Why did govt give only RM 36 tax cuts per year to working Malaysian but is willing to put RM 5b of EPF to bailout listed companies?

Why did the government give only a RM 364.2 million tax cuts to 10 million working Malaysians or a mere RM 36 per year but is willing to put workers funds at risk by using RM5 billion of Employees Provident Fund (EPF) to bailout selected listed companies?

The drop in the Kuala Lumpur Composite Index (KLCI) to 859 points, its lowest close in four years, is a clear indication of the failure of the BN government economic response to the global financial crisis by injecting RM 5 billion into Valuecap Sdn Bhd, a company set up by the Government in 2003 to invest in undervalued companies. What is RM 5 billion to buy shares in a few counters compared to the Bursa Malaysia’s capitalization of around RM 700 billion?

A RM 48 billion economic stimulus plan that has the tidal effect of helping 27 million Malaysians is fairer and financially sustainable than the RM 5 billion funds borrowed from EPF to fund purchases of shares of certain companies. By risking RM 5 billion to buy shares in companies belonging to BN cronies only helps the few at the expense of risking RM 5 billion of EPF money belonging to all Malaysians.

DAP condemns EPF for agreeing to this short-sighted measure without first calling for a full Board meeting to discuss this issue thoroughly. It is unacceptable that representatives from workers do not have a say on how workers’ funds are now put at risk to save those few companies who never remember to give back to workers when they reap huge profits. This is another classic case of BN’s unique public-private partnership where profits are privatized to individuals but losses are socialized and borne by the public.

Such funds should be put to better use by helping those who are hurt most by the global financial crisis. The government should stop being in denial mode but fulfill its sacred duty to act not for the few but in the national interests of all. DAP proposes a 4-prong RM 48 billion economic stimulus plan to help the poor and businesses overcome the adverse impact on the global economic crisis:-

• RM 6,000 annual oil bonus to all families earning less than RM 6,000 a month or RM 3,000 annual bonus to bachelors earning less than RM 3,000 a month will cost RM 35 billion or a mere one-third of Petronas last year’s gross profits of RM 107 billion;

• A progressive reduction of corporate tax rate from the present 25% to 17% which will cost RM 13 billion;

• A daily revision of petrol prices to take into account of changes in the international price of oil;

• An immediate reduction in electricity tariffs which was increased by 26% when the price of oil was USD to reflect in the change in the price of oil.

Monetary and fiscal measures like cutting costs and putting money into people’s pockets will help to generate both jobs and businesses. The RM 48 billion will be shared by ordinary Malaysians who will put the money into the local economy. This will drive the economy and with the multiplier effect from the RM 48 billion in the local economy help grow and contribute to the GDP and maintain the quality of life of working Malaysians.

DAP is disappointed that the government has not announced any measures to help working Malaysians reduce the financial burden of rising prices, apart from giving a miserly RM 364.2 million in tax cuts or only RM 36 per year for each working Malaysian in the 2009 Budget. What is RM 364.2 million in tax cuts for working Malaysians compared to the RM 5 billion using workers funds to help companies.

Such a policy is discriminatory against workers as their funds in EPF should be used to help workers and not employers. Clearly the BN government has not only got its priorities wrong helping the few instead of all, but is a short-sighted measure that confuses and equates economic policy with corporate bailouts.

Press Statement by Lim Guan Eng in Petaling Jaya on Saturday, 25th October 2008

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