By Dr Hsu Dar Ren
DEC 1 - Some time back, I wrote an article “From greenback to our economy” where I predicted that the US dollar would appreciate against the Malaysian ringgit. In a little more than two months, It has climbed from around 3.20 to 3.60 now.
Our foreign reserves have gone done a few billions, and now stands at about RM109 billion, still very healthy and able to sustain nine months of imports. But the fact that we need to sell a few billion dollars to prop up our ringgit is really a cause for concern.
Budget 2009 tabled in August this year has a total budget allocation of RM208 billion. The operating expenditure is RM154 billion, leaving only about RM54 billion for development.
The Budget runs a deficit of 4.8%. That was in August when oil and commodity prices were high. Now that the oil price as well as prices of commodities have come down so much, our revenue would decrease substantially, and there would really be little money to spend for development, when we need to spend to stimulate the economy.
Although I have suggested, in one of my earlier blog articles, that operating expenses be cut by RM20 billion in order to have funds for spending as a stimulus package and cushion the loss of revenue from a possible tax cuts, it may not be feasible in the short term, when everyone in the government is so used to their way of doing things.
The priority now should be three-fold: create more jobs, stimulate the economy so as to put money in people’s pockets as well as to provide a safety net for poor people and retrenched workers.
How can we hope to do this when our revenue is coming down due to falling commodity and oil prices, when cutting operating expenses may not be feasible, when borrowing more money may not be workable as we are already running a fairly high deficit, when wastage and corruption are still so rampant and cannot be corrected overnight?
There has been a lot of debate of late whether this crisis is about governments triumphing over the markets or the markets triumphing over governments?
I believe that in Malaysia, if the government is unable to provide a stimulus package without going into deeper debt, then the logical thing is to give incentives to the private sector and hope that it can provide the engine to stimulate the economy.
There are still many cash-rich Malaysian companies and individuals. If these people can invest and be the engine of growth, we can create more jobs as well as stimulate growth to counter the global economic recession.
For the private sector to invest, there must be a few pre-requisites:
1) Cheaper access to funds. Bank interests and interest spread must be lowered.
2) There must be less regulatory interference in order for the companies to invest and grow. In this respect, we may have to do away with the NEP. If that is not immediately acceptable, then perhaps we should have a moratorium to suspend the NEP for a few years to see how our economy can benefit.
If this trial can prove that NEP is in fact a hindrance to the growth of the people, including our Malay brothers, then we can, at the end of the moratorium period, do away with the NEP completely and replace it with a needs-based economy.
3) Tax cut and incentives for investments in certain priority sectors, such as education, healthcare as well as transportation, biotechnology, nanotechnology and so on.
I ask our Malay brothers to accept my suggestion for a moratorium rationally. It is better for everyone to have an expanding cake than to have a cake that is rapidly shrinking. In the latter case, having a fixed proportion of the cake may be meaningless if the cake shrinks to half its former size.
On the part of the non-Malays, they should try to have a real economic partnership with the Malays, genuinely imparting skills and business know-how, and not just form an Ali Baba relationship to beat the loopholes in the NEP.
We need to think out of the box and adopt fast action to counter this economic tsunami. Already we have felt the first wave; subsequent waves will be more devastating and if nothing is done now, we are going to face a really bleak future.
“There must be less regulatory interference in order for the companies to invest and grow. In this respect, we may have to do away with the NEP. If that is not immediately acceptable, then perhaps we should have a moratorium to suspend the NEP for a few years to see how our economy can benefit.”
How many years to see our economy benefit?
“On the part of the non-Malays, they should try to have a real economic partnership with the Malays, genuinely imparting skills and business know-how, and not just form an Ali Baba relationship to beat the loopholes in the NEP.”
Do you think the Chinese will try to have a real economic partnership?
Calvin Reply:
December 2nd, 2008 at 12:03 pm
with the decrease in chinese population, the Malay market IS the future, as a chinese, I don’t see a reason why not? afterall the future is where the monies are. I believe in the near future, Chinese and malays will work together, it is just a matter of time, after all, China and India is growing, the Malays too need the Chinese and Indian to tap these local market, we ought to owkr together totap these market, not fighting among ourself, we could have been so much more than what we are now, just look at singapore, the Chinese venturing into China’s market while the Indian and Malays in Malaysia and India… work together for the country’s GDP, not against
kk Reply:
December 2nd, 2008 at 4:26 pm
It takes both hands to make a clap. I am a non Bumi, and I have several business failures in my hand now. Everytime I fall, I just pick myself up and dust myself. No one takes my hand and guide me through my failures. As I am writing, I continue to endure hardship. I have 2 shops in thailand and a software business in Malaysia. As you are aware, Thailand is facing a crisis, and one of my shop has to closed down as it depends on the tourism industry. Now my other shops is also in danger of failure if this crisis prolong.
When I was a student in US, I work through 2 jobs to get through my studies. Here again, I have no help from the government. Like all dutiful non-bumis, I continue to pay my taxes to the government and never once do I get any help in return. Worse still I am considered a 2nd class citizen here and to hear the ruling Umno keep harping on the Ketuanan Issues. We are all Malaysian, there is no difference between us except what Umno is trying to play. My sister in law is a Bumi.
If you truly wants to learn from the non-bumi, I am going to impart our skills and business know how to you. BE COMPETITIVE AND INDEPENDENCE. FIGHT HARDSHIP AND WORK HARD. BE FAIR TO ALL PEOPLE. There is no 10 commandment, bible or Koran in business for you to read up and follows. If there truly is, let me know. I am a non-bumi and would like to get these know how too.
The author must be day dreaming because in reality, the Malays will never ever let go of NEP due to the rampant corruption & mismanagement of public funds. The NEP has been benefiting the Malays since the racial riots in 1969. The NEP has made them lazy & uncompetitive in all economic sectors. With China & India as the next economic superpowers, Malaysia is long forgotten by MNC & foreign investors. Malaysia can’t even catch up with Thailand, Vietnam, Indonesia & other 3rd world countries. Malaysia is a doomed nation with corrupted government, judiciary, police & public institutions. As a Malaysian, I feel very very very sad about this beautiful country.
Bumi Ownz U Reply:
December 3rd, 2008 at 9:24 pm
Dear Neo,
I have predicted the same thing. China’s mass market of 1.3 billion people coupled with its extensively cheap labour and abundance of industry has gnerated internal market competition which has caused many of its products to increase in quality naturally… Malaysia is at dire risk of losing out to China and India as these behemoths are economic powerhouses with nearly 2 trillion USD in China Capital reserves.
And we have had a government in power for the last 51 years propogating rubbish, ineffective policy, uncompetative laws, corruption, promotion of poor service levels, poor product quality standards…. Neo, I’m in the same boat as you….
…but that doesnt mean we should be in despair… we should pick ourselves up and fight for unity so that we can work together and compete against other nations to achieve.
We need equity foundations. Equity in rights. Inclusive policy and a unified approach in commerce enterprise and education.
economic partnership is difficult to start with. suppose you have a business. you need a partner to grow it. a partner who is probably doing the same business as you, (like- selling mangoes). So if your partner happens to be the same race as you, so be it. business comes first.
now the government is telling you, no no..economic partnership must be forged between different races. so to answer the governments call, you contact the government department and they introduce you to a potential partner. but..LOL..the partner is an out of job contractor who knows nothing about selling mangoes, and is the nephew of one of the department official.
so how to grow the economy like that??
my solution is this..let people shine through. if you’re really a good mango seller, then I am sure you will have plenty of business offers coming your way. there is nothing really hard in business. everybody starts from scrap..and there is success only with hard work. the world is not against you, it is you who have to prove to the world you have what it takes.
BELAJAR DARI JERMAN & JEPUN- kalah teruk dan bankrup selepas perang dunuia ke-2 namun bangkit sebagai gergasi ekonomi dunia sekarang..Malaysia pun apa bezanya dengan syarat kerajaan yg korup dan lemah sekarang jatuh dahulu di tangan rakyat dan diganti dengan kerajaan rakyat yg sebenarnya
Dear Guys,
When we speak of economic partnership between malays and non-malays, we ARE falling into the skewed parameters set by UMNO.! Why ?? Because we will then be thinking along the lines of thought of the NEP which is a failure, and we will be brainstorming within the water-well called NEP…!! And, the result ? There will be no workable result because the sneaky Mahathir has already set the trap / ground rules about 28 years ago .. We must see outside the box now..
In order to think out of the box, there is no such thing as bumi and non-bumi partnership. With this new premise and concept, we CAN move forward. How ??
1. PK ruled States like Penang and Selangor etc will give incentives or tax breaks etc to non malay companies that employ rakyat of other races. The more non-same race employees vs. employer, the higher the tax break etc. PK policy makers will sort out the details.
2. Non-malay Companies that gives training to malays and indigeneous races will receive part subsidies for training, and the like. As a result, this will encourage a chinese company to employ non-chinese in order to share with them the trades of business and the skills to run a business BUT not at the Company’s expense but with the encouragement and support of the PK govt…!! This will definitely work, i guarantee you …!!! All businessmen are money-minded. What better than to get money from the Govt.
3. Nobody likes to have a business partner…regardless of race. So, let’s not think about JV between races. It will not work. Why should it work in the first place ?? My cousin does not even want to partner me, let alone a stranger…of whatever race.
4. The NEP’s premise of JV is to get the rich chinese businessmen of old to pass some commission from the business to the non-business-minded malay partner. This is to enrich the cronies of UMNO. Is this what we want ? To make the JV between malay and non malay workable so as to prove that the NEP is the correct policy to start with ?? That would be silly of us then.
Let’s think from another direction, and forget about the workings and methods of the NEP if we want the transfer of technology, business skills, and business acumen from one race to another, whatever the race may be.
Is there any information about this subject in other languages?