Second fiscal package timely to stimulate economy

THE monster that is the global financial paralysis is biting … and biting hard and deep.

For Malaysia, the stark reality in a sick world economy is that its earnings from the traditional exports of commodities such as oil, gas, palm oil, timber and timber-manufactured products as well as other goods produced in the country are being whittled away.

The national combined incomes from both the public and private sectors have suffered as a result – so much so that constant pro-active fiscal measures are necessary to cushion the impact and ride out the storm.

Hopefully, the slowing down in demand for our export goods, which has caused job cuts and layoffs in the sectors most severely affected, will not be a protracted one. How fast the situation will turn around will depend on how fast the global economy recovers.

And as market confidence continues to shrink, things will get worse before they get better. While this may sound trite, it is, nonetheless, the unpalatable truth that has to be faced in the scenario of an upended world economy.

Like all countries trying to get to grips with the global financial meltdown, Malaysia is not sitting back and waiting for the crisis to resolve itself but has rightly adopted a pro-active – rather than a reactionary – stance by taking measures that can help industry and business as well as the common people cope with the hard times ahead.

Bank Negara has reported that non-performing loans (NPL) have remained below three percent and that financial institutions have been asked to take pre-emptive measures to forestall potential disasters by helping borrowers in dire need.

It’s clear that manufacturing is one area than can do with such help and financial institutions will do companies producing goods for the domestic and export markets a great turn by keeping the credit line open, particularly for businesses with proven track records and promising potential to bounce back when the battered world economy eventually turns the corner.

By so doing, lending bodies will go a long way to help prevent further job losses and ensure that the number of Malaysians out of work is kept to the barest minimum.

The initial RM7 billion economic stimulus package has had a positive mitigating effect on the slowing economy and a second and welcomed package is due to be unveiled by Deputy Prime Minister and Finance Minister Datuk Seri Najib Tun Razak in Parliament on March 10, and widely believed to be in the form of a mini budget – in essence a variation of the 2009 Federal Budget.

While the manufacturing sector will stand to benefit from this timely mini budget, it is important to ensure that projects to be implemented are appropriate and growth-centred, and that funds are disbursed to areas which will have a positive impact on the economy and the well-being of the people both from the short and long term perspective. For after all, the budgetary allocations are intended not only to tackle the problems caused by the economic slump but also lay a stronger foundation for the future.

Even ahead of the introduction of the Second Economic Stimulus Package, Tenaga Nasional Bhd (TNB) has already announced, effective from March, a five per cent reduction in electricity tariff which will benefit industrial, commercial and domestic consumers.

Since power takes up a fair percentage of manufacturing costs, it is fitting to bring such costs down to a level that will help sustain especially the manufacturing sector. Sarawak should consider doing likewise in respect of the numerous requests from local manufacturers.

Electricity tariff is generally higher in Sarawak than Peninsular Malaysia and this has always been one of the moot points among both local and foreign investors and manufacturers albeit not without good reason, considering greater manufacturing activities in the state are already disadvantaged by higher logistical and transportation costs, making the connection to export markets more difficult.

The various suggestions put forth in recent months by manufacturers in the state could perhaps be weighed according to their merits so that action can be taken to help them increase production, given the fact that virtually every sector of the export industry in the country is affected, one way or another, by the downturn.

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