KUALA LUMPUR: The government is shifting gear towards a recovery mode after the reopening of sections of the economy on May 4, and is working on a short-term recovery plan to facilitate the rehabilitation of a fractured economy while preparing for the 2021 Federal Budget.
The Prime Minister Tan Sri Muhyiddin Yassin is expected to announce the recovery plan at end-May.
The Socio-Economic Research Centre (SERC) executive director Lee Heng Guie said the government has adopted six approaches or 6Rs (resolve, resilience, restart, recovery, revitalise and reform) to balance between the Covid-19 containment and people’s livelihood as well as the economy.
“With the movement control order in place to contain Covid-19 pandemic, it is to be expected that many households would have depleted savings or incurred debt, and would rebuild savings and, hence, consume less.
“Similarly, many firms have shut down their business, suffered cash flow problems and also need to rebuild their balance sheet before committing to invest,” he told Bernama.
Therefore, he said, recovery, revitalise and reform of the economy would be the government’s focused priority in the tabling of the 2021 Budget, which will outline measures and policies to revitalise and ensure a sustained economic revival over the next 12 months.
On the other hand, the 12th Malaysia Plan (2021-2025) will chart the country’s medium- and long-term strategic directions, he said.
Growth stabilisation must be on the mend and it is reasonable to expect domestic consumption and business capital spending to mend gradually, accompanied by a restoration of consumer confidence and business sentiment, Lee said.
“Restoring consumer and investor confidence will be key to domestic economic recovery. This should be anchored on keeping clear and consistent communication flows of the government’s economic stabilisation policies, backed by calibre leadership management.
“Macro-economic and political stability are also essential for ensuring a conducive and predictable environment for businesses to continue operating,” he noted.
To spur consumer confidence in enhancing consumption, Lee suggested the use of both government and participating merchandisers/retailers/hotels/tour operators/-issued online consumption vouchers that provide incentives to consumers and shoppers as one of the ways.
Job placement, skills training and income support programmes must also be continued for the vulnerable groups.
“For loss of employment amongst low-income workers, consideration can be given to providing extended income-support funds and training schemes to improve skills and job placement assistance based on the recovering economy and businesses,” he said.
The government needs to accelerate projects implementation particularly ongoing public infrastructure projects (Mass Rapid Transit 2, Light Rail Transit 3 and Pan Borneo Highway), and RM4 billion smaller rural and socio-economic projects cutting across the ministries and the National Fiberisation and Connectivity Plan.
“Over the medium term, fiscal spending on infrastructure investment in new projects should remain targeted to support domestic demand while enhancing the country’s future productive capacity,” he said.
Focus must also be given to investing in “new smart infrastructure” used for high-tech, digitalisation and sustainable purposes including big data centres, 5G infrastructure, and charging stations for new energy vehicles, solar energy, healthcare and defence technology, he added. – Bernama