Mouth watering stimulus

Wow!

From the initial 10 billions, the second stimulus package has suddenly ballooned to 60 billions. It is about 9% of Malaysia’s GDP.

I welcome any stimulus package because I have mentioned many times before that I think this recession is going to be deep and prolonged. We the small men cannot do much except to keep cash and spend prudently . So any government initiatives must be welcome, afterall, the government is our representatives to handle all these things for us.

Having said that, any stimulus package, to be effective, must put money into people’s pockets, and must have a safety nettings for the poor and the unemployed.  I would have expected that a package so hugh would have given consideration to waive taxations, give cash incentives, direct unemployment benefits, etc.   There was none of this.

The breakdown is  roughly this ( from Anil netto blog-including his comments):

  • RM15 billion in fiscal injection  (RM10 billion in 2009 and RM5 billion in 2010). Fiscal deficit expected to rise to 7.6 per cent in 2009;
  • RM25 billion in guarantee funds (RM5 billion for SME Working Capital Fund, another RM5 billion for Industry Restructuring Fund and the rest?)
  • RM10 billion in equity investment (For Khazanah?)
  • RM7 billion for private finance initiative and off-budget projects (Where is this “private finance” coming from? Not out of the EPF, I hope.)
  • RM3 billion in tax initiatives
  •  

    Looking at the big package, I can’t help but think that this is mainly tailored to help the big corporations, and not so much the small men on the streets like you and me… What we get are the pittance like certain food subsidies and absorption of toll increase by the government… which are already in place..

    Those businessmen with connections , I suspect, will now be laughing all the way to restaurants and night clubs , to drink champagne  and celebrate.

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    26 Comments (+add yours?)

    1. monsterball
      Mar 11, 2009 @ 12:06:41

      Yes….Tian Chua of DAP pointed out why no direct help to the poorest and jobless?
      The only thing I welcome are controlling daily essentials and food prices….stay low.
      Tian Chua said…food stamps should be offered to the poorest and jobless….like in USA.
      Why UMNO never take any good advises..to help the poor?

      Like

    2. monsterball
      Mar 11, 2009 @ 12:08:50

      oopp! Not Tian Chua.. it is Tony Puah…the welknown young economist of DAP.

      Like

    3. klm
      Mar 11, 2009 @ 12:20:02

      I dont see single benefit for me. I dont pay tax. So tax initiative dont benefit me.

      I dont see any money going to re-build our economic engines.

      – Oil Palm (down)
      – rubber (down)
      – Oil (depleting)
      – electronics (down and continue going down)
      – IT (gone)
      – shared services (maybe)
      – tourism (maybe)

      There is no new engine. After 60B RM is spent, we probably end up with nothing.

      60B RM is a mighty big piece of plaster. It is ok to spend it to cover the hole we are in. But still, at the end of the process, we should have something that will continue to give benefits. I dont see this in the stimulus package.

      Like

    4. Dr Hsu
      Mar 11, 2009 @ 12:30:20

      60 billions divided by 26million Malaysians will be roughly RM 2300 per person. For a family of 5, it means you can get RM11500 if given directly. ( of course, this is only an illusion as actually what government spends is only about 15 biilions directly as pointed out by Tony Phua….. the guarantee would only work if someone defaults on loans… mainly to save banks and encourage banks to lend)

      Maybe it would not be a bad idea to give directly this amount, with the caveat that those above certain income level not eligible for it…. That would give people more to spend …. directly stimulating retail business and the multiplier effect will be better.

      Now everything depends on the implementing agencies and the civil servants..

      for the short term boost, there is practically nothing….

      Anyway, we will wait and see … hopefully the effects can be felt in 2 months time….

      Like

    5. Chauncey Gardener
      Mar 11, 2009 @ 13:55:18

      I don’t see why RM 10 billion is allocated to equity investmentS. Is it the govt’s function to prop up the stock market ?

      How about investing directly in companies thru 5 year redeemable preference shares ? This will give companies a cash flow boost, esp SMEs. In 5 years time, they should be able to pay off the govt and if unable, get an extension.

      What about buying back the NSE ? According to a political pary’s proposal, it will take about RM 16 billion to buy back and with it, the toll rate can be frozen or even reduced. Ultimately, the toll rate on the NSE will either remain the same or reduced for years to come. That translates to money in the pocket of the ordinary rakyat.

      But please, no bailout of cronies. We have seen that in the case of Tajuddin in MAS and Halim Saad in UEM. Cukup lah.

      Last question – where is the money coming from ?

      Like

    6. klm
      Mar 11, 2009 @ 13:59:41

      Dr Hsu. You said for the short term boost, there is practically nothing. I say, for the long term boost, there is also nothing.

      This stimulus package is just pure spending. No investment spending at all.

      I think it will be better to join your children rather than stay here.

      Like

    7. Richard Loh
      Mar 11, 2009 @ 14:20:08

      You see the problem with our leaders are they want to do it their way.

      First they claim that our economy is sound, then not so sound and then we are going to be hit with a minus recession.

      The rakyat cry for help and they act to listen by announcing mini package, and all kind of packages. You and I know that these billions are not going to help the man on the street but to you know who. So they have to pretend and act like they are really helping us.

      My thought is always this, when they announce stimulus packages or the so call Malaysian plans, 30% for me, 40% for my cronies, 20% standby for buying members, buying votes etc and finally 10% to the rakyat.

      You see there is still 10% given to the rakyat and they are feeling generous and helpful.

      Like

    8. klm
      Mar 11, 2009 @ 15:59:11

      For once, he say something sensible and not blindly applauding big brother. I hope he finally wake up to how unrealistic BN has become.

      “The RM60 billion mini Budget should have emphasised on improving productivity and acquiring technological capability to remain competitive rather than being a fiscal expansionary policy, Gerakan president Tan Sri Dr Koh Tsu Koon said today.”

      Like

    9. Disgusted
      Mar 11, 2009 @ 19:00:40

      There should be a mechanism to check accountability and transparency where the money is going but if it continues to be directed on the political basis and crony-approach rather on need basis, it will be another fiasco suitable for the Audit General’s report.

      The warning signs were all there last year sounding a grim 2009 year. But our first class politicians but 3rd rate mentality refused to examine the ringing bells.

      Still calling it a premature confirmation only if technically a recession, it’s a bit too late. It all depends now on the implementation and since this country leaders have proven to have such an “excellent” record of implementation, I guess there should be no worries because there is no high expectations of them. Their records speak for itself.

      Already, for the first time after months of dead silence, the housing and local government minister was seen announcing “santa claus” goodies for schools. BN MPs should be happy, plenty of goodies and ice cream now for courting support.

      monk

      Like

    10. Nick
      Mar 11, 2009 @ 19:25:00

      He did succeed in blowing everyone away with an awesome RM 60 Bn. That’s about US$ 16 Bn, more than S’pore’s US$ 13.6 Bn announced in January.

      He then ate humble pie by admitting that the +3.5% growth for 2009 ain’t going to happen and a more realistic expectation for a -1% is a possibility. S’pore already expected -10% for 2009.

      However, once the “awe” part is discarded and when you poured over the details, it seems to be below the mark. For example:-
      (1) Giving a double deduction for hiring retrenched staffs is meaningless as most Companies are already in the red and we don’t need tax stimulus or incentive;
      (2) Doubling the foreign levy just killed off many MNCs who have their backbone factory staffs being foreigners as locals cannot match them in terms of productivity;
      (3) There is nothing for the middle class. Personal tax rates stayed the same; the toll hikes “suspension” merely postpone a difficult issue and the toll companies must be celebrating.
      The good portions in my view are:-
      (A) Increasing the retrenched portion from 6k to 10k for each year of service is good.
      (B) Allowing losses to be c/back to preceding year, cap to RM 100k is pittance but still welcomed. A real kacang putih incentive.
      (C) The guarantee of 80% of the SME loans is a lifeline to many banks. The NPL can be transferred to the government.

      Frankly, I am hugely disappointed. With such large sums, he failed to deliver to the middle class. He could have granted a “income tax free” year. He could have doled out “spending vouchers” to every citizen. He could have offered to pay “employer’s epf by 3% or 5%, subject to a cap, just like what Spore governmt did.

      Useless fella and a low class stimulus package. Might as well not announced it.

      Like

    11. Disgusted
      Mar 11, 2009 @ 21:00:16

      And pensioners, majority of those who retired with middle-income level i.e. ex-civil servants and from private sectors with shoe string budgets.

      Little or no more money in EPF, those entering 60s and 70s with little family support and no fixed livelihood.

      With dollar shrinking and rising food prices.

      It’s hell.

      monk

      Like

    12. cilipadi
      Mar 11, 2009 @ 21:16:42

      To me, is very simple. Just ask a simple question to your Najib, will there be any multiplier effect on the so-called ‘stimulus’?

      A simple person like me can’t see any multiplier effect here, maybe your Najib can see better since he is a holder of a certain degree major in economics.

      If he cannot explain convincingly, perhaps he was using ‘viagra’ as stimulus to make his ‘mouth watering’.

      I am sure HEE is an expert in viagra.

      Like

    13. Kenny
      Mar 11, 2009 @ 21:36:01

      Quote from malaysiakini:

      “Later at a press conference, Anwar said one of the flaws in the package was the failure of the government to look at the private sector as the major cataclysm player.

      “If they had looked at it that way, then they would have given more incentives including tax reduction relief to the private sector or companies, even to the small and medium industry,” he said.

      “On the contrary what has been supported by the stimulus package are the government companies. Khazanah Nasional has been given close to RM1 billion for prawn farming… can you imagine that?”

      Like

    14. cilipadi
      Mar 11, 2009 @ 21:36:39

      Again, to me, a budget means whatever I am planning to spend using my savings or income to spend and invest, definitely not from borrowing.

      It seems to me your Najib can’t even understand the logic of 1+1=2. He should learn from maths sifu Lee Shien Loong of the Red Dot. But, I doubt he is willing to change his “big brother” or “I know best” mentality….equally applicable to his “kakis”….all expert in viagra.

      Till now, I can’t figure out the RM60 billion.

      Like

    15. anun
      Mar 11, 2009 @ 21:47:36

      Till now, I can’t figure out the RM60 billion.

      What can you expect from this migratory bird with pea size brains ?

      Like

    16. cilipadi
      Mar 11, 2009 @ 21:48:11

      “What is important is to accept the reality that Malaysia is a country where we share our lives and nobody has the right to portray himself as superior than another,” said Tunku Aziz.

      monk, how come this Tunku Aziz not a PM or Finance Minister? He is much much better than your Najib….Bodohland or Bolehland?

      Like

    17. cilipadi
      Mar 11, 2009 @ 21:52:06

      anun,

      You are so good, you add up for me please, then you realise who is the pea size brain?

      Dr. Hsu, see this anun, sigh!!! Who is this in the first place.

      Like

    18. chinseng
      Mar 11, 2009 @ 23:22:53

      After this Second Stimulus Package was table in the Parliment, look at the share market, continue to go south!

      If this 60Bn can be of any good to our economy, the Stock Market should have reacted and become a bull!

      Like

    19. monsterball
      Mar 11, 2009 @ 23:58:43

      In simple logic…the more money you can bring out to help with the objective to stabilized ..maintain …give breathing spaces to companies ..affected by the world change reaction bad economy….is good.
      More money aids…means time is bought for these companies to adjust and plan ahead…with money problem solved.
      Then part of the money to stabilized food prices.
      The general idea how the RM60 billion to be spent…given by Najib.
      The point is…UMNO have the clearest bad reputation…to be so corrupted….so racialist…so insincere and unfair to Malaysians…and previous budgets….mostly helping something to benefit UMNO..and their members only.
      Malaysians will never trust UMNO can change that…overnight.
      Yes..wait 1 year..and see the end results.
      I say…we are going to the clearest sign..the rich getting richer…..the poor getting poorer…..crime rates will increase….the usual…end results of a corrupted and dictatorial government.
      I sincerely hope..I am wrong.

      Like

    20. romerz
      Mar 12, 2009 @ 01:00:05

      Update from my blog on the mini-budget.

      Having looked at Najib’s proposal in greater detail, I’m utterly disappointed. Of the RM60 billion, the single largest item of RM25 billion is for guarantees, not actual money to be spent. In fact most of the 60 billion are not real expenditure but rather ‘opportunity costs’. I haven’t had time to do the sums but I believe that at the end of the day, less than RM20 billion is real expenditure spread over 2 years.

      Bear in mind that our current delivery system with all its flaws, it wouldn’t surprise me if less than 70% (if we’re lucky) actually trickles down to those who need it most; which translates to a stimulus of RM7 billion per year for the next 2 years.

      Bah!!! So much for my pleasant surprise earlier!!!

      Hang on tight people, we are in for a rough time!

      http://romerz.blogspot.com/2009/03/rm-60-billion-mini-budget.html

      Like

    21. romerz
      Mar 12, 2009 @ 01:07:34

      Dr Hsu,

      Unrelated to the economy but I’ve reproduced Malik Imtiaz Sarwar’s article on the constitution in my blog.

      Could I suggest that you get your party leadership to read it so that they understand the true meaning of democracy.

      Normally I would have sent an email to KTK but I’ve decided (for some time now) that I no longer want to hear his lame excuses anymore.

      I leave it in your hands to do what you have to do.

      Like

    22. anon
      Mar 12, 2009 @ 09:08:03

      A New Low in Drug Research: 21 Fabricated Studies

      http://blogs.wsj.com/health/2009/03/11/a-new-low-in-drug-research-21-fabricated-studies/

      We’ve followed plenty of controversies around drug trials, from ghostwriting to keeping quiet about unflattering results. But the latest news is particularly eye-popping: A prominent Massachusetts anesthesiologist allegedly fabricated 21 medical studies involving major drugs. Yikes.

      Like

    23. Disgusted
      Mar 12, 2009 @ 11:04:46

      Latest:

      Rumors on Tourism office raided by Agency Cows and Cars.

      And more possible by-elections vis-a-vis Bernama report.

      Malaysians enjoy more dramas. My guts feelings coming true.

      monk

      Like

    24. Atila
      Mar 27, 2009 @ 01:41:22

      waaaa..RM60Billion

      Why cant govt give us Malaysian RM1.0Million each?

      RM60Billion…coming from where?
      Saudi or EPF?

      Like

    25. wits0
      Mar 27, 2009 @ 02:15:13

      Just look at the RM5K rebate to buy a new Proton car for your old crate, for instance. It’s not reported in the media as something so hot with plenty of takers so far. Wonder why.

      Your old still faithful crate is supposedly meant to be scrapped yet needs JPJ and Puspakom approval. What a stupid contradiction in terms – scrapping also needs approval and all the hassle (to the potential customers) that goes with it!

      Then there’s that need for Proton to have your old crate before they’ll deliver your new one! A final straw that breaks the camel’s back!

      If people are about to close an eye to the way in which Proton has wrecked havoc to the local car market, they won’t forget or forgive now. If this is the way to do business, they don’t deserve to succeed. You don’t run a business by imposing all sorts of hassle and red tapes on to potential customers. You can’t do things like it’s done in a gomen bureaucracy – pushing the inconvenience to the public.

      Utter dummkopf!

      Like

    26. Marchetti
      Dec 18, 2009 @ 03:41:34

      Regarding stimulus packages and the economy, where do you get the best gas deals

      Like

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