PETALING JAYA: Former federal minister Salleh Said Keruak has called for greater discussion about the government’s debts and its need for taking loans, saying that borrowing was necessary and should not be treated as bad news.
Salleh, who was communications minister in the previous government, said that debts were not necessarily bad as long as the government could service its debts from future revenues.
“This is what we need to focus the discussion on, rather than treat debts as bad news,” he said in an article on his blog.
Earlier this month the federal government said it was looking into raising a second round of loans from Japan by issuing new “Samurai bonds”.
Barjoyai Bardai, an economist with Universiti Tun Abdul Razak, urged Putrajaya to slow down on spending, citing Bank Negara Malaysia figures showing that the government had already borrowed RM58.1 billion in the first six months of the year.
Salleh said in his posting today that all countries had borrowings and none could survive if they did not borrow money to pay for development. “And without development, the country will shrink and eventually die. We can ask what are we borrowing for but we cannot say the country must not borrow,” he said.
He pointed out that in 1987, when the global economy took a beating, Malaysia postponed or suspended many projects, while Singapore did the opposite. “Instead of cancelling, they brought the projects forward,” he said.
He said Malaysia’s rationale was to stop spending as it had more money, while Singapore increased spending to help the country’s cashflow.
“Of course, to be able to do that, you either must have plenty of reserves or you need to borrow money,” he said, adding borrowing was not a “bad move” and was actually necessary.
Finance Minister Lim Guan Eng has said that the increase in the government’s debts arose from commitments by the previous government to development expenditure. He said the infrastructure projects would carry on as they would benefit the nation in the long term.