Prime Minister Muhyiddin Yassin RM15 billion PERMAI aid package for businesses and the rakyat cope with the MCO 2.0 is a huge disappointment

Yesterday, Prime Minister Muhyiddin Yassin RM15 billion PERMAI aid package for businesses and the rakyat cope with the second Movement Control Order (MCO 2.0) is a huge disappointment, when it is merely recycled from Budget 2021 or previously announced economic stimulus package. There is no new cash injection to the economy and a far cry from the RM45 billion economic stimulus package mooted by the opposition to overcome the current economic recession to save jobs and businesses.

Muhyiddin must be either ignorant or given wrong advice if he expects the impact of the MCO 2.0 to be less damaging to the economy, compared to MCO 1.0 imposed on 18 March 2020, by reason that many businesses are now allowed to operate. After MCO 1.0, the GDP growth plunged by a negative 17.1% in the second quarter of 2020. If the economy plunges by 2% in either the first or 2nd quarter for this year, this cannot be good for the Malaysian economy when in relative terms, robust economic growth this year was expected.

The RM15 billion PERMAI aid package is too little and a far cry from the RM305 billion PRIHATIN economic stimulus package with a fiscal injection of RM45 billion unveiled last year to mitigate the negative impact to our economy from MCO 1.0. Despite such measures, the economy still slipped into recession and recorded the highest unemployment rate in decades of 4.8% in November 2020.

What can a RM15 billion aid package, with an estimated direct spending of a mere RM3.87 billion repurposed or redirected from existing spending priorities, help our economy to recover? This “old wine in new bottle” approach can be seen by Muhyiddin’s own admission that the funds required is not new money, but reallocated from existing funds in Budget 2021.

As there is no fresh fiscal injection into the economy under PERMAI, there is minimal significant impact on economic growth to lift our economy out of the recession. Why is there no rental relief or subsidy for businesses suffering without any income? How does this PERMAI by Muhyiddin help to slow down retrenchments or business closures and save the economic livelihood of ordinary Malaysians?

Here’s the estimated direct spending by the government, including grants, redirected from existing approved spending estimates. Excluded are guarantees (which does not require actual fiscal allocation), EPF measures, tax cuts, fee exemptions and moratorium-related measures. Based on these estimates, direct spending in the RM15 billion plan is estimated at RM3.87 billion.

Estimated direct spending by the government under the RM15 billion Permai plan

Note: There’s no sum mentioned for additional electricity bill discount