New council, old problems

WHEN it was announced that a new economic council would be established, it brought back memories of the past but with a current twist to the problems at hand.

The old National Economic Action Council (NEAC) was formed in the wake of the last and worst economic crisis to hit Malaysia. Gross domestic product collapsed along with the stock market that brought a crunch to the value of assets in the country.

The NEAC then was to coordinate the recovery measures that have since put Malaysia on a stronger economic footing. The current iteration of that is different. There is no “crisis” at hand, but it is clear to all that the economy is slowing.

The question many have asked is how is it going to be different? For one, circumstances were not the same in 1998/99 and right now it is about coordination. The government is new and the initial message many have got is that prudence is priority, given the debt problems.

With housing and construction in a slump – and those two sectors have the biggest linkages to the economy – there is a need for the plan to soothe things over until growth, at least internationally, returns.

With ministries being helmed by novice ministers after the change in government, it is understandable why there is a need for coordination. Planning is essential in giving growth a fillip and measures to assist in that would help.

But the new council has to be different than the last. Currently, debt is a bigger issue than before and there is a need to check how much the government and taxpayer money can be used to drive growth.

What the new economic council has to do is to see just how much innovation and the new economy can drive growth. That will take time and there will be a desire to resort to what had worked in the past, but whatever tried and tested measures has to be temporary. The world has changed from 20 years ago and any new economic stimulus measures have to reflect that.