For immediate release
20 January 2015

Measures for growth or for closed economy?

Kuala Lumpur, 20 January 2015 – Certain measures introduced by the Prime Minister, Dato’ Sri Najib Razak, to address current economic development and government financial situation in his speech this morning are good, but others require some serious re-consideration.

Revising Malaysia’s fiscal deficit target up from 3% to 3.2% is quite realistic given the huge gap between the initial forecast for oil revenues and the current estimate. Measures for cutting down operating expenditure by RM5.5 billion is also on the right track.

However, a lot of measures for sustaining economic growth are very inward-looking. The government’s plan to intensify import-substitution services and to prioritise local vendors for government and GLC procurement are worrying. There is a lot of rooms for leakages in these areas.

Instead the government should consider further cuts in operational expenditures and increase efficiency of public service delivery. Efficiency however would not be delivered by prioritising local vendors, but instead by making our procurement even more competitive.

At a time when revenue drops, we must look for ways to maximise value for taxpayers’ money. This require the government to focus on value and quality, not the origin of the suppliers.

There are also other ways to cut the size of the government even further. Perhaps this is a great opportunity to look at how to downsize the Prime Minister’s Department, which is very big at the moment.

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