More fiscal injection needed to save economy


THE government should commit at least another RM5 billion to expand testing, tracing and monitoring efforts, as well as for the Covid-19 vaccination programme to the levels required to save the Malaysian economy, said Datuk Seri Mohd Shafie Apdal (picture).

The Parti Warisan Sabah president said the effort in trying to balance lives versus livelihoods or signalling fiscal prudence at this crucial time in the pandemic is a breach of the government’s fiduciary duty.

“To really jump-start economic activity, we need to aim for a much lower test positivity rate,” Mohd Shafie said, citing South Korea as an example, which has been battling its third wave at the same time as Malaysia.

“In order to reach the same level here, we need to aim for at least 360,000 people tested per day, up from 64,000 today,” he said, adding that to maintain this level of testing for 60 days would cost an additional RM2.5 billion.

In comparison, Mohd Shafie argued that Budget 2021 only allocated an additional RM475 million for the virus testing. He further said based on the Finance Ministry’s estimates of losing RM600 million per day under the Movement Control Order (MCO), Malaysia has already incurred an economic loss of some RM8.5 billion.

“The conclusion is simple, the only way to save the economy is to contain and control the pandemic.

“Building on the lessons learned from other countries that have successfully done so, the only way to do this is through comprehensive and quick testing and tracing, ahead of a comprehensive vaccine rollout,” he added.

Malaysia, he said, could not afford to move in and out of the MCO to contain Covid-19, as it is untenable to the economy and will reduce the nation’s GDP.

“No expense should be spared in these two areas. There will be no economic recovery until the pandemic is contained, so investing in test-and-trace capacity and the vaccine rollout are by far the best way for the government to help the economy,” he said.

“Fitch Solutions Country Risk and Industry Research” report yesterday warned of a bleak economic outlook for the country going ahead with the rise in the virus infections.

“We have revised down our forecast to 10%, from 11.5% previously to account for the slower recovery due to muted private consumption as employment and wages are likely to once again come under intense pressure this time, with even less scope for fiscal support, given that government finances are already strained and close to the raised debt limit of 60% of GDP,” it said.

“A decline in GDP growth will further negatively impact the number of funds available needed to strengthen Malaysia’s healthcare system,” the report added.