22 July, 2008
Former economic czar Tun Daim Zainuddin has suggested that Prime Minister Datuk Seri Abdullah Ahmad Badawi put together contingency plans to better manage the economy which is headed for tougher times and to prepare Malaysians for the worst.
Describing the current mood as bearish, he alluded to the lack of strong leadership and clear policies which he said was confusing to Malaysians as well as foreign investors.
“At present, there is a perception that the government is weak and politically not stable, and people lack confidence in it. ... They want to see where the government is heading,” he said.
Daim's views on the current economic situation was sought by Malaysian Business, his answers in the July 16 issue indicating that the man credited with the country's rapid growth in the 1990s is on the same page as his former boss Tun Dr Mahathir Mohamad when it comes to Abdullah's political and economic performance to date.
Stating that he was not here to advise the government, he stressed that he was concerned the government “should not be too obsessed with the deficit” — currently around 3.2 per cent of gross domestic product — “as there must be growth too”.
Because of its concerns over the deficit, Abdullah's administration shelved a number of planned projects in 2004 when he took over the leadership from Dr Mahathir, incurring the wrath of the latter. One such project was the electrified double tracking train project. It was estimated to cost RM12 billion to build from Johor Baru to Padang Besar in 2003. Revived late last year, the cost has ballooned to RM14.5 billion — and is only for the portion from Ipoh to Padang Besar.
Daim, who holds substantial interest in the ICB Banking Group, observed that reviving these projects would be costlier now because of the increase in construction costs, a point that the federal government acknowledged recently when it allocated an additional RM20 billion for the 9th Malaysia Plan to deal with higher building expenses.
The two-time finance minister and former ally of Dr Mahathir before they fell out in 2001, was also of the view that the ringgit peg had been lifted too early — even though it was seven years later in 2005, and in response to China's scrapping of its fixed peg. “I think we rushed to remove the peg. Retaining the peg gives us flexibility,” he commented, but agreed that a strong ringgit would not harm the economy. “We just need to be efficient.”
Foreign investors were put off by the present political environment, and corruption, the judicial crisis, security and political stability had to be addressed, he said. “The government claims it is transparent and accountable but policies must be clear and unambiguous. No flip-flops. Be consistent.”
Alluding to the current administration's lack of options to deal with soaring inflation and the current economic problems, Daim, who headed the National Economic Action Council during the Asian financial crisis and was tasked with getting the country back on track, asked what the government planned to do if oil hits US$200 per barrel as predicted.
“Subsidy is out of the question. Any alternatives? The government has to think ahead and plan for the future.”
The embattled Abdullah, who recently announced a transition plan to hand over the premiership to his deputy, Datuk Seri Najib Razak, in June 2010 following the ruling Barisan Nasional's worst showing at the polls in March, has found no shortage of criticism or advice.
His harshest critic has been Dr Mahathir who yesterday, writing in his blog, suggested that the government “should really look at the whole economy” and seek ways to reduce the extra burden on the people caused by higher oil prices, “not piecemeal but in a comprehensive way”.
With his trademark sarcasm, he concluded: “Sorry, I know I am not in the government, not even in Umno.” — Singapore BT/The Malaysian Insider
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