All Hail The “Unprecedented” Stimulation!!!!!
Posted by ErnieJean on March 11, 2009
So, it has finally happened……..after months of denying till their faces are blue, what the rest of us ordinary Malaysians have known since last year, our dear Finance-Minister-cum-Incoming-UMNO-Tai-Kor and his 2nd Finance Minister have admitted that they can no longer pull wool over our eyes about the inevitable recession…..
And then, just like that, they somehow waved a “magic wand” and lo and behold!!!! We have RM60 BILLION !!!!!???? Where on earth did the Finance Ministry dig those figures from!!!???
Mr. Rosmah, who is already smelling the fragrance of the nation’s PMship, called his “baby” “unprecedented in the nation’s history“…….Well, I totally agree with him. It’s “unprecedented” alright…….but IN WHAT SENSE!!!???
Remember when Najib unvieled his 1st Economic Stimulus Package of RM7 billion on November 4 and he issued this statement?
On November 4, I introduced a 7 billion ringgit ($1.93 billion) pro-growth stimulus package to implement projects with high multiplier effects, building on the previously announced 5 billion ringgit allocation of existing investment capital to ValueCap, Malaysia’s asset management company.
The stimulus package as a whole is designed to enhance domestic growth and improve market confidence. This package ensures that a larger segment of the population will realize the benefit of productive expenditure from the government.
We anticipate no additional expenditure in implementing these measures. The larger stimulus package is entirely funded by savings on subsidies as a result of falling global oil prices. ValueCap will enhance existing assets and multiply the benefit the Employees Provident Fund already provides Malaysian workers.
To address your suggestion that parts of the stimulus package might be inappropriately managed, all measures, including ValueCap, will be supervised by Malaysia’s Project Monitoring Unit. They will report directly to me, the Minister of Finance, and I will provide regular updates and, I suspect, receive candid assessment by an active political opposition, the public and the press. (Well, obviously this Malaysia’s Project Monitoring Unit is sleeping on the job!!!!)
Malaysia is no stranger to this sort of scrutiny. During the last crisis, our “unorthodox” stimulus initiatives were loudly criticized and largely condemned. The current crisis, however, has reinvigorated interest in and, apparently, the validity of those initiatives.
Malaysia is well positioned for the coming economic challenge. Our financial sector is in a much healthier position today than 10 years ago. The capital adequacy ratio of banks at 8% is much higher than the minimum international requirement. Non-performing loans of all banks are at an average of 2.5%. Financial institutions have ample capital liquidity. Foreign reserves are high at $100.2 billion. The current account surplus is 15% of GDP.
All I wanna know is what happened to that RM7 Billion announced to be injected to save our country from further despair? If the government agencies can’t even handle RM7 billion, how are they expected to handle EFFICIENTLY an amount that’s 10 times larger!!???
Maybe it’s too early to judge the success (or failure??) of this package……maybe we shuld give Najib and his team the benefit of the doubt and see where we end up after a couple of months…..and hopefully, Malaysia does not end up in the dog house by then…………
Let’s have a quick look at the following salient points in the mini-budget announced by Najib, courtesy of Malaysiakini
GDP growth is expected to be in the range of –1% to 1% for 2009. Without the two stimulus packages, the economy faces the prospect of a deep recession.
RM60 billion stimulus package – RM15 billion is fiscal injection, RM25 billion Guarantee Funds, RM10 billion equity investments, RM7 billion private finance initiative (PFI) and off-budget projects, as well as RM3 billion in tax incentives.
According to the government, the budget deficit, which shoots up from 4.8 percent to 7.6 percent in 2009, can be financed from domestic sources. It added that the financing of the deficit will not crowd out the private sector in sourcing funds. (Pray tell us in detail, what are the domestic sources??? Our EPF again!!!???)
The RM60 billion is allocated to achieve four aims:
1. Reducing unemployment, increasing employment – RM2 billion
2. Easing the burden of the rakyat, especially vulnerable groups – RM10 billion
3. Assisting the private sector – RM29 billion
4. Building capacity for the future – RM19 billion
RM2 bil to reduce unemployment, increase employment
To create a total of 163,000 training and job placement opportunities in the public and private sectors
To establish 22 JobsMalaysia Centres and upgrade 109 existing centres to facilitate access for workers and employers to obtain job placements, career counselling and information on training opportunities
Employers who employ workers retrenched from July 1 2008 be given double tax deduction on the amount of remuneration paid. (What about the majority of us wage earners who got our salaries cut!!?? Why are the Employers the ones enjoying tax breaks whilst the employees have conveniently been side-stepped!!??)
Government to recruit 63,000 staff to fill vacancies and serve as contract officers in various government agencies. (As it is, aren’t our civil service departments already filled to the brim with non-productive leeches?)
To encourage more Malaysians to pursue Masters and PhD by financing tuition fees and research grants up to RM20,000 for student pursuing PhDs locally and RM10,000 for those taking Masters programme. (What are the criterias for one to be qualified to apply? If all unemployed undergraduates are eligible for these grants, would our local universities be capable of handling such huge intakes?)
Levy on foreign workers will be doubled for all sectors except construction, plantation and for domestic maids; the levy will be paid by the employers and not by the workers.
RM10 bil to ease the burden of the rakyat
To assist oil palm and rubber smallholders whose incomes have been affected due to declining commodity prices.
RM674 million in subsidies to be allocated to avert price increases of necessities, such as sugar, bread and wheat flour.
To provide RM480 million to ensure that toll rates are not increased. With these above measures, the government will allocate a sum of RM27.9 billion for subsidies in 2009. (Why are we still putting our hard earned money into these cronies’ pockets!!!???)
House buyers be given tax relief on interest paid on housing loans up to RM10,000 a year for three years.
RM200 million to repair and maintain drains and roads. (So, what happened to the RM500 million allocated in the 1st Stimulus plan for this purpose?????? This road and drainage repair works never seem to end, don’t you think so?? And we all know why that is so…….)
RM150 million for renovation, maintenance and repairs of welfare homes, fire and rescue stations and quarters, as well as public toilets in mosques, surau and tourist spots. (Isn’t this a little too much for renovation works? Do you smell “Happy Class F Contractors” with the fondness of marking up 100% on their contract sum, here?? !!!???)
RM1.95 billion to build and improve facilities in 752 schools, particularly in rural areas as well as Sabah and Sarawak, with RM300 million to be used to improve facilities in government-aided religious schools, national-type Chinese and Tamil schools as well as mission schools. (Do you notice Sabah and Sawarak seems to be getting a lot of allocation during budget announcements but they never seem to receive the actual amount at the end of the day?? Anyone care to tell where those money get channelled to???)
RM230 million will be provided to increase the coverage of electricity and water supply in rural areas, particularly in Sabah and Sarawak. (After 50 years, there’s still a need to increase coverage of these basic amenities!!!??? )
RM350 million will be provided for the construction of rural roads. (Once again, didn’t they already allocated RM500 million form the 1st stimulus plan for this purpose??? SHOW ME THE MONEY!!!!!!)
RM1.2 billion to be allocated in Sarawak and Sabah. This include the expansion of Sibu Airport, deepening works at Miri Port, repair and improve infrastructure damaged by floods, upgrading of schools as well as construction of Lawas Training Centre, Kota Samarahan Industrial Estate and tourism facilities.
In Sabah, among the main programmes and projects to be implemented include building of Giat Mara centres, Kota Kinabalu Electricity Transmission System, as well as upgrading of schools, roads and bridges. The government to take action to resolve issues related to health services in Queen Elizabeth Hospital, Sabah.
Existing tax exemption of RM6,000 given on retrenchment benefits be increased to RM10,000 for each completed year of service. Banks to allow retrenched workers defer the repayment of their housing loans for one year.
RM29 bil to assist the private sector
RM5 billion to provide working capital to companies with shareholder equity below RM20 million. The government to provide guarantee in the ratio of 80:20, that is 80% will be guaranteed by the government and 20% by the financial institutions.
To set up an Industry Restructuring Guarantee Fund Scheme totalling RM5 billion for loans to increase productivity and value-added activities, as well as the application of green technology.
Securities Commission to implement additional measures to reduce time-to-market to enable companies to raise funds in the capital market in a more efficient and cost-effective manner including doing away with approvals for rights issues by listed companies.
A new programme where permanent resident status would be considered for high-net-worth individuals bringing more than US$2 million for investments or savings in Malaysia.
RM5,000 discount to be given to car owners, who trade in their cars which are at least 10 years old, for the purchase of new Proton and Perodua cars. (HEY!!! WHAT HAPPENED TO THE PROMISED IMPROVEMENTS ON PUBLIC TRANSPORTATION!!!!!!!!?????)
RM2 billion for a new LCCT at Kuala Lumpur International Airport, which is expected to be ready in 2011.
A rebate of 50% on landing charges will be given for a period of two years effective 1 April 2009 to all airlines that operate from Malaysia. Likely to result in lower air fares.
Company’s current year losses be allowed to be carried back to the immediate preceding year.
An Accelerated Capital Allowance to encourage companies to renovate and refurbish their business premises. The allowance is capped at RM100,000.
RM200 million to upgrade infrastructure in tourist spots, diversify tourism products, organise more international conferences and exhibitions in Malaysia as well as improve the homestay programme.
RM19 bil to build capacity for the future
To promote domestic private investments, the investment funds of Khazanah Nasional Berhad will be increased by RM10 billion.
Khazanah to invest RM3 billion in the telecommunications sector, which among others, will facilitate its subsidiary to improve broadband infrastructure.
RM1.7 billion of Khazanah’s investment to go into Iskandar project for the building of infrastructure, hotels, theme parks as well as universities.
RM5 billion for 23 projects implemented on off-budget basis, including LCCT at KLIA and the expansion of Pulau Pinang Airport at an estimated cost of RM2 billion and RM250 million.
RM2.4 billion for the Malaysian Communications and Multimedia Commission to improve telecommunication infrastructure.
RM100 million to build sky bridges and covered walkways between buildings, especially in the Golden Triangle, Kuala Lumpur.
RM2 billion for private finance initiative (PFI) and public-private partnerships.
RM20 million for Radio Televisyen Malaysia to implement several projects to develop the local music industry.
All government procurements will be made through open tenders or restricted tenders, except for specific cases. (This additional clause of “Specific Cases” totally freaks me out!!!!!)
I dont know about you guys……….but this 2nd Stimulus Package is definitely what I had anticipated……A COMPLETE DISAPPOINTMENT for the ordinary folks like me………
Like how an accountant friend quite aptly put it, insteadof spending on non-productive matters such as upgrading and increasing job placement centers and beautifying firemen’s quarters, the government could have implemented more people-friendly measures such as abolishing personal income taxes for individuals, quit rents and assessment rents for 2 years. This should be the true spirit of the stimulus plan, which is to help the rakyat get back on their feet. Instead, what we are seeing now is that it looks very much like the AMNO cronies and businessmen will be getting the bulk of the money.
Penang CM Lim Guan End also couldn’t have sum this up any better when he said;
“To stimulate the economy, the government should give the money to Malaysians, like what Singapore, Taiwan and even Thailand are doing.
“For the next two years, things are going to get bad.
“We need to help the poor families in order for them to have money for their day to day life.
“Currently, there is no direct financial aid to all Malaysians,”