Malaysia targets recovery effort on areas hardest hit by Covid-19
Malaysia targets recovery effort on areas hardest hit by Covid-19
As it enters the endemic phase of Covid-19, Malaysia still has a long way to go to reverse the damage from the pandemic that caused deep recession in 2020.
That’s the view of National Recovery Council (NRC) chief Muhyiddin Yassin, who told The Straits Times that the NRC’s job “is far from over” as it seeks to balance lives and livelihoods while getting the economy back on track.
Gross domestic product fell by 5.6% in 2020 and rebounded by only 3.1% last year as Malaysia recorded a record number of coronavirus cases and more than 30,000 deaths.
Yassin said: “In terms of total output, we have yet to recover back to 2019 numbers. It is Recovery++, not just going back to 2019 before Covid-19, but much better, because in 2019, there were already signs of global slowdown and Malaysia faced some problems.”
He added that the second National Recovery Plan (NRP 2.0) will focus on the hardest-hit areas, including small and medium-sized enterprises (SME) and the tourism sector, as well as helping students catch up on missed education.
Quality investment, higher productivity and increased trade are the priorities as the country sought to avoid a second slowdown in “a double-dipped growth or W-shaped recovery”, Yassin said.
He added that of particular concern is ensuring that SMEs can sustain themselves after the end of pandemic-era rescue packages that include loan moratoriums and wage subsidies worth hundreds of billions of ringgit.
SMEs account for 99% of businesses in Malaysia, but the pandemic saw their contribution to GDP drop to 38.2% in 2020, the first time the proportion has shrunk since 2003.
These small firms also made up 48% of employment, down 0.9 percentage points from 2019. “We have agreed at the NRC in the last two meetings to set up a team… with five top economic advisers to prepare and submit this plan within two months, said Yassin.
Decision on minimum wage hike due
International Trade and Industry Senior Minister Azmin Ali has announced the government would decide before the end of March on whether to raise minimum monthly wages to RM1,500 (S$483) from RM1,200, as previously announced. He added that ministers would also decide on whether to exempt SMEs, which typically have lower revenues, so as not to stifle Malaysia’s economic recovery.
Prime Minister Ismail Sabri Yaakob also urged the private sector to follow the government’s move to pay employees at least RM1,500 a month.
A senior government official said that if minimum wages were raised, subsidies may return for some firms.
The NRC’s Muhyiddin confirmed that NRP 2.0 could see a continuation of wage subsidies that began when he was prime minister for 17 months, from March 2020.
“Wage subsidy was one of the strongest support factors during that time; otherwise, many companies couldn’t sustain. What is important now is to see what the special support systems are. SMEs are the most critical sector,” he said.
