In every crisis, there is always an opportunity so it is important the govt do not squander this opportune moment to make an impact
pic by TMR FILE
WITH the appointment of the ninth prime minister, the formation of his Cabinet and the formation of the National Recovery Council, we have high expectations.
Coincidentally, with the upcoming Budget 2022 and also the 12th Malaysia Plan (12MP), we are at the most important crossroad as an economy of the decade.
To make it even more interesting is the unprecedented memorandum of understanding between the government and the Opposition parties which gives hope for political stability. While there is many reports indicating that we will be recovering with real growth that will lessen the impact, fact is the real impact of the pandemic can only be seen when we analyse the people’s wellbeing in the first quarter of next year, via the household wealth, household income, homeownership, household debt and many more.
As it is we are expecting the Bumiputera economic community will be suffering the most as we are already in the most vulnerable and our economic baseline has dropped even further, undoing years of support given to Bumiputera via the New Economic Policy and its variants. Allow us to share or remind each other of the latest statistics and of the Malay-Bumiputera economy.
You will find that the Bumiputera economy is far behind and most affected compared to other ethnicities. All this can be understood through the following statistics:
• The unemployment rate in Malaysia has climbed to 4.8% in June 2021 involving 768,700 persons. The unemployment rate for May 2021 was at 4.5% with 728,100 unemployed persons
• The number of unemployed graduates increased by 22.5% to 202,400 in 2020 compared to 165,200 in the previous year with 70% of them are Bumiputera graduates
• In 2020 to July 2021, a total of 155,893 people lost their jobs during the Covid-19 outbreak involving a total of 5,959 employers
• Families from the hardcore poor category increased by 4,815 households in 2021 compared to 1,109 households in 2020. At the same time, families from the poor category also increased from 2,200 in 2020 to 5,617 this year
• For the employed, 88.5% T20 demoted to M40 while 74.2% from M40 demoted to B40 whereas for the self-employed 22.9% demoted from M40 to B40
• Per capita income in 2014 for Bumiputera is only 21.7% (RM16,066 per year) as much of non-Bumiputera income (RM74,067 per year)
• Bumiputera only owns 26.1% of housing assets in Malaysia while non-Bumiputera own 63.3% even though the Bumiputera population is three times larger than non-Bumiputera
• Bumiputera equity has dropped to between 10% and 16% in the last three years • Malaysia has the highest debt to GDP ratio in Asean and No 2 in Asia
• Our fiscal contribution to stimulating the economy due to Covid is a mere 5.2% of the GDP which is so much lower compared to Thailand which 11.4% and Singapore 18.4%
There is a clear and present danger to many households with the impending collapse of the many, if not the majority, small and medium enterprises (SMEs) which have been repeatedly shared and announced by many SMEs coalition, economic associations including from the ministry in charge of SMEs themselves.
The government seem to be acknowledging these concerns with latest disbursement of Geran Khas Prihatin which is still insufficient not to mention long overdue.
But hope we must and hope we can. We hope the government will all its might and a new sense of renewed approval from the Yang di-Pertuan Agong, and hopefully the Parliament, with a whole-of-government approach, will focus its mind and energy and heart on seven focus areas.
Each should have two important types of measure which are short-term and long-term measures that will decide not only what happens in the next six months but also define the Budget 2022 agenda and symbolised the aspirations from 12MP which must indicate the continued reforms to take place 13MP with the essence of Shared Prosperity Vision still in place:
Special Covid-19 Relief and Rescue
This must include a six to 18 months of wage subsidy special revolving fund for micro and SMEs with a more cash transfer for the B20 coupled with a new taxation strategy
New FDI Strategy
There is over-dependence on export-based foreign direct investment (FDI) when we should be also promoting and incentivise direct domestic investment (DDI). We need to ensure that we get FDI that doesn’t just want cheap labour by non-Malaysian workforce. The new FDI should be those that are not only providing high-income jobs, but with significant opportunities for our SMEs, our talent and other resources. Pre-requisite must include real technology transfer and meaningful job creation for Malaysians. Most importantly, the government must delay and ignore ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and Regional Comprehensive Economic Partnership, and focus on bilateral trade goods only with all major economies. Logically we need more protectionism as part of our post covid policy measures.
Wage Strategy and Job Guarantee
The government need to look into job guarantee proposals and not delay the gradual increase of minimum and fair wages. It’s time to enforce union to complement wage negotiations between employees and employers. It’s time to incentivise and/or penalise corporations who do not subscribe to a fairer CE/GDP ratio.
We cannot NOT impose windfall tax for banks and gloves company who are profiting immensely from this pandemic as we have done before for palm oil companies. Why not reintroduce the Goods and Services Tax at 1% beginning 2022 before increasing it in 2023? Perhaps introduce wealth tax and inheritance tax as part of the strategy to promote DDI. We should introduce capital gain tax at 1% but reduce corporate tax for businesses for 2022.
This will also allow us to analyse better on our taxation needs and who should we tax moving forward. But it’s no brainer to suggest that we must increase personal income tax for the top 5% of Malaysia’s richest.
This is probably the best time to make this decision. Government must make a clear policy stand and strategy to reduce dependency on foreign workers within two years which includes giving amnesty to all Illegal workers to complement current economic need. Government cannot bring in more foreign workers for health reasons and should increase cost of the levy to import foreign workers.
With banks earning billions, and Bank Negara refusal to think beyond the classical economic textbook, perhaps it’s time to introduce public banking and community-based banking which is not based on usury. Our traditional banks, unfortunately, are focusing on earning huge profits in times of great calamity. Public banking will take over the role of lending from the commercial banks and thus, controlling the creation of credit in the market. Upgrading our fiat currency into sovereign money will also create currency stability. It’s time that all economic policies including monetary policy should be prioritising to achieve the real economic multiplier effect and not about keeping private financial institution happier or ratings higher at the expense of the rakyat and our ability to recover.
Better Bumiputera Policies
As per recommended by Dr Lee Hwok Aun, it’s time for broadened attention to identity-based policies for Bumiputera, indigenous groups, women and other beneficiaries, rather than abolition of “race-based” policies. Why should we be apologetic or debate about it, best is to accept that the policy is available and make it work rather than accept calls that need-based policy replaces this targeted affirmative action based on different groups.
In every crisis, there is always an opportunity. We hope the government do not squander this opportune moment to make an impact like never before, radically resetting certain economic conditions to benefit the rakyat including the Bumiputera community.
Ahmad Yazid Othman is a senior fellow of Majlis Tindakan Ekonomi Melayu Bersatu.
The views expressed are of the writer and do not necessarily reflect the stand of the newspaper’s owners and editorial board.