Kuala Lumpur, 13 October 2020 – The government needs to continue helping Malaysians with some forms of assistance or stimulus packages to brace themselves for the impact of the COVID-19 pandemic, said Khazanah Research Institute (KRI).
Its chairman Tan Sri Nor Mohamed Yakcop noted that the government should not be unduly worried about raising its debt service ratio at this time of crisis, and that it still has space to borrow, especially in the domestic debt market.
“The government would have to assist because we are not out of the woods, and I am sure that knowing the government, it will continue to assist the citizens in this challenging period.
“Of course, it is the Budget 2021 (planning) time now and I am sure that the government, especially the Treasury, is looking at this very carefully — on what is working and what does not work,” he said during a virtual media briefing on KRI’s flagship publication, “The State of Households 2020”, today.
Nor Mohamed, who is also a former finance minister, said the government would have enough time to study the previous stimulus packages introduced to cushion the impact of COVID-19 before formulating new assistance for Malaysians during this health crisis.
“In this era, when people ask, ‘Can the government continue to spend?’, the answer to me is ‘Can the government afford not to spend during this challenging period?’” he said.
Earlier in his speech, Nor Mohamed said the health crisis this time is also expected to last for the next few years without any convincing signs of recovery.
He said that the lessons learnt from this crisis should be used to the best of one’s ability to make structural changes both for the short term and long term.
According to him, the government should take the opportunity from this crisis to rebuild a better, stronger and more just society than before the crisis.
“Therefore, strengthening the social protection system is important to provide a safety net for households which face various types of risks and difficulties throughout their lives, resulting in them being constantly trapped in a life cycle below normal living standards,” he added.
Nor Mohamed said the government should also look at improving the country’s economic structure.
“For example, in the agricultural sector, we must move from monocropping or dominance of one crop such as oil palm, to a variety of crops, including cash crops, so that we are more independent and do not put all the eggs in one basket,” he further added.