Editorial: Pump Priming The Economy

By Fathol Zaman Bukhari

Today is Friday, March 27 we are into the tenth day of the Movement Control Order (MCO) initiated by the government on March 18. Prime Minister Muhyiddin Yassin announced a slew of restrictions via a live telecast on Monday, March 16. The order which came into effect on Wednesday, March 18, was initially for two weeks ending on March 31. It was extended for another two weeks on March 25. The new expiry date is Tuesday, April 14.

The primary objective of MCO is to contain the spread of the deadly Corona virus (Covid-19) which, as of today (March 27), has claimed 24 lives. Some 2031 are confirmed cases and they are being treated at the designated general hospitals in the country. Perak has recorded 151 positive cases and one death. The number of Covid-19 patients escalates by the day taking the country to the top of the casualty table in South East Asia.

Extending the length of the control order receives mixed feelings from Malaysians in general. Some are in favour while others are against it. The underlying factor, however, is the safety of the nation as inaction and indifference will inadvertently prolong the problem. From an outbreak it has developed into an epidemic and now the World Health Organisation (WHO) has termed it as a pandemic meaning the whole world is being affected by the virus. It is no ideal boast that over half of the countries in the world are in lockdown to arrest the spread of the carnage. Presently, some 24,090 have succumbed to the disease while 383,824 are receiving intensive treatment. Those infected by the disease have breached the 500,000 mark.

Covid-19 will have a devastating impact on the world’s economy. Business has come to a standstill arising from sell-imposed restrictions on movement and daily trading. Malaysia is certain to undergo a technical recession when its Gross Domestic Product (GDP) suffers two straight quarter-to-quarter contraction. Only time will tell.

To put in simple terms when trading comes to a standstill the business community cannot make money. The rakyat’s spending power nose-dives as they have little or no money to spend. Who will be the most affected? Obviously, it will be the poor and the marginalised. During such times the only people who can help is the government. The government has to increase liquidity (money) in the market so people and businessmen can exchange goods and services to generate income. This injection of capital into the market is to stimulate the economy thus it is called a stimulus package. The government has set aside billions of ringgit to stimulate the economy. Other countries in the region are doing so too.

For the rakyat, cash handouts are being considered. The amount may be small but it is to tide over this difficult time. The problem is how the money will be disbursed to the laymen knowing how corrupt the system is. But I remain optimistic. Although this is seldom done, a no-nonsense approach has to be adopted.

Bank Negara has announced a six-month moratorium on loan repayment to help businessmen with their cash flow. The government needs to prime the economy to stimulate demand. The business community wants the government to facilitate the shipment of goods and use of services. If demand does not pick up the possibility of layoffs is very likely. The stimulus packages, as announced by the PM today (Friday, March 27) is, therefore, welcomed.

At state level, the impact is centred mainly on land matters as it affects property developers. Thus problems relating to approvals, transfers, premiums, quit rents and assessments need to be addressed judiciously. To help property developers, state governments should lift restrictions on bumiputra lots, hasten land approvals and reduce stamp duties and premiums to encourage sales of properties.

Is this too much to ask during this trying time?