Lim Tak Sing (林德成), columnist, in his 成天幻想 (Daydream) column in Sin Chew Daily (March 28, 2020)
Summary by Alan Yang Gregory (Photo credit: peakpx)
In response to the Covid-19 epidemic, Malaysia’s new government has announced a 250 billion-ringgit (US$57.2 billion) economic stimulus package. While this package is urgently needed, it is important to question where the money will come from.
With the plunge in global oil prices, government revenue will continue falling. While the Prime Minister continues to promise the implementation of large infrastructure projects such as the East Coast Rail Link, the recent distribution of emergency funds will suppress Malaysia’s fiscal capacity. Cost reduction will be one of the only options for the government to manage the country’ fiscal deficit.
With limited funds, however, the government may be forced to raise money through government-linked companies and private institutions, while also selling off government assets and land. With the potential for currency devaluation, finding a balance between "capital preservation" and "economic relief" will require skill. Both approaches will have a significant impact on Malaysia’s economy.
In spite of these measures, industry will be severely damaged, and it is unclear whether many companies can return to their original business models. The potential wave of business closures is likely to shake the country’s economic foundation.
The government has often stated that “Industry 4.0” requires the digital transformation of enterprises. This epidemic could be a turning point for businesses to adapt to the future, with live broadcasting, online shopping and online teaching all becoming necessities.
Ultimately, these economic measures can only fix the symptoms while helping buy additional time rather than address the root issues of the country’s economic problems.