AUGUST 4 — On July 29, 2021, I was one of the Dewan Rakyat MPs that was supposed to speak after the Minister of Finance, Tengku Zafrul Aziz.
He was supposed to respond to our views on the Perikatan Nasional government’s “Economic Aid Packages” having earlier briefed the House on it.
As we all know however, a statement from the Istana Negara rebuking the government over the Emergency Ordinances was released that day. The ensuing uproar in the House meant that neither Tengku Zafrul nor I could speak after the session was adjourned several times.
The Minister however has published an article that has been carried in several news outlets, arguing that the NRP should be supported by the Opposition.
Here therefore, I would like to summarise the points I was going to make in Parliament but which I did not get a chance to.
Malaysians have suffered enough
The Covid-19 pandemic and the related lockdowns have obviously had a terrible effect on our economy, while exacerbating existing problems.
The first MCO brought unemployment to 5.3 per cent. It surely is worse now, especially for semi-skilled workers.
As per the Statistics Department, graduate unemployment rose 22.5 per cent from 165,000 to 202,000 in 2021.
The Statistics Department also found that average and monthly wages in 2020 have fallen to RM2,933 from RM3,224—the first time this has happened since 2010. Median wages and monthly wages also fell 15.6 per cent from RM2,442 to RM2,062.
Household spending is widely expected to decrease dramatically and impact GDP growth. There has also been a virtual extermination of Malaysian SMEs.
The economic and social scarring of individual Malaysians and families on the ground has been immense.
The government has not spent enough
The sad fact is that the current government has been in denial. It has been too reliant on overly optimistic economic projections.
PN’s blinkered views — as well as perhaps their leaders being bewitched by the ideology of austerity — have led them to make the blunder of providing too small fiscal injections in the various packages.
These pale to what neighbouring economies have spent. We spent an estimated 6.5 per cent of our GDP in this way, compared to Thailand’s 8.5 per cent and Singapore’s 19.6 per cent.
Also, most of PN’s so-called “fiscal” injections have been in the shape of bank loan moratoriums and EPF withdrawals. In effect, the government is asking Malaysians to save themselves using their own funds — and many have been forced to.
But what about when the pandemic is over? How will they guarantee themselves a comfortable retirement, when their EPF, which was already seen as inadequate, is gone?
How can anyone consider what the government’s failures here as in any way “responsible”?
The government ought to have been bolder and prompter in its spending.
6.5 per cent in direct fiscal injections today will not have the same impact if the same amount was expended in the 2021 Budget because our economic growth forecasts have fallen.
The deficit is not the only consideration
Indeed, it is inane that the Ministry of Finance was still speaking about fiscal consolidation and appeasing Credit Rating Agencies in the face of the pandemic up to this year.
When your house is on fire, you don’t agonise over how much water to spend but splash whatever is needed to put it out.
Of course, the government’s apologists will say: but what about our credit ratings?
It should be remembered that the ratings agencies also measure transparency and responsibility rather than just fiscal deficits in determining a country’s ratings.
For instance, Fitch Ratings, when it downgraded Malaysia from A- to BBB+ stated that “The government has secured passage of core legislation to implement relief measures, including the 2021 budget, but, in Fitch’s view, lingering political uncertainty following the change in government last March weighs on the policy outlook as well as prospects for further improvement in governance standards.”
Ultimately, we must look beyond the numbers. Malaysians are suffering and dying.
A young worker in my constituency has told me: “If I go out to work, I will die from the virus. If I sit at home, I will starve to death.”
The people have been forced to put up white flags asking for help. Our middle class is shrinking. Contract doctors have found themselves compelled to go on strike.
The status quo is not working and will exacerbate the disaster Malaysia finds itself in.
The way forward
Fundamentally, the government needs to spend big on public healthcare (including special allowances from frontliners), education (in light of closures of schools and universities) as well as support for workers. The latter includes expanding the Employment Insurance System and wage subsidies as well as assistance to SMEs.
We also need more social spending in the form of higher BPR payments, not just to the B40 but also the M40s/B60s.
Yes, all of this will increase Malaysia’s debts. But in a crisis, this is the only realistic way to generate economic growth with the more effective multiplier effect.
I welcome the Minister’s June 29, 2021 statement that the government is considering increasing the country’s debt limits. The current temporary 60 per cent cap is not realistic. We must also make drastic changes to caps on debt repayments and borrowing for development expenditure.
The current fiscal consolidation plan must be reworked as it no longer matches the situation we are facing.
However, this does not mean that we shouldn’t also be looking into the spending of each Ministry and Agency to ensure that their expenditure is truly benefiting the country.
Failed Emergency
Overall, the Emergency that lasted from January 11 to August 1, 2021 has failed to boost our fight against Covid-19.
This has been especially apparent in the lack of coordinated and extraordinary efforts when it comes to financial/economic initiatives to help the people.
The government had extraordinary powers given to it via the Emergency Ordinances, but it did nothing, likely because the Emergency was principally for political ends.
In his recent write-up, Tengku Zaful argues that: “Why can’t we show the same political will and cooperation to save our rakyat? Our esteemed Parliamentarians did this for the Covid-19 Bill in August 2020, for which I am sure the people are deeply thankful as it enabled aid and assistance to be channelled to the rakyat. I am confident we will be able to do it again through the NRP.”
Here, the Minister is rightfully acknowledging that the government needs a working majority in Parliament to pass the NRP.
But it is unrealistic for him to expect even the most patriotic MPs to back the plan of a government that does not listen to good advice and in fact, often takes actions that go against basic common sense, much less the national interest.
Recently events have shown that the current government has likely lost its majority in the House.
If it wishes the support of the various political parties to pass the NRP and further along, the 2022 Budget, it must change its direction and policies drastically.
If the government is unable to do this, then it should resign and allow the formation of a new one which can.
Nik Nazmi Nik Ahmad is the Keadilan Chief Organising Secretary, MP for Setiawangsa and former member of the Budget Special Select Committee in Parliament. He has authored several books including ‘9 May 2018: Notes from the Frontline and Moving Forward: Malays for the 21st Century’.
* This is the personal opinion of the writer or organisation and does not necessarily represent the views of Malay Mail.
