Opinion | Coronavirus: for Malaysia’s economy to survive and recover, its stimulus package needs more firepower

The country’s wage subsidy programme has been criticised for its inadequacy in helping businesses retain employees

This is likely to hit SMEs – which make up nearly half of the economy, and employ more than 60 per cent of Malaysia’s workers – particularly hard

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Residents wear face masks at home in Kampung Baru, a traditional Malay village in Kuala Lumpur. Photo: AP

Published: 6:00pm, 1 Apr 2020Updated: 7:04am, 2 Apr 2020

If Makcik (Auntie) Kiah existed, she would be one lucky lady.

According to Malaysia’s Prime Minister Muhyiddin Yassin, the hypothetical banana fritter seller and her family would be receiving around 4,200 ringgit (US$973) in cash transfers (disbursed at the end of April) and saving another 4,464 ringgit thanks to the Prihatin economic stimulus package he announced last Friday.

On the surface, the package – released in response to the economic impact of Malaysia’s attempts at “flattening the curve” of the Covid-19 pandemic – seems to have something for everyone, particularly when considered in tandem with other measures announced to offset the economic cost of the country’s month-long Movement Control Order (MCO).

The package provides additional one-off cash transfers not just for B40 (the bottom 40 per cent, in terms of income) households and individuals, but those in the M40 (middle 40 per cent) as well, in addition to more soft loans for small and medium-sized enterprises (SMEs) and a six-month loan moratorium announced earlier by the central bank.

Beyond the rhetoric and one-off cash disbursements, however, questions arise as to whether the package is sufficient to ensure the economy’s survival and subsequent recovery once the pandemic threat has passed.

In particular, Malaysia’s wage subsidy programme has been criticised for its inadequacy as an employment retention scheme. Under the programme, the government will subsidise wages of 600 ringgit per month per employee for three months for workers earning less than 4,000 ringgit, and employed by businesses that have faced a reduction in income of more than 50 per cent since January 2020.

A City Hall health official sprays disinfectant at a wet market in Kuala Lumpur, Malaysia. Photo: AP

SMEs – which make up nearly half the nation’s economy and employ more than 60 per cent of its workers – have been particularly vocal about declaiming the inadequacy of the government’s stimulus measures in supporting the sector.

Even before the MCO was imposed, SMEs were already hit hard by the effects of the Covid-19 pandemic. This is especially true of those linked to the tourism, hospitality, food and beverage, and events-management sectors – all of them labour-intensive.