Over the weekend, I had the opportunity to attend 3 night functions and the topic for chit-chat at the dining table was on the 2nd stimulus package.
Generally, people are relieved that the government is aware of the need to take drastic action to prevent recession, which may arrive in the first half of this year. It is comforting to find out that the leadership is not in denial. It is a good sign that the government is taking steps in confronting the economic slowdown. However, the rakyat are generally concerned about the budget deficit and this may in a way destabilizes the Ringgit currency against foreign currency.
For the Chinese community, they are generally happy that the 2 stimulus packages has special allocations for Chinese schools and this shows that the government has discarded the practice of giving allocations only during election to Chinese schools.
The double levy imposed on foreign workers has not gone down well with the industries, especially the service sector. It is hoped that the service sector which faces double levy should be implemented on new foreign workers rather than existing foreign workers who may be renewing their visa soon. This will reduce the financial burden of the service sector and at the same time be a deferent to engage new foreign workers.
Generally, people are not excited about the RM5000 discount on purchase of Proton and Perodua cars. With Puspakom having to certify the cars before the trade in and it must be 10 years old, it will not be a booster to automotive sector.
There is generally disappointment that there is no reduction in personal income tax or corporate tax. However, one must not forget that with these 2 stimulus packages, the federal government deficit will increase from 4.8% to 7.8% this year. This will lead to a fall of our credit rating at the international level.
The government needs to continue to make our Malaysia economy more competitive. As the service sector is identified as the next engine of growth, the liberalization of the economy is important if we want to invite more Foreign Direct Investment (FDI). A lot of condition laid by the Foreign Investment Committee (FIC) needs to be revamped.
There should be a total review of the quota system of the Bumiputra. Competition for FDI will be intense among developing countries and if we are still talking about quota, then we may be left out as the preferred destination for FDI.