by NUR HANANI AZMAN / graphic by MZUKRI MOHAMAD
THE government’s allocation under the Malaysian Economic and Rakyat’s Protection Assistance Package (Permai) does not seem to impress many quarters who claimed that the amount is a little too dismal to assist the people amid the economic doldrums.
DM Analytics Sdn Bhd senior researcher Zouhair Rosli said of Permai’s total RM15 billion allocation, only 20% or RM3 billion is the new added direct fiscal injection from the government, as the remaining RM12 billion was taken from Budget 2021 and the Prihatin Supplementary Initiative Package, or Kita Prihatin.
He said Prime Minister (PM) Tan Sri Muhyiddin Yassin on Monday did not introduce anything new as the aid was already announced last year under the Social and Welfare Department, Bantuan Prihatin Nasional 2.0, Bantuan Prihatin Rakyat and e-commerce training.
“The government spent very little while asking the rakyat to withdraw their own limited savings which are supposed to be for retirement. Why worry about fiscal deficit when people are suffering?
“To date, total spending allocated from all packages stood at only RM58 billion, 4% of total GDP. Last year, Singapore spent 18% of their GDP on Covid-19 related stimulus packages,” he told The Malaysian Reserve (TMR) recently.
Zouhair added that the government’s main role is to protect the rakyat, not to get brownie points from international credit rating agencies.
“The ministers are being paid on average RM54,000 per month to ensure that the rakyat’s health and wellbeing are well looked after.
“Unfortunately, the reverse happened where the people were asked to help themselves by withdrawing their own retirement savings,” he added.
Although Zouhair admitted that Permai does provide additional Prihatin Special Grant and micro loans, he said these aids are only offered to those registered with the Companies Commission of Malaysia (SSM).
“Three in four (75%) of total businesses in Malaysia are micro-businesses and out of the 2.4 million ‘Makcik Kiahs’ in Malaysia, one million are not registered with SSM. They will not have a chance to even apply for these loans,” he said.
Commenting on the jobless, Zouhair described the package as focusing on retaining those who are already employed through wage subsidy.
He said less attention should be paid to the unemployment rate as the focus should be more on the types of jobs offered in the market.
“Even if you work for just one hour per week, you are employed. Unemployment rate will not tell you much about the real situation. You can have university graduates becoming street hawkers and the unemployment rate will be improved.
“The real issue is underemployment which has increased since the pandemic began early last year. More graduates are taking jobs that only require Sijil Pelajaran Malaysia certificate. It means more graduates will be underpaid and lose the opportunity to upskill,” he said.
Zouhair also said Malaysia needs more meaningful jobs with decent wages and should not repeat the mistakes of pre-pandemic.
“Among the jobs that can be created are in the healthcare sector, so we will have more manpower to tackle the pandemic, as well as green jobs to avoid future natural disasters that the country is constantly suffering from,” he explained.
Meanwhile, the Malaysian Employers Federation has welcomed the government’s latest stimulus package, but said the Wage Subsidy Programme (WSP) should be extended.
Its ED Datuk Shamsuddin Bardan suggested the government to consider extending WSP to employers outside of Movement Control Order (MCO) states as they are equally affected by the pandemic.
“All initiatives will help employers remain afloat during this challenging period and as such would reduce retrenchment and layoffs.
“However, it will be challenging for employers to create enough jobs this year, considering that the number of new entrants to the labour market will be about one million, with 500,000 from the 2020 cohort and another 500,000 from the 2021 cohort,” he told TMR.
United Overseas Bank (M) Bhd (UOB Malaysia) senior economist Julia Goh said to finance the Permai package, the government will reallocate existing funds based on current priorities and through more prudent spending.
Hence, it should have minimal impact on the government’s fiscal position or fiscal deficit targets.
“Permai can provide temporary assistance, but there are ongoing labour market challenges, while much will depend on the course of pandemic, vaccination plan and the pace of recovery,” she told TMR.
Based on UOB Malaysia’s assessment, the tightened measures are expected to shave ~1% off 2021’s full-year GDP growth, with estimated economic losses of about RM12 billion.
This assumes that the affected states (which contribute 66.3% to the country’s GDP) will be under at least four weeks of strict MCO, and essential business sectors will operate at 70% capacity.
“Every two weeks of MCO could shave 0.4% off GDP growth with estimated losses of RM5 billion.
“Thus, we lowered our 2021 GDP growth forecast from 6% previously to 5% (official forecast: 6.5%-7.5%; UOB’s forecast for 2020: Estimated at -5.5%),” she said in a macro note.
OCBC Bank (M) Bhd economist Wellian Wiranto, on the other hand, saw the Permai package in a positive light, given that it would help businesses cushion the blow of the MCO.
He said direct cash transfers to the poorer segments of society would be particularly helpful in tiding the households over.
“Moreover, the broadening of the wage subsidy scheme to all sectors of the economy, rather than just those in tourism and retail sectors, would ultimately help limit any layoffs that would contribute to another uptick in the unemployment rate.
“The impact on the government’s fiscal position remains relatively unclear, although the PM’s assertion that it would be financed by budget reallocation signals that the Permai package is likely to have limited fiscal deficit impact,” he told TMR.