The RM250b stimulus package demonstrates the govt’s commitment to protect the country from recession
by NUR HANANI AZMAN/ pic by TMR FILE
THE Prihatin Rakyat Economic Stimulus Package (Prihatin Rakyat) announced last week is a necessary step for the government to ensure the nation’s economy is not sinking down into a deep recession.
Economic analyst Dr Aimi Zulhazmi Abdul Rashid told The Malaysian Reserve (TMR) that the RM250 billion stimulus package signalled that the government has already weighed its maximum financial strength to guide Malaysia in facing the likely global economic recession.
“Hence, it tries to cater to all groups. The bottom 40% (B40) and middle 40% (M40) income groups (the biggest number of population) are targeted with direct cash payment, Employees Provident Fund’s (EPF) withdrawal, restructuring of bank loans and even subsidy payment to employers to ensure they do not fire their staff or reduce the salary,” he said.
Aimi Zulhazmi also believes the package is also the first in the nation’s history.
“The RM250 billion package is even a larger budget than neighbouring Singapore and four times the size of the RM67 billion utilised during the 2009 recession.
“This budget makes up 17% of the nation’s GDP compared to 2009, about 8% smaller,” he said.
The latest package allotted RM128 billion for households, RM100 billion to support businesses including small and medium enterprises, and RM2 billion to strengthen the economy — in addition to the RM20 billion package previously.
Meanwhile, Deloitte Malaysia country tax leader Sim Kwang Gek said Prihatin Rakyat demonstrates the government’s commitment in prioritising the people’s wellbeing, while ensuring the survival of businesses impacted by Covid-19.
“The government announced a wage subsidy of RM600 a month for three months for employers who face a 50% drop in business since Jan 1, 2020, and this is applicable for workers earning a salary of below RM4,000 per month.
“This is similar to the stimulus package announced by the Singapore government recently where 25% of monthly wages (up to a monthly salary cap of S$4,600/ RM12,124) will be funded by the Singapore government for nine months till end-2020,” she told TMR.
Commenting on some employers’ requests to stop EPF contributions to reduce their cost, she said it would affect the wellbeing of Malaysians when they retire.
She, however, said the stimulus package announced a programme that allows employers to defer, restructure and reschedule employers’ EPF contributions.
“This is expected to generate cashflow savings of RM10 billion. This proposal is certainly more palatable and is a welcomed move as it alleviates cashflow constraints, while also ensuring retirement savings are not significantly impacted,” she added.
Meanwhile, Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the stimulus package is comprehensive.
“We could see cash transfers to be paid to the B40 and M40, wage subsidies and measures to support businesses.
“We could also see various participations from other government agencies that contribute to the stimulus package, such as Bank Negara Malaysia, the EPF and government-linked companies,” he added.
“The sooner the Movement Control Order is lifted, the better it will be for our economy. But this will be contingent upon our success in combating and suppressing the Covid-19 outbreak,” he said.