Covid-19: What Economic Measures?

Covid-19 has impacted the global economy. Malaysia is not exempted. Sectors such as tourism (hotels, cruise liners) and transport face immediate impact. Others may include manufacturing, retail, F&B, property, gaming, education and other services will show secondary impact. Healthcare and producers of gloves, masks and other surgical or medical items face positive outlook.

Source:https://www.euronews.com

So what can the Government do?

·       Create a stabilisation fund for firms and workers to draw on. Its size is probably 2% of GDP. The fund will help retain workers for firms impacted by Covid-19;

·       A one-time tax relief for firms impacted by Covid-19, i.e. no tax for one year? ;

·       Rental and lease payment (six months) support for businesses impacted (F&B and retail);

·       Hotels (and Airbnbs) receive support for room occupancy impact and room cancellations. Current (monthly) occupancy level is compared to a break-even level (say, 50%) and that will be the support level provided (for 6 months);

·       The transport sector (e-hailing, taxis, rail) will have direct financial support and/or rebates on fuel/gas/electricity used;

·       Aviation sector will have lower landing and parking fees and rebates on taxes (arrivals may fall 30-40% of total projected traffic);

·       Banks to provide moratorium on principal loan repayment for affected sectors; and

·       Cash flow support grants for six months to cover fixed costs of firms impacted or those self-employed.

There are many other possibilities to stabilise the situation. But it requires speed and some imagination to reverse the downward spiral. And, of course, a dose of good fortune or providence!