Don't be stingy, economist tells gov't in facing Covid-19 crisis

CORONAVIRUS | The government should not be stingy in dealing with the Covid-19 crisis, said economist Muhammed Abdul Khalid.

Muhammed (above), who was a former Khazanah Research director, said the two economic stimulus packages announced thus far is not sufficient.

"More needs to be done if we value the lives of all Malaysians," he said in a statement tonight.

"What's important is that any form of aid to the health and medical sectors must be made without limits. The policy is simple: 'whatever it takes'.

"The country's priority now is to ensure that Malaysians stay alive. This is not the time to think about the fiscal deficit, national debt, economic growth rate, credit rating agencies' perceptions, or politicking," he added.

Thus far the two government's stimulus plans total RM20.62 billion, including tax breaks and a safety net for workers who had to go on unpaid leave for more than a month.

Muhammed said going forward there need to be transparency, clear policies, and effective implementation that restores public confidence.

He has proposed a three-point economic strategy to help tho help workers as well as small and medium enterprises so that they can put food on the table.

The first point, he said, was to help those who have lost their source of income, especially the self-employed, who would usually earn less than RM5,000 a month. The measure would also help employers.

The measure is to give the self-employed a financial aid of RM1,000 while giving those who are employed an RM1,000 salary subsidy to be paid to employers, so that jobs are not cut.

This measure he said will cost RM26 billion.

The second measure, he said, is for business tax for all companies and individuals to be reduced this year. Bank and financiers should also lower repayment rates on loans for a few months.

This, Muhammed said, was necessary as the current tax deferments and incentives under the existing stimulus plans were insufficient, as many companies were in danger of shuttering.

"If we make a conservative estimate that 10 percent of SMEs close down, this will equal to one million people losing their jobs," he said.

The third point is to give substantive aid to food producers quickly to ensure the country doesn't face a food supply problem due to import disruptions.

He said the RM1 billion agro-food fund which was announced by Dr Mahathir Mohamad in the first stimulus package should be enlarged to at least RM10 billion.

"The main goal of this third strategy is to for us to not go hungry and starve," Muhammed said.

He added that the prices of main food items should also be placed under price control.

He said all the points he suggested is feasible, and that the objective is to ensure survival.

"There is no point for us to want positive economic growth, a good fiscal position, if the people are dead and the country in chaos," he said.

Muhammed said the 3.4 percent fiscal deficit is still relatively low compared to seven percent in 2009 during the global economic crisis.

The country, he said, had more than RM400 billion in reserves while the National Trust Fund (KWAN) had RM17 billion.

"What's the point of saving hundreds of billions of ringgit if it is not to be used for emergencies like this? This is the point of saving," he said.

Muhammed said that minister, deputy ministers should also cut their salaries while chairpersons, directors and CEOs of GLCs and GLICs should cut by 25 percent.

"If the finance ministry and government is still stingy and in denial, then Malaysians will bear the consequences. The time to act is now," he said.

---

Read Muhammed Abdul Khalid's full statement here.  - Mkini