New government must help rakyat deal with pandemic’s economic repercussion while keeping everyone safe.
THE pandemic and extended lockdowns have come at a heavy cost to lives and livelihoods since last year. As there is still nolight at the end of the tunnel, the incoming government must focus on what matters most for the people and the nation.
As it stands, Malaysia’s economic condition is dire. The gross domestic product recorded a seasonally adjusted quarter-on-quarter contraction of 2% in the second quarter, weighed down by the national lockdown measures imposed from May to June.
And given the tighter restrictions after June because of the surge in daily number of Covid-19 cases, this would pose further downside risks to the pace of economic recovery.
S&P Global Ratings just downgraded its 2021 growth forecast for Malaysia from 4.1% to 3.2% on account of the prolonged lockdowns, which led to subdued domestic demand.
Additionally, the reimposition of the full movement-control order (FMCO) in early June led to further deterioration in the labour market. The unemployment rate rose to 4.8% in June after registering a partial recovery in the four precedingmonths.
Worse, the Statistics Department’s household income estimates show that 20% of M40 households fell into the B40 income group and 12.8% of T20 households fell into the M40 category because of the economic contraction. This downward shift within the household income groups is evidence that the pandemic has not spared anyone.
These statistics should serve as clear indicators for the incoming government on what needs to be done. The state of political instability should not be an excuse to pause or stop policy measures.
The government’s recovery plan should focus on two key priority areas.
First, the gradual reopening of economic sectors under the National Recovery Plan (NRP) is welcomed as it will alleviate the burden on many people. This is due to the critical need to address the issues of high unemployment and continued closure of businesses, especially among SMEs, but this move needs to be coupled with extra vigilance over the new variants.
Although it is still too early to gauge how fast the economy is able to recover, the recent progress of the National Covid-19 Immunisation Programme where more than 50% of adults is fully vaccinated, is expected to facilitate recovery.
Nonetheless, constant monitoring on the national inoculation pace is required as our vaccination rate is low compared withother countries, such as Singapore.
Perhaps Malaysia can learn from the island-city state that has been at the forefront when it comes to Covid-19 detection and containment measures, as well as vaccination rollout.
As of mid-August, Singapore has fully vaccinated 73.1% of its population, the highest in Asean. The substantial drop in its daily Covid-19 cases has also allowed the government to ease restrictions and jump-start the economy.
Second, there is a need to ensure smooth distribution of existing assistance and to ensure that essential spending is not jeopardised because of the change in government.
Given the hardships that the rakyat have faced, short-lived and narrow-minded policies prioritising political interests would be the last thing everyone needs now
Cash assistance and food baskets to help households make ends meet and put food on the table, immediate assistance for SMEs to remain afloat, such as wage subsidies and grants, should reach the beneficiaries as planned. More importantly, exclusion errors in the provision must be minimised.
Surveys have shown that both households and businesses prefer financial assistance over other types of assistance, suggesting how dire the situation is. So, effort must not be wasted reinventing the wheel.
During this unprecedented twin crisis, lives and livelihoods should be the utmost priority of the incoming government. This iswhy we must set aside political differences to execute these key priority areas.
This article also appeared in New Straits Times on 25 August 2021.