Thursday, March 12, 2009

The Anticipated 2nd Stimulus Package/ 第二刺激经济配套

The much-anticipated 2nd stimulus package or mini budget was finally unveiled by the Deputy Prime Minister who is also the Finance Minister I.

I am surprised that the amount RM60billion over 2 years was much higher than anticipated. This is a good sign that the government is not in state of denial and Malaysia, like any country in the world will not be spared from the economic tsunami originating from America.

It is good that the government has readjusted the GDP growth this year from a predicted 3.5% when presenting the 1st stimulus package to 1 to -1% of GDP growth this year. The 2nd stimulus package is about 9% of GDP growth over 2 years. This will be financed from the domestic financial system. That will not burden the government with foreign debts, which may have an impact to the actual cause of borrowing because of currency fluctuation.

If we take into account that the yearly budget under RM9 is RM40 billion, the additional RM30 billion would mean a RM70 billion budget for 1 year. However, the actual government spending under the 2nd stimulus package is only RM15 billion since the rest is in the form of government guaranteed bank loan.

With the private sector reducing their investment and spending, the government needs to balance the economy through direct spending to prevent a steep downturn.

If the 1st and 2nd stimulus package can reach its target, we will be spared a severe economy contraction as experienced by other countries

It is good that the 1st thrust of the stimulus package is to reduce unemployment and increase employment opportunities. RM700 million is allocated to create 163, 000 job opportunities in public and private sector. The double levy imposed on foreign workers except from plantation, construction and domestic sectors hopefully will reduce the number of foreign workers.

The service sector will feel the pinch since doubling the levy for foreign workers means that the new levy is RM3600 per year per worker.

Reducing the cost in doing business is crucial with turnover down and a margin squeeze. Hence, a lot of people are disappointed that there are no reduction in corporate tax. However, incentives are still given to business which is up to a maximum RM100, 000 for loses incurred this year to be offset against last year’s tax period. For example, if you make a lost of RM200, 000 this year and made a profit of RM300, 000 last year, you are able to claim RM100, 000 loses last year.

Besides that, the double tax reduction on worker’s salary for companies that employ retrenched workers is a welcome move by the private sector. However, the salary should not be more than RM10, 000 a month.

There is also reduction in certain sectors and levy to the human resources fund. The working capital guarantee scheme would help SMI to obtain loans from the financial institutions.

To reduce the burden of the common rakyat of the financial burden, the RM674 million in subsidy to avoid increase in price of bread, rice and wheat and no increase in toll rate will be welcomed by most consumers. House buyers will be given tax relief for interest up to RM10, 000 per year for three years and hopefully this will provide a booster for housing developers.

A lot of industries are disappointed that there is no reduction in electricity tariff and the price for industrial gas remain high.

During an economic downturn, many graduates may opt for post-graduate studies since a total of 500 phd and 10, 000 Masters degree are offered in local universities. Tuition fees and research grants will be given. It is hoped that students will take up these offers rather than be unemployed.

The government becomes more generous to Chinese, Tamil and Mission schools. I am glad to note that the government has allocated RM300million to the Chinese, Tamil and Mission schools. This is in addition to RMM200million announced in the 1st stimulus package. This is important to show that the government does not give goodies only during election and the government must demonstrate its commitment in education regardless of race and religion.

I am glad to note that all government procurement will be held through open tender. The concept of design and build will not be allowed except highly technical development. This will make construction projects more transparent and people will get project without any political connection and patronage.

To ensure that there is no cost overrun, the government should beef up its standard and cost committee so that all costs of any government projects would be subjected to scrutiny.

However, the committee needs to be staffed by people who are technically competent and that they are there as facilitators for private sector development and not to frustrate private sector.

All in all, it was a good 2nd stimulus package. No stimulus package will satisfy everybody. It is heartening to note that the government is not in denial and is aware if steps are not taken, this impending slowdown may be a long one. To achieve its target, implementation should not be delayed and this may require constant monitoring by various agencies.


















jotan said...

I can see you were extremely caution in making the comments, then why bother ?
Where is the benefits for the street people ? So how can it be good ?

Chee Yong said...

Wow its such an achievement. Aft more than 51 yrs of independence, BN finally doing open tender.Guan Eng took over Penang less than a year had already started open tender. What took BN so long? Whats the benefit of close tender, I wonder. What a load of crap from BN.Plus I dont see the stimulus package money goes directly to the people like in Taiwan and Singapore.

BN is making me sick and upset that I pray everyday it loses the mandate to govern the country in next GE.

Unknown said...

Great News!! But then, talking is one thing, putting food on poor man's table is another.
We all know much of these so called projects, grants or loans be given to some priviledged people. By the time these projects are implemented, it be 2 or 3 years down the road for actual realisation of the benefits. What are we going to eat for the time being?
How many of us (non Bumis)really can get loans from those Government linked banks? How many of us are registered with Ministry of Finance to get those short term projects like link ways and bus stops?

Personally, I think one of the way to get our economy moving is to get tourists. We have a cheap Ringgit now.
We can have better taxis (they are the best people to impress our tourists). We got to get those tourist spots cleaned up. Some money can be distributed to do up the tourist spots. When tourist come, we have better business in hawker centres, shopping, hotels and even airways.

Mike said...

This is a crap budget.

There are so many hidden codes and agenda (if, but kind of things).

Does it help the average working Malaysia?. The answer is a BIG NO. NO.

Does it help the surviving SMI? Again the answer is another BIG NO. NO.

So whom does it actually help, your guess is as good as mine.

When we already have excess of graduates who cannot speak nor write properly & get a decent job, how smart is it ask more of them to pursue PhD or Master & get rebate of 10-20k?

When people already cannot cope with day to day living, how smart it is to ask them to trade in old proton for Rm 5000? ! or buy another home for tax rebate of 10k?

Just look at the market response for the last two days & you can pretty much see how people fell about this budget. Go any web site survey more than 80% of the people surveyed don’t think this budget is helpful or of any significant use at all. Only those blinded or crony will speak otherwise.

Again this government is hopelessly loss in knowing what the people of Malaysia actually need and wanted! And you pretty much can figure the outcome in the next by election or any election at all.

NEIL said...

Dr, It's just window dressing and I can tell you that nothing will happen after the announcement.Where is the money?If this announcement have any impact,then the stocks will not have gone into tail spin.

Pearls said...

Talk! Talk! Talk! Talk....

In reality, how much of this RM60 billion is going to come right down to the people like me?? Frankly, I dont think it would. Nothing will change.. the prices of food, transportation, medical care, housing and clothing are going to remain just as high. So, what benefits are we talking about?!

笑看风云 said...

2 nd. stimulus

i suppose stimulus is suppose to be focus on immediate need.

i say 30b in i year.

if i am the prime minister

1) cut interest rate for proton ecomonic car, expensive car get lower rate rate.

2) free up monopoly on import and export if any

3)nationalise N-s highway own petronus . efp and the malaysian people , sell the whole company asset, land except the high way.outsource to be manage by company. on term and condition.very transparent, efficient and profitable.

4) freeze "national services" for student.

5)transform proton into assembly plant.

6) cancel windfall tax on palm oil provide incentive to plantation who got better oil extraction, plantation yield.and direct export.

7) privatise on open tender for KTM
(open tenderto sell the ideal land in singaporeand malaysia)
high speed, high pay load, green energy.

8) open tender for all governmnet, GLC purchase, project off couse still maintance bumi and non bumi status.

9) open tender for all who want to apply AP.or fix a rate anyone can apply

10) collect all federal govermnent arear loan. --- transfer asset sell land building ,company.
make it clear no suplus no BONUS NO Increment.

11) complete bakun job, cancel submarine cable.

12) cancel space project , if still going.-- message to people we are 'realistic'
13) revise whole country "abandon" project, housing, or other-- by private sector, bank, goverment on open tender
14) free up all subsize on diesel-- sell market price. --- set up a account and anounce the saving and where to used it.

15)increase " malay reserve " land value

16)cancel holding period for " bumi house" for at least 5 year or forever

17) increase transport system paid load.

18) overhaual insurance rate and cover rate -- eg. insured car, life, property --- seperate.go afer the hospital or doctor charging extra, indirectly cause the premium to increase.

19)strick rule for money lender act
20) increase taxable braket for people , allowance for wife,child
21) stick control of credit card,
22) reconize world class university (academic and politic seperate)--

23)citizen ship for foreign wife, husband at least a PR and work permit automatic. someone" propose" ? deposit $$ in mlaysia you get PR.,it is unfair if it is true.

24) a special collage/ university
for airplane only for
repair and maintaince we can beat singaopre and hong kong.

26)cancel all future pension scheme
fix a date say from 2010.
look at the usa and europ social benifict ,union is kill the country.

27) cut short legal court case time .--- 2 time postphone the lawer must be blacklist can't apper in court for i year and have to pay penalty to customer.i don't know about judge?

28)go after all those did not pay the education loan,make them (in LEGAL LAW)to pay by monthly reduction from salary. and those joker did not come back to malaysia and refuse pay
sue them by all means they are killing the next generation chance of education.

so much more ----

Pearls said...

Ish!!! Forgot to add...

I think the only people stimulated by this Stimulus package delivered by the very stimulating PM in waiting are...

Kawan-Kawan, Kunchu-Kunchus,sanak-saudara mara, bermacam adiks dan abangs, isteri(s), perempuan simpanan(s), gundik(s) dan sebagainya! Yess.. that's about right.

So, the story is this, we the unknown will have to continue to work our butts off, if we still have a job to work on, if not, we will have to find our own means of survivial and YET support and contribute to this RM60billion stimulus package.

YAH WHAT!!?? Where is the country going to find so much money to vormit out!? Didnt our PM in waiting say it is from internal source? Besides EPF and Petronas, what other internal source do we have that is like a cash cow besides us, human who has a MYKAD?

My EPF better be there when I am ready to take it, if not...

Mike said...

Incidentally what happen to our EPF. They normally announce dividend payment way back in February. Now is coming to April, still no news on 2008 dividend payment.

Another thing, if the government is really facing with fiscal constraints, why are we still proceeding with this nonsense National Service program. I personnel don’t see much accomplishment except food poisoning, fighting in camp and even mysterious death case of innocent students reported every now and then.

I said for once please scarp this nonsense national service and save us tax payer billion of hard earn money and innocent life too

stingray said...

Najib is just cooking the second stimulus plan.I bet he haven't had a clue about where the economy is heading.He never strike when the iron is hot.This stimulus plan is too late.The problem have long been rooted and Najib is just window dressing.
I don't believe a word Najib says becos I don't have faith he will take our country to new heights.I have my sixth sense telling me that Najib will take our country into shit.Just look at the way he handle Altantuya case,Razak Baginda unconditional release,Perak issue,corruption in umno,political situation in malaysia,the suppression of the opposition,the treatment of Hindraf and the Indians,the illegal taking of the submarine commission,the maybank issue etc.This is just the tip of the iceberg.As you all can clearly remember what Racist Mahathir have said about chosing Abdullah Badawi instead of Najib to be PM.He is just not fit to be our PM.

Food so delicious! said...


Didnt you heard that EPF dividend for 2008 is rumoured to be...jjjj (stands for Jang! jang! jang! jang!).. READY!? 4.5%

FOUR Freaking point FIVE percent!! I am so freaking mad about this if it is true!! EPF should be able to give us better dividend!!

Don't even think of saying about the economy and what have you ah!! Don't even go that path!! EPF got money to loan to some loser like Valuecap but got no money to pay us, the contributors, better dividend!? Who's decision is it to pay what dividend or who gets a loan from EPF??

Mike said...






马来友人说:马来人对政治局势的发展非常关心,他们正对“RAHMAN”这个字作各种预测和解读。它的前面五个字母已完全应验了,顺序代表着我国五位首相名字的第一个字母。最后一个字母“N ”代表候任首相“Najib ”(纳吉)的名字。过了三月,这个预言完全成为真实。



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