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Friday, December 6, 2013

The govt is in reverse gear

| December 6, 2013

There is already a glut in office space in the Klang Valley and it will be disastrous and suicidal if the Najib administration bulldozes ahead with its planned mega projects.

It was reported in the press that there is currently a glut in rentable space in the Klang Valley of no less than 7.6 million sq ft. The excess is not small by any standard. It would take a long time before these spaces could be absorbed by the market.

But why then the Najib administration plans to put aside more than RM34 billion under the Economic Transformation Programme (ETP) to embark on gigantic projects such as the Tun Razak Exchange, Menara Wawasan, Sungai Besi Development and the former RRI land bank?

There is no indication that the local investors are able to take up these additional floor space created by these mega projects.

The foreign investors from both the American and European markets are not likely to take up these space, too, as their economies back home have yet to improve.

It would be disastrous and suicidal if the Najib administration bulldozes ahead with these mega projects. Malaysia will certainly add on another few to its existing long list of “white elephants”.

The recent Real Property Gains Tax and other measures adopted by the federal government in the so-called efforts to reduce speculation on properties may be good in its intention but certainly would dampen the growth of the housing sector.

The 141 sectors related to the housing industry closely or loosely would inevitably suffer a dip and eventually cause serious damage to the overall domestic economy.

Even the first home-buyer category would not be spared as such measures will affect all our banks and financial institutions and make housing loan approval almost impossible for many home buyers.

Reverse gear

Some people have argued that property prices have gone too high or simply gone beyond the ability of our young people.

A fresh engineer graduate from Universiti Malaya used to be paid about RM2,000 in the nineties but the new ones will only get about RM2,500 today.

Something is obviously wrong here. The earning power of our people has not gone upward for two decades! Situations would have been better if the salaries of our working force were not stagnant for far too long.

The situation can only go from bad to worse as the authorities have no clue on how to curb the growing dependence and reliance on foreign labour.

For the same reasons, I would argue that Malaysians will continue be stuck in the low- to medium-income trap for many more years to come.

There are more bad news than good ones for the rakyat of late. It appears that the Najib administration will cut subsidies and allow all prices and assessment fees to go up after the general election. The introduction of Goods and Services Tax (GST) in 2015 will certainly hurt the small men’s pockets further.

It seems to me that the Najib administration is now shifting to reverse gear. And this is certainly detrimental to our Malaysian economy if left unchecked.

Has the Najib administration gone bankrupt of ideas? You bet. God save Malaysia.

Ronnie Liu is former elected rep for Pandamaran and former state exco in charge of local government. His FMT column is called Nutshell.

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