Ways to cushion the recession

A few months ago, I have voiced out concerns on our economy. I have said that the best strategy would be to admit that Malaysia is going to face a recession and that the leaders must prepared the people for this, mentally as well as financially.

I have urged the government to adopt some of  the following measures:

1. Stimulate the economy, not only by more spending , but that spending must be prudent and wise…  Besides the government spending, I have urged that private investments be encouraged by doing away the NEP, or at least have a moratorium to suspend the NEP..

The first rescue package was a let down. With money being injected to valuecap, what values can we hope to get? Now that there is a second rescue package, I urge the government to use this money intelligently. If needed be, get some independent economic experts to sit in a council to dispense and monitor this money, said to be more than 10 billions.

2. Secondly, there should be a cut in the interest rate, mainly the spread between lending and saving… The spread is more than 4%, which is considered high, and if this spread can be reduced, it will lower the cost of running business and help many companies bordering on insolvency to survive.

3. There must be a cut in income tax, so as to put money in people’s pockets.. to borrow a phrase by one of my commentators. This will reduce government coffers, but it will stimulate spending in the short term. Deficits may go up, but if it is for short term and for the rescue of our economy, it should not be too much of a worry.

4. There must be a safety net to help the poor and the unemployed.. Consider given out certain unemployment benefits for those who are out of jobs for several months, and those who accept this benefits must consent to be retrained and redeployed to sectors that required manpower, sectors that are currently employing tens of thousands of foreigners.

For the retirees, bank deposit rate should be higher than for those working people, and special funds which give a better return be constituted by the government to give a return of at least 5% to these retirees of over 60 years old. (like what was practiced in the last meltdown).

5. For companies that are trying to retrench their workers, a special task force be formed to monitor these companies and if possible, enforce pay reduction rather than retrenchment.

For  this Chinese New Year, the people in KL can sense a slow down; most celebrations are on a more modest scale, and the people eat out and spend less than before.

The government has  taken some of these measures.   for NEP, there are calls from prominent bankers such as CIMB’s Nazir to review . I suspect his call is  to test water for the government, to see the response of the conservative Malays… But this is a right move, because it is better to prosper together than to die together economically, figuratively speaking… A  milieu without the restrictions of NEP would be very conducive to private investments, and I have often mentioned, there are many rich Malaysians still , holding on to their money and sitting on it most of the time.

This is the time for casting aside all the differences of the various ethnic groups and pool our resources together to tackle the big problems of the economic slowdown, which, if not well managed, could undo many years of our growth and reduce our income and standard of living as a people.

So far, I see only Bank Negara hard at work and most government leaders are too engrossed in politics and trying to topple each other through undemocratic means.

I hope that for these 2 by elections, do not send all the big guns to campaign; they should spend more time in their offices to administer their departments and ministries , to deal with problems that may arise from this slowdown.

Afterall, they are being paid by the rakyat not to play politics but rather to run the country for the rakyat.