Think-tank urges government to ramp up spending in Budget 2021

 

To create jobs, Research for Social Advancement has called for an expansion of tertiary education systems under Budget 2021. (Bernama pic)

PETALING JAYA: An economic think tank has called on the government to ramp up spending in Budget 2021, rather than looking to minimise debts.

This is necessary to lay the foundation for economic growth and expand social protection for the people affected by the economic impact of Covid-19, said Research for Social Advancement (REFSA).

In its policy brief, entitled “Budget 2021: Ushering in the New Economic Paradigm”, the think tank termed the upcoming budget a “once-in-a-lifetime chance to commit to greater spending”, without major repercussions.

“Malaysia will not be alone in experiencing deteriorating fiscal metrics like deficit/GDP ratios,” it added.

REFSA said the government can “borrow its way out of the crisis” due to historically low bond yields that could minimise the impact of new debts.

The think tank suggested this money be used to invest in job creation, the green economy and widen social safety nets to both encourage future economic growth and support those hit hardest by the current recession.

To create jobs, REFSA called for an expansion of tertiary education systems to allow wider inclusion, the development of the rapidly growing healthcare sector and the resumption of the Malaysia@Work scheme, which encouraged private companies to create jobs for fresh graduates.

Investment in the green economy would allow Malaysia to take advantage of increasing demand for environmentally conscious products such as electric vehicles, renewable energy and sustainably farmed goods, and would also “future-proof” human capital in the sector, the think tank added.

Widening social securities would offer substantial short-term benefits, REFSA said.

This should include expanding the scope for the Employment Insurance System (EIS) and increasing the Bantuan Sara Hidup (BSH) financial aid initiative payments to align with the national minimum wage of RM1,200.

REFSA also said Malaysia’s social security system is in need of long-overdue reform. It cited the need to streamline the “more than 110 programmes, organised by more than 20 ministries and agencies”. - FMT