Paved The Path Towards Economic Recovery
In response to the Covid-19 pandemic, countries around the world are announcing stimulus package to save their economy and livelihood.
In May this year, the government has announced its latest economic stimulus package, the PEMERKASA Plus Stimulus Package, totalling of RM40 billion.
“Since COVID-19 hit the country, the government has implemented various assistance and economic stimulus packages amounting to RM340 billion,” said Malaysian prime Minister YAB Tan Sri Dato’ Haji Muhyddin bin Haji Mohd Yassin on 31st May 2021.
He added that to date, it has benefited more than 20 million household members as well as more than 2 million businesses with an economic injection of over RM200 billion.
“PEMERKASA Plus is the latest government initiative to help alleviate the challenges faced, especially following the implementation of the current MCO,” he said.
The other six assistance packages announced by the government;
- PRIHATIN – RM250 billion
- PRIHATIN SMEs -RM10 billion
- PENJANA – RM35 billion
- Kita PRIHATIN – RM10 billion
- PERMAI – RM15 billion
- PEMERKASA – RM20 billion
Since the first Movement Control Order (MCO) was implemented last year, the Government has introduced various financial assistance to limit the human and economic impact of the COVID-19 pandemic.
| Geran Khas Prihatin (GKP) | A one-off cash payment to help small and medium enterprise (SME) owners alleviate their financial hardships and to help stimulate the economy. |
| Bantuan Prihatin Nasional (BPN) | A one-time off cash assistance for B40 and M40 households and individuals to cope with the economic effects of COVID-19. |
| Bantuan Prihatin Rakyat (BPR) | A new financial aid scheme for Malaysians that will replace the previous Bantuan Sara Hidup (BSH) starting January 2021. |
| National Economic Recovery Plan (PENJANA) | An initiative by the government to restore the country’s economy, hence helping the people to deal with the economic crisis during the COVID-19 pandemic. |
| Strategic Programme to Empower the People and Economy (PEMERKASA) | This package focuses on 20 strategic initiatives to boost economic growth, support business, and to continue to provide targeted assistance to the people and sectors that are still affected by the COVID-19 pandemic. |
| PEMERKASA Plus | A response to the national lockdown measures, which focus on three aspects: increase public healthcare capacity, continuing welfare programs, and supporting businesses. |
The pandemic has direct damaging impacts on the economy in numerous ways.
For instance, border closers, stay at home is required, lockdowns which directly affect peoples’ socio-economic life.
In addition, employees who are infected are also required to be quarantines or hospitalized, hence halting them from joining the join the workforce.
For ordinary citizens, this means their household income are affected as many may have lost employments, therefor leading to a surge in the poverty level.
Apart from that, the pandemic has also jeopardized the mental state of frontlines as well as effecting many businesses from various sectors including the small and medium enterprise (SME).
The government’s stimulus packages and financial assistance have softened the impact of the COVID-19 pandemic and paved the path towards economic recovery.
For instance, the introduction of Bantuan Prihatin Nasional (BPN) and Bantuan Prihatin Rakyat (BPR) in 2020 (and continued in 2021) to individual and households of the B40 and M40 groups has somehow alleviate the socio-economic impact to their livelihood.
This is especially true for daily wage earners as the financial assistance come in handy when helping to mitigate the loss of employment-based income for many households and temporarily eased the economic damage from the pandemic.
While it’s not completely clear how the financial assistance has affected the economy, they may have contributed to a rise in personal income, consumer spending, personal savings, and economic growth.
Unlike others, saving money is less likely to stimulate the economy in the near-term, however, it may help in the long term.
For instance, people who opt to save the money received from the financial aid will least likely need to take out riskier loans in the future.
The spending patterns of financial assistance varied across each individual and households, with many families opting to increasingly save them or use them to pay off existing debt or bill or perhaps purchase food and other necessities.
Regardless, those assistances has helped alleviate the financial hardship faced by many lower to middle income individuals and household due to the COVID-19 pandemic and may have helped fuel the ongoing economic recovery.
In the midst of this, the country announced another lockdown period on 1st June 2021.
During this period, the closure of most economic sector is expected as only necessary sector such as the eatery and heath sector are allowed to operate to minimize movement.
The Geran Khas Prihatin (GKP) is among the financial assistance provided to SMEs to help businesses cushion the blow of the MCO as they are considered the drivers of national economic growth.
Financial stimulus such as National Economic Recovery Plan (PENJANA) and Strategic Programme to Empower the People and Economy (PEMERKASA) are also introduced to boost economic growth, support business, and to continue to provide targeted assistance to the people and sectors that are still affected by the COVID-19 pandemic.
The statistic of labour force in Malaysia (March 2021) by the Department of Statistic Malaysia noted that to empower the SME businesses, a total of 7,205 loan applications had been approved totalling RM1.36 billion under the PENJANA SME Financing as of 13th March 2021.
The closure of economic sectors has a huge impact on the nation’s economy as well as affecting the lives of the public.
Business owners are pleading for various assistance from the government to help them survive the challenging circumstances as they cannot operate their business during the lockdown or MCO period.
However, most might agree that it is the right move as it might put their staffs as well as potential customers at risk.
Nevertheless, there has been a rise in the gig economy, e-hailing and those involved in the food business as most have lost their employment due to the pandemic.
According to the statistic of labour force in Malaysia (March 2021) by the Department of Statistic Malaysia, the number of employed persons in Services continued to increase in March 2021 primarily in Wholesale and retail trade; Food and beverages services, Education and Human health and social work activities.
Similarly, employed persons in Manufacturing and Construction sectors continued to rise, while employment in Agriculture as well as Mining and Quarrying sectors declined.
For this some business owners or entrepreneurs might find themselves not able to apply the financial assistance.
Due to the changing nature in the labour force affected by the pandemic, a robust and updated database is required to identify the SMEs that needed financial assistance as they are some that might not be registered with the Companies Commission or the local authorities.
Thus, it is important for the authorities to be on the ground and have a lot of engagement with the public.
While there is no single measure is enough to completely dampen the effect of a pandemic, this shows that a continuous resumption of economic activity coupled with various assistances of the government’s initiatives has help ease the burden of people, business and economy.
These then led to the recovery of the economy and labour force back on track and thus strengthening the economic momentum.
