Malaysia needs to learn and to rethink basic assumptions about the economy in order for it to move forward and help people in distress, prominent economist Jomo Kwame Sundaram said today.
“You need to have countercyclical policies. That is why I welcomed the Prihatin stimulus package when it first came out last year, but it was not sustained.
“People need to live, they need to keep the economy going,” he said at the virtual Malaysian Economic Summit 2021.
“Given the nature of the economy today, you cannot depend on (the government) becoming the employer of last resort, but you can become the buyer of last resort to keep the economy going, to help the people (who are living) in precarious conditions,” he added.
Jomo was a panellist at a session titled “Will Productivity and Growth Return After the Covid-19 Pandemic? How to Strengthen the Competitiveness of the Malaysian Economy in the New Normal?”
He argued that the country need not be held hostage by credit rating agencies by taking countercyclical fiscal policies.
“We have to rethink our attitude about a whole range of issues, both internationally as well as domestically, but (we need to be open) in terms of public policy and to think about these issues.
“What the chambers of commerce have raised (about their problems) has been known for over a year and a half. We could have addressed these issues much earlier but we have a situation where some people presume that they know best, and this is a major problem,” said Jomo who is senior adviser at the Khazanah Research Institute.
Recently, German, Dutch and Japanese trade groups in Malaysia expressed concern over the government’s Covid response, warning that businesses are rethinking their investment decisions in the country.
Meanwhile, answering questions at the meeting, MUI Group chairman and CEO Andrew Khoo said the government needs to diversify foreign direct investment (FDI) into the country, which is mainly contributed by the oil and gas sector.
“This can be done by promoting the adoption of innovative and advanced technologies. Foreign investors also need to be encouraged to establish or relocate subsidies in or to Malaysia,” he said.
Khoo said the government needs to improve national competitiveness in terms of FDI by introducing more investor-friendly policies and incentives.
The implementation of the National Fiberisation and Connectivity Plan also needs to be sped up to improve the country’s digital connectivity by rolling out 5G, he added.
Khoo said the next six months would be critical to ensuring the right level of confidence is cultivated among trade groups and the wider foreign investment community.