Will COVID-19 pandemic affect Malaysia's exports, SME and employment?
Question: Malaysia's exports may not
recover so easily following the COVID-19 pandemic. Economically, what must the
Malaysian government do to promote Malaysia's exports?
Chan Kung: Malaysia is basically a
market economy country. Such economic system determines that there's not a lot
that the government can do to intervene. As such, it is still recommended that
government waits patiently for the market to warm up. From the perspective of
expanding exports, two main things could be done: The first is the structure of
exports. If Malaysia's exports can join the supply chain of Western companies,
its exports will benefit, because truthfully speaking, such exports are to meet
rigid demand. With that in mind, both the Malaysian government and the business
community can do more to adjust the structure of exports. For China personally,
it is also equally important to maintain export markets during difficult times.
For example, the export of Chinese products is indispensable for the importers
within the automotive industry as most parts and accessories originate from
China. Then there's the issue of pricing. Competitive prices are always key to
maintaining and expanding exports. If the Malaysian government can make efforts
to reduce the cost of businesses, such as reducing capital costs, or even
attempt to reduce the comprehensive costs including human resources, it would
benefit the export of Malaysian goods.
Question: The unemployment rate in
Malaysia is rising. How can the government assist SMEs in helping their
employees keep their jobs?
Chan Kung: All countries worldwide
are facing high unemployment rate. The number of the unemployed in the United
States has reached a record high of 23 million, and it is still rising as we
speak. This shows just how severe the damages of a public health crisis can be
(to a country). Based on the ways in which various countries have responded to
the pandemic, I notice that more countries are beginning to adopt countermeasures
on the consumer side rather than the production side. Personally, what I have
seen is that the measures employed on the production side only concerns
industries that are directly impacted by the government's shutdown, such as
hospitality, tourism and aviation. Most of the measures are still targeted
towards the consumer side of unemployment and households. This is done so with
the purpose to salvage the consumer market, in an attempt to maintain and meet
the minimum needs of families and ensure social stability. And that's because
the unemployment happening in most industries is temporary, and will gradually
improve as the economy picks up, so temporary relief measures can help a lot.
From a macroeconomic
perspective, consumption is crucial to most countries' national economy. If a
certain level of consumption can be ensured, it will help maintain the market
size and avoid post-pandemic economic austerity in the national economy. Once
the level of consumption is greatly reduced, economic contraction is likely to
occur. This is a very dangerous condition that can deepen the economic crisis
and turn into a financial crisis from an economic one. Thus, it is necessary to
provide direct aid on the consumers' side.
Question: If the rest of the world
is still struggling with COVID-19 and is unable to recover, will
economy-related issues stimulate and delay loans for a longer period of time?
Chan Kung: The ratio of consumption
to exports is about the same for Malaysia's economic structure. This is the key
to supporting the Malaysian economy. In 2018, the total export was close to MYR
1 trillion, so exports are very important to the Malaysian economy. Now that
the global market is struggling with the pandemic and demands are on the lower
side, the impact on the Malaysian economy will definitely be greater. Assuming
the Malaysian government employs certain measures to help promote and increase
the scale of investment, this will help offset the pandemic's impact on the
economy. That is because Malaysia's investment scale obviously still has room
for growth from the perspective of GDP growth structure. These measures may
include additional aid loans, encouraging commercial banks to extend debt,
cutting interest rates, and equity investment. Of course, further opening-up
the economy, expanding the market size, and introducing more investors will
also have a positive outcome for the economy. In general, the Malaysian economy
will have a difficult period and it is still uncertain how long this will last.
That being said, ASEAN is slowly becoming a more prominent figure in the global
market in the future, so I'd say keep your chin up. An economic rebound will
definitely happen, the main challenge here is whether the above average growth
can be sustained or not.
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