As the traditional budget presentation on the last Friday of October, i.e. 26th October 2001, was being altered as Mahathir would be overseas for the Asia-Pacific Economic Co-operation (APEC) Summit, it would have been more prudent to delay the budget presentation by two weeks till November 2 instead of bringing it forward by a week yesterday so as to give more time for the government to revise it after getting a better gauge of the impact of the September 11 terrorist attacks in New York and Washington and the US airstrikes in Afghanistan on the Malaysian economy.
Such a two-week deferment in the presentation of the 2002 Budget would have been more sensible especially as the government had announced a post-September 11 and second RM4.3 billion economic stimulus on Sept. 25, so that the government could take advantage of the extra two weeks to revise its figures and forecasts to update the 2002 budget as they had been compiled largely before the terrorist attacks.
In his budget presentation yesterday, Mahathir said that the GDP growth for 2001 which had been revised from 7 per cent to between 5 to 6 per cent in March 2001, has been further revised downwards to between 1 to 2 per cent.
But this third government forecast for the GDP growth this year to 1 to 2 per cent had been made before the September 11 attacks, and was in fact announced by Mahathir when he introduced the RM4.3 billion economic stimulus package on September 25.
Everybody knows that the economic slowdown was already there and September 11 exacerbated it. What the 2002 Budget should have given are the government’s forecasts for the GDP growth this year and next year taking into account the economic impact of the September 11 terrorist attacks on trade, employment, capacity building, investments, business decisions and costs.
Many figures in the 2002 Budget are outdated. For instance, the
Economic Report 2001/2002 which Mahathir presented to Parliament together
with his budget speech, provided the following forecasts for the 2002
GDP growth for “advanced countries” (p.48):
United States 2.2%
Japan 0.2%
United Kingdom 2.4%
Germany 1.8%
France 2.1%
Italy 2.0%
The Organisation for Economic Co-operation and Development (OECD),
however, has slashed its 2002 growth outlook for major world economies,
more than halving its earlier projections for the United States, Japan
and Germany in the aftermath of the Sept. 11 terrorist attacks, as follows:
United States 1.3%
Japan -0.8%
United Kingdom 1.6%
Germany 1.5%
France 1.6%
Italy 1.2%
Is the government prepared to present a revised forecast of our
GDP growth this year and next year after taking into consideration the
economic aftermath of the September 11 terrorist attacks during the winding-up
of the policy debate on the 2002 Budget in the first week of November,
especially as private economists had already forecast Malaysia slipping
into recession and negative growth this year even before September 11?
Another example of the lack of nimbleness and dexterity in government management to cope with fast-paced macro-economic changes and developments is the inability to fully utilise the first RM3 billion economic stimulus package announced in March.
As Mahathir said in his budget speech yesterday, the fiscal stimulus package will not have its intended impact of generating higher growth if the programmes and projects under the package are not implemented immediately.
It is a blot on government efficiency, accountability and transparency that the 2002 budget did not give a progress report on the implementation of the first RM3 billion economic stimulus package - as the RM3 billion projects are meant to be spent in the remaining nine months by the end of this year and not in 2002 or 2003.
As at the end of August, or after five out of the nine-month span, only RM200 million of the RM3 billion fiscal stimulus package had been released, i.e. an implementation capacity of only 6.6 per cent which cannot be very stimulating!
Has the government the implementation capacity to fully utilise not only the first RM3 billion economic stimulus package announced in March but also the second RM4.3 billion economic stimulus package announced last month?
But the biggest disappointment and which throws the greatest doubt about the government’s capability to navigate Malaysia through the new global challenges is the budget’s total failure to refer to the much-touted K-economy master plan for Malaysia to make the transition from a P-economy (production-economy) to a K-economy (knowledge-economy).
Mahathir himself had announced in February last year that the K-Economy Master Plan would be the "Strategic Initiative One" to reinvent Malaysian society to grasp the opportunities of the Information Age, that it would be "for the entire nation and for every citizen" and would not be drafted by the best brains behind closed doors because it must be relevant to Malaysians and become a personal master plan for all.
He promised that the formulation of the K-economy Master Plan would
"not be an elitist process but one involving everyone from the teacher
to his pupil, to his fisherman father, to the mechanic, to the secretary,
janitor and the chairman of the board" and that there would be a 18-month
“process of national consultation, brainstorming, drafting and national
mobilisation” for the K-economy Master
Plan.
It was only by reading the Economic Report 2001/2002 that one stumbles on the mention that the K-economy Master Plan was “recently completed” and that it is “holistic in approach and outlines the key strategies to transform the economy to be highly competitive and resilient”.
The Economic Report said the K-economy Master Plan comprised seven strategic thrusts, comprising 155 recommendations, to expedite the development towards the K-based economy.
Why has the K-economy Master Plan and its 155 recommendations not been made public and why was the Prime Minister’s promise of a 18-month “process of national consultation, brainstorming, drafting and national mobilisation" to formulate it not been honoured?
It would appear that the government is quite ashamed of the K-economy Master Plan, not meriting a mention let alone highlight in Mahathir’s two-hour 2002 Budget speech, but has to be hidden away in the Economic Report.
Can Mahathir explain why?
(20/10/2001)