This reaction came from the high savings Japanese on the proposed one-time cash handout of 12,000 yen (about US$120 each) by the government.
A good majority of respondents pooh pooed the idea as something that would help spur spending for the recession stricken economy that used to be second globally, behind the United States.
US$120 (in micro economic terms) also isn’t that much moolah that would make you suddenly developed an itch to be extravagant, especially since it’s a one off thing.
I would have wondered if Malaysians would have made the same kind of rejection but for the overwhelming 78% of contributors (4.4 million) to the Provident Funds all FOR a 3% reduction in their “savings for the future” response back in January.
As well as a possible 100% (I’m truly guessing here) take up for the also one time RM625 and RM150 fuel subsidies upon renewal of the yearly insurance and vehicle road tax.
Since the Provident fund’s reduction only starts this year, one cannot really gauge whether it would have a positive impact in promoting some growth in the economy.
As for the latter, there were little - statistically speaking - to show as to its effect as the country growth plummeted to a mere 0.1% in the 4th Quarter last year.
Had it not been for the fantastic prices of our commodities – palm oil and fuel – in the first half of the year, the country would have seen a much lower than the 4.6% of GDP growth for the whole of 2008.
Back to Japan; though.
The common thread in all of the detractors’ minds was this: how would the one-time payment help the mainly export-based economy grow or stabilise?
In an earlier article in the Herald Tribune on the country fiscal stimulus of the early 1990s – which spent nearly US$2.1 trillion for construction jobs (contractors, please stop salivating!) - many of the local analysts decried the hefty funding of infra works that provide little in future growth value.
Bridges and roads that lead to nowhere in particular were the common lamentations.
Studies – said the article, not me – showed that Yen for Yen (growth wise), the better investments were in structures of social significance; those which includes hospitals, educational and, even, elderly care institutions.
A particularly damning criticism for the stimulus package was however this line: “... used government spending to grease rural vote-buying machines that help keep the party in power.”
Sounds ever so familiar, doesn’t it?
Going by the sentiment shown to the latest offering from embattled Japanese premiere Taro Aso (of the Liberal Democratic Party, the carrot method no longer works and people genuinely wanted something positive instead.
One comment goes so far as calling it “Pork Barrel spending”, linking the payment asincentive to keep LDP in power.
Japan is in deeper shit than any other Asian economy so far, our “What technical recession?” country included.
If they manage to turn around theirs, then the methodology used would be a great example for the rest of the region to replicate or at least copied in some ways.
The last time Japan introduces a stimulus package, it manages a two year positive growth albeit in a scenario of burgeoning and healthy trading nations.
This current challenge however would take real genius to tackle.
Don’t look like any is emerging so far, though. What about us?
We wait for March 10 with bated breath.
Hopefully its nothing like the “tolong kawan – kawan” RM7 (on paper) billion stimulus package.
Wouldn’t bet on it though.
No signs whatsoever that it would be any different.
Illyana Nikolievna Rasputina