Monday, May 3, 2010

New Economic Model (NEM) and Goods and Services Tax (GST), Their Impact on the Malaysian Rakyat.

The Impact of the New Economic Model (NEM) and Goods and Srevices Tax (GST) on the Malaysian Rakyat.

Held on 2 May 2010 at the Han Chiang College, Penang.

About 80 people attended this forum organized by the Persatuan Persaudaraan Phoenix, Penang Chapter on a Sunday morning on the 2nd of May, 2010 to commemorate the Labour Day.

Dr. Jeyakumar Devaraj (MP Sungai Siput, PSM)
Dr Mujahid bin Yusof Rawa (MP Parit Buntar, PAS)        
Dr. Toh Kin Woon (former Penang State executive councillor)
Dr.Cheah See Kian (media commentator, Board
of Directors of Han Chiang College)

Moderator: Mr Tan Kim Hong (local historian)

An attentive audience

Dr.Jeyakumar Devaraj, MP Sungai Siput, Perak

Dr Jeyakumar shared PSM’s views on the NEM and GST. 

He said that the NEM is nothing new as it is repackaged and rebranded from the old economic policies since Tunku’s time. It has been given new names by successive Prime Ministers Tun Razak and Mahathir. 

Our country’s economic policies have always been global capitalization and open markets. The NEM is business friendly giving capitalists more options. It continues to maintain pressure on Malaysia to remain as a low cost manufacturing centre. 

Only 15% of our population pays income tax. However with the introduction of GST, all the rakyat will not be spared from paying indirect taxes. Corporate tax which is now at 27% will be further reduced to attract foreign investors. 

Our economic growth is wasteful and environmentally unsustainable. Dr Jeyakumar said that it is not possible to sustain continuous growth without severe damage to the environment. Can you imagine a world where every country is growing at 8 to 10% every year? 

Dr Jeyakumar questioned what is progress when there is severe income disparity? When there is poor quality of life and inadequate access to health and education?

Dr.Toh Kin Woon, Chairman of Lim Lian Geok Foundation

 Dr Toh Kin Woon presented his paper titled “The NEM and Social Justice: A Pessimistic Perspective”. 

He said that the major concern regarding the NEM is the increasing trend of greater privatization and marketization. These policies are unfavourable to the poor. 

The BN government has enforced a weak trade union movement and its labour policies discriminate against the workers. It has rejected the principles of the minimum wage. It continues to be reliant on foreigh labour in order to suppress wages for the Malaysian workers. 

Coupled with such harsh labour policies, the BN government has further refused to provide some form of social safety net for retrenched workers. 

The objective of the NEM is to transform Malaysia into a high income society. However one must ask where are the sources of growth to come from? 

Malaysia's oil and gas reserve is predicted to become depleted by 2012. Its internal market is too small to generate sufficient consumption to generate growth. 

In recent years, Malaysia has failed to attract direct foreign investments as it looses its competitive edge to its neighbours in South East Asia as well as to India and China. 

To become a global exporter in manufactures goods, it has to re-vitalise its own industrial base. This demands the presence of a creative and productive labour force. At present, there is a critical shortage of skills in this country for such an urgently needed economic transformation. 

The NEM aims to be inclusive in spreading the benefits of growth to the bottom 40% of households. But how can this objective be achieved when there is an increasingly rolling back of the frontier of public sector while the government continues to sponsor the rapid expansion of the private sector as is witnessed in the provision of health care and other social services sectors such as the tertiary education. 

In fiscal policies, there is a trend towards reducing direct income tax while increasing indirect regressive taxes such as the GST. Such regressive taxes will further burden the lower income groups. These groups have so far been exempted from income tax. With the introduction of the GST, they will have to pay taxes on many basic items ranging from food to clothings.

 Dr. Mujahid bin Yusof Rawa, MP Parit Buntar, Perak

Dr. Mujahid bin Yusof Rawa predicted that the NEM will fail like its predecessor the NEP ( New Economic Policy ). This is because the BN government has so far failed to stop the mismanangement of funds and widespread corruption within the adminstration. As such the NEM will meet with corrupt practices during its implementation.

Dr.Cheah See Kian viewed the NEM as a re-packaging of the NEP. The Najib administration realized that the conservative factions within Umno wants the continuation of the NEP. Yet in order to appear consistent with the admninstration's "1 Malaysia" slogan, Najib has to to be seen as introducing a new economic policy by re-packaging the NEP as the NEM.

The Forum ended with a round of discussion, followed by a summing up of views and a motion of thanks to the speakers.


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