Budget 2021 : The rakyat and companies drive the economy

By ZAIDI ISHAM ISMAIL
editor@dagangnews.com

IT is a well known fact that for any country to thrive, its economic activities must also grow in tandem. Among the three economic pillars for any nation is the domestic economic activities of its people, the companies as well as its exports performance.

Thus it was not a surprise that under Budget 2021, the government had to provide a lot of aid and incentives for the rakyat as well as the small and medium scale enterprises (SMEs).

During this pandemic, even if export demands weaken and the country does not receive tourists, the domestic economic activities of the rakyat as well as the resilience of the SMEs will cushion the impact.

Thus that is why the government had allocated a massive for the rakyat in the form of cash, loans, grants and so many others.

It is important to note that allocation for the B40 and the M40 are extremely important.

At a time when other countries do not import from Malaysia, it is imperative that internal demand is stimulated.

The rakyat must be cajoled to spend to spur domestic economic activity to shield the country from weak global economy.

Cash aid given by the government in the form of Bantuan Prihatin Nasional will be used by the rakyat to spur the domestic economy.

The rakyat will use the money for food, buy groceries and delve in online shopping which will bolster the country's economy.

So that is why Budget 2021 focuses on the M40 and the B40 as the rakyat from these categories are the ones who will carve the economy.

Recognising this, the government allocated RM6.5 billion in cash aids which will benefit some 8.1 billion households.

Budget 2021 also reduced the income tax by one percentage point for those who earn between RM50,000 and RM70,000 a year.

The government also cares for the rakyat by allowing for the withdrawal of RM6,000 from the Employees Provident Fund over the 12 next 12 months.

The loan moratorium was also extended for targeted groups. The T20 or the top 20 meanwhile are unlikely to spend their money preferring to keep their wealth.

Savings which are kept in bank accounts will not generate any economic growth.

Small and medium scale enterprises meanwhile provide the much needed impetus for the country's growth.

Companies provide employment, wages and pay taxes to the government.

The taxes are then used by the government to fund infrastructure projects for the rakyat, build schools, roads and once again give them cash aids.

Thus it is an economic cycle but a vital cycle at that aimed at generating and sustaining the country's economic growth.

Malaysian Retail Chain Association Shirley Teh said that generally the government has done a good job in holding dialogues with the industry.

"The cash aid and minimum wage subsidy have been good measures but more initiatives need to be done for the long term," said Teh.

The RM322.5 billion budget is aimed at reversing Malaysia's economy from negative growth to a positive growth of 7.5 percent next year.

Bank Negara Malaysia had also lowered interest rates at 1.75 percent which is the lowest ever and this should bolster business activities.

But companies at the same time must help the government.

The SMEs cannot do businesses the same way like they did before.

The government has given out incentives, training and grants for companies to shift towards automation and digitalisation.

These are the new norms right now amid the pandemic and the companies need to migrate too. It is clear that companies and the rakyat are an integral part of any country's economic growth.

They must not be allowed to collapse.  -  DagangNews.com

The writer is former NST assistant editor