The government must stay away from including measures in the 2017 Budget which would ultimately “bait” the people into overspending says Bayan Baru MP Sim Tze Tzin.
In a statement, the PKR strategy director voiced concern over talk that the government would seek to stimulate growth with measures which would encourage consumer spending.
He said such measures would include the much-speculated exemptions on excise duty for first time car-buyers and a proposal to allow housing developers to issue loans to house buyers.
Such measures, Sim said were short-sighted and would ultimately burden the public by increasing household debt – already at 89.1 percent of the Gross Domestic Product (GDP) in 2015 – with the potential to cause an economic crisis in the long haul.
“We have to learn from the United States subprime crisis in 2008, caused by excessive spending and borrowing.”
Training his sights on the idea of excise duty exemptions, Sim said the idea of lowering car prices must be across the board to benefit the people.
He said exemptions only given to first time car buyers and for only one or two years would create an artificial demand and a short term rush, resulting in such buyers being saddled with debts.
He said PKR preferred a permanent decrease in car prices so that the people could enjoy a higher disposable income for other purposes such as education, health and food.
Such an economic model would be healthier compared to short-term measures to stimulate the economy.
As for the proposal to allow developers to issue loans, Sim said the issue was not a lack of loans, but the exorbitant prices of houses.
He said banks had enough money to give out loans, but were faced with high risks as the loan amounts were too big for many applicants to pay back.
Sim said the construction of more affordable homes was a better solution, as buyers would borrow less from banks.
The cost of homes was much cheaper in Singapore than in Hong Kong, because 80 per cent of homes in the island republic were developed by the government.
“This is something that needs to be studied in Malaysia as almost all houses in Malaysia are being developed by the private sector and this is one reason homes are so expensive.”
The 2017 Budget will be tabled on Oct 21 by the Prime Minister, Najib Razak, who is also finance minister.
FMT Reporters Online