‘Budget 2021 and 12MP crucial to chart M’sia’s economic direction’

KUCHING: Budget 2021 and the tabling of the 12th Malaysia Plan (12MP) will be crucial to chart the direction of Malaysia in overcoming the impacts of Covid-19, said a business leader yesterday.

Kuching Chinese General Chamber of Commerce and Industry ( KCGCCI) secretarygeneral Jonathan Chai said the private sector would require more projects and favourable policies that would accelerate the country’s economic growth.

“Hopefully, there would be a cut in the rate of income tax and corporate tax or even a tax holiday to ease the financial burden of the private sector,” he told The Borneo Post when prompted for comments on national Democratic Action Party ( DAP) secretary-general Lim Guan Eng’s recent statement that the country needed another injection of RM45 billion to be well on its road to economic recovery.

Chai said the Covid-19 pandemic has proven to devastate the economy globally including developing countries, which saw second-quarter growth figures plummet to unprecedented levels since the 1998 Asian financial crisis.

He said Malaysia was no exception with its gross domestic product (GDP) in the second quarter of this year contracting 17.1 per cent, surpassing the -11.2 per cent recorded in the fourth quarter of 1998.

“The local Chinese business community remains gloomy on this year’s economic outlook, but over two-thirds of them feel they can survive the challenges brought about by the Covid-19 pandemic.”

Quoting the recent Business and Economic Conditions Survey conducted by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), he said 70.9 per cent of the 828 respondents were pessimistic about this year’s economic prospects while only 2.5 per cent felt optimistic.

He said the substantial demand and supply shocks caused by the pandemic accounted for the negative economic outlook.

“From the perspective of the business community, we are of course in favour of any policy or aid packages from the government, which serve to mitigate the impacts of the pandemic.

The local Chinese business community remains gloomy on this year’s economic outlook, but over two-thirds of them feel they can survive the challenges brought about by the Covid-19 pandemic. Jonathan Chai

“Indeed, the Prihatin Stimulus Package which introduced the moratorium of bank loans, energy discounts, SRF’s (Special Relief Facility) loans at special rate and wage subsidies programme have helped to keep a lot of local businesses especially SMEs (small and medium enterprises) afloat and prevent massive unemployment from closures of businesses.

“Should the fiscal condition of our country allow, it would be a good idea to inject an additional RM45 billion as proposed by the former finance minister (Lim) to save jobs and businesses in the country,” he added.

As the tax collection would be dwindling this year and the oil price remained weak, Chai said Malaysia was expected to face some financial constraints if additional economic stimulus package was introduced.

Despite having said so, he felt that the government would have to do some balancing exercise in determining whether to keep a smaller budget deficit or to face the eventualities of bigger social problems arising from the heightening unemployment.

He noted that Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz had recently emphasised that there was still room for targeted initiatives, following the plan to increase Malaysia’s statutory debt limit to 60 per cent of the GDP, from the current 55 per cent.

With this, Chai hoped that the government would introduce further economic stimulus package in the Budget 2021, which is expected to be tabled in November.

He said around 71.4 per cent of the respondents from the ACCCIM survey indicated that they expected to survive the impact of the pandemic and only 4.5 per cent said they were “most likely to cease operations”.

However, around 68.4 per cent of them expected their businesses to take four to 12 months to get back on track while 21.1 per cent thought it would take over a year, he added.

“Looking at the figures and feedback of the survey, the SMEs will certainly welcome any decision of our government to extend the Wage Subsidy Programme for another three to six months after the current six-month subsidies end in September.”

Chai believed that the programme would certainly save a lot of businesses which would in turn save a lot of jobs.

“If additional funds are made available, those businesses which have missed out in getting an SRF’s loan previously offered by Bank Negara through the commercial banks will certainly like to have another go on the facility which serves to ease the cash flow of those businesses concerned,” he added.

In a statement last Thursday, Lim pointed out that the International Monetary Fund (IMF) had predicted a global economic contraction of 4.9 per cent this year.

With this, he proposed for an additional RM45 billion fund injection to enable local businesses to survive and prevent unemployment from exceeding one million.

“There is no reason for the federal government to be so stingy about injecting an additional RM45 billion when there is sufficient liquidity in the domestic debt market of RM1.6 trillion to sustain such borrowings.

“The total RM90 billion fund injection from the additional RM45 billion is not significant, compared to Singapore’s S$108 billion stimulus package,” added the Bagan MP.