Malaysia’s ECONOMY reportedly contracted by 17.1% in the second quarter of 2020 due to the impact of strict containment measures to control the COVID-19 pandemic.
Although this decline was the worst since 1998, the Malaysian economy began to show early signs of recovery since May following the gradual resuming of business.
The V-shaped recovery prospects are supported by the resurgence of key indicators such as wholesale and retail trade, credit card spending, industrial production, the Manufacturing Purchasing Manager Index (PMI) and gross exports.
This news gives optimistic hope to Malaysians. The country’s economic structure is still resilient. The business environment is still viable. Malaysians are still competitive.
In fact, our country is on a strong path towards recovery based on the implementation of an effective stimulus package and the efforts of every Malaysian to curb the spread of pandemics.
However, we need to practice simplicity and wisdom in balancing the epidemic of disease prevention and economic recovery efforts. Existing preventive measures should not be too strict so that the economic recovery process is stunted.
Efforts must be focused on educating the people and reducing provocative messages that provoke panic reactions. Rebuild the confidence of the people, consumers and investors so that the economy can be revived. The following steps are worth considering.
First, the Malaysian Government needs to consider the proposed temporary reduction of corporate taxes, especially for small and medium enterprises (SMEs). This move is important to accelerate the growth of private investment. Weak existing investment sentiment will stifle business expansion potential, thus squeezing the creation of new job opportunities.
To alleviate the tax burden on the most affected citizens, a special one-off individual tax relief of a reasonable amount should be considered for taxpayers in the low and medium taxable income ranges.
The Malaysian government should also consider wealth tax and property inheritance tax to offset the fall in tax revenue. In addition to increasing sources of income and ensuring the country’s financial stability, these two taxes can help overcome the problem of wealth gap.
Second, the government needs to consider reopening international borders in stages and in an orderly manner. Border reopening measures will drive economic activity, facilitate labor movement and help address unemployment.
The local industry, especially tourism and higher education sectors, could not survive with the support of the domestic market alone. The resumption of cross-border economic activity is an important strategy to increase demand and production.
Accordingly, the opening of international borders will facilitate trade between the countries involved which will eventually create an economic overflow to various sub-sectors.
Third, ASEAN member countries need to enhance regional economic cooperation to drive economic recovery together. The regional growth trajectory needs to be re-examined to be more competitive, inclusive and guided by digital technology.
ASEAN needs to stimulate the regional economy by reducing trade restrictions imposed during the pandemic as well as working to finalize the Regional Comprehensive Economic Cooperation (RCEP) agreement.
In conclusion, the above measures to revive the economy together with the effectiveness of economic stimulus will be the key to ensuring that Malaysian economy is fully restored and boosted as soon as possible.
Dato Seri Utama Mohamad bin Haji Hasan
UMNO Deputy President
Rantau State Assemblyman