Govt in an economic dilemma


THE government faces an economic dilemma. On the one hand it faces a global slowdown and even possibly an impending recession, especially in the face of the current Covid-19 virus outbreak. On the other hand, our national budget has been running a deficit for several years. Therefore, it cannot be depended upon to adequately stimulate the economy, to counter the weakening business, especially the small businessmen, and growing unemployment and underemployment. 

Hence, although the government is obliged to and will provide an economic stimulation package, it has serious limitations as to how much it can do help businessmen, and to prevent more damage to the economy and the welfare of particularly the poor and more vulnerable Malaysians.

What then can we do to face this economic dilemma?

1. The stimulation package cannot be strong nor too weak. It has to be moderate and affordable. The previous stimulation package was about RM8billion for the SARS epidemic in 2003. 
Maybe our new package can exceed this amount?

The government cannot be expected to provide much more because of the continuing budget constraints and the lack of sufficient high savings of our reserves to meet, the uncertainties and hazards of rainy days and storms ahead, like we now face.

We cannot also say for sure, how long this nasty Covid-19 epidemic will last. So far we have done pretty well with the drastic and gallant action taken by China to control the vicious virus. 

2. We should understand the government’s budget limitations. We should face up to the inevitable facts of periodic economic cycles and ups and downs in our businesses and also the unpredictability of virus attacks that have come even before. After all, we have overcome serious economic uncertainties and socio economic setbacks in the past. We must therefore brace ourselves to this looming crisis again.

3. We should reform and restructure our economy even more now, to face future crises with more resilience and confidence and determination. We should learn from this crisis to be more efficient and competitive to overcome external threats and internal weaknesses, that would undermine our capacity to face more of our future dilemmas, with greater resources and competencies and self confidence. Let’s also learn how some smaller and more vulnerable economies will do better than us, to overcome their own crisis? 

4. The new stimulation package needs to give priority to the small and medium enterprises (SMEs) and to the low income groups.

 While the bigger business can be helped by reducing uneven business practices in tenders and contracts and interference in their awards, as we have witnessed recently, we could also reduce rates and charges for the SMEs and the poor. For instance, the SMEs have asked for more subsidies and loans while and the poor need help in the form of lower fees and utility rates.

Conclusion 

Let’s resolve to face up to the challenges unfortunately brought down upon us. We cannot and should not hope to gain much from the government’s Stimulus Package, since the Budget itself is weak. 

If we insist on a bigger stimulus package, it will stretch the federal and state budgets well beyond their limits, There could then be longer term disruptions and damage to the economy. 

I would say that if our economy was allowed to be more competitive and if the Private sector was encouraged to participate more strongly in our economic development, the Public sector would be smaller, the civil service would be leaner and our economy would be more resilient and more sustainable, in facing our delicate dilemmas and overcoming our socio-economic dilemmas. 

Let’s learn more from these lessons to perform better and to become a better country. 

*Ramon Navaratnam is Asli Centre for Public Policy Studies chairman.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.


Sign up or sign in here to comment.


Comments


  • When every policy, economic or otherwise, were infused with elements of race and religion, they are guaranteed NOT to achieve optimum results!

    The very reason Malaysia regressed compared to its peers.

    Posted 4 years ago by Malaysian First · Reply