Stimulus package has to be moderate and affordable

THE government faces an economic dilemma. On the one hand it faces a global slowdown and even possibly an impending recession, especially with the Covid -19 outbreak. On the other hand, our National Budget has been running deficits for several years.

Therefore, it cannot be depended upon to adequately stimulate the economy to counter the weakening business environment, growing unemployment and underemployment.

Hence, although the government is obliged to and will provide an economic stimulus package, it has serious limitations as to how much it can do to help businessmen, and to prevent more damage to the economy and the welfare of particularly the poor and more vulnerable Malaysians.

What then can we do to face this economic dilemma?

Firstly, the stimulus package cannot be strong or too weak. It has to be moderate and affordable.

The previous stimulus package was about RM8 billion for the SARS epidemic in 2003. Maybe our new package can exceed this amount.

The government cannot be expected to provide much more because of the continuing budget constraints and the lack of sufficient high savings of our reserves to meet the uncertainties and hazards of rainy days and storms ahead.

We cannot also say for sure, how long this nasty Covid-19 outbreak will last. So far we have done pretty well together with the drastic and gallant action taken by China to control the situation.

Secondly, we should understand government’s current budget limitations. We should face up to the inevitable facts of periodic economic cycles and ups and downs in our businesses and also the unpredictability of virus attacks. After all, we have overcome serious economic uncertainties and socioeconomic setbacks in the past. We must therefore brace ourselves to this looming crisis again.

Thirdly, we should reform and restructure our economy even more now, to face future crises with more resilience and confidence and determination. We should learn from this crisis to be more efficient and competitive to overcome external threats and internal weaknesses that would undermine our capacity to face more of our future dilemmas, with greater resources and competencies and selfconfidence.

Let’s also learn how some smaller and more vulnerable economies will do better than us to overcome their own crisis?

Fourthly, the new stimulus package needs to provide priority to the small and medium enterprises (SMEs) and to the low-income groups.

While the bigger business can be helped by reducing uneven business practices in tenders and contracts and interference in their awards, as we have witnessed recently, we could also reduce rates and charges for the SMEs and the poor.

For instance as requested by the SMEs and the poor they would need to be helped with lower fees and charges, utility rates and more subsidies and loans to SMEs.

Let’s resolve to face up to the challenges unfortunately brought down upon us. We cannot and should not hope to gain much from the government’s stimulus package since the budget itself is weak.

If we insist on a bigger stimulus package, it will aggravate the federal and state budgets well beyond our budget limits. There could then be longer term disruptions and damages to the economy.

I would say that if our economy was allowed to be more competitive and if the private sector was encouraged to participate more strongly in our economic development, the public sector would be smaller, the civil service would be leaner and our economy would be more resilient and more sustainable in facing our delicate dilemmas and overcoming our socioeconomic dilemmas.

Let’s learn from these lessons to perform better and to become a better country.

Tan Sri Ramon Navaratnam

Chairman Asli Centre for Public Policy Studies