Following the USA into Insolvency?

We all know that the USA is actually a bankrupt nation, always spending more than they earn and the recent damage caused by hurricanes Rita and Katrina only add on to the heavy burden of the war in Iraq.

Malaysia too has been spending too much on pump priming with many meaningless projects that have become white elephants. Add to that the lack of financial discipline and downright mismanagement of many government departments to the tune of billions of ringgit as detailed in the latest Auditor-General’sAnnual Report.


But there are some differences.

After the hurricanes struck, President Bush had to get approval before emergency aid could be provided to the victims. In Malaysia, there is still almost total secrecy on how government moves the funds so much so that it may end up in the wrong accounts.

The USA still attracts vast inflow of funds even though some people have been trying to get foreigners to put their money elsewhere.

For Malaysia, we have lost out in FDI as China and other cheaper markets absorb more of investment funds.

The message by the PM to reduce wastage sounds like hypocrisy when the government itself has been spending monies it does not own on questionable projects.

Unless the government does more to help the private sector, as it is a more efficient vehicle to boost investment and growth, we are going to see a major slowdown in the economy. Unfortunately the Budget 2006 does little to get the private sector going and seem more like a sleeping pill for someone who has difficulty sleeping.