(Kajang, Saturday): The National Economic Recovery Plan (NERP) - the economic salvation plan drafted the National Economic Action Council (NEAC) - made one important recommendation to restore confidence. It repeatedly stressed that as the economic crisis had been "prolonged by the weakening of confidence", steps should be taken to strengthen public and corporate governance and enhance transparency and accountability, with "more frequent release of economic data to allow analyses and to increase transparency".
The NERP even pointed out that in the United Kingdom, the minutes of the Bank of England board meetings are released to the public, while the US Treasury releases economic data at a regular and timely manner.
In less than two months after the release of the NERP, the government seems to have backtracked from this important NERP recommendation of greater transparency and accountability on the "more frequent release of economic data to allow analyses and to increase transparency".
A policy U-turn in this regard is the latest move by Bank Negara Malaysia to loosen disclosure requirements for banks, a backtracking from the previous government goal of developing a more transparent economy.
Newly appointed Bank Negara governor Tan Sri Ali Abul Hassan Sulaiman had told a meeting of chief executives of financial institutions on Wednesday that banks will no longer be required to report their results quarterly but half-yearly, to help them focus on lending activity.
Many had seen the move to report banks' results half-yearly instead of quarterly as a step back in the transparency argument, with many suspecting it to be an effort to mask deteriorating balance sheets until recapitalisation occurs.
The Prime Minister who is also Finance Minister, Datuk Seri Dr. Mahathir Mohamad should make a policy statement whether one of the new post-Anwar economic and financial policy of the government is to publish fewer facts about the Malaysian economy - a move away from greater transparency and accountability as recommended by the NERP?
Yesterday, the new Bank Negara deputy govlernor, Zeti Akhtar Azia said Malaysia's economy will likely rebound from recession next year as new capital controls shield it from global economic turbulence, saying that the government expects gross domestic product to pick up in the final three months of the year and then grow by about one percent in 1999.
I have been asking for the government’s GDP forecast for the third quarter, fourth quarter and its revised GDP forecast for 1998, without any response.
If the Special Functions Minister for Economic Affairs, Tun Daim Zainuddin and the Bank Governor Deputy Governor could publicly forecast a one per cent GDP growth in 1999, why are they unable to make public the government’s GDP forecast for the third and fourth quarters as well as its revised GDP forecast for 1998 - after the disastrous minus 2.8 GDP contraction for the first quarter and minus 6.8 GDP contraction for the second quarter?
The people are entitled to the government’s latest revised GDP forecast for this year, as private economists and analysts have come out with very pessistimc figures.
For instance, a recent Reuters poll of 10 economists have produced a
forecast that Malaysia’s GDP would dive 5.1 percent between 1997 and 1998
and will barely rise in 1999 - with the outlook for 1999 quite uncertain,
anything from five percent growth to another one percent contraction.
Some economists polled thought the currency controls recently imposed would make little difference to gross domestic product growth, because their positive effect was offset by the stifling of foreign investment.
As one economist put it:``On balance, you have room for short-term stimulus. On the other hand, you have private capital inflows getting retarded. So I don't know if net-net we're going to see any impact.''
It is time that the government make public its own revised GDP contraction for 1998 in keeping with the NERP recommendation of greater transparency and accountability with more frequent release of economic data and analsyses.