If everything goes like what finance minister Datuk Seri Najib Tun Razak has said, the recent market performance is only a matter of investment sentiment, then there is hardly any need for KWSP's RM5bn loan to invest in undervalued stocks!
Britain's bailout programme has been designed to inject money directly into ailing banks to restore public confidence in the country's banking sector. The full guarantee of bank deposits by governments, including ours, is one of the ways that will help shore up waning public faith.
What Southeast Asian countries should be concerned about is not the magnitude of this financial storm, but whether the Chinese economy will eventually be implicated, and the severity of its impact upon fringe economies.
Most regional countries have been relatively immune to the Wall Street meltdown because of their limited involvement in the US subprime mortgages. But if the United States and Europe slip into recession, which will deal a direct blow on Chinese manufactures, then the nightmare of Southeast Asian economies, major raw material suppliers to China, is just beginning to take shape.
|"The point now is not whether the sum is enough or not, but whether it is necessary and practical."|
Although basically Malaysia is not encountering any credit crisis for the time being, that does not mean we have sufficient investment inflows or liquidity in the market to meet the capital demands of SMEs.
Instead of putting the RM5bn in the equity market to lift the thinning market confidence, why not offer special loans to SMEs to revive commercial activities so that their operations will not be stalled because of a dearth of funds.
Besides, substantial policies should also be liberalised further to lure foreign investments. If the government insists not to cut back on the development expenditures outlined in the Budget, the only solution will be to look for new sources of living water for the national economy.
Compared to our neighbours, Malaysia is undeniably at an advantage in terms of software and hardware development. Although this advantage is being slowly undercut by lower costing in other countries, we still have our unique edge over the competitors in luring foreign investors.
In view of this, the deregulation and liberalisation of various policies seem more important now than ever, including those on quota restrictions and ceiling stakes for foreign participation.
If we take this opportunity to liberalise these policies, more foreign investors will be lured to our shores, for we are somehow more attractive than our neighbours in utility supply, educational and linguistic standards of our workforce, as well as broadband infrastructure, among other things.
Tun Mahathir has said RM5bn is not enough, but to the people in the street, this amount of money will very much see them through their retired years.
The point now is not whether the sum is enough or not, but whether it is necessary and practical. (By YANG HANQIANG/Translated by DOMINIC LOH/Sin Chew Daily)
source: Living Water For The Economy
Sin Chew Jit Poh, Malaysia