The first
so-called stimulus package of RM20 billion was more of easing the employee
contributions to EPF. That took about half of the sum (RM10b) suggested. It
presumed people will spend because they have a higher disposable income.
Propensity to consume for the low-income earner may not happen in these
challenging times, even though basic economics may suggest that.
Muhammed Abdul
Khalid, the former economic advisor to Mahathir, called for a bigger stimulus
package focused on:
i.
aid to self-employed and lower income workers;
ii.
reduction of income tax and easing of loan repayments;
and
iii.
allocation of RM10 billion for food production.
The Government
needs to support those who earn less than RM5,000, who make 72% of the
workforce. Muhammad believes it will cost RM26 billion if implemented for 3 months
beginning April. If 10% of SMEs were to close shop, it would see one million
lose their jobs. He then adds for a step-up of food production to ensure food
security. This last point will not change the immediate situation but perhaps
improves food supply in the medium term. Why? Food production will take time
and any step-up will only see fruits in 18-24 months, at best.
On 23rd
March, the Government came up with the idea of withdrawal from Account 2 of
your EPF account to meet your living needs. But that is your savings for
retirement. Isn’t this the contributor’s own money?
On a macro level,
the Government has to focus on 3% - 5% of GDP as the stimulus required. That
roughly translates to RM45billion – RM75 billion. It looks colossal but that is
what is required. Then focus on two things (i) where, who and what will be impacted
most; and, (ii) which critical sectors/industries could be “saved” from this
extraordinary (Covid-19) situation. The money could be channeled through banks
and EPF. Banks for stabilization of businesses. And EPF for living support of
contributors.
Doesn’t that look simple? A good plan is always
simple.
For more details you can kindly contact MP Capital
Advisory Sdn Bhd.
Reference:
Povera
A. & Yunus A. PM: Additional
measures to lessen people's burden, enhance healthcare capabilities, https://www.nst.com.my/news/nation/2020/03/577387/pm-additional-measures-lessen-peoples-burden-enhance-healthcare
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