(Posted on Tuesday May 20, 2003 )

Prime Minister, Datuk Seri Dr. Mahathir Mohamad is expected to unveil the much talked about "stimulus package" on Wednesday to spearhead further economic growth and development after recent anxieties over the Iraq War and the SARS epidemic.

The introduction of this "stimulus package" is no doubt, to uplift, bolster and safeguard our economy, in the wake of various international happenings, that has a direct and indirect impact on our shores!

This move by the government, is timely, and sends a clear signal that the Barisan Nasional government would do everything within its power, to bolster and assist "players and dependents" of the Malaysian economy.

However, it must be pointed out that "due care and concern" must be embedded into the whole process, to prevent and avoid any major "spending spree" under this "lifeblood attempt."

The last time, we had a similar package, there were allegations of "sheer imprudence and lack of objectivity" in spending patterns and therefore, this time around, it is crucial that all attempts and strategic safeguards must be put into place.

We cannot deny, that our "development efforts" has run up high deficits and this adds more support that all attempts must be undertaken, that due care, merit and prioritizing be the mode of the day!

The writer is made to understand, that the said "stimulus package" was originally due to be announced in late March but was postponed to early April after war broke out in Iraq and has now been put off until an "indefinite period" as the deadly Severe Acute Respiratory Syndrome (Sars) which sparked a global health scare takes a further toll and dents all major economies in the global stage!
This move must be lauded and is no doubt be one of calculated prudence.

In particular, with SARS in the picture it is pertinent that "certain adjustments" have to be made to sectors that will be hard-hit specially, those linked to tourism.

As a consumer advocate, monitoring the issue, it is hoped that the financial package introduced by the government would contain 'specific measures expected to have an immediate impact on the economy, while laying the foundation for more stable growth in the medium and long-term'.

It would also be hoped that the measures introduced would speed up existing projects and focus on sustaining consumer spending.

However, these efforts may be inadequate if there are no measures put into fast track to further liberalize the economy and cut red tape to boost competitiveness and woo foreign investors.

The corporate sector must be made more competitive and draw in more foreign investment to sustain its growth'.

The government should also 'restructure and deregulate' the economy in its upcoming package to counter stiff competition from China and regional economies.

One would also caution the government against overstretching its finances as its budget deficit for this year had ballooned to 5.6 per cent of gross domestic product (GDP), from 5.2 per cent in 2002.

As such, multi billion ringgit projects that depend on foreign borrowings must specially be caveat and sent for rigorous reexamination and review.

For the record, it must be pointed out that 2 years ago, the government spent RM7.3 billion to "pump prime" the economy amid the US slowdown and the Sept 11 terrorist attacks in the US.

The result was, it kept the recession away, prompting an anemic 0.4-per-cent growth.

But, the good news is that we are not on the brink of recession now, so there is no need to break or pressurize the banks to push growth.

However, the federal government needs to be extremely prudent and it will certainly help if certain state governments, noted for their "lavish spending" be advised by both the Prime Minister and deputy premier, Datuk Seri Abdullah Ahmad Badawi, to be of "extreme thrift" in the long term interest, of the nation.

Dr. Jacob George
Subang Jaya
Tel: 012-3664444
Dr Jacob George is president and legal adviser to the Consumers Association of Subang and Shah Alam (Cassa) and chairman of the MIC Subang Jaya Town Centre (MICSJTC).