CME SUPPORTS A GOVERNMENT OF PEACE TO FACE THE WAR
WEDNESDAY, 18 August 2021: With the fall of the Perikatan Nasional government, the Center for Market Education (CME) supports the idea of a new government characterized by political peace in order to fight the healthcare and economic crises which Malaysia is facing. CME believes that the main features of the new executive should be:
- Ample parliamentary support, certified by a confidence vote.
- A clear programmatic agenda centered on:
- Fighting COVID-19.
- Putting the country on the path for economic recovery.
- A well-defined timeline for executing a limited number of targeted policies and preparing the country to face, in safety, new general elections so that the democratic process can be fully restored.
“Following the example of Italy – said Dr Carmelo Ferlito, CME CEO – we should aim to restore trust, confidence and hope through a government of national pacification. But, contrary to what is happening in Italy, the government should have well-defined program and timeline in order to give back the power of choice to the rakyat as soon as possible”.
CME observes that Malaysia desperately needs to address the loss of confidence both domestically and internationally; in order to do so, a climate of peace is very much necessary. Furthermore, a clear sign of discontinuity with past policies should be given. The Prime Minister should be someone who cannot be identified with the “strategy” that was implemented so far. A fresh vision is very much needed.
With regard to the fight against COVID-19, CME repeats the necessary pillars to win the health emergency:
- Mass, frequent and affordable testing at workplaces and schools. At this regard, the utilization of breath analyzers should be considered too.
- Direct investments to strengthen the healthcare system with additional bed, ICUs, oxygen, etc.
- Pharmacological research to develop a long-term treatment, as complement and eventually as alternative to vaccination.
On the economy, the Center for Market Education agrees with Fitch forecasts according to which the Malaysian economy is projected not to grow in 2021. An optimistic 2% growth is conceivable only if lockdowns are immediately abandoned and economic policies radically changed. Currently, hundreds of thousands of jobs are at risk, while the purchasing power of the people is threatened by the inflation created by supply-side shocks and expansive fiscal and monetary policies.
The measures that the new government should implement, and to which its mandate should be linked, are the following:
- A new, clearer and faster strategy to normalize business conditions, with the commitment to avoid future lockdowns.
- Tabling a program for domestic and international mobility, opening a dialogue with the ASEAN partners.
- A fiscal reform with the following points:
- Simplification of the income tax system.
- Introduction of a multi-layered GST to specifically support expenditures in the healthcare system.
- A special regime for micro and small businesses, aiming to introduce them into the national fiscal and welfare system without discouraging economic initiatives.
- Design a program to make Malaysia attractive again for Foreign Direct Investments (FDIs), cutting red tape and clarifying the long-term strategy toward expatriates (currently compromised by an extremely restrictive new MM2H plan).
- Creation of a support desk for households in difficulties because of the pandemic. The support desk should help families and individuals to restore their financial capacity through education, information and connections with the relevant financial institutions.
“A strong leadership and political support are equally necessary. But competence and vision are also important for driving the country back to the growth path”, concluded Dr Ferlito.
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About CME: The Center for Market Education (CME) is a boutique think-tank based in Kuala Lumpur, Malaysia. As an academic and educational institution, CME aims to promote a more pluralistic and multidisciplinary approach to economics and to spread the knowledge of a sounder economics, grounded in the understanding of market forces. In order to do so, CME is not only involved in academic initiatives, but it organizes seminars, webinars and tailor-made economics classes for students, journalists, businesspeople and professionals who wish to better understand the relevance of economics for their daily lives and activities. Economics matters and needs to be presented in a fashion in which the link with reality is clearly visible. In this sense, we look not only at theoretical economics but also at policy making, with an emphasis on the unintended consequences generated by political actions.