‘Najib’s handouts bad for the country’

The Wall Street Journal says the combination of temporary handouts and tax breaks doesn’t help Malaysia’s competitiveness.

(Free Malaysia Today) – US business paper Wall Street Journal said today Najib’s Budget 2012 handouts is bad for the country as it will not boost competitiveness.

“This combination of temporary handouts and tax breaks on one hand and welfare spending on the other doesn’t help Malaysia’s competitiveness.

“The export-dependent economy is already hurting from weak markets abroad and a rising cost of living at home—GDP growth fell below 5% in year-on-year terms for the last two quarters—and needs long-term incentives to invest and build a stronger domestic consumer market,” stated the paper in an article today.

Prime Minister Najib Tun Razak who also holds the finance portfolio was also criticised as the government failed to do away with food and fuel subsidies despite pledging to do so earlier.

“He even likened subsidies to “opium” and made small but noteworthy cuts last year. He could have continued that rehab this year by incrementally raising regulated prices to bring them closer to market levels.

In addition, WSJ also predicted that the 9.4% rise in expenditure only indicates wastage in resource because Najib did not propose permanent changes to tax structure. He also did not reduce regulation and spending.

WSJ also had less than kind words for Najib on the reforms for 27 subsectors and instead called for reforms in major industries.

“These are small industries that don’t hire many Malays. The government needs to tackle bigger reforms in industries like manufacturing, where regulations still gives Malays dominance.