Focus has to be given towards empowering the small and medium enterprises (SMEs) ecosystem in the 2023 Budget to help entrepreneurs get back on their feet following the Covid-19 pandemic-induced economic slump.
Universiti Utara Malaysia economist Dr Irwan Shah Zainal Abidin said efforts should also be trained on empowering existing enterprises and related support institutions in the SMEs ecosystem.
He urged the government to introduce new initiatives to further assist local entrepreneurs to penetrate the international market.
"The same applies to introducing new institutions, such as a 'green bank' for SMEs, or an institution that collaborates with the Regional Comprehensive Economic Partnership (RCEP) member countries to jointly benefit from the largest free trade agreement in the world at the moment," he added.
Irwan, who is the former director of Asean Research Institute of Banking and Finance, said the government should give due attention to resolving the labour shortage, which is derailing economic recovery.
"Wage subsidies can also be introduced, but the effect is quite limited because the issue of a labour shortage is the major issue at this point."
Irwan added that while introducing wage subsidies could be considered, its effects would be minimal due to the severe labour shortage.
Dr Irwan Shah Zainal Abidin
He said the government should also consider targeted and focused loan moratoria to provide a safety net for struggling local SMEs.
"This time, it has to be targeted and focus on efforts to save them from bankruptcy.
"This is necessary to help those still badly affected as well as those trying to switch to new business models, such as the digital economy and export sectors," he said.
On Sept 12, Prime Minister Datuk Seri Ismail Sabri Yaakob said the government would consider a special loan moratorium for SME players still struggling to recover from the pandemic slump.
On a related matter, Irwan said pegging the ringgit at this point was inappropriate and would risk further eroding investor sentiment.
"We need to understand why the fall of the ringgit during the 1997 and 1998 crises were a different scenario. The fundamentals of our economy today are far different from the country's economy back then," he said.
Recently, Malay Chamber of Commerce Malaysia president Dr Abd Halim Husin had urged the Finance Ministry and Bank Negara Malaysia to intervene in the ringgit's floating policy to address ringgit's depreciation.
He had urged the government to peg the ringgit by using Bank Negara's foreign currency reserves to push its value against the US dollar to 3.80.
Source: https://www.nst.com.my/news/nation/2022/09/834702/economist-emphasise-empowering-smes