KUALA LUMPUR, 27 April 2020 – PUTRAJAYA has to do more to assist the self-employed as well as small and medium enterprises (SMEs) get back on their feet, said economists.
The government must dole out more financial assistance and introduce targeted policies to help them through the recession triggered by the pandemic, they said.
They also suggested further interest rate cuts to encourage the affected group to take out loans.
Associate professor at Universiti Tunku Abdul Rahman Wong Chin Yoong said he is certain Bank Negara will announce further interest rate cuts next month.
Bank Negara cut interest rates in January and March, reducing the overnight policy rate (OPR) by 25 basis points, from 3% to the current 2.5%.
“The government’s post-MCO fight is to deal with the recession,” he told The Malaysian Insight.
He lauded the decision to leave the tax policy untouched while paring interest rates.
“It was the right call because tax cuts should not be considered at this time.”
Adli Amirullah, a senior economist at the Institute for Democracy and Economic Affairs (IDEAS), said those in the B40 group and the self-employed need more help.
“The previous economic stimulus plan was okay, but more assistance should be provided to the self-employed from the B40 group who do not have a formal business and only sell nasi lemak.
“They have not formally registered their businesses with the Companies Commission of Malaysia (SSM).
“They might not enjoy tax reliefs and will face difficulties applying for business loans.”
Without assistance, they will continue earning a meagre wage that will barely be enough to put food on the table, he said.
Putrajaya should establish policies to assist self-employed people, including those who only have a micro business, he said.
A survey by the Statistics Department between March 18 and 31 found that 81.9% of the self-employed were left in a limbo when the movement-control order was extended for the first time.
The first MCO extension was from April 1 to 14. Phase IV of the MCO runs to May 12.
The poll also found that 71.4% of them have only enough savings to cover less than one month’s expenses.
Meanwhile, Adli said while the government has given enough help in terms of financial assistance, it has not touched on the transformation of SMEs.
Since the outbreak of the coronavirus, the government has yet to put forward a policy to assist SMEs strengthen their business model in response to the so-called “new normal” way of doing things, he said.
“Some countries enacted programmes during this restricted movement period to assist SMEs migrating to an online business.
“I hope the government will have policies on this so SMEs can decide what new business models are most suited for them in the new normal after the MCO.”
Wong said he believes SMEs are adapting to life under the restrictions.
Because of this, they will likely retain the MCO way of doing things even after the restrictions are lifted.
Therefore, even if the MCO is to be extended another 14 days, it will not have much impact on those who have adapted to new operations, he added.
Yesterday, 100 patients recovered from Covid-19 and were discharged from hospitals, while 38 new cases were detected, said director-general of health Dr Noor Hisham Abdullah.
Noor Hisham said no deaths were reported either, leaving the cumulative death toll at 98.
A total of 3,862 people have recovered from the virus, while the accumulated number of cases stands at 5,780.
First published in The Malaysian Insight, 27 April 2020