Written By : Siti Khadijah
PETALING JAYA: Economists have welcomed Ismail Sabri Yakoob’s maiden speech as prime minister yesterday, stating that his two-pronged focus on boosting purchasing power and strengthening the private sector is well-placed.
In his televised address, Ismail talked of once again making Malaysia the “premier investment destination in Southeast Asia”.
Geoffrey Williams of the Malaysian University of Science and Technology said it was “reassuring” that Ismail has acknowledged the severe impact the Covid-19 pandemic has had on the economy, particularly SMEs and consumers.
“It will be important for the private sector, consumers and investors to drive recovery because then it will be more sustainable based on real buying decisions rather than one-off short-term government projects,” said Williams.
“This is an important change and it’s a good sign things might be different from before. It would be good to see reforms of GLCs and responsible privatisation of non-core activities to reduce crowding out, but this is not short-term.
“Overall, the new prime minister is offering an opportunity to change policy and follow different policy advice, so we look forward to this if it happens.”
Ismail highlighted how the pandemic has seriously impacted both the national and international economy, leaving many local SMEs struggling or bankrupt.
To reverse this, he announced two main economic objectives: Improving consumers’ purchasing power and strengthening the private sector’s role as a key driver of growth.
He also acknowledged that long-term economic effects have to be addressed, including unemployment, and a need to help those who have lost their sources of income during the pandemic.
Williams said: “We have been pressing for this for some time. This, along with the steady opening up (of the economy), is what we have asked for and hopefully, it will come quicker now.
“We have also recommended cash handouts to support people who have lost their income and to help consumers, so it’s good he has mentioned the importance of supporting purchasing power.
“Businesses need customers and consumers need some help to buy because we’ve seen salaries and incomes fall and unemployment and underemployment rise.”
Goh Lim Thye, a senior economics lecturer at Universiti Malaya, hoped to see the new administration embark on a serious push to attract foreign direct investment (FDI) with some consistent policymaking.
While Goh agreed with Ismail’s call to increase purchasing power among domestic consumers, he felt it would be easier said than done.
Noting the 4.8% unemployment rate (764,900 individuals) in the second quarter of 2021, he said he expected both figures to continue rising due to prolonged lockdowns.
He also said that up to 580,000 businesses, representing 49% of the SME sector, are at risk of closing down by October, according to a report by the entrepreneur development and cooperatives ministry, and that this has now given policymakers more impetus to create employment opportunities.
Apart from enhancing FDI inflows and attracting foreign capital investors, Goh said policymakers should place emphasis on drafting policies that can boost investor confidence.
“Our country needs investors. Thus, our policymakers should make sure that all policies drafted are consistent to gain investors’ trust.
“A drastic change in existing policies such as MM2H should be avoided or rectified,” he said, referring to the recent amendments to the Malaysia My Second Home programme, which many consultants said would deter applicants from the country’s long-term visa programme for foreigners.
Among the controversial changes are an increase in applicants’ compulsory fixed deposits (FD) in local banks from between RM150,000 and RM300,000 to RM1 million, and offshore monthly income from RM10,000 to RM40,000. Applicants would also need to have at least RM1.5 million in liquid assets, compared with between RM300,000 and RM500,000 previously.
The programme had brought in RM40.6 billion throughout its 19 years, with real estate, healthcare, education, travel, hospitality, retail, food and beverage, and entertainment among the key sectors benefiting.
