Tuesday, October 12, 2010
VISION 2020 BETTER THAN NEM
Is Prime Minister Najib Razak being openly sabotaged by Level Four? The question arises after it became clear ‘his’ New Economic Model (NEM) and the recently unveiled Economic Transformation Plan (ETP) are based on very big bucks for super-mega projects to run the country into a high income economy by 2020.
The ETP costs about RM 1.4 trillion from 2010 to 2020 without a minimum wage for workers, with no subsidies and affirmative actions allowed that can or may distort the operations of the market economy and which will also see many of the Government-Linked Companies (GLCs) privatized.
In short, it is a promised Laissez-faire Shangrila seeded at a time when the leading capitalist nation (USA) is slapping tariff protection on a large number of Chinese goods and while the USD and the Euro are likely to collapse at any time, the PIIGS in the EU having become bankrupt and Greenland recently busted too, giving a sum of 17 countries unable to service their external debts so far.
People with money are hedging themselves against the impending Depression and currencies collapses. They pushed gold price above USD 1,360. Yet some in Malaysia wanted to trade the Ringgit in the money market. What for?
There’s a currency war going on. Some say it is due to the cheap Yuan. But that is clearly only one of numerous reasons - money printing on hitherto unknown scales in a few countries is another.
We know when too much money is printed and flushed into the market and lots of loans are given to trail huge stimulus packages, the ensuing inflation will become a depression should production fall.
Now we are told the 33 industrialized (OECD) countries have collectively run a 0.1 percent negative growth in August 2010.
A world depression follows should that become a trend.
Truth is, economic experts have all been saying that depression is already a swinger in the neighborhood and should claim a space on your bed the next time you blink.
Hence, we need to ask what is Najib’s RM 1.4 trillion 10-year injection to bring in high income about in a world economy that is already going down once again?
He is an economist and he must himself know the NEM with its ETP (Economic Transformation Plan, or whatever) is seriously a threat, not merely to the 40 percent of households in Malaysia that earn RM1500 or less per month but to the reality of households that cannot make ends meet earning twice that amount because of (present) rising prices. More than 70 percent of these are Bumiputras.
Was there anything in the ETP or the NEAC’s NEM that suggested the price spiral of essential items can or will be contained?
There are plans for FELDA to produce food and for some pharmaceutical industries to produce an assortment of drugs. But will that contain the inflation that is rising on the back of stimulus packages, money printing, unwinding of subsidies and bubble-making like in the case of housing where prices suddenly leapt 35 percent in the space of three months?
Neat packets of projects have already been given out in principle to the country’s mega companies, the Gamuda-MMC rapid-transit trains alone said to be worth more than RM43 billion, much of the money to be raised by issuing bonds.
YTL will be building a high-speed (280 kmph) train from Penang to Singapore, a much needed facility no doubt but most of that money must be quickly mopped or it will add on to the burdensome inflation.
MMC, which is reported to be already super-geared, want to develop some pieces of government land for some tens of billions while it also wishes to buy out UEM, which owns the lucrative cash-cow, PLUS, that built, maintains and runs the North-South Highway with the right to raise the toll every few years, and it does that.
This is assets sale. It is rumored MMC along with a few other companies are also interested in buying over PNB, the largest Bumiputra trust company.
We are now running into “super-mega projects” to raise the per capita income to more than US15,000, projects that make the RM12 billion KLIA and the RM19 billion Putrajaya look like penny buns.
The seven entry-point projects of the ETP alone, which are earmarked for takeoff before the year ends, cost RM118 billion, you see. It does not include the 10th Malaysia Plan spendings.
People, therefore, find the NEM and ETP a big threat. Until now this writer has not read a single positive acceptance of both anywhere in the pages of Internet discussions. Even economists writing to the government-inclined mainstream media have been highly skeptical.
What’s up then? Can it be true Najib is stuck with a Level Four that’s making him look like a super-dreamer compared to his predecessor and find himself knotted into a rot in less than a year or is Najib so aloof he believes he can stand above the impact of another world depression?
The world is certainly going into a Depression again. Is the ETP and the NEM really some kind of a solution to that? Is the Laissez-Faire economy magic?
Every critical writer on the subject has decided the NEM and the ETP are threats to the larger body of Malaysians and this writer joins the chorus. It will fail. Vision 2020 was far better.--- a. ghani ismail, 12 September, 2010.