AUGUST 15 — The new Governor of Bank Negara Datuk Mohammad Ibrahim played it cool, in his smooth presentation of the second Quarter Bank Negara Report 2016!
He was understandably upbeat in trying to encourage confidence in Malaysia’s economic performance and outlook. However, he could also have stoutly alerted the Government to be more wary of the external headwinds as well as the internal threats to our economic growth and stability.
Actually our economic growth has been declining to 4.0 per cent this second quarter from 4.2 per cent in the 1st quarter and 5.7 per cent in the 1st quarter of 2015. It is more likely that our economy will slide further, unless the Government Budget spends or pump primes much more expenditure, to push economic growth? However, this may not be possible for the following reasons.
Triple deficits?
As we all know, there is a strong likelihood that we are heading towards a Triple Deficit economy to contend with is the current Budget deficit, the likely Balance of Payments current account deficit and the present Debt Limitations or Debt Deficit!
Hence there are three likely threats to the economy and it is hoped that Bank Negara will highlight how the Government should handle these possible threats of Triple Deficits, in its next report.
It should also advice Government to adopt important and urgent policy measures and to ensure more effective implementation that will further strengthen the economy to combat these likely triple deficits.
The threats that government and bank negara must address?
1. Inflation is a major problem and has not been adequately dealt with. Food constitutes a sizeable part in calculating the rising Cost of Living. Have we got an Anti Inflationary Plan, to counter rising prices, particularly in our Basic Needs of especially Food, Transport and Housing. If so, please let the people know the specific targets and then publicise the achievements. The people will then be consoled that these vital issues are not being played down or worse still, swept under the carpet.
3. The Triple Deficits in the Budget, possibly in the Balance of Payments Current Account and the Debt deficit as well, can be tackled more effectively, if our economy is made more competitive!
However, our policies continue to be governed by the old NEP policies of preference for Government agencies like the GLCs. There is still public sector predominance in the alienation of land for vital agriculture and food production , expanding business and investment and in the award of big infrastructure contracts.
Thus the private sector, both local and foreign feel constrained in its participation and contributions to economic growth, employment and rising incomes.
Thus the natural and national drive to improve the well being of the Rakyat can be badly inhibited. The rich are thus getting richer and the poor are becoming relatively poorer. What plans have we got to narrow the gaps soon enough? Will Budget 2017 introduce measures to narrow the income gaps ?
4. The Triple Threats or Deficits in the Budget, Balance of Payments and the National Debt, can cause the economy to decline as Tun Musa Hitam has courageously claimed — for other significant reasons as well! We cannot therefore afford to play it cool, when the socio-economic and political problems are seriously heating up! We cannot ignore the fact that the socio economic, religious, racial and political problems, are all inter-related and can hold back our national development and progress. We cannot wait for a so called Tipping Point. We have to anticipate problems and move faster to counter rising problems!
5. Given our short term constrains to effectively manage our likely Triple Deficits, we have to show greater priority in the doable Policies in the short term. They should be, to drastically cut down corruption, cronyism and Government Expenditure Wastage as indicted by the Auditor General’s constant annual reminders!
But are we acting fast and efficiently enough to solve these long standing and festering issues? Many seriously doubt it. In the meantime the economy and especially the poor Malaysians continue to suffer most!
Conclusion
Given the domestic and external headwinds and threats to our national growth , our further development and our progress, we have to recognise the need for a sense of urgency, to adopt new policies and techniques to promote greater national resilience. We cannot take it easy or cool and take the future progress for granted.
With the National Elections looming large on the horizon, and likelihood of it being held sooner rather than later, even as early as next year, since the international and domestic uncertainties are steadily growing larger, we cannot afford to be cool, lest we become too complacent! Tougher policy decisions by Government and Bank Negara have to be taken soon, to counter the national threats, facing the economy, some of which are mentioned above.
If we play it too cool we can face a rising pool of deeper problems and experience more decline. Then it may too late to arrest the possible slide into hot soup!
Hence we have to be hot in pursuit to solve our problems or fail in our collective mission to protect and sustain the success of our country’s future! Let’s all be much more alert and rise to better serve our beloved country, with greater integrity, truth, righteous and justice for all! — Bernama
* Tan Sri Ramon Navaratnam is the Chairman of Asli Centre of Public Policy Studies, the corporate adviser to the Sunway Group and the former Secretary-General of the Ministry of Transport.
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail Online.
