All parties involved must play their part to ensure that the funding goes to the worthy applicants
pic by HUSSEIN SHAHARUDDIN
THE Covid-19 health crisis is slowly evolving into an economic crisis with unemployment rates rising rapidly in many counties, signalling a challenging period ahead for policymakers everywhere.
The lockdowns enforced to control the spread of the virus have badly hurt sectors like hospitality, aviation, retail, and food and beverage especially hard, leading now to layoffs as businesses struggle to keep afloat.
Despite the sizeable fiscal and monetary stimulus measures announced across the world, the long lines at food banks and unemployment offices have policymakers in the tight spot and appear to have reignited the US-China trade tension again which risks undermining a pace of recovery of the global economy.
As risk factors grow, the country’s policymakers must ensure the situation here remains manageable, and jobs and livelihoods are sustained as best as possible.
The virus has already left its mark on our economy. The Visit Malaysia Year 2020 campaign, which was meant to attract some 30 million tourists and RM100 billion in tourist receipts this year, has been cancelled as cross-border movement restrictions are instituted across the world.
The impact has been severe on the hospitality and aviation sectors with thousands of workers being told to take pay cuts or let go completely. Hotels have closed down, some of them for good, while people involved in the sharing economy like Airbnb have been left high and dry by the lockdowns.
Early data from the Department of Statistics Malaysia revealed a 17.1% year-on-year increase in unemployed persons to 610,500 in March as a result of the Movement Control Order (MCO) in Malaysia, which took the unemployment rate to 3.9%, with some expecting the rate to rise to over 5.5% in the months ahead when the impact of the lockdown becomes more pronounced.
The RM250 billion Prihatin stimulus package and Bank Negara Malaysia’s (BNM) statements point to a recovery in economic activity by the second half of the year or a ‘V’ shaped recovery.
Hopefully that is so, but nevertheless, Prime Minister Tan Sri Muhyiddin Yassin and his Cabinet’s priority must have options available to help companies continue to keep their headcounts, as the local economy starts to get back on its feet as the MCO is eased and finally removed.
If jobs are lost, the problem will impact other sectors, like banking, as housing and hire purchase loans turn bad. The social and psychological impact of unemployment is also something you can’t really capture in numbers.
Thus, cash resources must be deployed far more strategically. Increase the financial assistance to micro, small and medium enterprises (MSMEs), who employ two out of three people in the labour force, through facilities like the Special Relief Facility, instead of giving cash handouts to the public or civil servants.
The RM10 billion allocated now has been fully taken up by some 20,000 applicants which will easily help preserve over 300,000 jobs.
BNM recently stated that the funds were snapped up quickly. Many applications remain. Perhaps the central bank should consider doubling the fund size as total loans to SMEs last year amounted to about RM290 billion.
Of course, all parties involved must play their part to ensure that the funding goes to the worthy applicants. The funds should be deployed to sustain viable SMEs.
Bhupinder Singh is the corporate desk editor of The Malaysian Reserve.