Think tank calls for long-term plan to get economy running post-Covid-19

(FMT) – The Institute for Democracy and Economic Affairs (IDEAS) today welcomed the stimulus package announced by the government to cushion the impact of Covid-19 but said a sustainable and long-term plan is needed to pave the way to economic recovery.

In a statement, the think tank said the government had rightly responded to the people’s cry for help with additional spending.

“But we also have to recognise that as Malaysia emerges from our MCO, we will discover a global economy deeply shaken by the Covid-19 situation, with demand dampened and supply chains disrupted.

“So it is high time that we introduce sustainability in stimulus spending backed by longer-term thinking in order to pave the way for greater resilience in our economy.”

Last week, Putrajaya announced an economic stimulus plan worth RM250 billion with RM128 billion for the people’s welfare, RM100 billion for businesses and SMEs, and RM2 billion to strengthen the economy, aside from the RM20 billion announced in the package by the previous government.

In doing so, Prime Minister Muhyiddin Yassin had maintained that no one would be “left behind” as the country continues to battle the spread of Covid-19, including by extending the movement control order from its original expiration date of March 31 to April 14.

But IDEAS said a plan is needed for “the next six to 12 months, not just the next two weeks”, adding that otherwise, “the government may find itself getting out from a public health crisis just to get into an economic crisis”.

It urged the government to establish a longer-term economic plan which incorporates three components: reducing short-term business insolvency risk, targeting the loosening of production clusters, and incentivising upskilling for future recovery.

It suggested the creation of an SME “distress centre” which could act as a one-stop information and business support platform to process applications for stimulus package programmes in a streamlined manner.

“A special relief mechanism can be considered to include the application of moratorium on commercial rental payments through the SME distress centre.

“Professional support should also be given to business operators who are facing insolvency to explore all funding options, while at the same time registering them for a special programme for training and job opportunities,” it said.

It also called for a clear strategy to bring the economy back to normal gradually but with greater speed.

It suggested a zoning system for production clusters to allow employees to gradually return to work and businesses to resume operating.

“Better location-based targeting can also allow the government to expand the list of exempted sectors to include vital enabling industries and supply chains which have been coming under strain.

“At the same time, incentives could be provided to encourage business compliance on mandatory testing of all staff and other precautionary measures like employees taking their temperatures before entering business premises.”

It said longer-term thinking is also needed in existing stimulus measures, for example through programmes to provide businesses with incentives to send their workers for reskilling.

“The measures need not focus exclusively on more government funding per se, but rather how the government can intervene, facilitate and enable businesses.”