KUALA LUMPUR (Nov 1): The government should shift its financial focus from controlling its debt levels and fiscal deficit to borrowing more money, to save and pull the pandemic-struck economy out of its current recession, said former finance minister Lim Guan Eng.
The obsession with controlling the country's deficit to protect its sovereign credit ratings must give way to borrowing more money to save Malaysian jobs, businesses and livelihood, the Bagan MP said in a statement yesterday.
"Prime Minister Tan Sri Muhyiddin Yassin should initiate a unity Budget 2021 consultation process with opposition parties, that incorporate financial policies to ensure that this Budget fulfils the aspirations of the Yang di-Pertuan Agong to overcome Covid-19 latest spike in infections and help ordinary Malaysians economically.
"No one would dispute that more funds should be allocated for our front-liners battling this 3rd wave of Covid-19 infections," he said, adding that the need for financial assistance to help the country's economic sectors can help to craft a unity budget that bring all Malaysians together.
"Such a unity budget must clearly and unequivocally provide a Coivd-19 economic shield costing RM31.4 billion to save jobs and livelihood, as well as businesses facing closure. A GDP (gross domestic product) contraction of 17.1% in the second quarter of this year and the Human Resources Minister stating that one million Malaysians are expected to be unemployed by September 2020, only underlines the economic crisis affecting ordinary working Malaysians," he said.
This RM31.4 billion economic shield, he said, will be for a three-pronged measure involving a monthly welfare aid of RM1,000, including to those who are unemployed, automatic extension of the bank loan moratorium by another six months, and hiring incentives for employers and employees.
"This RM31.4 billion is not significant compared to the RM305 billion package under KitaPrihatin, that does not appear to have the desired effect to jump-start the economy," he said.
The RM1,000 monthly welfare aid, an increase from RM200-RM300 and as promised by the Prime Mminister on Aug 30, should be implemented immediately and will cost RM12 billion, which will provide an immediate safety net for unemployed workers, he said.
On the extension of the bank loan moratorium that expired on Sept 30 by another six months, he said that will cost RM6.4 billion and will help eight million Malaysian individuals and companies.
"In contrast, the targeted bank loan moratorium extension and bank assistance after Sept 30 have assisted only 1.4 million borrowers. Many have complained that this does not benefit them but only financial institutions by merely extending the loan repayment period, thereby requiring even higher interest payments," Lim said.
As for hiring incentives, he said this should be provided over two years under the [email protected] scheme at RM500 a month to employees and RM300 a month to employers, to encourage the hiring of local workers as proposed by Pakatan Harapan in the Budget 2020.
"Expanding this scheme to cover 600,000 Malaysian workers and their employers would cost RM13 billion. This would also help the more-than-500,000 youths who are unemployed, making up a large proportion of the 4.9% unemployment rate," he added.