GEORGE TOWN – A veteran economist has apprised that Malaysia has the capacity to borrow more compared with some other countries in the region, which offers the government the option to inject more stimulus into the national economy.
Universiti Tun Abdul Razak academic Prof Emeritus Barjoyai Bardai said it is untrue that the government has limited funding capacity.
In fact, Malaysia is in a better position to borrow compared with others, he said, but the question is what the best strategies are to stimulate the economy, which has been backpedalling quickly due to the Covid-19 pandemic.
The latest reimposition of the movement control order (MCO 3.0) is evidence enough that it will take much longer than anticipated to arrest the spread of the virus despite the arrival of vaccines to the country.
With a sense of despair engulfing small and medium-scale enterprises, especially those related to the tourism sector, there is a need to offer fresh policies and new impetus to them, Barjoyai said in an interview with The Vibes.
“Allotting an extension to a loan moratorium is a false pretence for both the borrower and lender, as the recipients are struggling to repay their dues due to the lack of growth in the real economy,” he said.
Indeed, micro-scale enterprises are on the verge of collapse with the possibility that MCO 3.0 is turning into a catalyst for this, he said.
“I think the ratio of non-performing loans would likely increase. Yes, the moratorium gives space to breathe for some businesses – but the question is for how long,” he said.
“It is a serious situation. Many people have given up. They are only hoping for a miracle.”
Banks would be worried as with limited economic activity; their bottom lines would be affected.
Barjoyai suggested that the government help the banks formulate new loan packages and offer seed capital to start-ups to slowly nurse the economy back from the suffocating effects of Covid-19.
On April 12, Prime Minister Tan Sri Muhyiddin Yassin had claimed that the national coffers are depleting after the government allocated more than RM600 billion for Budget 2021 and other stimulus packages to help Malaysians weather the Covid-19 pandemic.
Have ‘targeted’ moratorium extensions
Meanwhile, Prof Yeah Kim Leng of the Sunway University Business School concurred with Barjoyai’s assertion for a fresh strategy to stimulate the economy.
But for him, this can be done through targeted moratorium extensions.
However, he said, the process must be expedited to allow the cash-flow momentum to continue as it can boost domestic spending.
Yeah urged the government to ramp up the immunisation programme as it can breathe confidence back into the economy.
He said that the triple blows the three MCOs since March last year caused to the economy are particularly evident with tourism-related businesses.
Yesterday, Bank Negara Malaysia had announced that a blanket loan moratorium may not be the best solution for borrowers following the imposition of MCO 3.0, which starts today and is scheduled to last till June 7.
The central bank suggested that borrowers instead approach banks to help them meet their debt obligations.
BNM governor Datuk Nor Shamsiah Mohd Yunus said all banks already have their payment assistance plans, including targeted loan moratoriums, which can be offered to borrowers who have lost their jobs or suffered a reduction in income. – The Vibes, May 12, 2021
