Research for Social Advancement (Refsa) said there was a need to ensure adequate allocations for an effective “find, test, trace, isolate and support” (FTTIS) programme for those infected with Covid-19 under Budget 2022.

This could reduce justification for lockdowns, which had been shown to be destructive for the economic sector, creating uncertainty and dampening domestic demand, it said.

“As Covid-19 becomes endemic, it is also important for the 2022 budget to provide adequate scope for pandemic-proofing of businesses.

“Small- and medium-sized enterprises (SMEs) should be given support in this regard through grants, soft loans and tax incentives,” Refsa said in a statement.

It was referring to the ministry’s Aug 31 pre-budget statement (PBS) on the economic outlook. The publication of the PBS, starting this year, was in line with international best practices to increase transparency in drafting the annual budget.

Refsa hoped the ministry would keep its promise under its PBS to engage further with civil societies in preparing the 2022 budget for greater transparency.

It said sectors such as tourism, hospitality and entertainment, which were badly affected by the pandemic, would benefit from further support in the form of loan guarantees and credit extensions instead of just tax exemptions to stay solvent.

It said the ministry had rightly adopted a cautious but optimistic approach in its macroeconomic outlook for 2021-2022, with Bank Negara Malaysia’s downward revision of its gross domestic product (GDP) forecast of 3%-4% for 2021 against an earlier estimate of 6%-7.5%.

Refsa said Malaysia’s solid export performance alone could not guarantee a comprehensive recovery as long as consumption remained subdued due to the prolonged lockdowns and the lack of a robust pandemic exit strategy beyond just vaccinations.

“We echo the finance ministry’s receptiveness to increasing the statutory debt to GDP ratio of 60%. This is a moving target that can be raised temporarily given the circumstances, and now is the right time to do so,” it said.

It acknowledged the ministry’s proposed strategies under the PBS to increase tax revenue through management of leakages.

“We are also particularly supportive of the government’s recommendation to implement a Tax Identification Number (TIN) system. We hope this will provide an opportunity to formalise gig workers in Malaysia’s labour market,” it said.