PM’s announcement reflects the real concerns of a further slowdown in growth, trade and investments and public morale in general
pic by MUHD AMIN NAHARUL
IN PUTTING the country ahead of personal interests, interim Prime Minister (PM) Tun Dr Mahathir Mohamad unveiled a RM20 billion fiscal stimulus yesterday, which provides the much-needed relief for certain sections of society and sectors that are hard hit by the Covid-19 outbreak’s contagion both domestically and globally.
Although the political turmoil in the country over the past week has put the fiscal stimulus at risk of a delay, the announcement by the PM reflects the real concerns of a further slowdown in growth, trade and investments, and public morale in general.
Much like a rapper “making it rain” at a party, the PM handed out cash to frontline healthcare and immigration workers, to tourist bus and taxi drivers including those impacted by the virus outbreak.
The measures include discounts on electricity bills and service tax exemptions for the hospitality industry.
To stimulate consumption, the Employees Provident Fund’s employee contribution rate is optionally lowered to 7% from 11%, as the move will see some RM10 billion remaining in the hands of contributors for the rest of the year.
Some RM21 billion in investments will come from government-linked companies like Tenaga Nasional Bhd, the Malaysia Communications and Multimedia Commission and the Ministry of Energy, Science, Technology, Environment and Climate Change for the development of solar generation projects and fibre optic networks.
The Federal government will also make billions more available for financial loans via Bank Negara Malaysia and financial institutions to assist small and medium scale industries.
The stimulus is partly meant to ensure growth remains with the lowered forecast range of 3.2%-4.2% and complement BNM’s looser monetary policy bias to sustain growth momentum this year.
Although the term “recession” has been absent from the general discourse here, the threat is real as regional governments like Hong Kong and Singapore have gone to print and roll out expansionary fiscal and monetary measures.
The year 2020 is shaping up to be a big year for the country with the hosting of the APEC summit in November, as well as the Visit Malaysia 2020 (VM2020) with a targeted 30 million tourist arrivals.
The virus outbreak across the world appears to have poured cold water on the VM2020 programme with many hotels reporting cancellations and airlines forced to cut routes as fliers cancel or delay travel as nations deny excess as a safety measure.
Both have cut rates with airlines in particular looking to fill seats with tempting offers for flights abroad with flash sales and promotions.
Maybe we can take heed of Thailand’s Deputy PM and Public Health Minister Anutin Charnvirakul’s advice this week to carriers there to reduce flash sales and promotions especially to destinations and countries hit by the deadly Covide-19 virus to contain the outbreak.
Instead, domestic tourism should be promoted further as it is far cheaper than the medical bills that come with a Covid-19 infection.
The SARS outbreak in late 2002 cut Malaysia’s economic growth rate by half in a space of 12 months to 4.6% by the third quarter of 2003. The Covid-19, has the potential to do the same.
With the stimulus package announced, the doctor in the house now heads to Parliament for a vote of confidence or possible fresh elections for the nation.
Bhupinder Singh is the corporate desk editor of The Malaysian Reserve.