Agenda Daily


The ruling coalition's backdoor recapture of Perak, while showing up the weaknesses of the Opposition, doesn't augur well for it, especially at a time when it is facing two by-elections. Reason: It risks facing a voter backlash and even more losses in the next general election.


THE US LOOKS SET TO IMPLEMENT ITS US$ 827-billion economic stimulus package, which, if President Barack Obama has his way, could rise to US$ i trillion or more.

Our southern neighbour Singapore has just launched a similar exercise worth US$ 13.63 billion by dipping into its reserves.

Australia this month launched an A$42-billion (US$ 26 billion) stimulus package and slashed interest rates to a 45-year low.

Prime Minister Kevin Rudd said the massive stimulus package was aimed at nation building and supporting up to 90,000 jobs `in the face of the unfolding national and international economic emergency'.

German Chancellor Angela Merkel this month announced a €50-billion (US$ 64.5 billion) stimulus package, the biggest of its kind since World War II.

Some €17-€18 billion will be spent on infrastructure investments for education and highways, and tax cuts for firms and individuals.

European Union (EU) leaders in December agreed on a €200-billion (US$ 264-billion) fiscal stimulus package.

The World Bank in its latest forecast warned that the financial crisis threatens to shrink emerging markets' access to trade and investment, saying that each i% drop in growth could trap another 20 million in poverty.

`Governments must keep their commitment to increase aid to the most vulnerable people,' it said.

The World Bank is calling on developed countries to pledge 0.7% of their stimulus packages to a special vulnerability fund to assist developing countries that cannot afford bailouts and are facing serious budget deficits.

The fund's three priorities would be for the purposes of establishing safety nets for the world's poorest and to finance small and medium-scale enterprises and for micro finance institutions.

Last November, the Malaysian Government announced a US$ 1.94-billion (RM7 billion) stimulus package and a second, according to Deputy Prime Minister and Minister of Finance Datuk Seri Mohd Najib Abdul Razak, is in the offing.

When compared to the Singapore package, our package so far is small. Granted that our bankingsystem is fundamentally strong and in no immediate need of assistance, the general economy, however, is beginning to show signs of weakness.

Unlike the 1997/98 crisis, which was regional in nature and affected only the currencies of the East Asian and Southeast Asian countries, the current crisis is systemic and affects the whole world.

Then, we had a stronger government and a lot less political issues to handle. The worry is the weaker government and the mounting political challenges it is facing may divert energy away from the bread-and-butter issues.

The just released survey results by the Merdeka Centre for Opinion Research found that voters in Peninsular Malaysia are concerned about the economy in addition to ethnic and governance-related issues.

Forty three per cent of the 1,018 respondents said they were concerned about the general economic situation, rising prices and unemployment.

When every ringgit counts

IT'S hard to predict the direction our economy is heading, although the general indications suggest that we must brace ourselves for a long-drawn recession.

Just days ago, the International Monetary Fund predicted that Asian economies will start to recover next year while other forecasts say the recession will continue until 2011.

From general observations and the outcome of the recent one-day conference organised by the National Chamber of Commerce and Industry Malaysia entitled Global Financial Crisis — Mapping the Blueprintfor Survival, chaired by former Prime Minister Tun Dr Mahathir Mohamad in Kuala Lumpur on Feb 4, the following points and observations can be made.

Unemployment is the most worrisome issue. There have been estimates that as many as 400,000 people have either been retrenched or are no longer employed full-time. It is feared that another 200,000 jobs are at risk.

If not effectively handled, this could spark off a chain reaction that will affect the whole spectrum of the economy. These estimates are frightening and could very well be true, given the fact that not every worker is registered and accounted for.

Official statistics do not capture casual workers and the self-employed who form a significant number of the workforce.

As such, it's critically important that the domestic economy is given a major boost in order to maintain private consumption, which is a key element in guaranteeing production and employment.

In the current weak economic situation, the government, understandably, has to increase its expenditure to offset the shortfall in private expenditure.

The conference was unanimous about the need for the government to launch the second economic stimulus package as soon as possible.

The former Bank Negara Deputy Governor, Tan Sri Lin See Yan, in summarising the

deliberations, said the package has to be large, purposeful and `impactful'. There are estimates that as much as RM3o billion might be needed.

Every ringgit spent must be closely monitored to ensure that it trickles down and reaches the ordinary consumers.

The conference attendees, who were made up of captains of industry, senior civil servants

and academicians, were not particularly sure about the impact of the first stimulus package.

They proposed that part of the allocation for the second stimulus package should be given directly to the poor and the needy like single mothers and those who take care of ageing parents or handicapped children.

Apart from inducing and `forcing' the banks to continue to lend, the participants suggested that the government should consider `taking over' their funds if they continued to show an unwillingness to lend.

Several participants noted that banks were becoming growingly reluctant to lend, noting that while loan applications have fallen, loan disbursements have declined at a faster rate.

The government can also increase liquidity and lower capital costs by releasing more money from such funds as the rubber and oil palm replanting funds, research, manpower training and higher education funds.

Pak Lah to stay on?

AS Finance Minister and anointed Prime Minister, Mohd Najib bears a very heavy responsibility. The hope rests with him.

If he's wise in seeking counsel and is not afraid to befriend people with proven expertise in the economy, then his chances of saving the economy are good.

He has to start by acknowledging the expertise of people like Dr Mahathir, Tun Daim Zainuddin, Tan Sri Thong Yaw Hong, Tan Sri Zeti Akhtar Aziz, Tengku Razaleigh Hamzah, Datuk Mustapa Mohamed, Tan Sri Lin See Yan and Tan Sri Ramon Navaratnam, to name a few.

For the stimulus package to produce the desired effects, it must be directed at the sectors and activities that are most productive and the ones that facilitate and encourage consumer spending.

What has made our otherwise strong economy unimpressive in recent years is the general lack of confidence in the system. Investors and consumers are not convinced of the policies and programmes of the government.

For Mohd Najib, there will be no honeymoon. He has to act fast and decisively to bring back public confidence in the management of the economy and in law and order.

From experience, I think a compact high-powered task force like the National Economic Action Council (NEAC) should be reintroduced, comprising key ministers, civil servants,

representatives of the private sector, the workers, think-tanks and non-governmental organisations.

But there's the additional fear that Mohd Najib's attention might be distracted by the ongoing political uncertainties in Perak and the wild talk that attempts are being made by certain quarters to lobby for Datuk Seri Abdullah Ahmad Badawi to stay on.

Coalition on a hot tin roof

THE development in Perak, where the Barisan Nasional (BN) has regained control following the defections of three Pakatan Rakyat representatives - two from Parti Keadilan Rakyat and one from the DAP — is both a boon and a bane for Mohd Najib.

The three Pakatan Rakyat assembly members left their parties but did not join any of the BN parties. They declared themselves independents and pledged support for the BN.

The BN was severely criticised and accused of offering the defectors monetary and other forms of inducements although nobody has come forward with credible proof.

The two PKR assemblymen — Jamaluddin Mohd Razdi (PKR-Behrang) and Mohd Osman Mohd Jailu (PKRChangkat Jering) — are facing corruption charges in court. The third defector is Hee Yit Foong (DAP-Jelapang).

It's not going to be plain sailing for the BN. With a majority of two — including the three defectors - the BN government is like the proverbial telor (egg) at the tip of the tanduk (horn). It can fall anytime.

Even forming a multi-racial executive council is impossible, given the fact that out of the 28 BN state assemblymen and women, only one, namely, Dr Mah Hang Soon (Chenderiang), is a non-Malay. The BN non-Malay parties were decimated in last year's general election.

But the choice of Datuk Dr Zambry Abdul Kadir as Menteri Besar was a saving grace. A former academician, he made his name as an active promoter of Information and Communications Technology in the state when he was an executive council member in the last BN government.

Of all the Pakatan Rakyat state governments, Perak was the shakiest and the most controversial, when the largest party, the DAP, was forced to play second fiddle to the smaller PKR and DAP due to the absence of a Muslim representative. The Perak Constitution requires the Menteri Besar to be a Muslim.

The DAP has 18 seats in the assembly against the PKR's seven and Pas' six. With the defections, PKR is down to five and the DAP, 17. But behind the scenes, the DAP yields the real power.

The Pakatan's woes may not end anytime soon. In the next 6o days, it will have to defend two seats in by-elections. One in Perak forced by the death of Pas' Member of Parliament for Bukit Gantang, Roslan Shaharum, and the other by the resignation of PKR's state assemblyman for Bukit Selambau in Kedah, V Arumugam.

To make matter's worse, a war of words has broken out that has pitched the DAP chairman and Bukit Gelugor MP, Karpal Singh, against his compatriots - Lim Kit Siang and Lim Guan Eng — and the Pakatan Rakyat de facto leader Datuk Seri Anwar Ibrahim.

Karpal has blamed Anwar for the collapse of the Perak Pakatan Rakyat government and has called for his replacement as the head of the informal alliance.

For the BN, the Bukit Gantang and Bukit Selambau by-elections promise to be what the names of the two places suggest — an uphill battle. Bukit in the Malay language means hill.

Having failed last August to recapture the Permatang Pauh parliamentary seat from PKR and losing the federal seat of Kuala Terengganu to Pas last month, the BN is hard-pressed to show some improvement.

Unfortunately, its backdoor recapture of Perak could be its undoing in the by-elections. The voters may show their protest by rejecting its candidates.

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