Country Needs Prudent Expansionary Fiscal Policy

Economist Dr Jomo Kwame Sundaram says the country urgently needs a developmental, counter-cyclical fiscal policy as there is a clear consensus that the global economic situation is worsening.

He expects Malaysia’s economic prospects to be bleak in the near term; therefore, introduction of a more expansionary fiscal policy is now necessary, one that is nonetheless prudent, and not profligate.

Dr Jomo insists that fiscal consolidation in the face of recession is foolhardy, and that the medium-term fiscal position will be improved by short-term spending. Fiscal spending serves two main purposes, namely to serve as a buffer against the economic downturn in the short-term, as in late 1997, and to lay the foundations for medium-term economic progress.

Noting that public spending will shape growth recovery, he suggests four priorities. Topping the list is social protection. He says effective programmes to improve health, welfare, education and training should be expanded.

In this connection, he argues that the Education Ministry’s school feeding programme has tremendous transformative potential as a school lunch programme. Adequate preparation and good design can ensure that such a programme enhances the nutrition, learning and culture of the next generation.

He suggests that the food procurement policy to obtain safe and healthy local vegetables as well as fruits be used to transform smallholder food agriculture. He also suggests improving social protection and nutrition programmes for pre-school children.

This, he suggests that healthcare should be financed from tax revenue as all insurance options are more costly and most promote opportunistic behaviour.

Lastly, he suggests more effort in investment and technology promotion, especially renewable energy, such as photovoltaic solar panels and palm oil biodiesel, healthy organic biofortified food products as well as generic medicines, especially for tropical diseases neglected by Western pharmaceutical giants.

Jomo warns that poor government spending will discredit public policies and cause further problems later. He cautions that buying over existing assets does not enhance economic capacities, capabilities and output. Citing ECRL as example, he said investing more in the corrupt investments of the previous government will not improve them.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

Securities Commission Revises Guidelines On Digital Assets

The Securities Commission Malaysia (SC) has revised its Guidelines on Digital Assets (Guidelines), which came into force today to regulate Initial Exchange...

MATTA calls for sufficient funding for tourism businesses to digitalise in upcoming Budget 2021

The Malaysian Association of Tour and Travel Agents (MATTA) is urging Putrajaya for sufficient funding for tourism businesses to invest in digitalisation...

MATTA urges for proposed two-tiered wage subsidy system

The Malaysian Association of Tour and Travel Agents (MATTA) in agreement with the Malaysian Association of Hotels (MAH) is urging for a...

#MyAPEC2020 exhibition registers over 6,000 viewers and 300 buyers

The #MyAPEC2020 exhibition has amassed over 6,000 registered viewers on the online platform in just under two months since its commencement as...

Tourplus secures RM4.1 million in investment

Tourplus Technology Sdn Bhd, a Malaysian travel startup that provides an online marketplace for travelers providing personalised itineraries linking travelers to local...

Must read

5 ways how corporate culture works for remote teams

By Vinod Chandramouli, Head ASEAN Business, Freshworks, Back in the days of pre-Covid 19, the strategy to embed corporate...

Ok, Boomer. Ok, Gen Z. Let’s talk

By Dr Jesrina Ann Xavier, Senior Lecturer and Programme Director at the Faculty of Business and Law, Taylor’s University and Anna Matthew,...

A three-phased approach to Budget 2021: The now, next and beyond

By EY Tax Leaders, In response to the Covid-19 pandemic, the Malaysian Government has announced stimulus packages of...

Plus Solar’s Budget 2021 Wishlist: A voice for the clean energy industry

By Ko Chuan Zhen, Co-founder & CEO, Plus Solar, Sustainable living remains one of the four broad themes of...