The package is significantly bigger than the RM67 billion package announced in 2009, after the housing financial crisis. It is obvious that the economic package focuses on the welfare of our people where most of the emphasis are placed on giving remunerations and support to the poorer people. It looked widely politically appealing as the government is trying to appeal everyone, as they are the new "back-doored" government. Business owners claimed to go bankrupt and the public masses said they need immediate assistance. Now, who's more right and who's more wrong?
There is only TWO things that the government need to do: help citizens and businesses who suffered during and after the MCO, and keep the inflation and unemployment rate low after MCO.
First of all, why a one-off of RM500 to government pensioners? More than 850,000 pensioners will be receiving RM500 assistance, costing more than RM430 million. I fully support the decision of government to help the citizens during these tough times especially those who live on day-to-day basis (most are paid on daily basis) and MCO will mean no income for them. For front-liners risking their life to help us, we need to compensate their sacrifice at least by giving allowances to them. For pensioners, they might really need help too, but are they the one that REALLY REALLY needs help? That RM430 million could've been utilized in a better way (like increasing the wage subsidy programme, income tax defer for coporates, SMEs, and etc).
Second, free internet to all customers amounted to RM600 million. I don't really understand this movement because bread and butter always comes in first, and internet should be considered a “luxury" if you have trouble even feeding your families during these tough times. Again, the RM600 million could've been better utilized. It is very critical that the government utilize our capital efficiently, as a wrong step taken will inherently lead our country into a mess in such tough times. Rapid inflation, high unemployment, wider fiscal deficit, investors losing confidence are things that we want to avoid after the outbreak. Feeding our rakyat is important, but do not forget that it is those businesses and SMEs that will be feeding our rakyat in the future.
Next, the Wage Subsidy Programme is eligible for employers that did not lay off any workers, force workes to take unpaid leaves and cut employees wages for three months starting April 1st. This will keep the employee's payroll safe as government will pay RM600 per employees to the companies under the programme but their business income must decreased at least 50% since 1st January 2020. For example, if my company has 100 people with salary under RM4k, I will be eligible to get RM600 X 100 amounted to RM60k if I follow the rules imposed by the programme for three months starting April 1st. This will help the employers that faced cash flow difficulties as their business stopped during the MCO.
In the package, SMEs will be provided will be provided with funds worth RM4.5 billion to enhancess access to financing for SMEs. Special Relief Facility (SRF) funds also increased to RM5 billion with an interest rate of 3.5% instead of 3.75%. A mere 0.25% cut with a 3.5% interest rate is still too high that I think its effect is non significant to help the SME owners. For comparison, in US$2 trillion stimulus package, a 0.5% interest loan is offered totaling up to $500 billion to help big and small companies to survive through this critical period. Fortunately, these loans are guaranteed under the RM50 billion guarantee scheme by Danajamin with the condition of financing working capital requirements.
The end, that's it. Wait, how about businesses like airlines, tourism, entertainment? They closed down for few weeks during the MCO and is expected to suffer for few months until Covid-19 outbreak subside. Property and real estate owners and manufacturers that closed down incurred losses at least millions throughout the lock down did not receive any tax relieve or income tax exemptions. Farmers and agriculture sector also suffered as their goods are thrown out with no demand. Aviation industry suffered millions of losses and I expected government to at least inject some capital to the aviation industry like what Trump did (Airlines in US get $60 billion in loans and loans guarantees and a tax deferment) but all I heard was a 2% electricity cut (-_-). More than 50% of our stimulus package focuses on welfare and businesses only gets <50%. I added America's stimulus package for comparison (Credit to VisualCapitalist).
The new government needs some time, and our citizens need to let them prove themselves. I do not support government's action to "keep no man left behind" as it can be defined as a politically appealing package instead of a real economic stimulus package. Populism is nothing new. It is deeply embedded in many political ruling and will continue to place an important part in politics. There is no wrong in making our citizens happier through cash injections, but I believe they will be more than happy to keep their bread and butter permanently instead of temporarily. No one wants our beloved country to suffer the same fate as old Argentina under the ruling of Juan Peron (for context)! Anyway, stay healthy and positive during this MCO period and we will rebound stronger after the crisis.
Thanks for reading!
Disclaimer: All opinions are solely mine and do not reflect any opinions of any organizations that I might be affiliated with.
The notable points in the package can be summarized with:
1) RM10 billion Allowances given to B40 + M40 groups, frontliners (police, doctors, nurse, grab drivers etc) fighting the pandemic, students and households.
2) Electricity discount of 15% in tourism sector and 2% for other sectors, free internet for all
2) Electricity discount of 15% in tourism sector and 2% for other sectors, free internet for all
3) Wage Subsidy Programme of RM5.9 billion to encourage employee retention
4) RM4.5 billion given to SMEs and micro-entrepreneurs
5) RM50 billion credit guarantee scheme to ease funds borrowing
6) RM2+2 billion building houses and improving roads, upgrading tourism facilities
4) RM4.5 billion given to SMEs and micro-entrepreneurs
5) RM50 billion credit guarantee scheme to ease funds borrowing
6) RM2+2 billion building houses and improving roads, upgrading tourism facilities
First of all, why a one-off of RM500 to government pensioners? More than 850,000 pensioners will be receiving RM500 assistance, costing more than RM430 million. I fully support the decision of government to help the citizens during these tough times especially those who live on day-to-day basis (most are paid on daily basis) and MCO will mean no income for them. For front-liners risking their life to help us, we need to compensate their sacrifice at least by giving allowances to them. For pensioners, they might really need help too, but are they the one that REALLY REALLY needs help? That RM430 million could've been utilized in a better way (like increasing the wage subsidy programme, income tax defer for coporates, SMEs, and etc).
Second, free internet to all customers amounted to RM600 million. I don't really understand this movement because bread and butter always comes in first, and internet should be considered a “luxury" if you have trouble even feeding your families during these tough times. Again, the RM600 million could've been better utilized. It is very critical that the government utilize our capital efficiently, as a wrong step taken will inherently lead our country into a mess in such tough times. Rapid inflation, high unemployment, wider fiscal deficit, investors losing confidence are things that we want to avoid after the outbreak. Feeding our rakyat is important, but do not forget that it is those businesses and SMEs that will be feeding our rakyat in the future.
Next, the Wage Subsidy Programme is eligible for employers that did not lay off any workers, force workes to take unpaid leaves and cut employees wages for three months starting April 1st. This will keep the employee's payroll safe as government will pay RM600 per employees to the companies under the programme but their business income must decreased at least 50% since 1st January 2020. For example, if my company has 100 people with salary under RM4k, I will be eligible to get RM600 X 100 amounted to RM60k if I follow the rules imposed by the programme for three months starting April 1st. This will help the employers that faced cash flow difficulties as their business stopped during the MCO.
In the package, SMEs will be provided will be provided with funds worth RM4.5 billion to enhancess access to financing for SMEs. Special Relief Facility (SRF) funds also increased to RM5 billion with an interest rate of 3.5% instead of 3.75%. A mere 0.25% cut with a 3.5% interest rate is still too high that I think its effect is non significant to help the SME owners. For comparison, in US$2 trillion stimulus package, a 0.5% interest loan is offered totaling up to $500 billion to help big and small companies to survive through this critical period. Fortunately, these loans are guaranteed under the RM50 billion guarantee scheme by Danajamin with the condition of financing working capital requirements.
The end, that's it. Wait, how about businesses like airlines, tourism, entertainment? They closed down for few weeks during the MCO and is expected to suffer for few months until Covid-19 outbreak subside. Property and real estate owners and manufacturers that closed down incurred losses at least millions throughout the lock down did not receive any tax relieve or income tax exemptions. Farmers and agriculture sector also suffered as their goods are thrown out with no demand. Aviation industry suffered millions of losses and I expected government to at least inject some capital to the aviation industry like what Trump did (Airlines in US get $60 billion in loans and loans guarantees and a tax deferment) but all I heard was a 2% electricity cut (-_-). More than 50% of our stimulus package focuses on welfare and businesses only gets <50%. I added America's stimulus package for comparison (Credit to VisualCapitalist).
The new government needs some time, and our citizens need to let them prove themselves. I do not support government's action to "keep no man left behind" as it can be defined as a politically appealing package instead of a real economic stimulus package. Populism is nothing new. It is deeply embedded in many political ruling and will continue to place an important part in politics. There is no wrong in making our citizens happier through cash injections, but I believe they will be more than happy to keep their bread and butter permanently instead of temporarily. No one wants our beloved country to suffer the same fate as old Argentina under the ruling of Juan Peron (for context)! Anyway, stay healthy and positive during this MCO period and we will rebound stronger after the crisis.
Thanks for reading!
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Disclaimer: All opinions are solely mine and do not reflect any opinions of any organizations that I might be affiliated with.
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