By Lim Guan Eng
ON Monday, Prime Minister Tan Sri Muhyiddin Yassin RM15 bil PERMAI aid package for businesses and the rakyat to cope with the second movement control order (MCO 2.0) is a huge disappointment, when it is merely recycled from Budget 2021 or previously announced economic stimulus package.
There is no new cash injection to the economy and a far cry from the RM45 bil economic stimulus package mooted by the opposition to overcome the current economic recession to save jobs and businesses.
Muhyiddin must be either ignorant or given wrong advice if he expects the impact of the MCO 2.0 to be less damaging to the economy, compared to MCO 1.0 imposed on March 18, 2020, by reason that many businesses are now allowed to operate.
After MCO 1.0, the gross development product (GDP) growth plunged by a negative 17.1% in the second quarter of 2020. If the economy plunges by 2% in either the first or second quarter for this year, this cannot be good for the Malaysian economy when in relative terms, robust economic growth this year was expected.
The RM15 bil PERMAI aid package is too little and a far cry from the RM305 bil PRIHATIN economic stimulus package with a fiscal injection of RM45 bil unveiled last year to mitigate the negative impact to our economy from MCO 1.0.
Despite such measures, the economy still slipped into recession and recorded the highest unemployment rate in decades of 4.8% in November 2020.
What can a RM15 bil aid package, with an estimated direct spending of a mere RM3.87 bil repurposed or redirected from existing spending priorities, help our economy to recover?
This “old wine in new bottle” approach can be seen by Muhyiddin’s own admission that the funds required is not new money, but reallocated from existing funds in Budget 2021.
As there is no fresh fiscal injection into the economy under PERMAI, there is minimal significant impact on economic growth to lift our economy out of the recession.
Why is there no rental relief or subsidy for businesses suffering without any income? How does this PERMAI by Muhyiddin help to slow down retrenchments or business closures and save the economic livelihood of ordinary Malaysians?
Here’s the estimated direct spending by the Government, including grants, redirected from existing approved spending estimates. Excluded are guarantees (which does not require actual fiscal allocation), EPF measures, tax cuts, fee exemptions and moratorium-related measures:
Based on these estimates, direct spending in the RM15 bil plan is estimated at RM3.87 bil. – Jan 20, 2021
Lim Guan Eng is the former Finance Minister and MP for Bagan.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
