KUALA LUMPUR: Malaysia needs to learn and rethink basic assumptions about the economy for it to move forward and help people in distress, prominent economist Jomo Kwame Sundaram said today.
“You need to have counter-cyclical policies. And that is why I welcomed the Prihatin (economic stimulus package) when it first came out last year but it was not sustained. People need to live, they need to keep the economy going,” he said during the virtual Malaysian Economic Summit 2021 today.
“Given the nature of the economy today, you cannot depend on (the government) becoming an employer of last resort but you can become the buyer of last resort to keep the economy going to help people who are living in precarious conditions.”
Jomo was a panellist at a session titled “Will Productivity and Growth Return After the Covid-19 Pandemic? How to Strengthen the Competitiveness of the Malaysian Economy in the New Normal?”
He argued that the country need not be held hostage by credit rating agencies by taking counter-cyclical fiscal policies.
“We have to rethink our attitude about a whole range of issues both internationally as well as domestically, but we need to be open in terms of public policy and to think about these issues.
“What the chambers of commerce have raised (about their problems) have been known for over a year and a half. We could have addressed these issues much earlier but we have a situation where some people presume that they know best and this is a major problem,” said Jomo, who is also Khazanah Research Institute senior adviser.
He was referring to the German, Dutch and Japanese chambers of commerce in Malaysia, which recently expressed concern over the government’s Covid-19 response, warning that businesses are rethinking their investment decisions in this country.
Meanwhile, in answering questions during the virtual meeting, MUI Group chairman and chief executive officer Andrew Khoo said the government needs to diversify foreign direct investment (FDI) into the country, which is mainly contributed by the oil and gas sector.
“This can be done by promoting the adoption of innovative and advanced technologies. Foreign investors also need to be encouraged to establish or relocate subsidiaries to Malaysia,” he added.
Khoo said the government needs to improve the national competitiveness, in terms of FDI, by introducing more investor-friendly policies and incentives.
The implementation of the National Fiberisation and Connectivity Plan (NFCP) needs to be sped up to improve the country’s digital connectivity by rolling out 5G, he added.
Khoo said the next six months are going to be absolutely critical to ensure the right level of confidence is cultivated among trade groups and the wider foreign investment community.
CLICK HERE FOR THE LATEST DATA ON THE COVID-19 SITUATION IN MALAYSIA