An enormous package that exceeds the expectations of most people – two weeks before the Umno general assembly.
RM60 billion of our money! And guess what? RM29 billion of this is slated for “assisting the private sector”. The “boys” will be licking their lips and rubbing their hands in anticipation. (I can just picture it – stimulated by the stimulus package!)
First off, the obvious question: where is this money coming from? “Domestic sources,” says Najib, cryptically. Apparently, there’s “ample liquidity” in the system.
And secondly, what mysteries lie hidden behind the RM60 billion? Let’s keep it simple. The RM60 billion package comprises:
- 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
The RM60 billion will be spent under four key “thrusts”;
- Reducing unemployment/increasing employment (bloating up the civil service?): RM2 billion
- Easing burden of rakyat: RM10 billion (including RM8.4 billion projects under the Ninth Malaysia Plan to be accelerated). The government will also borrow RM5 billion from the rakyat by issuing “savings bonds”;
- Assisting private sector: RM29 billion (RM5 billion for SME Working Capital, RM5 billion for Industry Restructuring Fund and the rest?)
- Building capacity for future: RM19 billion (Khazanah investment funds to be increased by RM10 billion, RM3 billion of which will go to telecommunications and RM1.7 billion for the Iskandar region in Johor. Taking up the slack of foreign investors?)
There’s also going to be an increased government subsidy for Proton and Perodua. The government will part finance RM5,000 discounts given by the national car-makers to those who replace their old cars (more than 10 years) with new Protons and Peroduas. (An earlier announcement said the discount was only for those with cars older than 15 years. Car sales down, huh folks? Very generous of the government to use our money to help Proton/Perodua. Why not invest this public money in public transport?
And GDP forecast for 2009 in the range of -1.0 per cent to 1.0 per cent? Come on, get real! Singapore is already spiralling downwards. Does Najib seriously think we can get even -1.0 per cent (forget about growth of 1.0 per cent)? What happened to his earlier forecast of 3.5 per cent growth for 2009? Is he going to come up with yet another lower revised forecast a few months down the road?
Najib is still thinking it’s going to be a U-shape global recession when in reality, there is a growing risk of a prolonged L-shape global Depression.