set to announce its largest ever stimulus package of more than RM50 billion this afternoon.But even the administration concedes that this infusion of cash, tariff cuts, retraining grants may not be enough to stave off a recession this year.Sources told the Malaysian Insider that in addition to the RM10 billion to be spent by the government to stimulate the economy, today’s package could also include tax and tariff cuts, suspension of employer contributions to several funds, all of which will add more than RM40 billion of liquidity to the market.The government hopes that this stabilization package will reduce the cost of doing business and encourage employers to retrench workers only as a last resort. As many as 200,000 Malaysians are expected to be laid off work in 2009, as companies in the manufacturing and logistics sectors hit by falling demand close their shutters.The mini-budget will be presented at a special Cabinet meeting today before Finance Minister Datuk Seri Najib Tun Razak tables it in Parliament this afternoon.Perhaps as important as the numbers and the size of the budget will be stark scenario that Najib will sketch today. The government has maintained for months that the Malaysia will still experience growth despite the global slowdown.As recently as a month ago, the official position was that the growth would still be around the 3.5 per cent announced by Najib when he unveiled the first RM7billion stimulus package.But privately, Ministry of Finance and Economic Planning Unit officials have revised growth figures since January to between 0.5 per cent and 1.5 per cent on the back of worsening economic data from Malaysia’s main trading partners and export nations.Since then, the news around the world has become worse. On Monday, the World Bank said that the world is on track to post its worst performance since the Great Depression, with developing countries bearing much of the economic pain.“The global economy is likely to shrink this year for the first time since World War II,” the bank said, noting that global industrial production, by the middle of 2009, could be as much as 15 per cent lower than in 2008.Based on those projections, world trade is on track to record its largest decline in 80 years, with the sharpest losses expected in East Asia.The World Bank, which helps finance the debt of developing nations, says the financial crisis will have long-term implications for them.“Many institutions that have provided financial intermediation for developing country clients have virtually disappeared. Developing countries that can still access financial markets face higher borrowing costs, and lower capital flows, leading to weaker investment and slower growth in the future,” the bank said.Government sources said that the administration did not paint the worst case scenario as done by Singapore and several other countries because the structure of the Malaysian economy is different from their neighbour down south and not as exposed to the gyrations of the global economy.In addition, until recently, there was little evidence that recession would visit Japan and several other markets for Malaysian goods and services so quickly and in such a devastating fashion.And most importantly, the consensus among Prime Minister Datuk Seri Abdullah Ahmad Badawi, Najib and other members of the Cabinet was that bad news should be managed well to prevent a plunge in consumer spending.A senior government official told The Malaysian Insider: “The view was that Malaysians are by nature a pessimistic group and could overreact, making the recession a self-fulfilling prophecy.”Not everyone in the government agreed with this approach but as long as Abdullah and Najib kept to this line, others followed suit, regardless of how ridiculous it made them sound.Despite efforts by some bloggers to paint Najib as a renegade who has been prepared to call a spade a spade in this economic crisis, he was very much part of the team that believed in staying on message.Only in recent weeks has he signalled a willingness to paint a dire picture of the Malaysian economy. But even then, he and other ministers have been reluctant to admit the possibility of the economy entering negative territory.At a briefing for senior editors last night, Najib sketched a gloomy scenario for Malaysia in 2009 and said that recession was a possibility, given the waves of continuous bad news from around the world.Today, the country’s next prime minister will paint this dark picture for the rest of the country. His job in the coming weeks and months will be to convince Malaysians that his administration has the tools and ideas to alleviate the pain and suffering on main street.

(From The Malaysian Insider)

In the next few series of installment, I will outline what are the projects that need to be invested, the rational behind it, and how it going to help economy stimulus.  Keep in mind! Look carefully at the figure or the funds needed to implement those projects, then you make a conclusion whether Lim Guan Eng deserves to be confer the title of "Cheap Minister of Darul sampah" or not.

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