Inject more cash for faster economic recovery

Restrictions on business activities under the movement control order will be relaxed from Monday.

Malaysia is said to be facing its worst quarterly economic contraction in more than two decades (-17.1%), with the steepest contraction in April (-28.6%).

Private consumption, which is the major contributor to total gross domestic product growth (59.4% of GDP), saw a decline of 18.5% during the second quarter of the year. Many services sectors such as retail and tourism also remain weak.

The reason behind this is simple: in April during the movement control order period, many businesses were forced to close, thus contributing to the gloomy performance across most economic sectors.

This economic catastrophe did not come as a surprise considering the massive shutdown in business activities and work obstruction in almost all economic sectors, not to mention the massive amount of money spent by the government to mitigate the impact of the pandemic on the rakyat and the economy.

According to experts, Malaysia’s contraction in 2Q20 has made Malaysia the worst-performing economy in the Asean region. After going through such a rough patch, we must now rise again to restore the country’s economic standing.

So, what can the government do or what can we as the rakyat do to help our country revive its economy?

Firstly, the government can increase direct fiscal injection into the economy to help the rakyat gradually rebound from the economic downturn.

Through this initiative, which could be known as Bantuan Prihatin Nasional 2.0 (BPN2.0) under the National Economic Recovery Plan 2.0 (Penjana 2.0), the government could introduce a new subsidy for household goods such as electrical appliances as a means to prop up private consumption.

Vouchers that can be spent at selected local businesses could also be introduced to help Malaysians with their daily expenses while supporting local merchants and vendors.

Also, another round of stimulus for small businesses to restart or further stabilise their operations as well as enhance the Hiring Incentive Programme (PenjanaKerjaya) to promote job creation and at the same time increasing employment prospects wouldn’t hurt.

To bolster the nation’s tourism industry via cash injections, the government could introduce a tourism digital voucher that can be used to “seduce” Malaysians with travel package discounts where Malaysians will receive discounts on selected hotels and tourism products throughout the country or even discounted airline tickets, coupons for local attractions and free entry to tourist sites.

This initiative was previously introduced by the former Pakatan Harapan government as part of the 2020 Economic Stimulus Package, so perhaps it can be pursued again by the current government to mitigate the impact of the Covid-19 virus on the domestic tourism industry.

As for the rakyat, you need to know that while saving your money during such trying times is crucial, it would be better for you to make full use of the opportunities provided by the government which will also assist in restoring the country’s economy.

Spend accordingly and make use of all the incentives provided. Your role might seem small but it will have a significant impact on the country’s economy.

Let’s help each other, shall we?

Afifah Suhaimi is a research assistant at EMIR Research. - FMT

The views expressed are those of the author and do not necessarily reflect those of MMKtT