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Why stimulus package ineffective in reducing job cuts

12 May 2020 / 11:28 H.

WITHOUT a doubt, Malaysia has been able to contain the spread of Covid-19 more effectively than most countries. This has won praise, locally and internationally.

According to a report, the World Health Organisation described Malaysia’s Covid-19 response as a “whole of government” approach that is strong and robust.

The China Global TV Network also named Malaysia’s Health Director-General Datuk Seri Dr Noor Hisham Abdullah as one of the world’s top three doctors in handling the Covid-19 outbreak, alongside Dr Anthony Fauci of the US and Dr Ashley Bloomfield of New Zealand.

As much as credit must be given for a job well done, shortcomings in our approach to tackle the economic impact of the pandemic ought to be pointed out too.

The Prihatin Economic Stimulus Package (ESP) has brought much relief to Malaysians, with short-term protection measures like the Employee Retention Programme, wage subsidies and Bantuan Prihatin Nasional.

Industry experts have predicted that the number of Malaysians retrenched will hit at least a million this year.

And that is a conservative figure as fears of up to three million workers getting retrenched are real.

Group CEO/editor of Malaysia SME media group Wayne Lim has put ESP’s failure down to the ineffectiveness of the Wage Subsidy Programme (WSP). The amounts of RM1,200, RM800 and RM600 subsidised by the government is simply too little to support businesses that are operating in city centres.

The WSP structure only benefited businesses that operate in second-tier and third-tier cities and towns, but more than 60% of businesses are operating in city centres, he said.

Greater prudence is also needed in the allocation of funds under the ESP. Right off the bat, one of the missteps was the doling out of RM1.17 billion to 1.5 million civil servants and 850,000 pensioners.

But with that done, the more important task at hand is ensuring that financial stimulus packages worth RM250 billion are not mismanaged, delayed or lost to wastage and leakage.

The integrity departments or units of every ministry should monitor and vet the standard operating procedures and the mechanism on how funds are channelled. All public expenditure under the government’s stimulus packages must be accounted for.

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Why stimulus package ineffective in reducing job cuts

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