Sabahans want more from federal budget to fight impact of Covid-19

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KOTA KINABALU: Economists here believe Sabah deserves extra attention in the 2021 federal budget since the state is the hardest hit by Covid-19.


Universiti Malaysia Sabah senior lecturer Rafiq Idris hoped there would be a special allocation for the state for the post-movement control order (MCO) period, targeted at strategic sectors such as the service industry.

“This includes the tourism sector that is severely affected by the spread of Covid-19. We can’t afford to see many players collapse,” he told FMT.

“All sectors should be assisted to recover from the slow economic activities. The pandemic has caused demand in the market to fall significantly. To minimise the impact, something must be done to stimulate spending and demand in the economy.

“Cash aid for B40 ad the M40 groups can cushion the impact by allowing them to spend.”

Rafiq said although the economy was sluggish, it would not be a good idea to spend less because this would likely cause it to move even slower.

“I hope the allocation for national expenditure is an expansionary fiscal one and the distribution for Sabah this time is large,” he said.

Sabah UiTM’s Firdausi Suffian agreed that spending was key to sustaining economic growth, especially during a crisis.

He said the government should extend the loan moratorium for individuals and businesses, as well as the Bantuan Prihatin Nasional cash handout for another year, especially for Sabahans.

“Extending the moratorium for individual and small and medium enterprises (SMEs) means they have extra cash to spend or invest. This will especially help to cushion the impact on businesses.

“SMEs are key to generating growth and employment. It is obvious that they are badly affected now, so the government needs to allow them to borrow with interest-free loans to let them invest.

“And when you extend the individual cash handout, a lot of people who are short of money because they are unemployed or had their wages cut will have extra cash and this will subsequently help the economy recover,” he said.

Rafiq hoped the government would not slash the allocations for education and health, saying they should be increased or at least maintained.

“Education and health are among the important sectors which contribute to the economy and the wellbeing of Malaysians. The allocations for these should not be compromised.

“It is hoped that there will also be a special allocation for game changer projects for Sabah which will boost the state’s economy with a large multiplier effect, to fight the slow economic situation,” he said.


Firdausi said internet connectivity was another crucial infrastructure to invest in Sabah. ”Internet connectivity is a new way of life. This is important for the gig economy to grow besides helping to support digital businesses and education.”

He said funds were also needed to increase food production in Sabah.

“Covid-19 has shown the importance of food security. Sabah is one of the biggest contributors to the nation’s GDP, so new investments geared towards food production is key to help the economy. It is also one way to diversify our economy in Sabah.”

Firdausi also felt the government’s wage subsidy programme should be extended for another year to help ailing businesses so they would not go under.

This was also to reduce the unemployment rate, especially in Sabah where an estimated 130,000 people were unemployed, he said.

Tourism players’ wish list

Stakeholders in Sabah’s tourism industry, among the businesses worst hit by the pandemic, also urged the federal government to give extra funds to the state.

Sabah Tourist Association (STA) chairman Tonny Chew said the loan moratorium for those in the sector should be extended at least to the first half of 2021 so tourism players could survive.

He said the government should also consider subsidising the wages of workers in the industry on a 50-50 basis.

Chew said the hospitality industry also needed a subsidy on their electricity and water bills as these were the major operating costs besides wages.

Malaysian Association of Tour and Travel Agents (Matta) Sabah chapter chairman Lawrence Chin hoped the government would hold back Employees Provident Fund (EPF) payments for employers until next June.

He said there should also be a double tax relief for losses this year to be carried forward to next year to offset future profits.

“There should also be zero or reduced tax on all tourism related purchases of new vehicles,” he said. -FMT

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