A mercy-for-all stimulus to save lives, restart economy


PRIME Minister Muhyiddin Yassin announced various unprecedented economic stimulus and relief plans for the benefit of the rakyat at large and to help those in society with the greatest financial exposure. This is against the backdrop of the extension of the Movement Control Order, to last until April 14.

The world is facing an unprecedented crisis. The Covid-19 pandemic occurs amid the backdrop of on-going uncertainties in the global economy brought about by, inter alia, the collapse of the global oil prices, the trade war between US and China, the tension between Iran and US, the ethno-religious riots in India, the dubious Middle East’s Deal of the Century propounded by the Trump Administration and China’s US$2 trillion domestic debt bubble. In one go, the world is being confronted not with a double or triple but multiple whammies.

All other challenges are being eclipsed by the Covid-19 pandemic. While the impact of these uncertainties usually affects nations differently, where developed countries can weather these perfect storms better, only the Covid-19 crisis has shown that all countries are equally not immune to the virus.

This creates a level playing field in term of dishing out economic stimulus to the infected economy. The question of whether the off-budget stimulus will create excessive inflation, affect sovereign ratings or causing a dent on a country’s economic growth, while important, becomes irrelevant since every country is equally impacted by the virus. 

Hence, the first order of business in such a situation is to save lives, while at the same time, resuscitate the economy for its survival and future growth.

It is imperative therefore the economic stimulus that will ensure the survival of the rakyat for now in this difficult and trying time, is placed at the highest priority as oppose to any fiscal prudence, gross domestic product (GDP) growth or rating agency factors. The focus must be primarily on the rakyat, which comprises individuals and their families, and their livelihoods whether as farmers, fishermen, hawkers, entrepreneurs or businessmen. 

Economic stimulus for the future growth of the economy and its macroeconomic stability will be topics of future analysis conducted by many, to assist in ensuring a speedy and robust economic recovery posit the Covid-19 health crisis.

Since drastic times require drastic measures, our suggestion is for the government to draw on some of its reserve to finance the big expenditures to save lives and restart the economy. In this extraordinary time, austerity consideration will “kill” the ordinary men on the street and their families, along with the economy.

Hence, for now, our collective focus should be on the next nine months, beginning April 2020. Although we are aware of the uncertainty over how long the Covid-19 saga will last, yet we actually have a precedent in the SARS outbreak where most countries were then on a path of economic stimulus for six months before a return to some semblance of normalcy.

Some worthy considerations for the administration to make.

For our ordinary men on the street and their families:

• Those with no Employees Provident Fund (EPF) account or a meagre balance in their EPF account will be provided a monthly cash pay-out of RM500 for six months beginning April.

• A BR1M-like cash pay-out of RM1,000 in April, RM2,500 in May and RM3,000 in June.

• Suspension of income tax for M40 for fiscal year 2020.

• A six-month moratorium on all bank loans for individuals affected by the Covid-19 outbreak.

• A six-month waiver on interest payment for credit cards loans for those affected by Covid-19.

• From April, loan arrears can be converted to interest-free term loan not exceeding one year.

• Government services related to registration, licences, permits, etc. should be temporarily discounted to ease cash flow concerns for households.

• Tap into zakat funds for rightful disbursements to the rightful recipients.

For our small businesses:

• A six-month moratorium on all bank loans for small and medium-sized enterprises (SMEs) affected by the Covid-19 outbreak.

• A six-month waiver on interest payment for credit cards loans of SMEs affected by Covid-19.

• From April, loan arrears can be converted to interest-free term loan not exceeding one year.

• For SMEs, 25% rebate on utilities for the first two months and 15% rebate for another four months.

• A discount of 50% for rental of market and stalls covering a period of six months up to September 2020.

• Government to bear the payment of sick leave for small businesses for 14 days.

• Government services related to registration, licences, permits, etc. should be temporarily discounted to ease cash flow concerns for businesses.

• Business rate abolished for one year for small businesses that are affected by the Covid-19.

• Funds channelled to development finance institutions of RM100 million for businesses worst-hit by the Covid-19.

• Companies with up to 250 employees can apply for loans between RM250,000 and RM500,000.

• 30% discounts for payments of land rents to all land uses for the year 2020.

• Reduction in corporate tax at the prevailing rate of 24% to 18% for all hotels for Year of Assessment 2020.

For our frontliners:

• Critical Services Incentive Payment to be increased from RM750 to RM1,000, from April until the Covid-19 pandemic ends.

• RM500 monthly allowance for medical doctors, nurses and medical personnel who are working tirelessly in hospitals and clinics, from April until the pandemic ends (based on the Sarawak model).

• RM500 monthly allowance for immigration officers manning the entry points throughout Malaysia, from April until the pandemic ends (Sarawak model).

• RM500 monthly allowance for policemen and officers working round the clock to ensure safety and security of Malaysians, from April until the pandemic ends (Sarawak model).

• RM500 monthly allowance for Armed Forces personnel manning the borders and those helping the police in maintaining law and order, from April until the pandemic ends (Sarawak model).

• Free food: Providing dedicated support of food supplies for doctors and healthcare personnel involved in the testing, diagnosing, and treating patients at risk of Covid-19, from April until the pandemic ends.

The expected economic stimulus to be presented by the administration will definitely be huge, although it will be implemented for a limited period of time, between six and 12 months. But because the merciful nature of this stimulus lies in its focus and emphasis on putting money into the pockets of the most vulnerable segments of our society during the pandemic, it radiates and begets another mercy – the multiplier effect of their spending will revive and accelerate the infected economy to a myriad of vigorous economic activities that will pull the country together towards peace and prosperity. 

The focus is to survive and ready for a restart of the economy. – March 26, 2020.

* Rais Hussin reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight.


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