16th July 2021 - 3 min read
Economist Muhammed Abdul Khalid has called for government efforts to enhance economic recovery and to provide more aid to the regular working people, as well as those from the B40 and M40 income groups amidst the current challenging situation. This is in addition to offering higher wage subsidies, despite the country’s rising debt level that is close to breaching the 60% statutory limit.
Muhammad Khalid, who hails from Universiti Kebangsaan Malaysia, said that there is still financial room for Malaysia to channel more aid to the people, and that the country should consider raising funds locally due to lower interest rates. “Take the economic crisis of 1986, for example, the national debt level was over 100% and in less than 10 years, the country managed to strengthen its fiscal standing and recorded a surplus,” he said.
The economist further highlighted that the eight economic stimulus and aid programmes that have been announced thus far came up to only 6% of the national economy. The total budget of all the packages – with the latest being the PEMULIH stimulus package – was worth RM530 billion.
“Of this RM530 billion, the government has only forked out RM83 billion, while RM120 billion is from the EPF, moratorium (RM210 billion), and the rest… if you compare with regional neighbours, Thailand spends more than Malaysia although the lockdown in this country is among the longest in this region,” said Muhammad Khalid.
As such, Muhammad Khalid opined that Malaysia could afford to give four times the wage subsidy that has been provided thus far, which can benefit 5.5 million workers. This is on top of monthly aids to those from the B40 and M40 groups.
Muhammad Khalid also highlighted that the country’s economy has yet to recover from the 5.6% contraction, and may be further dampened following a forecast of only 4% growth in 2021. In defining economic growth, he clarified that economic growth must take into account variables beyond just the gross domestic product (GDP) growth as GDP growth does not reflect the real economic situation. Case in point, the country’s poverty rate increased from 16% to 17% between 2016 to 2019 despite a recorded GDP growth.
According to Muhammad Khalid, one key variable that should be considered is the wage factor. He pointed out that recent data has shown that the average wage level has gone down by 9% in 2020 – the first decrease since this statistic was documented back in 2010. Specifically, after two consecutive years of the average wage being recorded at over RM3,000, it declined from RM3,224 in 2019 to RM2,933 in 2020. The numbers also showed that 9.8 million workers out of a workforce of 13 million people in the country received wages.
Finally, Muhammad Khalid highlighted that the number of Malaysians who lost their jobs had spiked by 41% in 2021 – which points to Malaysia’s risky economic standing. As such, more aid is required to hasten economic recovery, he said.
(Source: The Edge Market)
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