Saturday, 04 Apr 2020
26/03/2020 11:33 AM

By Siti Radziah Hamzah

KUALA LUMPUR, March 26 -- The Institute of Political Studies for Change (KPRU) today urged the government to consider implementing four measures to mitigate the economic impact of the COVID-19 pandemic especially on household incomes.

The think-tank said the 14-day extension of the Movement Control Order to April 14 could have more serious economic effects including people running out of money from having to take no-pay leave, widespread job losses and cessation of operations of small and medium enterprises.

It said most of the COVID-19 affected countries have introduced economic stimulus packages so that their respective economies are not affected by the closure of almost all sectors of the economy.


KRPU has proposed the following measures: 


1. Cash handouts to all citizens


KPRU said cash handouts to all citizens would promote consumer spending and help the country’s economic recovery.

“KPRU believes that cash handouts to all citizens according to age and income are very effective in safeguarding the people’s well-being, encourage household spending and revive the country’s economy,” it said in an analysis of other countries’ economic stimulus packages.

It said Malaysia can emulate the United States and Singapore, which provide cash aid to individuals according to their income. Such a move would ensure a fairer distribution of resources, it said, noting that it would benefit those in the M40 group, who do not have recourse to the Cost of Living (BSH) aid scheme as enjoyed by the B40 group.

KPRU said those earning between RM4,000 and RM6,500 monthly are also at risk as they are not eligible for the BSH scheme and the Employee Retention Programme (ERP), under which RM600 monthly aid is to be paid out to workers earning RM4,000 monthly and below who have been forced to go on unpaid leave.

It said the i-Lestari facility, which allows Employment Provident Fund contributors under the age of 55 to withdraw from their Account 2 savings, is not sustainable, and no other country includes such a scheme in their economic stimulus package.  


  1. Improving the ERP

KRPU said Malaysia could emulate the United Kingdom’s job retention scheme, which provides 80 per cent of the wages of workers who are not working due to the COVID-19 outbreak, up to a maximum of 2,500 pounds a month.

Such a subsidy scheme would reduce companies’ burdens while minimising large-scale unemployment, it said.

KPRU said Malaysia should expand the scale of its ERP to limit massive unemployment during and after the COVID-19 crisis.

It said Malaysia could emulate the United Kingdom’s job retention scheme, which provides 80 per cent of the wages of employees not working due to the COVID outbreak, up to a maximum of 2,500 pounds a month.

Such a wage subsidy scheme, which is also implemented in New Zealand and Australia, would reduce companies’ burdens while minimising the risk of mass layoffs, it said.


3. Restructuring financing facilities for SMEs


KPRU said if 10 per cent of local SMEs go bankrupt at the end of this crisis, it could result in up to one million Malaysians losing their jobs. The government, it said, needs to prioritise the recovery of SMEs, by, among others, providing them interest-free financing for a certain period of time.


  1. Mass screenings 

A JP Morgan report said Malaysia’s mortality ratio from the COVID-19 outbreak was 0.77 per cent, much lower than its original forecast of 2.0 per cent and the global average of 4.4 per cent.

The US investment bank attributes Malaysia’s low mortality rate to active screening, the movement control order, and the high capacity of the country’s hospitals.

KPRU said Malaysia has been screening suspected cases at a ratio of 482 persons per million population, a ratio that is four to eight times higher than in other ASEAN countries.

The RM700 cost for each screening is also cost-effective in terms of public health benefit and economic impact, it noted, citing the success of South Korea in curbing the spread of COVID-19 despite not restricting its citizens’ movements as in China, Italy and Malaysia. The country provides free screenings for citizens, and carries out over 300,000 screenings daily compared with 3,000 in Malaysia, it pointed out.

KPRU also said it supports Health Ministry director-general Datuk Dr Noor Hisham Abdullah’s stated wish to enhance Malaysia’s ability to conduct COVID-19 detection tests, believing that mass screenings as done in South Korea could curb the spread of the coronavirus in the community.






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