Stimulus packages cushioning blow

PETALING JAYA: The various stimulus packages implemented by the Perikatan Nasional government will help businesses and Malaysians from different backgrounds persevere through the socio-economic effects of the Covid-19 pandemic, say economic experts.

Prof Datuk Dr John Antony Xavier, vice-chancellor and chief executive of Asian Institute of Medicine, Science and Technology (AIMST) University, said the government had introduced five economic stimulus packages to weather the impact of the pandemic.

These include the latest RM15bil Malaysian Economic and Rakyat’s Protection Assistance Package (Permai), comprising 22 initiatives.

“Combined, they constitute about RM320bil or 20% of the gross domestic product (GDP), causing the widening of the fiscal deficit to about 6%, ” he said.

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Citing an example under the Prihatin Economic Stimulus Package, he said the government allocated RM13.8bil for a wage subsidy to retain workers across the country, and an additional RM4.5bil for relief to ease the pain of small and medium enterprises (SMEs) as well as micro enterprises.

“These SMEs are important as they constitute 98% of all business establishments (in Malaysia) and close to 40% of our economic output.

“They also employ half of all those employed in the economy. They have to be supported, otherwise the economy will come to a grinding halt, ” he said.

Prime Minister Tan Sri Muhyiddin Yassin said since the outbreak of Covid-19 early last year, the government has implemented four economic stimulus packages worth RM305bil to help the people and businesses.

The government also allocated RM322.5bil for Budget 2021, the largest expenditure in the country’s history.

The first package Muhyiddin announced on March 27,2020 was the RM220bil Prihatin. It was followed by the Prihatin Package for Small and Medium Enterprises (SMEs) (Additional Measures) on April 6, the National Economic Recovery Plan (Penjana) on June 5, and the Prihatin Supplementary Initiative Package (Kita Prihatin) on Sept 23.

Among the notable highlights of the government’s assistance was the targeted Wage Subsidy Programme amounting to RM1.5bil for the tourism and retail sectors under Budget 2021, said AIMST’s Xavier.

He said that the Permai package was also timely as it seeks to protect the health and welfare of the people.

“Previously, the government had allocated some RM1bil to the Health Ministry, but now it has also allocated RM3bil for vaccines, testing and tracing efforts.

“This will help contain the pandemic and relieve the strain on our healthcare system, ” he said.

“The economy is expected to improve this year with a growth rate projected to be around 7%. The government can realign its spending priorities and can be more prudent so that the debt and deficit levels can be reduced, ” he said.

Universiti Tun Abdul Razak (Unirazak) economist Prof Emeritus Dr Barjoyai Bardai said there were many forms of assistance available under the various economic packages introduced by the government.

He also noted that the targeted approach had given more focus towards B40 groups.

However, he also suggested that the impact would be more meaningful if the initiatives could do away with strict bureaucracy.

Malaysian Institute of Economic Research (MIER) executive director Emeritus Professor Datuk Dr Zakariah Abdul Rashid said all the stimulus aid packages including Permai would mitigate socio-economic problems including higher unemployment, slower GDP growth and lower salaries that may lead to lower household incomes.

Another economist, Tan Sri Ramon Navaratnam, said all these packages were timely and would help those who are in need during this trying time.

“The Permai package adds to supplement and complements all the previous packages and should be seen in totality, ” he said.

Navaratnam, who is the Centre for Public Policy Studies chairman at the Asian Strategy & Leadership Institute, said while the packages had helped cushion the impact of the Covid-19 pandemic on the business community, they should also cover those who are truly in need.