PRIME Minister Ismail Sabri Yaakob’s government must help pandemic-battered businesses recover and restore foreign investor confidence, said economists.

The experts said Budget 2022 and the 12th Malaysia Plan (12MP) would set the direction forward.

Malaysian Institute of Economic Research research head Dr Shankaran Nambiar told The Malaysian Insight Ismail must also make sure to keep up the Covid-19 vaccination rate.

“With an effective vaccination drive, I would expect the number of Covid-19 cases to start declining. That being the case, the prime minister must maintain the momentum and avoid the temptation to be overconfident,” he said

“As cases go down, there should be a careful opening up of the economy.  Efforts should go into supporting the recovery of businesses that may have failed or are close to failing given the series of lockdowns in the last year and half.”

Nambiar said special attention must be given to the worst-hit sectors, such as wholesale and retail and tourism, travel and hospitality.

“Labour matching and placement agencies must be set up to help workers find employment. Credit facilities must be relaxed for those wanting to pick up the pieces,” he said.

He added that the government must also take steps to restore the confidence of foreign investors.

“More than just producing a new set of tariff measures to gain confidence, the government should demonstrate a firm resolve to reduce obstacles to business.  The effort to streamline incentives should be revisited,” he said.

He added that attention must be give to fiscal policy in the coming months with Budget 2022 being the focal point.

Socio-Economic Research Centre executive director Lee Heng Guie said Budget 2022 must contain quick and decisive actions to support people and businesses as well as to stimulate investment. 

“Fiscal stimulus under consideration has to be bold, sweeping and comprehensive to create jobs, expand productive capacity and unleash more economic and investment opportunities to restart the economy post the prolonged Covid-19 pandemic,” he said.

Lee said the overdue 12MP (2021-2025) must be immediately rolled out to chart the course of national economic development over the next five years.

He said the country has struggled to win a war of more than 18 months against the Covid-19 pandemic.

“While the pace of vaccination has increased, the virus spread remains far from over though it will likely be contained with a time lag. We are seeing lower hospital admissions of serious cases after reaching a high vaccination rate but we must not let our guard down,” he added.

Lee said the economy remains vulnerable despite reporting a 16.1% gross domestic product (GDP) growth in the second quarter of 2020.

“Economic desperations have deepened on reduced and unstable household incomes and high jobless rate; many hardest-hit businesses and sectors are continuing to struggle for survival,” he said.

Bank Negara Malaysia has slashed this year’s GDP growth forecast to 3-4% from 6-7.5% previously, implying a sharp pullback in growth from 7.2% in in the first half of 2021.

Lee said the government should ensure political stability and work on rebuilding confidence and trust.

He said Putrajaya must be able to implement effective virus containment measures; timely economic responses to limit economic damage; and navigate the country out of this crisis. In addition, it has to promote trust, transparency, common purpose, and accountability.

“Policymakers must figure out how to fix a shattered economy and to safeguard it against the next catastrophe. Immediate priority is to craft a swift economic recovery plan for growth, resilience, investment, generating jobs, reskilling and upskilling of manpower,” he said.

“Vulnerable households must continue to be given appropriate social protections in terms of income, employment and skills support.”

Lee said businesses should be given incentives to help them recoup and encourage investment. 

“Many badly hit firms are eager to see tax reliefs and incentives for their revival and to invest in digital technology and automation, in particular businesses that suffered the most from the prolonged pandemic.”

It should also prepare for the future by accelerating structural changes through the adoption of new technologies and innovations and enhancement of workers’ skills

In delivering his maiden address to the nation on Sunday, Ismail said the government will focused on two objectives, which are to return public prosperity by increasing the purchasing power of the consumers and strengthening the private sector as significant drivers of the nation’s economic growth.

He said attention will be given to those who have lost their incomes, the shrinking middle-class, small and medium industries as well as domestic tourism.

Ismail said the government will also introduce short-term initiatives to stimulate the economy. He has yet to unveil his fiscal policies and appoint ministers for the finance and economic portfolios. – August 25, 2021.