By Tan Sri Ramon Navaratnam
The government faces an economic dilemma! On the one hand it faces a global slowdown and even possibly an impending recession, especially with the current COVID-19 virus attack. On the other hand, our national budget has been running deficits for several years. Therefore, it cannot be depended upon to adequately stimulate the economy to counter the weakening business and especially the small businessmen and women and growing unemployment and underemployment.
Hence, although the government is obliged to and will provide an economic stimulus package, it has serious limitations as to how much it can do to help businessmen, and prevent more damage to the economy and the welfare of the people, particularly the poor and more vulnerable Malaysians.
What then can we do to face this economic dilemma?
Firstly, the stimulus package cannot be too strong nor too weak. It has to be moderate and affordable.
The previous stimulus package was about RM8.0 billion for the SARS epidemic in 2003.
Maybe our new package can exceed this amount?
The government cannot be expected to provide much more because of the continuing budget constraints and lack of sufficient high savings of our reserves to meet the uncertainties and hazards of rainy days and storms ahead, like we now face.
We cannot also say for sure how long this nasty COVID-19 will last. So far we have done pretty well together with the drastic and gallant action taken by China to control the vicious COVID-19 virus.
Secondly, we should understand the government’s current budget limitations. We should face up to the inevitable facts of periodic economic cycles and ups and downs in our businesses as well as the unpredictability of viral attacks that have come even before. After all, we have overcome serious economic uncertainties and socioeconomic setbacks in the past. We must therefore brace ourselves to this looming crisis again.
Thirdly, we should reform and restructure our economy even more now, to face future crises with more resilience, confidence and determination. We should learn from this crisis to be more efficient and competitive to overcome external threats and internal weaknesses that would undermine our capacity to face more of our future dilemmas with greater resources, competencies and self confidence. Let's also learn how some smaller and more vulnerable economies have done better than us in overcoming their own crises?
Fourthly, the new stimulus package needs to provide priority to small and medium enterprises (SMEs) and the low income groups.
While the bigger businesses can be helped by reducing uneven business practices in tenders, contracts and interference in their awards, as we have witnessed recently, we could also reduce rates and charges for SMEs and the poor. For instance, as requested by SMEs and the poor, they would need to be helped with lower fees, charges and utility rates, as well as more subsidies and loans for SMEs.
Let's resolve to face up to the challenges unfortunately brought down upon us. We cannot and should not hope to gain much from the government's stimulus package since the Budget itself is weak.
If we insist on a bigger stimulus package, it will aggravate the federal and state budgets well beyond our budget limits, There could then be longer term disruptions and damages to the economy.
I would say if our economy was allowed to be more competitive and the private sector encouraged to participate more strongly in our economic development, our public sector would have been smaller. The civil service would be leaner and our economy would be more resilient and sustainable in facing our delicate dilemmas and overcoming our socioeconomic dilemmas.
Let's learn more from these lessons in order to perform better and become a better country.
(Tan Sri Ramon Navaratnam is the Chairman of ASLI Center for Public Policy Studies.)