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©The
Business, Singapore (Used by permission)
KUALA LUMPUR, July 22 — Former economic czar Tun Daim
Zainuddin has suggested that Prime Minister Datuk Seri Abdullah Ahmad Badawi put
together contingency plans to better manage the economy which is headed for
tougher times and to prepare Malaysians for the worst.
Describing the current mood as bearish, he alluded to the lack of strong
leadership and clear policies which he said was confusing to Malaysians as well
as foreign investors.
“At present, there is a perception that the government is weak and politically
not stable, and people lack confidence in it. ... They want to see where the
government is heading,” he said.
Daim's views on the current economic situation was sought by Malaysian Business,
his answers in the July 16 issue indicating that the man credited with the
country's rapid growth in the 1990s is on the same page as his former boss Tun
Dr Mahathir Mohamad when it comes to Abdullah's political and economic
performance to date.
Stating that he was not here to advise the government, he stressed that he was
concerned the government “should not be too obsessed with the deficit” —
currently around 3.2 per cent of gross domestic product — “as there must be
growth too”.
Because of its concerns over the deficit, Abdullah's administration shelved a
number of planned projects in 2004 when he took over the leadership from Dr
Mahathir, incurring the wrath of the latter. One such project was the
electrified double tracking train project. It was estimated to cost RM12 billion
to build from Johor Baru to Padang Besar in 2003. Revived late last year, the
cost has ballooned to RM14.5 billion — and is only for the portion from Ipoh to
Padang Besar.
Daim, who holds substantial interest in the ICB Banking Group, observed that
reviving these projects would be costlier now because of the increase in
construction costs, a point that the federal government acknowledged recently
when it allocated an additional RM20 billion for the 9th Malaysia Plan to deal
with higher building expenses.
The two-time finance minister and former ally of Dr Mahathir before they fell
out in 2001, was also of the view that the ringgit peg had been lifted too early
— even though it was seven years later in 2005, and in response to China's
scrapping of its fixed peg. “I think we rushed to remove the peg. Retaining the
peg gives us flexibility,” he commented, but agreed that a strong ringgit would
not harm the economy. “We just need to be efficient.”
Foreign investors were put off by the present political environment, and
corruption, the judicial crisis, security and political stability had to be
addressed, he said. “The government claims it is transparent and accountable but
policies must be clear and unambiguous. No flip-flops. Be consistent.”
Alluding to the current administration's lack of options to deal with soaring
inflation and the current economic problems, Daim, who headed the National
Economic Action Council during the Asian financial crisis and was tasked with
getting the country back on track, asked what the government planned to do if
oil hits US$200 per barrel as predicted.
“Subsidy is out of the question. Any alternatives? The government has to think
ahead and plan for the future.”
The embattled Abdullah, who recently announced a transition plan to hand over
the premiership to his deputy, Datuk Seri Najib Razak, in June 2010 following
the ruling Barisan Nasional's worst showing at the polls in March, has found no
shortage of criticism or advice.
His harshest critic has been Dr Mahathir who yesterday, writing in his blog,
suggested that the government “should really look at the whole economy” and seek
ways to reduce the extra burden on the people caused by higher oil prices, “not
piecemeal but in a comprehensive way”.
With his trademark sarcasm, he concluded: “Sorry, I know I am not in the
government, not even in Umno.” — Singapore BT
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