Malaysia: RM28 Billion Stimulus

The Prime Minister announced yesterday a RM28 billion stimulus package:

- RM20 billion to be invested in ValueCap to support undervalued shares
- RM4.5 billion for integrated development of hotel and theme park in Desaru Coast
- RM2 billion for a working capital guaranteed scheme for small and medium enterprises
- RM1.1 billion to enhance Muzium Negara, National Monument, Perdana Lake Gardens
- RM1 billion more to Domestic Investment Strategic Fund under 11MP
- RM80 million for health tourism promotion campaign in selected markets

- Asking international and local Malaysian companies to repatriate their profits and reinvest at home.
- Restructuring and rescheduling the loans of SMEs.
- Import duty exemption given to an additional 90 tariff lines including consumable spare parts and research apparatus used in manufacturing companies.

 1. If we take the view that a soaring stock market does not necessarily mean a bubbly real economy, whereas a sore stock market may indicate a sick economy, then we think that trying to boost the stock market is merely trying to produce a sign of well-being without taking a good look at the cause of the problem.

It is indeed exasperating that time and time again, the government tries to pander to the stock market all the time whenever there is a little sign of trouble.

I think we should tax the stock market, a specific transaction tax, first to discourage speculators and second to collect money for times like this when the government feels to urge to give a resemblance of helpfulness.

This attempt to shore up the stock market reflects very small and narrow economic thinking.

If we remove this RM20 billion stimulus, we are left with RM8 billion.

2. The next big chunk is a tourism development by Khazanah for RM4.5 billion. This is a one-off project. The RM1.1 billion refurbishment of tourism sites. This is the usual maintenance cost.

The depreciated ringgit is good for tourism and the thinking seems to be that it is good to encourage tourism. Does it imply that the ringgit to stay weak forever? You mean the government does not any idea of how to revive the economy or how to make the economy regain its vibrancy again?

Well, seriously, one small project does not an economy of RM330 billion make.

3. The rest are just sprinklings of stardusts all over the place to try to make the economy glitter.

If we take this to be the maiden outing of the Special Economic Committee, we may forgive it for being polite and demure. For the SEC to do any real good to the economy, as John Lennon's Aunty Mimi said to him on the release of the Beatles' first single "Love Me Do," "you've got to do better than this."