(Petaling Jaya, Saturday): DAP commends Anwar for his emergency financial package as a step in the right direction, but it is not comprehensive enough to fully restore confidence and it should have been announced as a second budget in Parliament at the end of October when it was clear that the 1998 Budget had failed to restore confidence
I had in fact proposed on October 30 in a speech during the Sungai Bakap by-election in Penang that Anwar present a second 1998 Budget in Parliament on November 5 during his winding-up of the budget debate, as the 1998 Budget presented by Anwar on Oct. 17 had failed to address the fundamental issue of restoring confidence in the Malaysian economy or to check twin currency and stock market crisis, as both the Malaysian stock market and ringgit have embarked on a sharp decline ever since the budget presentation.
If Anwar had heeded the DAP advice in early November, confidence in the government’s stewardship of the national economy in the face of the economic crisis would not have plummeted to such a depth, with the markets sending the ringgit down to a new low of 3.865 against the US dollar yesterday against 3.17 a day before the 1998 budget on Oct. 16, while the KLSE Composite Index had plumbed to 512 as compared to 802.02 just before Anwar stood up in Parliament to present his budget.
Anwar’s emergency financial package yesterday had been better received than his 1998 Budget on Oct. 17, as while both the currency and stock markets reacted negatively to the 1998 budget, Anwar’s 4 p.m. media conference announcement yesterday checked the unprecedented decline of the ringgit to 3.865 against the US dollar and strengthened to 3.7000.
The Kuala Lumpur Stock Exchange's benchmark index finished with a late rally triggered by Anwar's announcement and closed up 31.51 points, or 5.47 percent, at 607.40, the first time it closed above 600 points since 19th November. Before Anwar announced the measures, the index had been at about 572 points.
Although the markets have given their "thumbs up" with their positive response to Anwar’s emergency financial package, the measures proposed are still not comprehensive enough to fully restore confidence, which is most crucial and critical in any government strategy to put the Malaysian economy back on the track of recovery and revival.
When I called for a second budget on Oct. 30, I had made six proposals to be included in the second budget. So far, only one of the six proposals had been addressed, and that was more because of the Sungai Bakap by-election on Nov. 7, while the remaining five proposals still wait action.
The six proposals for incorporation in a second budget which I had suggested on Oct. 30 were:
As Parliament is still in session and is in fact still debating the 1998 Budget, as Monday would be the last day for the passage of the 1998 budget, the right and proper thing for Anwar to do would have been to present the emergency financial package in Parliament for debate and adoption. Otherwise, he would be showing disrespect and even contempt for Parliament.
I can understand that the emergency of the crisis yesterday with the ringgit plunging into a bottomless pit might have made the 4 p.m. media conference unavoidable, although some of the measures announced yesterday should have been announced very much earlier.
Anwar should build on the emergency financial package yesterday and present a second budget to Parliament before its current meeting is adjourned. Parliament should be extended by another two weeks if necessary, to debate the need for an emergency second set of budgetary proposals to supplement the 1998 budget (as well as the proposed National Economic Action Council) but also to allow MPs to do justice to the 13 government bills which await passage in the current meeting.
Briefly, let me comment on Anwar’s emergency financial package which he announced yesterday.
DAP welcomes Anwar’s admission that the growth projection of the economy for next year is now 4%-5%, as compared to 7% in his 1998 Budget speech on Oct. 17. The government attitude of "growth-at-any-price" is completely unsustainable and the country must focus on sustainable development instead. The worrying part is whether the government would have to further reduce such a growth projection as suggested by some financial analysts and economists if the government is unable to fully restore confidence among investors, both national and international.
I am glad to see that my criticism of the 1998 budget had been taken into acccount with the announcement of a further cutback in Federal Government expenditure by at least 18% in 1998, beginning with an immediate 10% cutback across the board of both operating and development expenditure and 8% on a more selective basis, This is part of the new target to reduce the current accounts deficit to 3% of the GNP next year.
The government, however, has still to convey its seriousness that it is everyone who must be involved in the austerity campaign and not just the public at large, and this is why the RM5 million renovation of the Selangor Mentri Besar’s residence has sent such a wrong signal nation-wide!
This was also why the Prime Minister’s announcement on Thursday that the government is proceeding with the RM10 billion land bridge project linking northern peninsula and southern Thailand had created such a new crisis of confidence and why Anwar’s announcement that the land bridge project would be deferred had caused a quick rebound in the currency and stock markets. The country, however, cannot afford any more such flip-flops in government policies.
Anwar’s announcement that there would be no government bail-outs is most welcome although it has still to be seen whether the government would have the political will to ensure that there would be no catastrophes like the recent UEM-Renong deal.
Anwar’s statement yesterday is in fact the first public acknowledgement by the government that Malaysia is facing an economic crisis. It should not have taken the government five months to acknowledge such a crisis - but it is at least better late than never.