PETALING JAYA: Fine-tuning existing economic policies such as the stimulus package is a welcome move by the new Cabinet but its success will depend on implementation, say economists.
Prof Dr Yeah Kim Leng of Sunway University said a quick review of the stimulus package, unveiled initially by previous prime minister Tun Dr Mahathir Mohamad, would be useful.
“It is a welcome move to ensure the stimulus package’s adequacy and comprehensiveness, ” he said, adding that more assistance could be given to the badly-hit industries.
He added that local exporters should be better supported, especially as they were hit by supply chain disruptions and declining demand caused by the Covid-19 outbreak.“Other less affected sectors such as automotive and property could also be given support to strengthen domestic demand, ” he said.
Prof Yeah said the formation of the Economic Action Council would be a useful sounding board to filter ideas for economic policies.
“If it comprised impartial and credible thinkers and industry captains, it will increase public confidence in the government’s capabilities and economic policies, ” he said.
He also said that it was unlikely for the Goods and Services Tax (GST) to make a comeback until the economy was more stable.
“It is ill-timed to reintroduce GST as consumers, already faced with multiple economic uncertainties and political shocks, will be further burdened with a new round of price adjustments.
“The government could explore other short-term revenue sources such as asset sales or higher dividends from government-owned companies, ” he said.
Socio-Economic Research Centre executive director Lee Heng Guie said it was appropriate for the government to review policies such as the stimulus package.
“They can look into how much they want to enhance it or ‘top up’ the amount. Focus should be on the most badly affected industries, ” he said.
He said equally important was the government’s ability to drive implementation.
“Since it was just launched, the government must accord priority into the execution of Budget 2020 and the RM20bil stimulus package.
“The government can also consider making other policy changes to reap low-hanging fruit such as extending the home ownership campaign or zerorising the real property gains tax, ” he said.
Prof Mohd Nazari Ismail of Universiti Malaya said the problems besetting the Malaysian economy were not so easy to repair with a few policy changes.
“In reality, the country’s economic challenges are systemic in nature because they are due to a dysfunctional financial system that is overly reliant on debt.
“The virus outbreak is exposing the fundamental flaw because now, we can see that highly indebted organisations are the ones which are in worse trouble, ” he said.
Pertubuhan Pemerkasaan dan Transformasi Ekonomi Malaysia president Haris Fadzlah Mat said the new council should also focus on strengthening the agriculture sector to cushion the impact of the global economic uncertainties.
“We are blessed with abundant land but it is vastly underutilised as 85% of our food are imported to meet local demand. Over the years, Malaysia has carried out good policies and research to boost the agriculture sector but implementation is severely lacking, ” he said.
Haris said Malaysia would be facing economic challenges in the wake of Covid-19 and political uncertainties, compounded with global economic uncertainties.
“If we can strengthen our local economic resilience, we will be able to weather the external storm, ” he said.
National Chamber of Commerce and Industry Malaysia and Associated Chinese Chambers of Commerce and Industry Malaysia president Tan Sri Ter Leong Yap also welcomed the government’s move to set up the council to address economic problems caused by the virus outbreak and plummeting oil price.
“We believe that the private sector should play a pivotal role in helping to address the issues. We look forward to working with the government to mitigate the negative impact on businesses and the people, ” he said when contacted.