Finance Ministry charts course for Malaysia’s economic recovery

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz speaks to the media, September 6, 2020. — Bernama pic

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PUTRAJAYA, Mar 7 — The Finance Ministry has set six main targets for 2021 to alleviate the burden faced by the people amidst the Covid-19 pandemic and, at the same time, revive the country’s economy.

Its minister, Senator Tengku Datuk Seri Zafrul Abdul Aziz, said his ministry is focusing on creating 500,000 new job opportunities with the setting up of the National Employment Council as well as systemic efforts under the ‘Jaminan Penjanaan Pekerjaan’ (JanaKerja) Scheme.

“The JanaKerja Scheme is expected to create 250,000 job opportunities, reskilling and upskilling programmes will have 200,000, and the MySTEP Scheme another 50,000 job opportunities,” he told a press conference recently in conjunction with his one-year anniversary as Finance Minister.

Aid for the low income, vulnerable groups

In the second focus, Tengku Zafrul said the government has implemented various initiatives to facilitate the people’s cash flow to alleviate their burdens.

“The government is also studying ways to uplift the people involved in the informal economy. A survey conducted on several People’s Housing Projects (PPR) in Kuala Lumpur revealed that there are still people who were left out and not registered with any government system, preventing the government from channelling aid to them,” he said.

Tengku Zafrul said among them were cash assistance from Bantuan Prihatin Rakyat (BPR) with a total allocation of RM6.5 billion given to 8.5 million low income or B40 recipients.

“This BPR assistance has been expedited from May 2021 to February 2021. Apart from that, the assistance also involves the Employees Provident Fund (EPF) Account 1 withdrawal (i-Sinar) of up to RM10,000 per applicant, besides the social assistance for vulnerable groups,” he said.

Moreover, he said the government is also studying issues that had caused the country to be stuck in the middle-income trap and measures to tackle them in a targeted approach.

“The details will be revealed in the 12th Malaysia Plan (12MP),” he said.

At the same time, Tengku Zafrul called on the people and micro-enterprises not to be anxious when asked to apply to register with the Inland Revenue Board (IRB) as this is an efficient system to enable assistance to be channeled to them.

Harnessing digital advancements

On the Ministry’s third focus, Tengku Zafrul said the Jalinan Digital Negara (Jendela) and 5G digitalisation efforts launched by the Prime Minister Tan Sri Muhyiddin Yassin recently would be inclusive in closing the digital divide between urban and rural communities.

“Among the initiatives that have been and will be launched are financing through digital platforms such as JanaNiaga, the Dana Penjana Nasional (DPN) and My Co-Investment Fund (MyCIF) Scheme.

“In terms of digital inclusion, we have the RM1.5 billion Jaringan Prihatin programme, and the government has also launched MyDigital which also included 5G networks in the country,” he said.

GLC redefined for strategic investments

For the fourth focus, Tengku Zafrul said, is the transformation of government-linked companies (GLC) to redefine their direction, vision and mission especially in the midst of the Covid-19 pandemic.

“The government may consider social objectives in line with the Sustainable Development Goals (SDG), and this sustainability concept has been implemented in the 2021 Budget and will be further expanded.

“Generally, this effort includes the re-evaluation of strategic investments in the country and corporate social responsibility as well as the Bumiputera agenda,” he said.

Boost for SMEs, micro-entrepreneurs

Tengku Zafrul continued with the fifth focus, which aims to empower SMEs and micro-entrepreneurs so they can recover.

“In 2019 these sectors contribute about 39 per cent to the country’s gross domestic product (GDP) and over 70 per cent of jobs in the country.

“There is also the RM1 billion Penjana Tourism Financing to help the tourism sector which is greatly affected by the Covid-19 pandemic.

“The government is always ready to help these micro-entrepreneurs and SMEs to remain competitive in the country’s economy,” he said.

The sixth focus, Tengku Zafrul continued, is to accelerate projects to drive various economic recovery in the country covering five aspects, including allowing agencies to package their annual revenue for the supply of services and works into smaller packages.

“In addition, a higher threshold value was introduced for work contracts awarded to G1 and G2 contractors as well as simplifying the procurement process in accordance with new norms and facilitating cash flow for businesses.

At the same time, it involves expediting the procurement of Covid-19 vaccines in Malaysia,” he said.

People, businesses and the economy hit hard in 2020

Tengku Zafrul said the year 2020 was a very challenging year as the Covid-19 pandemic has greatly impacted the people, businesses and the country’s economy.

“Unemployment for 2020 was at 4.5 per cent, with the highest monthly rate of 5.3 per cent recorded in May 2020. The last time Malaysia recorded a higher unemployment rate was in late 1980’s, following the Commodities Crisis of 1985 – 1986. Through a study and survey conducted by (the Ministry’s) Laksana, about 50 per cent of Malaysians lost their source of income and part of their personal savings after the Movement Control Order (MCO) 1.0 was implemented.

“The survey was conducted from July to September last year on about 11,000 respondents,” he said.

He added many businesses were also affected, and based on the study, 67.8 per cent of them did not get any sales or revenue during the MCO 1.0.

“Some 53.4 per cent of companies also couldn’t sustain themselves for more than two months, and based on a Ministry of Entrepreneur Development and Cooperatives survey, 79.5 per cent of businesses could not operate during MCO 1.0, where the majority of them were micro, small and medium enterprises.

“In addition, a total of 70.8 per cent of businesses were closed during the Recovery Movement Control Order (RMCO) last year. In terms of economy, GDP contracted by about 5.6 percent in 2020.

“Among the most affected sectors were the construction sector, with its GDP dropping by 44.5 per cent, followed by the mining and quarrying sector which saw a reduction of about 20 per cent in GDP in the third quarter of last year.

“According to World Bank the country’s GDP is expected to increase between 5.6 and 7.6 per cent this year. The GDP recorded RM357.4 billion in the fourth quarter of 2020 compared to RM289.4 billion in the second quarter of 2020,” he said.

6R approach to tackle economic downturn

On efforts to address the economic downturn, Tengku Zafrul said the government has taken a 6R approach – ‘Resolve, Resilience, Restart, Recovery, Revitalise and Reform’.

He explained that through the ‘Resolve’ approach, the government introduced preventive measures to flatten the Covid-19 infection curve by implementing the MCO on March 18 last year.

“This also involved cooperation from the National Security Council, the Health Ministry and the Ministry of International Trade and Industry to prepare the standard operating procedures (SOP) in facilitating the essential and important economic sectors and activities to operate,” he said.

As for ‘Resilience’, he said this focuses on improving livelihoods of the people through various economic stimulus packages such as the Prihatin and the Prihatin SME+ packages by the government.

“These stimulus packages give cash and financial aid to the people, such as through the National Prihatin Aid (BPN) and the loan moratorium.

“While for businesses, the government helps in terms of cash flow such as financing and direct assistance in loan moratoriums, business operating cost support, wage subsidies, electricity bill discounts and others,” he said.

The third stage ‘Restart’ refers to reopening of selected economic sectors in an orderly and controlled manner.

“This focuses on the preparation of SOP for the economic sector operating in Conditional Movement Control Order (CMCO) areas between May 4 and June 9 last year, and the Recovery Movement Control Order (RMCO) between June 10 and December 31 last year,” he said.

Tengku Zafrul said the fourth stage is ‘Recovery’ where the government implements economic recovery strategies with the new norms. He added the government has announced the Prihatin Supplementary Initiative Package (Kita Prihatin) and Penjana.

“The main purpose is to ensure the people’s source of income are sustained, as well as to assist businesses to improve the country’s economy.

“The fifth strategy, ‘Revitalise’, represented by Budget 2021, is to balance between the needs of public health capacity and build the momentum of economic recovery, as well as develop resilience through the National Budget 2021.

“At the same time, the government also introduced the Perlindungan Ekonomi dan Rakyat Malaysia (PERMAI). The sixth stage, ‘Reform’, refers to the restructuring of the economic sector through the 12MP,” he said.

RM189.3 billion in various initiatives

“As of February 2020, the benefits of the Government’s assistance – channelled through Prihatin, Prihatin SME+, Penjana, Kita Prihatin, Budget 2021 and Permai – are valued at RM189.3 billion”

The Prihatin package includes initiatives such as loan moratoriums, wage subsidy programs and i-Lestari that benefited some 20 million individuals and 2.4 million businesses.

Penjana initiatives include Penjana SME financing, wage subsidy programmes and internet connectivity initiatives that benefited over 12.5 million individuals and 350,000 businesses.

The Kita Prihatin package which covers initiatives such as BPN, Prihatin Special Grant and wage subsidy programme benefited over 10.1 million individuals and 705,000 businesses.

Tengku Zafrul said a total of RM941 million or 1.2 percent of the total RM78 billion allocation under the National Budget 2021 has been channeled so far.

“The latest one is the Permai Package which saw a total of RM415 million or 2.7 percent of the total RM15 billion channeled as of February 12. Tengku Zafrul added that since a year ago, the Finance Ministry has also managed to recover more than RM19 billion in 1MDB-related settlements involving Goldman Sachs, AMMB Holdings and Deloitte. “Besides that, on October 23 last year, Parliament passed the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Act 2020,” he said. — Borneo Post Online