Exclusive - Revitalising and reforming the economy


  • Economy
  • Saturday, 26 Sep 2020

IT IS not easy to step into a position of authority and importance, especially when the nation is facing a crisis like never before.

A political crisis had engulfed the nation just prior to the outbreak of the global Covid-19 pandemic, but it was dealing with the potential economic catastrophe from shutting nearly the whole economy down to deal with the pandemic that was the real challenge for policy makers at the onset.

For Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, the job was a mammoth task, given where the domestic and global economies were heading. He dug deep into his experience in the corporate sector to navigate through the task ahead.

“What I have learnt from CIMB Group Holdings Bhd is being adopted here at the Finance Ministry (MoF). I wanted to be transparent and have our stimulus packages monitored for execution, ” he says.

CEOs of listed companies are used to articulating their plans and targets, and there is a risk that those ambitions do not meet their intended objective.

For Tengku Zafrul, there is a need for people to know how the packages are being delivered, regardless of the risk of missing targets.But one big deviation from how things were announced in the past has been the people-centric approach in the packages announced.

It is stacked with initiatives that puts money directly into the pockets of the people and rightly so. As the government had to shut down nearly the entire economy, it was imperative that the stimulus packages protected lives and livelihoods.

“Earlier, it was about giving out money and that was it, you were done with the job. But now, the policy response has to be targeted, where the money is going to end up and making sure households survive, ” he says.

And that approach is yielding results.

The jobless rate, although at an elevated historical perspective, has come down from 5.3% in May to 4.7% in July, meaning jobs are being created and filled.

The economy too is seeing trade numbers and the surplus growing, along with industrial production back in positive territory.

“If you look at the economy today, in terms of employment, SMEs contribute 40% of GDP but employ 70% of the working population.

“So, you need to look at that angle, and at the same time, if you look at the impact of Covid-19 on the vulnerable sector, the B40 especially are the people who need a lot of help.“That’s where we want to target the BSH recipients. We need to give them extra because they can’t go to work, because most of them are in the informal sector.

“But as the economy opens up and as the global economy improves, hopefully, Malaysia will also improve and then I think the shift will be towards back to where we think the balance should be, ” he says.

Tengku Zafrul says having the Prihatin and Penjana packages helps, as they are going to contribute 3% to GDP because of the multiplier impact, and the recent RM10bil additional package will help with the fourth-quarter numbers.

That money will work its way faster into the economy rather than large development packages for roads, schools and other big-ticket items.

The government has taken steps to set up the economic recovery and the next two are to revitalise and reform it.

That will take form in the upcoming budget and also the 12th Malaysia Plan (12MP) early next year.

There will be a different approach in the upcoming budget where the MoF has kept its ear to the ground in all states to see what is required.

Effectiveness of spending will be paramount and although there will be a need for big projects, there has to be a blend between what big business want and what the man in the street needs.“My hope is that we look at the long term, with the understanding that if there is a need to change and adapt to things quickly, we should be able to do that, ” Tengku Zafrul says.

“I think one thing we always talk about today is actually all the disparity.

“How to bridge the disparity?

“How do we do that with the income and digital, education, and even regional disparity between the different parts of the country?”

TVET and education will be a focus and the budget will be a prelude to what the 12MP will entail.

“The other pillar that I mentioned is sustainability. There will be emphasis on sustainable production, consumption, and even conservation of natural resources and the environment, ” he says.

In a wide-ranging interview, Tengku Zafrul spoke on many issues. He answered a number of questions ranging from the job at hand to the economy, the upcoming Budget and also the political developments in the country.

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Tengku Zafrul , GDP , Covid-19 , 12MP , B40 , BSH

   

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