The economic advisor to former prime minister Dr Mahathir Mohamad has called for a bigger stimulus package to deal with the impact of the Covid-19 pandemic.
Muhammed Abdul Khalid said Putrajaya could focus on three areas:
aid to the self-employed and lower-income workers;
reduction of income tax and easing of loan repayments;
allocate RM10 billion for food production.
The government should help the self-employed who have lost their income and channel aid to employees who earn less than RM5,000 a month, a group which was made up of 72% of the nation’s workforce.
The aid could be in the form of RM1,000 in cash for the self-employed or a RM1,000 salary subsidy for every employee to ensure they are not retrenched.
“It can be implemented for three months beginning April and this will cost RM26 billion,” said Muhammed, a trained economist.
Corporate tax and income tax should be reduced while banks and financial institutions can lessen the loan burdens of individual customers for a few months.
He said the decision to allow for tax payments from small-medium enterprises to be postponed under the stimulus package was insufficient, as many would fold, causing long-term negative impact.
“Based on a conservative estimate, if 10% of SMEs were to close shop, it would see one million lose their jobs. And this must be avoided.”
Muhammed called for a huge increase in the allocation for food production.
An allocation of RM1 billion in an agrofood facility provided by BNM had been announced in the government’s first stimulus package. The amount should be increased to RM10 billion quickly to spur food production, especially for the domestic market.
He said the government already spent over RM50 billion annually to import 25% of the nation’s food supply. The Covid-19 crisis was bound to affect food production in the country. “We must ensure that we do not starve,” he said.
Muhammed said the government could afford to dip into the country’s reserves to finance the stimulus package.
He said it was a matter of survival, and the government should not worry about doubling the fiscal deficits or facing negative economic growth.
There would be no point having a healthy fiscal regime if the country is in chaos, he said.
He called on the government to dip into its reserves of more than RM400 billion to spend on the people.
Source : FMT