Foreign funds have battered the stock market and sent the FBM KLCI below the crucial 1,800 level early Thursday with more downside seen especially with the shocking RM1 trillion national debt.
However, analysts said the cleaning-up process was crucial to put the economy back on stronger footing, pointing out the heavy selling was expected amid this short-term pain.
Analysts said while the selldown has been in line with the regional weakness and there are concerns about a potential rating downgrade following the larger debt-to-GDP.
“There is also uncertainty as to how the Goods and Services Tax (GST) shortfall will be narrowed, the projects which will be delayed and cancelled,” said a senior analyst.
“There needs to be more clarity with regards to these issues,” he said, but he said this was short-term pain.
Among the measures which Prime Minister Tun Dr Mahathir Mohamad announced on Wednesday were:
1. Several mega projects by the Barisan Nasional government will be reviewed to cut costs, including Bandar Malaysia, Tun Razak Exchange and the Pan Borneo Highway.
2. Lower pay cheques for all ministers.
3. Proposed pay rise of civil servants from July 1 by the previous Barisan Nasional government could be reviewed.
4. Government agencies such as National Professors Council (MPN), Special Affairs Department (Jasa), the Residents’ Representatives Committee (JPP), the Malaysian External Intelligence Organisation (MEIO), the Land Public Transport Commission (SPAD), Performance Management and Delivery Unit (Pemandu), National Innovation Agency and the Malaysian Global Innovation and Creativity Centre (MaGIC) will be abolished.
5. SPAD to be absorbed under Transport Ministry.
6. SPAD chairman Tan Sri Isa Samad told to resign within a week.
7. Government to re-engage essential employees and those of lower pay.
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