February 25, 2010
Malaysian Economy – The worst is yet to come
— PRESS STATEMENT FOR IMMEDIATE RELEASE —
The latest declaration by the Prime Minister that “the worst is over” when the country’s GDP grew at 4.5% in the last quarter of 2009 is not only premature but irresponsible.
It is clear that the supposedly stronger growth was due to the massive pump priming by the government over the last year. Propping up the sagging economy is at best a stop gap measure. Pump priming by definition cannot be permanent. I am deeply concerned that the continuous reliance on massive spending will take us down the road to economic serfdom. And that may not be too distant in the future.
Since 1998, the Barisan Nasional government has implemented only one economic policy i.e. increasing public expenditure (most of the time unnecessarily through massive projects that were subjected to leakages and inflated costs) to make up for the dramatic decrease in private spending.
The data on private investment trending since 1991 should serve as a reminder of the path to economic damnation that BN has dragged us into. While private investments grew at the compound annual growth rate of 16.2% between 1991 and 1997, this has dropped severely to a marginal growth of 1% between 1998 and 2008.
Translating this into private investments in real terms, between 2005 and 2008, private investments into our economy stagnated at RM20.3 billion each year. This is even lower than the private investments figure in 1991, nearly 20 years ago.
While Barisan Nasional remains clueless about rejuvenating the economy for the long term, private investments have plunged from the pre-1997 days when it constituted 40% of the gross domestic products (in real terms), to an average of 28% in the last decade.
That is why Pakatan Rakyat will not jump too quickly to declare that the economy has recovered, because there are still structural problems with the economy that have to be addressed urgently if we do not want to continue to fall behind.
Trumpeting a 5% growth for 2010 is disingenuous at best. What the Prime Minister does not say to the people is that even if our economy grows by 5%, Malaysia will continue to fall behind Korea, Singapore, Taiwan, Indonesia, Thailand, Philippines and even Vietnam in 2010.
The latest economic forecast by IMF published in October 2009 shows that in 2010, Malaysia is expected to perform the worst among all these countries even as the world economy shows signs of recovery. Vietnam is expected to double our growth rate while the rest will outpace Malaysia by an average of 50%.
The Barisan Nasional government must own up to the fact that our economy is the way it is because of the years of mismanagement and corruption perpetrated by the powers that be.
The future wealth of our country can only be guaranteed by a government that is accountable to the people where transparency and good governance are absolutely essential.
That is why Pakatan Rakyat will remain relentless in the pursuit to offer the people an efficiently managed economy that will sustain the livelihood of future generations.
Parliamentary Opposition Leader