So today Malaysia Prime Minister announce Muhyiddin Yassin announced that Malaysia will be undergoing a 2 weeks lockdown starting from 13 January 2021.
I honestly did not expect it due to how much damage it will do to Malaysia's economy if we start another lockdown.
I hope they have a plan for negating the damage it will have on the economy.
From my point of view, there is the only way left to save it and that is a deflation strategy. The reason is the government has already used the RM305 billion stimulus money move last year, the effect will only get lesser as the money value drop.
All this money doesn't come free, it has to be payback.
A deflation strategy have 2 advantage,
1) It will not overburden the banking sector. This will free up funds to be used for developing other sectors.
2)It will buy time for the affected sector by making their reserve last longer and allow the company to use the fund to makes the necessary changes like changing their business model.
The main move for this deflation is to make the cost of living go down. One of it is the government and bank decide which company debt to write off but that company must produce their good or service at a lower price.
For example: if a milk production company has a RM1 million debt, the debt will be written off in exchange for producing 1 million boxes of milk at RM1 less than the usual price.
If the government still wants to use stimulus money to do it. Then the other way is to make a contract with the company to lower down their selling price. The government will help the company cover its losses.
Don't expect the moratorium to save you even if it exists. The reason is you ended to accumulate the interest and increase the amount of money you need to repay.
Unless the bank decided to allow your debt to be interest-free for 1 year at least, the moratorium is hopeless.
I can smell a financial disaster coming sooner than I think for Malaysia if they don't use the strategy I suggest here.
