Prime Minister Muhyiddin Yassin wants Malaysians to buy local products to, as he says, “spend for Malaysia” to help the economy recover from the impact of Covid-19 and the lockdown.
It’s a good call, as domestic consumption will certainly help the economy improve.
The problem is where are people, especially those who have been laid off or whose salaries have been cut, going to get the money to spend?
Due to the Covid-19 pandemic and the subsequent lockdown, thousands of workers continue to lose jobs or have been told to take a pay cut. The Malaysian Employers Federation has estimated that up to 2 million workers could be laid off.
I expect the effects of the layoffs and salary cuts to be deeply felt only by the end of the year. We must not forget that the six-month moratorium on bank loan repayments is providing only temporary relief, as are cash handouts and most of the other relief measures initiated by the government.
We are going to see a sharp increase in loan and rent non-payments, a decrease in sales, tighter cash flow, and a rise in bad debts. Individuals and companies will think twice before spending, giving priority to essentials.
I suppose we will have to look to the only people economically unaffected by the pandemic and lockdowns, the civil servants, to go shopping more often.
According to Minister in the Prime Minister’s Department (Economy) Mustapa Mohamed, the manufacturing, construction and agriculture sectors have gradually recovered. That is good news.
But we need to note too that foreign investors have sold RM17.8 billion of local equities on Bursa Malaysia so far this year. Last week alone, they sold RM905.9 million in equities, the 22nd consecutive week of foreign net selling, according to MIDF Research.
Also, under the present climate, foreign direct investment will stall.
In a globalised world, it’s not good enough if our economy is recovering. Other trading nations have to be strong too. Countries are too interconnected and what happens in China or India or the US affects us. If their economies suffer and they don’t buy enough of, say, our electrical and electronic products or petroleum products or palm oil, we’ll be in trouble.
The ringgit has to be strong too or we’ll have to pay more for our imports, and that will further shrink our purchasing power.
The World Bank, in its Global Economic Prospects report in June, said the world had gone into a severe contraction due to the pandemic and the subsequent lockdowns. It forecasts that the world will face the “deepest recession since the Second World War, with the largest fraction of economies experiencing declines in per capita output since 1870”.
If all, or most countries, are suffering, their priority will be their people first. They will also be told, as Muhyiddin told us, to spend more money but spend it on local products. There is likely to be a de-globalisation of sorts, with nations turning inwards. We cannot rule out the imposition of new barriers to international trade.
Cumulatively, as I said in an earlier column, we can expect a rise in poverty and crime by the end of the year. And we can expect the income disparity between Malaysians to widen as the months pass. Malnourishment will rise too. It is almost certain that more people will become homeless, more bankruptcies will happen, and more people will need psychological support.
I hope ministries and their agencies have worked out precise strategies and put in place personnel to deal with the problems that are arising and that will be with us for some time.
The agriculture ministry, for one, should have gone to the ground to encourage or aid farmers to grow more food crops. In 2015, our food import bill came to RM45.39 billion. In contrast, we exported only RM27 billion worth of food products.
These are bad times. As I said earlier, we can expect countries to take care of the food needs of their people first before exporting them. What if we cannot get enough foodstuff if the pandemic continues in its present trajectory in some of our food-supplying countries?
I urge the government to allocate funds and encourage people, especially youths left jobless by the pandemic, to enter the agriculture industry. More land should be cleared for agriculture but this must be done in a transparent manner. The government should ensure that the deserving of all races are given this opportunity, not cronies and members of the ruling political parties.
By doing so, we can help youths earn an income while lowering our dependency on other nations for our food needs. Those without incomes cannot afford to be choosy and some may very well answer the call and adapt to farming.
It’s also time to again open the Green Book programme and encourage people to grow food crops in their gardens and in pots. The authorities could provide seeds and advice to members of the public to motivate them.
There is also a need for a specific unit in government and a dedicated central careline to attend to those seeking economic and welfare advice or assistance.
The unit can inform callers or emailers of the assistance available and put them in touch with departments or agencies or people who can help resolve whatever problem they may have. Importantly, people calling in should not be passed around from one department to another.
Departments such as labour and welfare should go to the ground now, if they haven’t already, and not wait for the roof to fall before acting. The authorities should also strengthen agencies providing financial advice to the public.
Will this government be able to handle all this? So far, so good. But only four or five Cabinet members inspire confidence, and that includes Muhyiddin and Mustapa. Also, government leaders are too distracted by politicking and the desire to hold on to power, and that may prove costly to the nation’s recovery effort.
The views expressed are those of the author and do not necessarily reflect those of FMT.
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