Pemerkasa falls short of ‘new deal’, says economist

 

In supporting the move to end large-scale MCOs, economist Carmelo Ferlito says Malaysians need to learn to live with the virus.

PETALING JAYA: The government’s latest list of initiatives for economic recovery under the Pemerkasa programme has fallen short of the “new deal” promised by Prime Minister Muhyiddin Yassin, says an economist.

Geoffrey Williams of the Malaysian University of Science and Technology (MUST) said his initial impressions of Pemerkasa was “a long list of increasingly small initiatives”.

Williams questioned if the recently introduced financial aids were new money, or simply a reallocation of the 2021 budget, like in the case of the PERMAI relief package.

“If it is a reallocation, it would not provide much stimulus but just help us through the ‘survival trap’,” he told FMT.

Geoffrey Williams

“It not only shows that the government is worried about the tipping point we have been predicting but also that it is using less money to help out.”

He noted that the various small-scale projects under the programme, like the one-off RM1,000 payment for small- and medium-sized enterprises (SMEs) under the extended special PRIHATIN grant was “too little to make much of a difference”.

Williams added that the daily RM50 for Covid-19 patients from the B40 group who are isolating at home was a “kind” effort, but not a sustainable solution either.

However, he said he was glad to see that the Malaysian Insolvency Department would facilitate its dealings with banks for bankrupt individuals to receive government aid and that there would be no more blanket lockdowns.

Chief executive of the Center for Market Education, Carmelo Ferlito, expressed similar sentiments, saying the promise to avoid large-scale movement control orders (MCOs) was a “huge step in the right direction”.

“Whether or not the immunisation campaign is effective, we need to learn to live with the virus for the time being, until a full treatment is developed,” he said in a statement.

In contrast to Williams, however, Ferlito welcomed the government’s attempt to move towards more targeted aid rather than generalised subsidies, particularly the tax reductions.

Carmelo Ferlito

“Tax cuts can be the most effective way to counteract the downturn and will be effective in reawakening positive profit expectations.

“However, they need to be accompanied by a better strategy on international borders, in particular a more effective strategy for attracting business travellers,” he said.

Ferlito also urged the government to monitor the long-term effects of its fiscal packages over the past year, as there was a risk of recurring tax increases once the economy recovered.

He added that fiscal incentives that were “too aggressive” could also generate “dangerous inflationary tendencies, which can already be seen worldwide in the dynamics of raw material prices”. - FMT