A mercy-for-all stimulus to save lives, re-start the economy


  • Letters
  • Thursday, 26 Mar 2020

THE Malaysian Prime Minister Tan Sri Muhyiddin Yassin has announced various unprecedented economic stimulus and relief plans for the benefit of the rakyat and to help those with the greatest financial exposure.

This is against the backdrop of the extension of the movement control order (MCO) to April 14.

The world is facing an unprecedented crisis. The Covid-19 pandemic occurs amid the backdrop of ongoing uncertainties in the global economy brought about by the collapse of the global oil prices, trade war between US and China, tension between Iran and US, ethno-religious riots in India, dubious Deal of the Century on Palestine propounded by the Trump administration and China’s US$2 trillion domestic debt bubble.

In one go, the world is being confronted not with a double or triple but multiple whammies.

All other challenges are being eclipsed by the Covid-19 pandemic. While the impact of these uncertainties usually affect nations differently in the sense that developed countries can weather a perfect storm better, the Covid-19 crisis has shown that all countries are equally at risk.

This creates a level-playing field in terms of dishing out economic stimulus to the infected economy. The question of whether the off-budget stimulus will create excessive inflation, affect sovereign ratings or cause a dent on a country’s economic growth, while important, becomes irrelevant since every country is equally impacted by the virus.

Hence, the first order of business is to save lives, while at the same time, trying to resuscitate the economy.

It is imperative therefore that the economic stimulus ensures the survival of the rakyat as opposed to any fiscal prudence, GDP growth or rating agency factors. The focus must be primarily on the rakyat which comprises individuals and their families, and their livelihoods whether as farmers, fishermen, hawkers, entrepreneurs or businessmen.

Economic stimulus for the future growth of the economy and its macroeconomic stability will be topics of future analysis post Covid-19 health crisis.

Since drastic time requires drastic measure, our suggestion is for the government to draw on some of its reserve to finance the big expenditures to save lives and re-start the economy. In this extraordinary time, austerity considerations will “kill” the ordinary rakyat.

Hence, for now our collective focus should be on the next nine months beginning April 2020. Despite the uncertainty over how long the Covid-19 saga will last, we actually have a precedent in the SARS outbreak where most countries were then on a path of economic stimulus for six months before a return to some semblance of normalcy.

Some of the suggestions for the administration to make:

For our ordinary rakyat in the streets and their families:

• Those with no EPF account or a meagre amount in their EPF account be provided a monthly cash pay-out of RM500 for six months beginning April, 2020.

• A BR1M-like cash pay-out of RM1,000 in April, RM2,500 in May and RM3,000 in June.

• Suspension of income tax for M40 for fiscal year 2020.

• A six-month moratorium on all bank loans for individuals affected by the Covid-19 outbreak.

• A six-month waiver on interest payment for credit cards loans for those affected by Covid-19.

• From April, loan arrears can be converted to interest-free term loan not exceeding one year.

• Government services related to registration, licenses, permits, etc, should be temporarily discounted to ease cash flow concerns for households.

• Tap into zakat funds for disbursements to the rightful recipients.

For our small businesses:

• A six-month moratorium on all bank loans for SMEs affected by the Covid-19 outbreak.

• A six-month waiver on interest payment for credit cards loans of SMEs affected by Covid-19.

• From April, loan arrears can be converted to interest-free term loan not exceeding one year.

• For SMEs, 25% rebate on utilities for the first two months and 15% rebate for another four months.

• A discount of 50% for rental of market and stalls covering a period of six months up to September 2020.

• Government to bear the payment of sick leave for small businesses for 14 days.

• Government services related to registration, licences, permits, etc, should be temporarily discounted to ease cash flow concerns for businesses.

• Business rate abolished for one year for small businesses that are affected by the Covid-19.

• Funds channelled to development finance institutions (DFIs) of RM100mil for businesses hit worst by the Covid-19.

• Companies with up to 250 employees can apply for loans between RM250,000 and RM500,000.

• 30% discounts for payments of land rents to all land uses for the year 2020.

• Reduction in corporate tax at the prevailing rate of 24% to 18% for all hotels for year of assessment 2020.

For Our Front-liners:

• Critical Services Incentive Payment (Bayaran Insentif Perkhidmatan Kritikal) to be increased from RM750 to RM1,000 from April until the pandemic ends.

• RM500 monthly allowance for medical doctors, nurses and medical personnel who are working tirelessly in hospitals and clinics from April till Covid-19 pandemic ends. (Sarawak Model)

• RM500 monthly allowance for Immigration officers manning the entry points throughout Malaysia from April till Covid-19 pandemic ends. (Sarawak model)

• RM500 monthly allowance for PDRM and officers working around the clock to ensure safety and security of Malaysians from April till Covid-19 pandemic ends. (Sarawak Model)

• RM500 monthly allowance for Malaysian Armed Forces (ATM) personnel manning the borders and those helping the police in maintaining law and order from April till Covid-19 pandemic ends. (Sarawak Model)

• Free food: Providing dedicated support of food supplies for doctors and healthcare personnel involved in the testing, diagnosing, and treating patients at risk of Covid-19 from April till Covid-19 pandemic ends.

The expected economic stimulus to be presented by the administration will definitely be huge, although it will be implemented for a limited period of time, between six and 12 months. But because the nature of this stimulus lies in its focus and emphasis on putting money into the pockets of the most vulnerable segments of our society during the pandemic, it radiates and begets another mercy – the multiplier effect of their spending will revive the infected economy.

The focus is to survive and get ready for a re-start of the economy.

Dr Rais Hussin

Parti Pribumi Bersatu Malaysia strategist

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