Malaysia is on the verge of a fourth wave of Covid-19 infections.
Six stimulus packages, totalling RM340 billion, together with the RM322.5 billion of the 2021 Budget are being rolled out. The National Covid-19 Immunisation Programme (NIP) is underway, albeit slowly.
It is difficult to focus on economic recovery when the daily Covid-19 infection rate is on the rise. But addressing the pandemic is equally troublesome when the economy is not being stimulated with clear and holistic short-, medium- and long-term policies.
Finding the right balance in addressing both issues is a daunting task.
The prospects for the global economy seem to be better this year than in 2020 thanks to the vaccination programmes worldwide, especially in the United States and the United Kingdom. This has helped the world economy and global trade to recover.
As a result, Malaysian exports are picking up, and global commodity prices, especially crude oil price, are on an uptrend. These will boost Malaysia's revenue and its prospects for this year. Hence, it is no surprise that Bank Negara Malaysia, through the Monetary Policy Committee (MPC), has maintained the Overnight Policy Rate at 1.75 per cent, in line with market expectation.
Even if the targeted growth rate of six to 7.5 per cent for this year is not met, gross domestic product (GDP) growth of between five and six per cent is within reach, at least for now. The economy must be resilient and competitive so that growth and public revenue can be enhanced and improve our capacity to handle the pandemic better.
The National Investment Aspirations (NIA) are a good start. But more details need to be unveiled in the 12th Malaysia Plan (12MP) and the Fourth Industrial Master Plan (IMP4) to attract more investments to our shores. Bold and extraordinary measures, such as tax reforms, social security net transformation, and legal and regulatory reforms, must be introduced to empower the people and protect the planet.
More importantly, the 12MP and IMP4 must be "mission-oriented" in approaches, whereby the public sector must lead in the drive for innovation, digitalisation and sustainability.
The re-imposition of the MCO is understandable as the lives of the people must be the utmost priority of the government. It must, however, be done without permanently destroying people's income, businesses and industries.
The relief measures in the stimulus packages, such as cash handouts, might help, but for how long? Hence, the government must strike a balance and expedite the NIP further so that herd immunity is achieved soonest possible.
This is where the use of the National Trust Fund is justified. We are experiencing unprecedented challenges because of the resurgence of new Covid-19 infections and new virus variants. These require a kind of 'whatever it takes" approach to deal with the problems.
The more crucial issue here is how the government can improve the reserve funds in the future. This matter is similar to the country's deficit and debt levels. The government still has the space to borrow.
Helping to prevent disruption to the people's income and helping businesses to stay afloat must take priority. Malaysia's debt and deficit levels are not the worst in its history. Even the debt ceiling can be increased once Parliament convenes again.
Fiscal consolidation exercises must be spelt out clearly. Hence, medium- and long-term economic projections are crucial. For instance, what would be the GDP growth in five or 10 years on average? More crucially, what economic strategies, policies and economic system would be put in place to achieve them?
I hope the recently established council on the Shared Prosperity Vision 2030 (SPV 2030) can come up with clear key performance indicators, macroeconomic targets in the direction as discussed above.
The SPV 2030 was announced in a "different world" than what we are living in today. Hence more refinement in terms of goals, policies and strategies are needed. The war against Covid-19 is far from over. Let's fight this war together.
The writer is Associate Professor of Economics, Universiti Utara Malaysia
