Malaysia Unveils $36 Billion Package as Lockdown Is Extended
Malaysia unveiled a 150 billion ringgit ($36 billion) package to help people through a nationwide lockdown that was extended for a second time with Covid infections still elevated.
The plan includes a 10 billion ringgit direct fiscal injection and will result in the government disbursing 10 billion ringgit in cash aid to the people by the end of the year, Prime Minister Muhyiddin Yassin said on Monday. Those applying for a six-month moratorium on loan repayments will be given automatic approval, regardless of their income status, he added.
The announcement marks the fourth stimulus package announced by the government this year. It comes a day after Muhyiddin said Malaysia will remain under a lockdown -- in place since June 1 -- after the country counted 5,218 new Covid cases Monday, above the 4,000 level the government had set for easing curbs.
The package “shows that the government is willing to walk the extra mile in providing financial assistance to all Malaysians,” said Mohd Afzanizam Abdul Rashid, chief economist for Bank Islam Malaysia Bhd. “The loan moratorium could essentially help provide more cash to borrowers, which could translate into immediate spending by consumers.”
Extending the lockdown will be an additional blow for Malaysia’s economy, which the government expects to bounce back strongly only in the final quarter of the year. Earlier this month the government said it would revise down its earlier estimate of 6% to 7.5% economic growth for this year because of the lockdown. The World Bank last week slashed its 2021 forecast for Malaysia to 4.5% growth, from 6%.
“Many are facing financial problems at the moment,” said Muhyiddin. “What I can promise today, even with very limited fiscal space, the National Alliance government will continue to remain committed in prioritizing the well-being of” the people, he added.
Under the latest stimulus package, Malaysia will offer service tax breaks to hotel operators and electricity discounts for affected economic sectors. The government will add more funds to aid micro entrepreneurs and extend wage subsidies too.
Account holders of state pension fund Employees Provident Fund can also withdraw up to 5,000 ringgit, a move that’s expected to release 30 billion ringgit to the people, Muhyiddin said.
READ: Malaysia Sees Strong Economic Recovery in Final Quarter 2021 (1)
Malaysia expects to transition to the second phase of its recovery plan once new daily cases drop below 4,000, 10% of the population is fully vaccinated and usage of ICU beds is moderate, Muhyiddin said earlier this month. The government expects to meet the inoculation milestone in mid-July.
“All government agencies have been roped in to provide assistance and so it is a question of how soon the country would migrate to the next phase” of the national recovery plan, Bank Islam’s Mohd Afzanizam said. “This is extremely critical as it will determine the trajectory of the reopening of the economy.”
Other highlights from stimulus package:
- Allocation of 100 million ringgit to help those in the creative industry
- Malaysia to set aside 100 million ringgit for SME digitalization grant
- Electricity discounts of 346 million ringgit over three months
- One billion ringgit of discounted power bills for hotels, malls and theme parks
- One billion ringgit of cooking oil subsidies
- Government to spend 3.8 billion ringgit to extend wage subsidy program, a move that is expected to benefit more than 2.5 million workers
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