NEW jobs and capital to start ventures should be the priority, not saving businesses that are on the verge of collapse due to the movement-control order, said economists.

Universiti Tunku Abdul Rahman Associate Professor in economics Wong Chin Yoong said the government cannot continue to try and save all industries as attempted in its Prihatin stimulus packages.

“Industries that are already collapsing should not be saved. Instead, the government should help people in those industries, such as by helping them find jobs or some capital to start a business in another field, or retraining.”

The stimulus packages rolled out so far do not include funds to start new businesses, which is something Putrajaya should consider, he said.

Another measure that will help people, in particular the self-employed, is to relax the eligibility for unemployment benefits. This will assist them as they look for jobs and find new sources of income.

“I do not think jobs or companies should be saved. When industries or businesses collapse, new ones will take their place. This is how the market works. It does not matter if the collapse is caused by a pandemic or new technology; the problem is that the business model does not work,” said Wong.

“I think the government should focus on saving the economy instead of jobs. Some industries, such as hotels, have been hit hard. I don’t think more money should be spent on sustaining them.”

He said tourism is unlikely to recover in the short term because consumer confidence is still low as Covid-19 infections continue, although at lower numbers.

If recovery is a long way off for some sectors, it will not be possible for the government to sustain them for the long term, he said.

By focusing on the economy instead of saving businesses, those affected by the pandemic will also have a chance to reinvent themselves, such as repurposing accommodation properties into other uses to generate income.

Institute of Democracy and Economic Affairs senior economist Muhammad Adli Amirullah agreed, saying businesses that lack planning or have closed due to a critical lack of funds should not be bailed out.

“If the government still wants to help, then it defeats the purpose of setting up a business.”

Any government aid for businesses should be in the way of preparing a platform or environment that enables them to return to profitability if they have the means to. 

This can be by providing low-interest loans and incentives, rather than continuing with subsidies and cash injections.

“Even if you want to stave off business closures, such as by helping them pay off debts, it’s just unsustainable,” said Adli.

“Injecting funds is easy, but how much can you give? The government should cooperate closely with industries to formulate long-term plans on how to revive certain sectors.”

Any direct help to businesses should target only those who have lost their jobs due to the pandemic, and self-employed persons who have had to close up shop.

These should be considered the weakest groups among businesses, said Adli. – May 17, 2020.