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PENJANA Recovery Plan: IDEAS urges more long-term thinking in implementation

Kuala Lumpur, 5 June 2020 – The Institute for Democracy and Economic Affairs (IDEAS) welcomes the government’s RM35 billion Short-Term Economic Recovery Plan (PENJANA) to kick start the Recovery stage in combating the COVID-19 pandemic. The announcement is timely in order to address the prospect of unprecedented levels of unemployment and slowdown in the Malaysian economy.

Overall, the key initiatives presented in PENJANA are balanced in its coverage of the different target groups and business areas. The focus on digital investment for consumer and business adaptations is also forward-leaning.

While PENJANA is understood as a short-term recovery plan that will expire at year-end, some of the initiatives still seem very much an extension to the protection-focused theme from previous stimulus packages. Therefore, IDEAS would like to also urge the government to ensure adequate long-term thinking in PENJANA’s implementation in order to guide the economy’s exit from the crisis mode more effectively.

First, the extension in Wage Subsidy Programme by another RM5 billion reflects the government’s ongoing priority to promote employee retention and reduce layoffs. However, according to the Ministry of Finance, only RM3.22 billion out of the total RM13.8 billion that was previously allocated in PRIHATIN stimulus package had been approved as of 31 May 2020. The low take-up rate raises concerns over the efficiency of approval and disbursement processes. IDEAS shares the concerns on unemployment and looks forward to an improvement in the bureaucratic processes so that targeted recipients have better access to the wage subsidies.

Second, the various financial assistance measures for businesses to hire unemployed workers, especially the youth, is a step in the right direction as the danger of long-term unemployment will result in losses of skill and productivity. However, there is a need to better identify the job-matching needs of the affected informal sector and migrant workers too. Given the recent COVID-19 clusters affecting migrant workers, it is also necessary for allocation to improve their living conditions in the hope of keeping contraction cases low.

Third, the allocation to spur digital adaption in the economy is highly commendable. IDEAS looks forward to a more comprehensive approach towards optimizing the enabling factors for higher digital adoption, in addition, to increase digital usage and spending over the short-run. Structural issues ranging from infrastructure investment, effective regulation and the presence of monopolies must be addressed in concurrence with current recovery spending. This is crucial to better lay the foundation for future growth and development.

Lastly, IDEAS commends the government’s approach in having more regular public communication to report on the status and progress of economic stimulus measures. At the same time, we would like to add that Parliamentary scrutiny and oversight of the government’s actions need to be urgently improved. Broader stakeholder engagement is also necessary to ensure greater inclusivity in gathering public feedback on potential challenges and effectiveness of policy implementation.

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2020-06-05T20:42:26+00:00 5th June 2020|Media Statements|Comments Off on PENJANA Recovery Plan: IDEAS urges more long-term thinking in implementation