The RM7 billion stimulus package announced by Deputy Prime Minister Najib Abdul Razak yesterday might not be an adequate measure to help the country weather the on-going financial storm in the global economy.

Economist Lim Teck Ghee, who is director of think-tank Centre for Policy Initiatives told Malaysiakini today that the package was "insufficient and badly targeted" as it may not reach those who need help most.

lim teck ghee "I am concerned that the government had earlier decided to put RM5 billion in Valuecap Sdn Bhd. This would result in an outflow of Malaysian money to shareholders and those holding the equities.

"We should be concerned with the lower and lower middle income group which may be deeply affected by the global economic downturn," he said.

Valuecap was set up in 2002 to invest in shares to help shore up the equities market.

Lim said the government was wrong to aim the stimulus package at the well to do rather than the poor, adding that it should also set up a fund to help retrain workers who may be laid off as a result of the current economic slowdown.

"Workers from the agriculture and manufacturing sector may have to be laid off as a result of the economic downturn and the formation of a fund to help retrain the workers would help them find other jobs."

Lim also said the proposed optional reduction of EPF contributions by three percent would not help the economy much as the amount of depositors in the country was negligible.

"There are more than 10 million workers. How many actually contribute to the EPF? Furthermore, EPF does not cover the self-employed. Hence, the reduction would not have much impact on the economy," he said.

'Not a unilateral move by Malaysia'

On increasing housing and car loan repayment periods for civil servants, Lim said it was a wrong move as even in a bleak economic climate, this group would be assured of their jobs. He, therefore, opined that the move was political one.

"This proposal could be seen as a political move to appease the civil servants."

dr yeah kim leng Another economist, Dr Yeah Kim Leng, said many countries have resorted to stimulus packages to cushion the impact of the economic downturn.

"Hence the stimulus package is not a unilateral move by Malaysia. Many governments, including the United States, Japan and European Union member countries, have taken (similar) steps," said the chief economist of rating agency Ram Holdings Bhd.

"The question is whether the funds are enough for Malaysia’s economy to face a prolonged period of recession or not," he said, adding that the government must be prepared to introduce other measures to help the economy cope with a global slowdown.