By P Gunasegaram
PARADOXICALLY, the greatest weakness of Tan Sri Muhyiddin Yassin’s economic stimulus package is the proud example that the prime minister gave of pisang goreng vendor Mak Cik Kiah and her family.
The rather contrived example of her is that she has a husband who is a government pensioner and currently a Grab driver and whose daughter is a PTPTN (student loan scheme) borrower. The household income of Mak Cik Kiah is below RM4,000 a month.
In his speech on March 27, Muhyiddin calculated that Mak Cik Kiah and family will receive cash support and savings of RM8,664 over six months or RM1,444 per month. If Mak Cik Kiah earns some money monthly, then she might – might – regain lost income. She won’t be delighted, like Muhyiddin said she will be.
But let’s switch – make it a lot more in touch with reality. Mak Cik Kiah is a pisang goreng seller still and earns RM1,500 a month. Her husband is a casual worker who earns some RM2,000 for a total income of RM3,500 per month, about the median income for rural households in Malaysia.
They live in a dilapidated private housing and pay rental of RM500 per month and make ends meet with RM3,000 per month – they don’t have Employees Provident Fund (EPF) accounts and little or no savings. The husband does not drive for Grab (no car) and has an old motorbike, the sole transport for the five of them. He does not volunteer for Rela – no time.
For the last two weeks, they have been tearing their hair out because they have no income. They have three young children, one of school-going age. Of the other two, one is an infant and the other a toddler.
They have run out of their meagre savings and don’t know when they will get more money. They are waiting for the RM1,600 payment from the government which will be made in two instalments. That first RM800 will be welcome but their immediate cash income has shrunk.
Consider their predicament: After paying rental of RM500, they have a disposable income of RM300 for April. What are they going to do for food? Five people on RM10 a day! And what about other expenses besides food?
How long is this going to last? When will they be able to sell pisang goreng, and will business be back to normal? The husband thinks about when he can go back to work again and get some daily wages and badly needed cash.
These will be the people who will most likely need the direct cash from the government. Because they will spend the money they receive, any payment to them will stimulate the economy.
There are many millions of people like Mak Cik Kiah and they need to be helped more, much more, than others. I simply can’t understand why so many social commentators out there knock even this payment.
A RM10 bil handout to all of them is not enough. The government needs to find more ways of channelling money to them and many times more than what has been allocated. If this is not done – and this is no exaggeration – they will starve.
And then there are the illegal workers who number at least two million, and the legal migrant workforce amounting to at least another two million. Nothing has been provisioned to assist these people.
It turns out that the direct stimulus package from the government announced in the much-touted RM250 bil package is only RM25 bil of direct injection of funds into the economy. Finance Minister Tengku Zafrul Tengku Abdul Aziz has confirmed this in a Bernama report.
The rest constitutes different types of aid such as loan moratoriums, soft loans and permitted withdrawal of savings from the EPF.
There is the matter of opacity. The RM250 bil package is broken down (refer to Table 1), but a close reading of Muhyiddin’s speech on March 27 still does not give a proper accounting of how the whole package pans out.
Table 1: The RM250 bil package
|For the people||RM128 bil|
|For businesses||RM100 bil|
|Strengthening the economy||RM2 bil|
|Earlier stimulus package||RM20 bil|
A big part of this RM250 bil is accounted for by a handful of large items (see Table 2).
Table 2: Where the RM250 bil package comes from
|Loan moratorium||RM100 bil (40% of total)|
|Financing for large SMEs||RM50 bil (20% of total)|
|Withdrawal from EPF savings (RM40 bil) and deferments (RM10 bil)||RM50 bil (20% of total)|
|Direct government stimulus||RM25 bil (10% of total)|
|Other financing||RM25 bil (10% of total)|
There is nothing wrong per se for all of them, except to note that not all of them may be taken up and spent by those to whom it is offered. Oh, just a little reminder, this does not affect Mak Cik Kiah at all because she has no bank borrowings and no access to funds and no EPF. Like I said, there are millions like her.
I have a housing loan, so I get a moratorium on payments for six months. If I don’t do anything, I automatically get the right to defer all loan payments for six months, but it’s not free – my loan gets extended and I still pay the same interest rate for longer, although I think it should be reduced for that six months at least. But those savings I have, I am not going to go out and spend it – there will be many like me.
But yes, it’s a great help for those who want that aid, as it gives them breathing space in a period where cash has contracted.
That withdrawal from the EPF is basically the government allowing withdrawals from retirement money in an emergency. It’s those who have little money who will withdraw. I wish the government had put more money in to help them.
Yes, there is a need to help keep jobs by keeping businesses afloat, but shouldn’t business owners dig from their own reserves too to do this, if they have the means? After all, they made good money during the good times.
But I will not knock giving them aid in the form of soft loans to help them tide over the business, loans which have to be paid back when better times return, or which have to be written off if better times take too long coming.
At the end of the day, any stimulus package is a balancing act – helping those well-off so that jobs can be saved, and ensuring that the poor do not slide into subsistence or worse. The balance is tilted in favour of the former – poor Mak Cik Kiah is left holding the short end of the stick.
I wish this back-door government which is supremely fearful of convening Parliament will put its mouth where the money is and do the needful to get cold, hard cash out to the needy.
How much would that take? Say 20% of the stimulus package would be fine or RM50 bil to the B40 group – that’s RM40 bil short right now. That would need a parliamentary nod. Do they have the moral gumption to do that?
If the package is good, why won’t the opposition approve? In fact, why not get the new package pre-approved by the opposition so it will pass parliamentary muster and lay off the issue of no confidence and the backdoor government away for a while? In tough times, we all have to work together, right?
How about that, PM? You did say you cared for all Malaysians even though we did not elect you. It’s time to show this right now. - March 31, 2020
P Gunasegaram, editor of Focus Malaysia, says talk is cheap