MUCH has been discussed about the adverse impacts of Covid-19 on the economy, globally and at home.
Less explored is how the Malaysian economy can harness the benefits of the pandemic in relation to how we live our lives.
Economics, after all, is about the art of making the most of life, as what George Bernard Shaw defines it. The hard truth is that we have to co-exist with the virus for years to come, even with the successful rollout of the vaccine and after achieving the so-called herd immunity in the near future.
Hence, in economic terms, the way we understand businesses and enterprises, jobs, investment, money and, most importantly, human nature, will and must change.
This will be the next new normal that we must face and understand, together with wearing face masks and distancing physically in public, as well as washing hands frequently.
In the context of Malaysia, this is the golden opportunity to reset the economy, which should be manifested in the form of the upcoming five-year plan, the 12th Malaysia Plan (12MP), and the long term, the Shared Prosperity Vision 2030 (SPV 2030).
Since the Emergency will end in August, the 12MP might not be unveiled anytime soon as it needs to be tabled in Parliament.
For a short-term strategy, the government has planned it well in the form of the various economic stimulus packages and the 2021 Budget in addressing the negative impacts of the pandemic on the economy.
The next course of action is by reaping the once-in-a-lifetime opportunities resulting from the Covid-19 pandemic by resetting the economy with clear medium- and long term plans that are tailored with the shared prosperity agenda.
The starting point is quite obvious: there is no point talking about making prosperity equally distributed for all if what we are doing now undermines the prosperity of tomorrow.
Thus, we need to think of the things we really value in life and not destroy them in the future. New strategies for sustainability must be of the utmost priority.
After all, nothing is more important than Mother Earth itself. This is not to say that we should discard the gross domestic product (GDP) metrics entirely, but to understand the basic concept of it, that it is meant to measure economic activity, not prosperity.
We know that the rise in GDP does not necessarily reflect the rise in the wellbeing of the population. But now, what happens when the GDP goes down and shrinks? People are losing their incomes, unemployment is going up, businesses are collapsing, government revenue is dwindling, and public debt and deficit levels are soaring.
That is why measures to stimulate and revive the economy is crucial in the 12MP, as part of a more crucial agenda of sustainability in the post-pandemic era. Let us not forget that there are structural issues that had existed in the economy even before Covid-19 arrived on our shores.
One of them is the problem of the middle-income trap. A projection of GDP growth below five per cent until 2030 will make the Malaysian economy "trapped in the middle" for a longer time beyond 2030.
This will impact the economy in terms of its competitiveness and its resilience for future economic shocks, and will further suppress the wage rate in the economy.
The middle-income trap also means that there is a serious lack of innovation in the economy. And this is where the 12MP and SPV 2030 come into play, to chart the way to develop capabilities for us to prosper.
We need to have clear medium- and long-term strategies to develop our technological capacity and to promote innovation. The National Policy on Science, Technology and Innovation 2021-2030 is a good start.
SPV 2030 and the 12MP must make sure that investment efforts in the future are skewed towards sustainability, like investing in high-tech agricultural sectors, or encouraging start-up companies to flourish in solving problems related to our sustainable development struggles.
And, of course, our money system must be reformed in a way that it is sustainable for the economy of tomorrow, meaning that it can play a role in reducing inequality, as well as becoming a social good that can empower people to prosper in their own ways.
The writer is associate professor of economics, Universiti Utara Malaysia
