Updated at 3.30pm
Spoke to quite a few people about the stimulus package. Most of them are quite disappointed about the package . there was a high expectation that this would do something to prevent economy from going into contraction, but on the look of it, it might just fail to do that…
In order to tackle this economic downturn, I think we need to implement the following:
1. Cheaper access of funds.
Lower the spread of the interest rates.. To enable people to have cheaper access of funds. This will help those with loans, either business loans and housing loans. In this respect, the bank guarantee fund does come in handy, but the spread needs to be brought down.
2. Put money into people’s pockets.
a. Help for the poor and the needy.. This can include food stamp for the poor, the unemployed and the old, as well as the handicapped. I will elaborate on food stamp below.
b. direct cash handout to employers like the Job credit scheme being implemented in Singapore. In Singapore, employers are given a maximum of S$300 for each employee employed, meaning that the State is now paying partly for workers’ pay.
c. Tax cut. This will help the middle class which will be badly hit by economic downturn. Perhaps having a tax free year will help.
3. Stimulus spending on constructions , building of roads, schools and hospitals, technical colleges..
4. encourage private investments by having tax incentives (tax holidays for a few years) ; having a moratorium on the NEP to attract rich private businessmen to invest their money;
5. Set up training institution to train and retrain the retrenched workers for semi skilled and highly skilled jobs . Allowances should be given during the training years, to compensate for the loss of income. This will prepare the country for the ultimate upswing that will come when this recession is over..
Well, hopefully the government will take heed of the voices from the people and adjust this stimulus package to make it more effective…
Coming back to Food Stamp. What is food stamp?
Basically it is an account that is given to the poor to help them to buy food, the most important of the basic needs.
Each account holder will be given a card, like the credit card. This food stamp card can be used in most grocery stores and supermarkets to buy food. It cannot be used to buy other things , such as tobacco alcohol, toothpastes etc…You can use the card until the amount in the account runs out, and it is some sort of a debit card… When the amount in the account runs out, you have to wait till the next month for credit to go in, and you can start using it again. All debits and credits are done electronically , and every time you make a purchase, the receipt will show how much credit you still have in the account. It is a good way to help the poor and a good way to prevent misuse of funds… which will happen if the funds are given as cash directly to the poor.It makes sure that even the poor will not starve.
For how the program functions in the States, please go to this overview.
For the RM5000 incentive for those with cars more than 10 years old and buying Proton and Perodua cars, is this the beginning of the return of Mahathirism? Is this the return of big government? I hope not…..and i shall pray hard for this….
A reader from Australia, Taikohtai, has given a link in the comment section about how Australian government pays A$950 as cash handout to five groups of people. I will quote part of the article here:
Tax Bonus for Working Australians of up to $950 paid to every eligible Australian worker earning $100,000 or less. This will support up to 8.7 million individuals.
$950 Single Income Family Bonus to support 1.5 million families with one main income earner.
$950 Farmer’s Hardship Bonus paid to around 21,500 drought affected farmers and farm dependent small business owners receiving exceptional circumstances related income support.
$950 per child Back to School Bonus to support 2.8 million children from low- and middle-income families.
$950 Training and Learning Bonus paid to students and people outside of the workforce returning to study to help with the costs of education and training.