Kuala Lumpur, July 23 - The government is on the verge of forming a council of economic advisors to help it come up with strategies to face the triple threat of a slowing global economy, rising fuel prices and inflation.
This move is a sure sign Malaysians are in for tougher economic times and also acknowledges that the Cabinet and senior government officials do not have all the answers to cushion the effects of the expected global recession.
The last time the government sought the expertise of the private sector and foreigners was in 1997 when the National Economic Action Council was set up to tackle effects of the Asian Financial Crisis.
Government officials believe that the economic slowdown in Malaysia and the government ability to ensure that it does not leave thousands jobless or struggling to make ends meet poses a bigger challenge to the Abdullah administration than the firestorm kicked up by the police investigation into the sodomy allegation against Datuk Seri Anwar Ibrahim.
The Malaysian Insider has learnt that the council of economic advisors could include corporate captains and heads of government-linked companies.
Ten years ago, the financial crisis involved South Korea, Thailand, Malaysia and Indonesia. Today, the slowdown is being felt in the United States and Europe, and many countries are grappling with higher prices of commodities and inflation.
Tun Daim Zainuddin, the former finance minister, said in a recent
interview that the Abdullah administration should borrow a page from 1997/1998 and put together a tackle the worsening global economic situation.
He noted that the NEAC prepared an action plan after consulting 250 groups and individuals. "The management of the crisis was not on an ad hoc basis. We had to get people, including the Opposition parties involved, '' he told the Malaysian Business.
"I think the government should tell people the facts. Share with them the figures you have. Prepare for the worst. They will support the government if they are told the truth. But the government must have a plan on how to handle this tough problem…People want to know whether the government has options. They want to know if the government is on top of these problems. If they know, then they will have faith in the government and continue to support it, '' he said.
He also urged that government not to be too obsessed with the budget
deficit. Since becoming the prime minister in October 2003, Datuk Seri Abdullah Ahmad Badawi has tried to rein in spending and has managed to reduce the deficit from a high of 5 per cent to 3.2 per cent.
But there is a growing realization within government that it will be
necessary to pump prime and create more economic activity in the country.
The only issue is the timing. Ministry of Finance officials believe that government should only resort to borrowing and pump priming early next year while their critics argue that the spending should begin now so that its effects will be felt in 12 months time when the global economic situation goes into a major tailspin.
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