Written by Carmelo Ferlito, CEO of Center for Market Education

First published in Focus Malaysia on 18 August 2021

WITH the fall of the Perikatan Nasional (PN) Government, the Centre for Market Education (CME) supports the idea of a new government characterised by political peace in order to fight the healthcare and economic crises which Malaysia is facing.

We believe 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, 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 programme and timeline in order to give back the power of choice to the rakyat as soon as possible”.

We observe 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.

Balancing act

Furthermore, a clear sign of discontinuity with past policies should be given. The Prime Minister (PM) 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, we wish to repeat the necessary pillars to win the health emergency:

  • Mass, frequent and affordable testing at workplaces and schools. At this regard, the utilisation of breath analysers should be considered too.
  • Direct investments to strengthen the healthcare system with additional bed, ICUs (intensive care units), oxygen, etc.
  • Pharmacological research to develop a long-term treatment as complement and eventually as alternative to vaccination.

On the economy front, CME agrees with Fitch Solutions Country Risk & Industry Research’s forecast that 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 as follows:

  • A new, clearer and faster strategy to normalise business conditions with the commitment to avoid future lockdowns.
  • Tabling a programme for domestic and international mobility by 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 programme 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 Malaysia My Second Home [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.

Towards this end, 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. – Aug 18, 2021