My two cents on the economic downturn and Second Stimulus Package

With the loss of over 31,000 jobs since October 2008, the expectation set on the Second Stimulus Package to save the country from deepening recession is very high. Everyone is waiting to see if it will really do so.

However, I don’t think people should expect it to be a miracle cure. What the people could do during the recession is learn how to tighten their belts instead of expecting the situation around them to always fit their existing lifestyle.

I’m surprised to see hordes of people at malls even at this time, eating and shopping like there is no downturn. And yet, there are so many complaints of suffering from price hikes, etcetera.

I don’t think everyone at the high end malls is rich. Surely there are a decent percentage of middle class families as well. Those who are feeling a bit lean financially could tighten their belts on luxury spending.

As for those who were retrenched, must they only accept job offers that tally their previous jobs’ salary? I read a story lately of a few high profile executives who were laid off. They claim that they are unable to find employment.

Yet there are still advertisements for senior executive positions in the newspapers. Could it be that Malaysians have become so fussy that they are too proud to take what they are offered when the pickings are slim?

The Second Stimulus Package attempts to save and create jobs by stimulating economic activity and helping businesses sustain. The other objective is to increase purchasing power by providing tax relief to individuals.

In order for the Package to work to the best of its capabilities, I feel it should be distributed and disseminated as fast as possible. According to the Prime Minister’s Department, RM5bil has been distributed to the various ministries on March 25, soon after it was approved by Parliament, while another RM5bil will be disbursed by September 2009.

That means each batch of funds released needs 6 months. That may be a bit too slow, for spillover effects take time and the economic situation looks rather dire. By that time some companies might have folded over.

It is a good thing that the Package attempts to help ease tax burdens of SMEs and alleviate capital issues. I hope, though, this effort will not be coloured with corruption.

Kudos to the new Prime Minister Datuk Seri Najib Tun Razak for giving the directive to reduce direct negotiations on government procurement contracts with more open or restricted tenders. This will not eliminate possibility of corruption but will certainly reduce it.

All the items which provide tax relief for individuals are well intended. The problem is there are many complaints that tax refunds take a long time to reach tax payers; from months to years. This defeats the purpose of increasing tax reliefs then. What the people need now is cash in hand, not cash on paper.

I am rather concerned about those who fall under the poverty line. All these tax reliefs may not be of great help to them, for instance, the RM5,000 discount off a new local brand car for a trade-in of a 10-year-old car.

Most of the poor don’t even own a car. And even if they do, which is usually an old one already paid for, the monthly installments for a new car are an additional burden. It might be good if the Package apportioned these funds to subsidize purchases of new motorcycles for the abject poor.

One of the main reasons people buy vehicles is because the transport system in many areas do not meet their transport needs. Upgrading services and efficiency of public transport could also benefit the people in terms of time and money. This would be a more long-term solution.

These are just a few observations. Time will show the results of implementation of the Second Stimulus Package on the economy as a whole.