THE economic stimulus package which is to be announced today should be more ambitious than the RM20 billion 2020 Economic Stimulus Package (ESP 2020) in terms of target groups and range of economic activities.
AmBank Group’s chief economist and head of research Dr Anthony Dass said it must address six strategic issues: Reducing unemployment and increasing job opportunities; easing the economic burden of the people, particularly those in vulnerable sections of society; supporting the private sector; undertaking capacity-building for the future; supporting the small and medium enterprises (SMEs); and supporting the informal business activities as well as those working in this sector.
Those in the informal sector include roadside food vendors and workers on daily paid jobs.
“We need to give cash assistance, like compensating 80% of their income,” he told The Malaysian Reserve (TMR).
Given the concerns over fund allocations, Dass said the Stimulus Package 2 (SP2) should seriously look at adopting “money financing” for the fiscal deficit strategy.
The RM20 billion for ESP 2020 announced on Feb 27 was formulated to minimise the economic impact of the Covid-19 outbreak, where the initiatives are aimed at ensuring the people’s safety, health and wellbeing.
Hence, SP2 should focus on the informal sector by providing direct financial assistance and incentive packages, said Dass.
He said it can be done by compensating individuals whose welfare have been adversely affected due to the current crisis and focus on those who work in the informal sector, paid daily or on contract.
“The government can reduce unemployment and create job opportunities by providing incentives to companies that employ those who have been laid off.
“Also to provide entrepreneurial skills and financial assistance for those who intend to venture into ‘micro’ or informal business activities,” he added.
During times of crisis, there must be measures to enable the private sector to raise funds in the capital market with greater ease.
Dass said companies relying on foreign workers should be exempted from levy payments to the Human Resource Development Fund for a period of six months.
“The government should also look into extending housing loans for government servants by an additional five years and increase the loan amount for certain categories of government servants to buy properties or cars,” he said.
This, he added, is to make it easier for foreigners and foreign companies to buy commercial real estate valued at RM500,000 or more without seeking the approval of the Foreign Investment Committee.
The government or local authority should also consider extending business operations of hypermarkets/retail businesses until 11pm on weekdays and 1am on weekends, while hypermarkets in shopping complexes can apply to operate on a 24-hour basis after the Movement Control Order (MCO) is over, so that they can recover the losses incurred during the period.
The Singaporean government announced yesterday an additional S$48.4 billion (RM145.8 billion) to support businesses, workers and families due to Covid-19.
Last month the republic announced S$6.4 billion to cushion the economic effect posed by the virus. In total Singapore allocates S$55 billion or about 11% of its GDP.
Meanwhile, Sunway University Business School Economics Professor Dr Yeah Kim Leng expected a bigger and more comprehensive stimulus package to mitigate the economic impact of the extended MCO and to alleviate the economic hardships faced by all firms, businesses and households.
He said more financial and wage support to help firms across all industries to cope with the loss of income and keep staff on payroll are expected.
“Larger income support for low-income households, retrenched workers, part-timers and self-employed — like small traders and hawkers — are expected to be included in the SP2 to alleviate the economic hardships caused by the MCO and disruption to economic activities,” he told TMR.
In a thematic note yesterday, he said money created through this mechanism could be channelled to promote private sector confidence and ensure that this sector does not collapse due to the deepening of the crisis.
“This can be carried out in a variety of ways, including direct financial assistance, incentive packages, and mega projects that require private sector participation and SMEs,” he added.
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