LETTER: In the wake of the Movement Control Order 2.0, manufacturing players, mid-tier companies (MTCs) and small- and medium-sized enterprises (SMEs) have joined Industries Unite as a broad coalition representing their interests.
In another parallel "movement" on the public health front, experts and medical professionals have been calling for a recalibration and fine-tuning of the Covid-19 containment strategy. The government may also want to consider the following suggestion.
On the basis of the government as the buyer-of-last-resort and stockpiler-of-last-resort, there's a need for the Vendor Development Programme (VDP) to be expanded so that SME participation can increase to 50 per cent and more.
The procurement would include critical assets such as sanitisers, gloves, surgical masks, other types of personal protective equipment, and even ventilators as part of the "war effort" against Covid-19, which can be provided free of charge to the private hospitals.
Other types of procurement include school-related items, digital items, hardware and household goods. All of these could be bulk sold at a discount to cooperatives, and even a cooperative outfit set up under the management of the Entrepreneur Development and Cooperatives Ministry.
The government would also be functioning as a "middle-person" between supplier (manufacturer and retailer) and buyer (that is, institutional and retailer).
To complement and supplement the above, the government could instruct the SME Bank to issue (electronic or digital) "notes"/"bills" for direct circulation within the industrial and business community.
Participating SMEs have the option to either pledge their assets to the SME Bank in exchange for the notes/bills as a form of collateralised loan (which, under company law, can either be "fixed charges" such as land or "floating charges" such as machinery) or otherwise as an unsecured debenture.
Notes/bills received by one SME as seller from the other as buyer can then be redeemed from the SME Bank (in ringgit). For this approach, it doesn't in anyway involve the physical printing of money, as well as increasing the deficit since no new nett financial assets are created — the loans that create the deposits equal to zero.
JASON LOH SEONG WEI
EMIR Research, Kuala Lumpur
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times