Tuesday, June 1, 2010

The BN WAY to Bankrupt Malaysia.....

The declaration by the Minister Idris Jala that Malaysia could become bankrupt is certainly startling as we have been told consistently that we will attain developed nation status by 2020 if we let the BN government carry out with its policies of nation-building.malaysiakini readers vent their anger and frustration in this article Idris spot on about nation going bankrupt.
For any nation to remain strong, it has to manage all its resources well and in Malaysia's case, the government has become too complacent about managing the economy.
According to one reader,
Habib RAK: There is every reason to believe what Idris Jala said about the government's total debt. The government is clearly on course to get into very serious money trouble.

Idris Jala presented the actual debt at year-end from 1997 to 2009 (12 years). Consistently, it has grown, each year, at an average of over 12% per year. For the past 12 years, the current government had led it grow. Do you think they are going to change their ways overnight? No way. In fact, at year-end 2008 and 2009, it had grown 14.6% and 18.3%, respectively.

This shows that the government has not been able to able to balance the national budget the past 12 years but instead had to borrow to meet expenditure or losses like the RM12bil PKFZ scandal - don't be surprised if that is carried off the balance sheet.
In other words, the budgets have not been properly managed even when the GDP has stagnated about 6% annually, the government has not made adjustments to its operating expenses but resorted to risking our future with spending that has little economic returns.

If a government borrows money to increase capability to generate income, the borrowing may be worthwhile but simply for expenses is foolhardy.
To me the biggest savings that can be made is in the civil service where we have at least 20% to 25% overstaffing.

A major review of the civil service is long overdue. I propose the following measures can be implemented now.

1.Freeze all NEW posts. Transfer staff from surplus departments to other departments that need more manpower.
2.Stop giving extended contracts to retirees.
3.Stop giving pensions to NEW employess but put them on EPF.
4.NEW employees to be given limited medical benefits on co-pay say 25/75 employee/employer ratio.

Other measures can include:
1.Reducing the numbers of managers that are entitled to secretaries and drivers.
In Singapore, only the MDs of large companies are provided drivers and only the top 3% managers have private secretaries.

On tax relief, I will only grant ONE tax-free pension for those who earn more than one pension.

The other major step the government can do is to operate on OPEN TENDER system. Even today there is news that one company is suggesting the RM50bil buy-out of all tolled roads in the country.
The most appopriate solution would be for the government to publish all the criteria that such a proposal should include and then have an OPEN BID by different companies like:

1.Cash Offer to be paid for takeover, including the minority shareholders.
2.Toll rates freeze for say 10 years.
3.Period of toll concession like 30 years, after which a new open tender will be carried out.
4.The financial support the company will require from the government, if any.
5.Traffic forecast for various roads for next 5 years.

Seriously, if the government cannot control spending beyond our means, we need to change the government in the next elections.

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