PETALING JAYA: An economist has urged Putrajaya to stop making it difficult for businesses to operate if it wants to restore the economy.
Criticising what he said were the government’s broad and disruptive measures in its fight against Covid-19, Centre for Market Education Malaysia CEO Carmelo Ferlito said he believed expectations for a V-shape economic recovery were too optimistic.
Moreover, he said, political instability was affecting investor confidence.
In a comment on the 0.5% slippage of the leading index (LI) between July and August, Ferlito told FMT it would be “very hard for the government at this point” to get the economy going.
Chief statistician Mohd Uzir Mahidin has said the LI was “consistently above trend and moving upwards” and that this implied the economy was expected to continue to recover though risks remained amid the spike in Covid-19 cases.
Ferlito said the Malaysian economy was underperforming because it was being restricted by policy decisions.
“The best thing the government can do is to avoid extensive movement restrictions like the one involving the whole of Selangor, which, far from being justified by the Covid-19 figures, is harming the most productive part of the country.”
He said decisions were not made with proper consultation with industry and he cited restrictions on hiring foreign workers as well as travel restrictions and lockdowns.
He also alleged that government policies were poorly communicated to industry.
“The government must realise that a recovery strategy is grounded in economic activities and therefore economic actors should be the parts to be involved in a shared strategy,” he said.
This meant making decisions and plans and implementing them after consultation with stakeholders, he added.
Shankaran Nambiar of the Malaysian Institute of Economic Research said the outlook for this year was “pretty bleak” and that this could also be the case for 2021.
“With the exception of China, the global outlook is also not encouraging and, domestically, political instability is likely to sap the government’s energy,” he said.
Nambiar said Putrajaya must focus on the Bottom 40 and Middle 40 income groups as well as on small and medium enterprises and micro businesses.
“The immediate focus will have to be on restoring vigour to these groups,” he said. “Otherwise, aggregate demand, including domestic consumption, will be depressed.”
He said the government would have to ensure that people have adequate capabilities to survive “this very difficult phase” in the face of barriers to trade and movement of people as well as disruption of global value chains. -FMT