Help rakyat first

17 Sep 2020 / 11:00 H.

PETALING JAYA: Economic recovery and continuation of government assistance to the people should take precedence in the fiscal budget for next year.

The government has to take into consideration that the economy is very fragile, given the devastation caused by the Covid-19 pandemic.

In addition, the unemployment rate is rising as the pandemic continues to ravage every sector of the economy, with no end in sight.

These are the two key issues the government has to address to restore economic stability when it tables Budget 2021 for debate on Nov 6, according to economists theSun spoke to yesterday.

Prof Dr Barjoyai Bardai of Al Madinah International University said the government must start by addressing the recessionary impact when it decides on the allocation of funds under the new budget.

He noted that the gross domestic product contracted by 3.2% in June but neither growth nor further contraction is expected for July.

“While that is an improvement, we need to stimulate the economy to ensure a turnaround as soon as possible.”

“For this, we need a stimulus package that can be a boost for private and public consumption,” he said.

Barjoyai added that this can be done by restarting mega projects such as the East Coast Rail Link and the Kuala Lumpur-Singapore high-speed rail.

Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz had said recently that market confidence remains strong among foreign investors.

He cited the RM23.1 billion investments in the bond market as of August as evidence that foreign investors were still keen on Malaysia.

Barjoyai said foreign investment is always welcome but stressed that for now, the country needs a “short-term fix” to address growing unemployment, that stood at 4.7% in July.

He also pointed out that foreign investments come with “strings attached”.

“For instance, China will be keen to invest in Malaysia, but it will insist on bringing its own workers and management team (to work on its projects in Malaysia). That will not solve our unemployment problem,” he said.

Barjoyai noted that in the United States and Europe, similar problems linger because of the pandemic.

Despite being the world’s largest economy, the United States is struggling to come up with more money to address problems caused by the pandemic, he said.

The US government had already approved spending of US$3 trillion on measures to fight the economic fallout from Covid-19.

“Our government should spend wisely.”

He said the government should also continue with the financial assistance under the Prihatin Rakyat economic stimulus package, but the funds should be channelled “the right way”.

“They have already declared that they are a caring government, so they need to continue doing it.

“But it must be strategically modelled in such a way that it will bring long-term benefits,” he said, adding that this can be done by investing in retraining and reskilling programmes.

Another economist, Dr K. Kuperan Viswanathan, feels that the escalating trade war between the United States and China will pave the way for more investors to direct their funds to Malaysia.

“Malaysia is an open economy and if the incentives are right, foreign investments will flow in. We have good infrastructure and policies in place that will enable investors to repatriate their profits,” he said.

Kuperan also agreed that the stimulus packages should be continued in Budget 2021 to support low income households and those who are out of work.

Industries facing financial challenges also needed to be given incentives to maintain employment through a wage support system, he added.

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