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PENJANA can be catalyst for short-term economic recovery - Academics

KUALA LUMPUR: The National Economic Recovery Plan (PENJANA) worth RM35 billion announced by Prime Minister Tan Sri Muhyiddin Yassin is well-crafted and will become the catalyst for the recovery in the economy affected by the COVID-19 pandemic in the short term.

Professor of strategic management, Universiti Utara Malaysia, Professor Dr Haim Hilman Abdullah, said the special fund to help the unemployed under 40 years and above 40 years old should be lauded as it would give some relief to those who lost their jobs, however, it should be expanded to residents in rural areas who are living in difficulty.

On the special fund for school leavers and graduates to undergo apprentice programmes with an allowance of RM600, he said this was commendable, but taking into account the high cost of living in towns, a higher allowance of RM1,000 to RM1,200 would help even more.

Meanwhile, he said the tax relief incentive to draw foreign investors to relocate their operations to Malaysia must be more attractive than that offered by neighbouring countries, for example, Indonesia, Vietnam, Thailand and others.

"The 100 per cent tax exemption (local assemble) and half (for import) for the automotive industry is a wise move.

"Better if it can be expanded to the manufacturing/assembling of motorcycles as it will give opportunities for the people to own vehicles at lower prices. This will move the economy at the macro level," he told Bernama.

For the RM30 fare per month without limit in Kuala Lumpur, Haim said it should be expanded to all main towns in Malaysia, in fact, the government should strive to give free transportation in rural areas.

"In the context of short term (plan), all incentives are good and can help in reviving the economy but for the medium and long term, we need a more comprehensive economic policies which focus on the aspects of infrastructure development such as better Internet facilities and are wide-reaching.

"National Agriculture Economic Policy must also be formulated immediately. This will enable millions of farmers nationwide, for instance smallholders, Federal Land Development Authority (FELDA) and Federal Land Consolidation and Rehabilitation Authority (FELCRA) to be involved more actively in various agricultural sectors," he said.

Nevertheless, he said, no special funds were announced to help the farming community in villages and FELDA.

"The government should have introduced a subsidy by buying two main commodities, that is rubber and palm oil, at certain prices specifically for production by smallholders and settlers of FELDA and FELCRA.

"The price subsidy will help farmers derive income and at the same time, if they lose jobs in the towns but have family land in the village, they can go home and develop the land," he said.

Besides that, a National Industrialisation Economic Policy must also be formed whereby the need to review existing policies is critical in line with the new normal, he said.

The country needs the right policies to take it to more sustainable plans in ensuring the country's economic continuity.

The stimulus package approach would help those affected but it cannot continue as it would aggravate the government's burden if it cannot create jobs, he said.

However, the financial assistance to the unemployed would help increase demand in the market, which would lead the companies to expand production, and when this happens, it would help create jobs.

"Towards this end, cooperation from all parties, whether the government, industry or the people is required in the recovery of the economy," he added.

Meanwhile, Professor Dr Mohd Nazari Ismail of University of Malaya's faculty of business and accounting opined that the huge package from the government would please many groups, especially those in the tourism sector which has suffered a lot from COVID-19.

He said this would help improve the people's perception of the government which is seen as being concerned with the plight of the people.

But, he noted this would also add to the government's debt burden and would be a big challenge for future government leaders.

"The incentives would not necessarily bring the country's economy back on track as the world economy is badly affected and so we will still be affected.

"It will just be a temporary relief using borrowed money, which will have to be repaid by the people in the future," he added.