PETALING JAYA: Experts have agreed with Prime Minister Tan Sri Muhyiddin’s projection of RM1 trillion in losses by the banking and financial system in the country if the economy is not reopened.
Prof Dr K. Kuperan Viswanathan, who is the head of the regional development cluster of the National Academy of Professors Malaysia, said the interim will be tough even with the economy rebooted.
The government has no choice but to spend through deficit financing in 2020 and early 2021 to support the economy due to the Covid-19 pandemic, he pointed out.
“The best the government could do is to reduce unemployment by providing incentives to business firms to employ people,” Kuperan told theSun yesterday.
“Get unemployed graduates into internships and training schemes which will eventually lead to longer term employment for university graduates. Promote agricultural production and continue to pursue new markets for our industrial and agricultural goods and reduce the import of low-skilled foreign labour.”
He said the gloomy outlook is global and the Malaysian economy will contract by about 5% in 2020.
However, a 4% recovery in 2021 and 6% recovery in 2022 are possible if there is no second wave of infections, he added.
Kuperan urged the government to protect the low-income group with its income support programme. He said the unemployed should be given at least RM500 per month until the end of the year.
“This will eventually lead to economic recovery by maintaining expenditure in the economy and creating demand for goods and services,” he said.
Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan also said recovery will be slow due to the low level of consumer confidence.
“People don’t want to buy products or services or at least not as much as before due to the state of the economy,” he said. “Their concerns are health and job security.”
Shamsuddin said the outlook is gloomy up to mid-2021 before the economy starts to recover. He urged the government to boost consumer confidence, review the wage subsidy programme and consider an extension to the bank loan moratorium.
“Consumer’s confidence can be boosted by promoting and selling products at an affordable price be it for local or import products,” he said.
“The wage subsidy programme should also be reviewed in terms of having a higher subsidy percentage. The percentage of assistance offered is significantly lower than that in other countries which goes up to 75% to 80%. Ours is less than 15%.
“This should be relooked as it would give employers the confidence to retain staff and see their business throughout this pandemic.”