Malaysia must allow an even recovery process if the country wants to build its economy back better and stronger after facing two years of the Covid-19 pandemic, said National Recovery Council (MPN) chairman Tan Sri Muhyiddin Yassin.

Muhyiddin said the government must be hands-on and intervene when necessary as the national pace of recovery is uneven with some sectors recovering better than others.

“We need an even recovery process so the disparity gap of wages of Malaysians can be closed. Certain States are dependent more on certain sectors. For example, take tourism and manufacturing. Tourism recovery is slower than manufacturing, States that are dependent on tourism will recover slower than the States that are big on manufacturing.

“The uneven pace of recovery between States will widen income and development gaps between States. That is why I had emphasised on the setting up of State-level National Recovery Councils earlier,” he said in an interview recently.  

The former Prime Minister also hoped there is more sense of urgency within the government in managing the recovery process as it must align with the longer development goals of the nation, which was highlighted by the 12th Malaysia Plan of building a more inclusive and resilient economy.

He fears that if the recovery is not given due priority, the two pandemic-hit years would lead to a lost decade for Malaysia and there would be permanent scarring in some of the economic sectors.

“It cannot be business as usual. I have said this before many times. We need to look at the bigger picture. If we don’t manage the recovery process well, the impact of the pandemic will linger longer,” he said.

Muhyiddin said the Covid-19 pandemic has also had a severe impact on the household income of Malaysians, especially those in the middle class where more than half of those who were classified in the 'M' category have fallen into the 'B' category.

Reports from other institutions and research houses such as Khazanah Research Institute also found that 70% of Malaysians are in the ‘vulnerable’ group due to the pandemic while the Mindshare Report found that 76% of B61 group has an average household income of below RM 2,965.

“These are the ones who are able to buy food for the family, but would have to eat once a day, compromise on the choice of protein etc. This is alarming and has dire consequences not just for recovery momentum but for the nation’s development agenda as a whole.

“A shrinking middle class is not a good prospect for any economy because we know that the middle-class drives consumption with their spending power. When their incomes are reduced, they will be unable to spend, what more save, and this will reinforce our economic predicament where we will be stuck in the middle-income trap and unable to make the leap to become a higher income nation,” he said.

Thus, Muhyiddin suggested that the welfare system like the e-Kasih be revamped totally, and also consolidated and integrated to better channel assistance when necessary, so that those who need help must be able to get help immediately without too much bureaucracy.

At the same time, he said the government must create an economy that focuses on creating jobs with decent wages which focuses on moving up the value chain through technology that will create higher paying jobs by using digital solutions like Al and robotics to increase productivity which will enable sustained wage growth.

Muhyiddin also suggested the government make sure that the Poverty Line Index which he had revised as prime minister in 2020 from RM980 to RM2,208, continues to be adjusted.

“This will enable us to target our assistance to the poor better and seriously reduce poverty, including urban poverty,” he said.