PETALING JAYA: The high figures for gross domestic product (GDP) being trumpeted by the government do not tell the story of the “regular Joe” businesses, who form 98% of the economy, says former second finance minister, Johari Ghani.
He said the GDP numbers did not reflect the real situation on the ground.
Micro, small and medium-sized enterprises (MSMEs) were required to stay open, then close, and then reopen, during the Covid-19 pandemic, he said. “As a result, many have been forced to close down.”
These small players incurred massive losses during the pandemic and had to lay off thousands of workers, which has had a far-reaching impact on the country.
“Therefore, pretty GDP numbers don’t tell the story of the regular Joe businesses,” he said. “The big headline numbers were contributions of large corporations, which only make up 2% of the 1.2 million-odd businesses in the country.”
“That is why the GDP looks good. But the remaining 98% are MSMEs, and among them, 78% are micro. A lot of them closed shop when Covid hit, and as a result, lost their staff, too.
“Therefore, GDP numbers that look good do not make sense to the small players and the regular Joe,” said Johari in a pre-2023 budget chat with PKR deputy president Rafizi Ramli on TV3.
He said the “small guys” needed attention, hence a competent set of ministers of economic-related portfolios must sit down and come up with solutions for them.
Rafizi agreed with Johari, saying he himself had to contend with uncertainties at the height of the lockdowns. He said it was sad that politicians at that time did not understand the nature of small companies.
“When there is uncertainty, SMEs decide not to spend more. From an investor point of view, it gives an impression that the government does not have a game plan, which reduces the confidence in the government’s ability to handle the economy and Covid,” he said.
Johari said mega projects should also be selectively pursued to ensure that there was a large multiplier effect on the local economy. He said many such projects in the past required large foreign involvement, causing large outflows of the ringgit, and import of foreign talent which affected the country’s balance of trade.
He said the government must come up with ways to cushion the extra cost of hire purchase loans of the rakyat due to the rise in interest rates.
Johari said those servicing their loans should continue paying the same amount, with the extra amount pushed towards the end of their loans.
“Say a person is servicing their loan at RM700 a month, but now has to pay RM120 to RM150 more. That additional amount should be pushed towards the end of their repayments. This policy is needed,” he said.