Not right time to sell national assets, says Mustapa

(FMT) – Now is not a good time to sell government assets to generate cash for economic recovery, Minister in the Prime Minister’s Department for economy Mustapa Mohamed said.

He said he did not believe this was a good alternative for the government to consider in finding money to alleviate the suffering of the people following the movement control order (MCO) as a result of the Covid-19 pandemic.

“If we were to dispose of these assets, it will be a fire sale. I’m not too sure if this is a good thing to do.

“In my personal view, sale of assets are not a good thing to do at this moment because the prices, of course, are very low.

“We are not going to get a good price for whatever we have to sell,” he said during an online discussion organised by the Institute for Democracy and Economic Affairs (IDEAS), with the theme “Post Covid-19 Recovery Plan: The Role of the Economic Action Council (EAC)”.

During the discussion, Mustapa also spoke on changes brought by the MCO.

As a direct result of the prolonged MCO, Mustapa expected there to be more virtual offices instead of people renting office spaces in the future, as people have become accustomed to working from home and the need for social distancing.

This, he said, would also impact the property market.

He said such strategic changes should be used as an opportunity for reforms, to simplify processes and reduce bureaucracy or red tape for businesses.

“It’s an opportunity to have a hard look at how we have been doing things.”

He said moving forward, the government would need to depend a lot on the private sector.

The minister said there may be a total recovery sometime next year for private consumption, as businesses start to open, tourists start coming back and SMEs go fully back into business.

The gradual opening up of the economy, with restrictions loosened gradually under the MCO, will also drive up private consumption.

Elaborating on the strategic changes, Mustapa said many small and medium enterprises (SMEs) have been badly affected by the pandemic, especially those which are not on digital platforms or utilising e-commerce.

“Tourism trends (a major revenue earner for the country) have changed a lot and will continue to change a lot in the next few months,” he added.

The private education industry will also be affected, with fewer intakes of foreign students.

“There have also been many challenges in the global value chain over the last few weeks. These will result in changes in the investment promotion strategy.”

Tweaking Shared Prosperity Vision 2030

Mustapa said the Shared Prosperity Vision 2030 will still be the main agenda for the country’s economy after the MCO ends.

However, as a result of the pandemic, strategic changes will have to be made.

The 12th Malaysia Plan (2021-2025) and the 13th Malaysia Plan (2026-2030) will also be affected, said Mustapa, who is a member of the Economic Action Council.

Mustapa expected private consumption to decrease post-MCO, due to many losing their jobs and not having any income.

There will also be changes in the pattern of how people spend their money, with more being spent on food, medicines and pharmaceuticals.

He said the situation would have been worse without initiatives introduced through the government’s economic stimulus package.

He was confident the direct fiscal injection of RM35 billion, plus all the money raised from the six-month moratorium on bank loans and withdrawals from EPF and Socso would stimulate consumption.

“The government is still functioning, with civil servants still getting their salaries.

”There are 880,000 pensioners and 1.6 million civil servants and many government-linked companies are still paying staff their salaries.

“These are also important elements holding up the demand for consumption.”

Mustapa added that the low global prices for oil would affect the economy badly as 20% of government revenue came from this source.

He said the forecast for economic growth for Malaysia this year and subsequent years had initially been favourable.

However, growth is in the negative now and there will be less tax collection and dividends from Petronas, he added.

“People may be holding back investment decisions. We have to revisit all the new assumptions that have come up over the last few months.”