He will also have the manage rising expectations that his announcement tomorrow is the equivalent of a silver bullet to all the hardship Malaysians will face in the next few months.
Analysts believe that the government will downgrade growth from 5.6 per cent this year to 2 per cent or 3 per cent next year, the biggest contraction of the economy since the Asian Financial Crisis in 1997.
Still, they expect the Finance Minister to provide evidence that the foundation of the country is much stronger than 10 years ago with financial institutions here in a much better position than banks in other countries, and with foreign reserves in a healthier position.
Several measures to cushion the impact of the slowing economy on the small man will be proposed by Najib, possibly even a reduction in the employees’ contribution to the Employees Provident Fund.
Analysts who spoke to The Malaysian Insider are also hoping that the administration will make sweeping changes to the business environment in the country including abolishing the Foreign Investment Committee. The FIC is part of the Economic Planning Unit and makes decision on property purchases and investment by foreigners in the country and transactions between Malaysians and foreigners.
Businessmen have complained bitterly that the FIC is just another layer of numbing bureaucracy that makes Malaysia a less attractive investment destination.
There has also been a push by the private sector for the government to tweak the New Economic Policy or hold in abeyance some of the requirements of the affirmative action programme, believing that it will send a signal that the country’s leadership is willing to undertake major structural change to make Malaysia more competitive.
But The Malaysian Insider understands that the government is still going to tip toe around any major change to the NEP architecture, given the prickly sentiment in the Malay community over calls for a review of the NEP in recent months.
Najib is likely to touch on the drop in the crude oil price and the freefall in the palm oil price and its impact on the revenue in the country. The consensus among economists is that the government will have little choice but to borrow and pump prime, and even allow the budget deficit to grow significantly.
There is a push for the government to use the funds productively and consider improving the public transportation system in urban centres, instead of mindlessly pouring money into infrastructure projects which do little to boost Malaysia’s competitive edge.
Barisan Nasional politicians and government officials are worried that there has been an unrealistic build up of expectations over tomorrow’s speech by Najib. They blame ruling party officials and ministers for marking Nov 4 as a watershed day.
“There will be a package of measures but this will not be the only response from the government. The nature of the economic turmoil is that no one knows how bad it is going to get and how long the downturn around the world is going to be. This is not going to be a new Budget but the first step in responding to a difficult global situation. There is no silver bullet,” said a government official, trying to play down expectations.
His caution has probably come several weeks too late.
