Deputy Prime Minister Muhyiddin Yassin has mooted to the government to hand out more cash via the BR1M programme as low-income Malaysians are facing the brunt of global economic slowdown. Is giving out more cash the answer?
The last round the government had forked out almost RM3 billion in direct cash payouts. Did the payouts help the economy? If yes, the government would not have mooted a second one. Ironically, a large number of those who received the RM500 had used the cash aid to clear their household debts. History is bound to happen again and it is scary trying to imagine the seriousness of our household debt situation.
The government should consider longer term solutions such as helping to improve our domestic economic health and to help to stimulate jobs.
Instead of giving out more cash, the government should consider continuing with the New Economic Model reforms mooted by PM Najib when he first succeeded Abdullah Badawi. There's not much being heard about the economic model which proposes reforms of the New Economic Policy which was blamed as a major hindrance to economic growth.
Through the NEM, the administration had liberalised several sub-sectors which do not have significant Bumiputera participation. However, his reform pledges under the NEM came to an abrupt halt when the politics of race took firm hold of his administration.
Next, he should restructure the public sector mindset to become more competent and efficient in supporting the private sector. Government linked companies should be scaled down and allow free up competition in the economy. At the moment, it is very difficult for SMEs to flourish in the local economy which is being overwhelmingly controlled by GLCs and huge local conglomerates.
This is not a healthy trend. It other countries, the SMEs are important employers and often employ up to 60% of the total work force. The SME sector has been long neglected by the government. It clearly does not have good and effective policy and programmes to help these businesses.
There should be a review of the foreign labour policy. The difference between Singapore and Malaysia is stark and serious. The former is good at attracting high net worth individuals and employers but the latter is a hub for low skilled manual workers of over 2 million. Malaysia's over dependence on low cost labour is a huge contributor to its economic malaise and middle income trap.
A lot more can be done with the RM3 billion direct cash handouts. The government should use our limited financial resources wisely. BR1M should become a political tool. It should not be used to help the ruling regime to buy support at the coming GE.
It is time for the ruling to embark on history making and significant reforms instead of depending on populist policy to help them stay in government.