A couple of months ago, when the credit crunch in the US spread rapidly to the Europe leading to a severe economic downturn, some economists and financial analysts were optimistic about the ability of Asian countries to buffer the financial impact caused by the Western countries.

The economic crisis was soon proven to be pandemic with no country being spared. However, our government leaders were in denial, refusing to admit that our country was very much affected by the crisis.

In response to public outrage, our government released a RM7 billion financial stimulus package, hoping that this paltry amount of money would be sufficient to reverse the downturn. That was back then.

The subsequent release of key economic indicators propelled them to confess that our country was not left out of the global economic crisis. The rising unemployment rate, the falling national exports and the deteriorating industrial production index, among others, all point to a concrete fact that our country is in an atrocious situation, and that if we don’t act quickly enough, we might fall into recession.

In the face of such a difficult time, a second financial stimulus package, or the so-called mini-budget, that is aimed to turn around the ailing economy, will soon be tabled in the Parliament.

While the ministries and relevant governmental bodies are finalising the details of this mini-budget, they may seek ideas from the financial stimulus packages of other countries as well as take suggestions from the private sector into consideration. Although our situation is not entirely same as other countries’, there could be things that we could learn from.

The manufacturing industry in our country is severely hit by the economic crisis. Our major foreign markets, the US, Japan, and the European Union, are all in the recession trap. It would be naive to expect our manufacturing industry to bounce back if we were to count on them for two reasons.

First is that these countries are in deepening recession with no sight of recovery at any time soon. The US GDP shrank 6.2% in the fourth quarter last year. Japan had the second worst contraction since 1974 with its GDP falling 12.7% last year.

The EU’s 27 member countries recorded a 1.5% drop in GDP in the last quarter of 2008. The second reason is that despite these countries’ leaders vowing to restrict protectionism at the G-20 Summit in Washington last November, they have already taken up protectionist measures to protect their local industries respectively.

For the above two reasons, our government ought to spur domestic demand for our products. While the local market is not large enough to totally compensate for the loss in exports, it can at least help ease the pain to a certain extent.

In order to entice the people to spend, there are many ways that the government can resort to One being providing tax cuts. A similar measure is adopted in the US, where 95% of working families will soon receive a $1,000 tax cut. Nevertheless, there is one concern to be addressed by this measure – how to ensure that those who enjoy the tax cuts spend the money instead of keeping it in the closet.

The US has no such worry as Americans are notorious spenders. The US’s personal savings rate in 2008 was as low as 1.7%, while it was a mere 0.6% in 2007. But be it a tax cut or a tax rebate, our government needs to have a way to make certain that the money distributed to the people is spent and is able to prop up domestic consumption efficaciously.

The international trade and industry ministry has proposed to offer a RM5,000 discount on the purchase of a new car for consumers who sell off their 15-year-old or older ones. This proposal is under the consideration to being included in the mini-budget. We hope this proposal would be accepted by the finance ministry as it would be beneficial to the people in terms of many aspects.

Not only does this measure make new cars more affordable, it will enhance road safety and reduce air pollution as new cars undoubtedly have more advantages in terms of their safety and impact on the environment. Similar measures can be seen in Germany where an incentive of US$3,250 is offered to those who scrap their nine-year-old or older cars and buy a new, eco-friendly one.

We have high hopes for this ‘promises-to-be bigger’ financial stimulus package. It should not only be a short-term plan but a long-term one as well. In the short-term, it is pivotal to keep our economy afloat by curbing rising unemployment and spurring domestic consumption.

In the long term, it should provide a blueprint for future economic reform. We have long depended too much on exports for growth, which can be damaging when foreign demand for our goods and services drop.

The current economic downtown has said it all. Hence, there is a dire need for a restructuring of our economy into a healthy one by reducing our reliance on exports.

Apart from that, the mini-budget should act to strengthen the small and medium enterprises’ role in the development of our country. This would enable our country to be more resilient against any economic storm in the future.

It is imperative for our country leaders to come up with a comprehensive package. More importantly, direct supervision should be in place to ensure that the package is strictly and swiftly implemented with no delay, no graft, and no abuse.

In the midst of this grave economic downturn, we appeal to our leaders to stop politicking and focus on tackling economic issues instead for the sake of the people.