By Prof Emeritus Datuk Dr Zakariah Abdul Rashid
The proposed Short-Term Economic Recovery Plan needs to pay more attention to micro and small enterprises as they are the groups most affected by COVID-19 that is harming the national and global economies.
Former executive director of the Malaysian Institute of Economic Research (MIER) Prof Emeritus Datuk Dr Zakariah Abdul Rashid said small and micro enterprises (SMEs) accounted for 70 per cent of the country’s 98.5 per cent of small and medium enterprises, and they were mainly involved in the services sector.
“They are entrepreneurs, who sell layered cakes, chips, banana fritters, who usually have less than five workers. Prior to the COVID-19 outbreak, this group had been affected by low household income problems and high-cost of living.
“The pandemic put pressure on them, causing them to run into cash-flow problems, and were unable to pay the wages of their workers as their operating expenses were disrupted,” he said in the Ruang Bicara programme themed “Economic Stimulus Package Spurs the National Economy” on Bernama TV.
Tomorrow, Prime Minister Tan Sri Muhyiddin Yassin is set to announce the Short-Term Economic Recovery Plan focusing on three main goals: empowering the people, propelling businesses and stimulating the economy, to pave the way to recovery and growth.
This is on top of the previously announced Prihatin Rakyat Economic Stimulus Package (PRIHATIN) worth RM260 billion to revive the economy and cushion the impact of COVID-19 on businesses and livelihoods of the people.
Zakariah said the economic problems facing the world and the country at the moment are much larger than the 2008 global financial crisis.
“If we used to call it recession before, now people have started asking whether we are facing the great depression of the 30s,” he said.
Zakariah does not deny a suggestion that the history of the great depression would repeat itself if the global economic uncertainty persisted for three years.
At present, he said the world’s largest economic players, namely China, Europe and the United States are already experiencing economic uncertainty.
“We have seen the US-China trade war has led to (tariff) barriers on goods where the US does not want to import goods from China, and Malaysia, which is China’s trading partner, will also be affected.
“When this happens, the government’s revenue will also be affected and it will impede the government’s ability to provide public assistance despite having a comprehensive plan,” he said
At the global level, Zakariah said the world’s major economies were now back imposing barriers to trade.
“In the past, we have always talked about globalisation, especially during the second world war, but now we are turning to protectionism. So, when the biggest economy adopts protectionism, small countries including Malaysia will be in a quandary,” he added.
Zakariah said unemployment among Malaysians is likely to increase to 1.7 million from 600,000 at present. – BERNAMA
- Panel is former executive director of the Malaysian Institute of Economic Research (MIER)