PM'S MOVE TO LIBERALISE SUB-SECTORS CRUCIAL FOR REMODELLING M'SIAN ECONOMY - MIER

By Tengku Noor Shamsiah Tengku Abdullah

KUALA LUMPUR, Aug 19 (Bernama) -- Besides easing the monetary policy and unveiling fiscal stimulus packages to stimulate the economy, the timely decision by the Prime Minister Najib Razak to liberalise and relax 27-sub sectors in the services industry are crucial initiatives for Malaysia to move into a new economic model, says a senior economist.

" The liberalisation and relaxation are very important initiatives and are
very much in line with the government's plan to re-model the economy," says
Prof Emeritus Dr Mohammed Ariff Abdul Kareem, Executive Director of the
Malaysia Institute of Economic Research (MIER).

He said the relaxation given to listed companies and the setting up of
Ekuinas, the private equity fund, are pertinent moves showing that the
government was moving in the right direction.

"These are more towards medium-and long-term initiatives and not for
tackling global economic crisis. They're not really adverse to the current
economic stalemate and therefore not part of the crisis management.

"But of course the current global economic malaise prompted the initiatives.
If these measures have been taken before the crisis, they would have had a
massive impact on the country's economy," he told BERNAMA in an exclusive
interview.

Nonetheless, Mohammed Ariff said: " These are very important measures and
hopefully we will see a positive impact, maybe in two to three years down the
road."

" Malaysia has to liberalise further as it goes along. Some investors have
emphasised that the government put in place these measures. They have some
doubts of the government reverting to the previous policy once the economy
recovers.

" The relaxation and the liberalisation are only for now. When boom times
later, the government may go back to the old restrictive regime. That's the
worry of many investors," he said.

To undo that kind of perception, the government must continue to liberalise
economic sectors and not stop at measures that will be reversed after the
economic recovery, he said.

He also pointed out that some of the liberalisation measures have not
yielded any encouraging results.

Asked on the measures taken by Najib, who is also Finance Minister, to
lessen the impact of the global economic crisis on Malaysia's economy and the
people, Mohammed Ariff said the government had responded pretty well.

He said it was unlike the 1997/98 Asian financial crisis where responses
came rather late. The crisis started in July 1997 but it was only in September
1999 the government took action.

"But this time around, the action has been pretty quick. I think that is
very commendable," he said.

On the two stimulus packages put in place, the government think-tank chief
said though the packages look bigger than it actually is but "I think they're
relevant and very timely."

The RM60 billion second stimulus package is actually not more than RM15
billion. The government spending is only RM15 billion.

Of the RM15 billion, RM10 billion will be spent this year and RM5 billion
next year.

"So far as this year is concerned, the government spending in the name of
stimulus is only RM17 billion, RM7 billion from November last year and RM10
billion from the second package, accounting for only 2.4 per cent of the Gross
Domestic Product (GDP)," he said.

But the MIER feels government spending should be RM30 billion, equal to four
per cent of the GDP. So we only put in place RM22 billion of government
spending, RM15 billion from the second package and RM7 billion from the first,
making up RM22 billion.

" We may still be short of RM8 billion to make the real critical mass to
have that kind of impact but the prime minister had said the government has to
be prudent.

" The government cannot simply go on spending and get into trouble. That
will be very irresponsible for any government to undertake.

"In Malaysia's case, we've to be very careful about fiscal stimulus
packages," he added. (US$1=RM3.54)
-- BERNAMA