Economic Performance And Challenges

The year 2020 is a tumultuous period for Malaysia, marked by many challenging  circumstances.  Never  before in modern history has an epidemic wrought such profound changes. The spread of COVID-19 has not only taken people’s lives but stifled economies. There are no guidelines nor precedence that can be used as reference because this is an unprecedented crisis.

The crisis has shocked supply and demand, disrupted supply chains, and exerted great pressure on the business ecosystem. We also have to deal with uncertain external headwinds, falling commodity prices and limited fiscal space.

The International Monetary Fund or IMF  has  projected the global economy to contract by 4.4 percent this year. Global trade, meanwhile, is set to decline by 10.4 percent. Described as the worst economic crisis since the 1930s’ Great  Depression, the COVID-19 pandemic has upended the economies in over 150 countries.

From the start, the Government has made it its utmost priority to protect the Rakyat’s  lives  above  all  else.  That  is why the Government has implemented the Movement  Control Order (MCO) even though we know that the  action,  over  the course of nearly 2 months, will impact the Rakyat’s economic and social activities. At that time, Bank Negara Malaysia (BNM) estimated that the country will lose between 2.0 to 2.4 billion ringgit daily with the closure of the economy.

In balancing our responsibility to protect the lives and livelihood of the Rakyat, the Government has to act quickly. As such, a phased economic recovery plan was introduced, centred on the 6R approach of Resolve, Resilience, Restart, Recovery, Revitalize and Reform.

At the initial Resolve stage, the Government’s priority was to flatten the curve of COVID-19. Meanwhile, during the second stage of Resilience, the PRIHATIN and PRIHATIN SME PLUS packages worth 260 billion  ringgit  were  introduced  to  mitigate the impact of the economic shutdown. We entered  the  Restart phase in May 2020, when economic activities gradually reopened after we had successfully flattened the curve. Subsequently, the country shifted to the Recovery phase, when the Government activated the 35 billion-ringgit PENJANA package and 10 billion ringgit KITA PRIHATIN package. The total value of the stimulus packages announced by the Government is 305 billion ringgit or 20.7  percent  of  the  country’s Gross  Domestic Product (GDP).

The LAKSANA unit was established to ensure that these stimulus packages are implemented efficiently, with transparency, and driven by data.  Based  on  a  survey  done by LAKSANA on the effectiveness  of  PRIHATIN,  more  than 80 percent of the 11 thousand respondents  indicated  that they were satisfied with the initiatives. I would like to thank LAKSANA and the more than 53 government agencies who have closely collaborated and shared data to ensure the successful implementation of these stimulus packages.

All these implemented initiatives are counter- cyclical measures, aimed to mitigate the impact of COVID-19. Alhamdulillah, we are seeing  the  country’s  GDP  showing  signs of recovery from negative 28.6 percent in April 2020 to negative 3.2 percent in June. Early GDP estimates for July to September also indicate an encouraging growth trend.

In relation to this, taking into consideration the current environment, the country’s economic growth was revised for the year 2020 and is expected to contract 4.5 percent. For 2021, our economy is expected to recover and expand at a rate between 6.5 to 7.5 percent. This is in line with the proactive measures undertaken by the Government through the economic stimulus packages, the Budget 2021 initiatives and supported by the recovery of the global economy, which is forecasted to rebound  by 5.2 percent.

One irrefutable fact that is worth reminding is, irrespective of the challenges, we have proved to the world that Malaysia can steer our own economy, whether in stormy seas or calm waters. Let us turn our experience in facing past economic crises into an anchor that keeps us committed, so that  we remain steadfast in our endeavours, reasoned in our actions, and surefooted in mustering our collective efforts.

I am deeply touched by the #KitaJagaKita spirit among the Malaysians, I recall Encik Rosnizam Ishak, hailing from Bertam, who started marinated lamb business using the Bantuan Prihatin Nasional assistance and created job opportunities for locals. There is also Mr. Pajan Singh s/o Kirpal Singh, who provided free accommodation for frontliners serving in Kuantan during the period of MCO till the CMCO, and Mrs. Michelle Kugan, an entrepreneur who sells crystal and pearl fashion accessories, benefitted from the microcredit loan under TEKUN  to sustain her business in Tuaran, Sabah. It is in this spirit and undertaking, that Budget 2021 has been formulated for Malaysians with the theme “Stand United, We Shall Prevail”.