Najib's Uphill Task

Najib's Uphill Task

27 Sept, 2008

As the prime minister in waiting, Datuk Seri Najib Tun Razak will have to be very careful and prudent in taking over the finance portfolio. He has so far not made any new announcement, but there is at least one thing he must review: the country's economic policies.

Our economic policies have been excessively conservative. We have been over-reliant on the exports of petroleum, palm oil and electronics without any new growth focus, which has resulted in the country's sluggish economy.

Racial quotas, meanwhile, have accelerated the outflow of our top brains, and we need to retain our talents to innovate, stimulate our economy and enhance our competitiveness.

Najib took over the finance ministry at a time when the Wall Street was encountering serious financial crisis. This, coupled with the downtrend of petroleum and CPO prices, has remarkably slashed the treasury's revenue. It is indeed an uphill task for Najib to keep the budget deficit at bay in the face of increased expenses provided by next year's Budget.

In view of the current economic difficulty, the new finance minister must pay attention to the following:

- Be ready to brace a possible storm: The US financial crisis has caused a severe liquidity crunch, resulting in a series of corporate wind-ups. Malaysia must therefore be prepared for what might befall us, and strengthen our financial system.

The finance ministry must ensure that credits will not be tightened and sufficient funds are available to the market, lest small and medium-sized industries will fall victims to the crisis.

"These talents will help Malaysia explore new areas of growth and boost government revenues."

- Enhance economic activities: The bubbling of the US property market should serve as a lesson that we should put our resources into actual economic production. Gaudy but impractical economic plans will never bring actual economic elevation.

It is not necessary for the ministry to map out any bailout plans for the time being to revitalise the equity market. There is a limit to how much the market can fall, as the volume of local share circulation is not too large while a sizeable portion of shares are being held by government investment funds. The government should instead mobilise the resources to stimulate the national economy.

- Austerity drive and stimulus: After the Western economies have slipped into economic stagnation, the prospects of the Malaysian economic have now become clouded. The government must consequently fork out the essential funds to kickstart the economy and assist local businesses through the current difficulty.

The government must also adopt austerity drive to control expenses and inject more funds into the market to avoid the widening of deficits.

- Lure the top brains and explore new areas of growth: When other countries are racing to bag in the best talents, we must never sacrifice the quality of our education owing to political considerations.

These talents will also help the country explore new areas of growth and boost government revenues.

- Increase consumption power: When the whole world is experiencing an economic slowdown, it is no longer feasible for us to depend solely on our exports. We must have the support of domestic demands. As such, in the midst of escalating inflation, we must strive to improve Malaysians' buying power in a bid to expand domestic demands so that businesses can be kept afloat.

Najib must overcome the challenges above in order to establish his authority as Malaysia's future prime minister. He must put in place a capable team with a strong aptitude in adapting to the changes. (By LIM SUE GOAN/Translated by DOMINIC LOH/Sin Chew Daily)