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New stimulus measures for Malaysia

Pauline Wong
Pauline Wong3/27/2020 07:00 AM GMT+08  • 6 min read
New stimulus measures for Malaysia
Malaysia has announced yet another stimulus package to combat the effects of Covid-19, but is it enough?
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SINGAPORE (March 27): Malaysia’s Movement Control Order (MCO), announced by Prime Minister Muhyiddin Yassin on March 18, has caused much confusion and chaos. Perhaps recognising the need to act quickly to soften the blow, the Malaysian government has now announced another stimulus package to mitigate the effects of the Covid-19 pandemic.

For now, the movement curbs will remain as Malaysia’s nationwide movement restrictions will be extended to April 14. However, more aid measures will also come on March 30, Muhyiddin said. Since last week, Malaysia has closed its borders while ordering non-essential businesses to shut until March 31. But the MCO extension comes as the country reports 172 new coronavirus cases — taking the total to 1,796, the highest among Asean countries. A total of 1,006 new cases were reported in the past one week since the movement curbs were enforced. The upcoming stimulus package — the Perikatan Nasional (PN) government’s second since coming to power — is the latest attempt at containing the economic fallout of the global pandemic.

On Feb 27, the Pakatan Harapan government released a RM20 billion ($6.5 billion) stimulus package, unveiled by the then Prime Minister Mahathir Mohamad. Muhyiddin’s PN administration — which was sworn in on March 1 — then followed up with an additional RM620 million on March 16. On March 23, Muhyiddin also announced that about 12 million workers below 55 years old would be allowed to make withdrawals from the Employee Provident Fund to a maximum of RM500. Citizens can also expect relief from higher education loan repayments. In addition to tax breaks and deferment of tax payments, the government has also broadened the 15% electricity bill discounts to include commercial, industrial, domestic and agricultural sector users. Banks have also extended moratoriums on loans for up to six months in order to ease the burden of businesses forced to shutter their doors during the MCO.

The government has also set aside RM500 million to the Ministry of Health (MOH) for the purchase of medical equipment like ventilators, lab apparatus and intensive care unit equipment. On top of this, RM100 million was also set aside so the MOH can hire nurses. Meanwhile, another RM130 million was channeled to state governments to help combat the pandemic. This fund can be used to assist small business owners who are badly affected by the outbreak as well as Covid-19 patients and their families, Muhyiddin added. Expect more cases The MCO extension should have come as no surprise to many. Many Malaysians have flouted the ruling while the police said they have made 110 arrests so far due to MCO breaches.

More importantly, Muhyiddin also said that Malaysians should expect more Covid-19 cases. “I am informing you on the extension earlier so that the people can be prepared,” he said, adding that in the past week alone, 673 new cases were reported. “The public must be mentally and physically prepared to stay at home for a reasonably longer period of time,” Muhyiddin continued. “Please stay calm and don’t panic. Even though we have extended the movement control order, you don’t have to unnecessarily stock up on food because the supply is sufficient. I assure you that there is enough food for everybody.I know you feel burdened but I don’t have a choice. I have to extend the MCO for your own safety,” he added.

Malaysia is also still struggling to identify all the participants of a mass prayer gathering on Feb 27, which attracted 16,000 participants. So far, only 11,000 have been traced. As of March 24, 943 of these participants have tested positive for Covid-19. In one of the sharpest increases of any Asean country, Malaysia reported an alarming increase of 1,280 cases alone between March 14 (238 cases) and March 24 (1,518 cases). More than half of total cases are from the mass prayer gathering cluster.

Experts are warning that hospitals would not be able to cope if the cases continue to rise. Malaysian Medical Association (MMA) president, Dr N Ganabaskaran said Malaysia has 135 government hospitals, with about 1000 units of ventilators in total. But hospitals there will struggle if there are more infections. Impact on Singapore In a research note, UOB Group senior economist Julia Goh said that the extent of the economic impact would depend on the effectiveness of the two week MCO and if more stringent measures are taken. “News reports suggest that the government is considering extending the MCO beyond March 31 if the number of Covid-19 cases do not improve.

At this juncture, we expect economic growth in the 1Q20 to be negatively affected with potential spill overs to 2Q20,” she said. Goh also pointed out that the economic weakness is not confined to just the two-week MCO as the effects of Covid-19 have been felt by the tourism and retail sectors since February while “other key concerns include deepening global risks related to COVID-19 and tightening of USD liquidity.”

Meanwhile, DBS senior economist Irvin Seah told The Edge Singapore that the MCO will continue to put immense financial and social pressure on companies on both sides of the Causeway. However, he is certainly hoping for an end to the MCO as soon as possible. Seah also said the effectiveness of the new mitigating measures will depend on finding permanent solutions to the problems faced by Singapore employers and their Malaysian employees. “[For example] Employers who do not find permanent solutions to the accommodation problem faced by their employees will continue to be affected by the increased costs and thus put more stress on an already-strained situation,” he explains.

Seah also believes the Singaporean government will continue to offer more subsidies and to continue to assist businesses coping with the fallout of Malaysia’s nationwide movement restrictions, which has left thousands of Malaysian workers — who commuted daily to the Republic — stranded here.

However, Singapore’s Ministry of Manpower (MOM) has announced that its temporary housing support for Malaysian workers stranded here will not be extended beyond March 31. “For their own long-term sustainability and business continuity reasons, employers will need to decide on how best to house their affected workers in Singapore, and the sharing of additional costs with their workers,” MOM said in a statement released on March 25. According to local media reports, MOM — along with the Housing and Development Board, the Ministry of Trade and Industry, the Singapore Tourism Board and the Ministry of National Development — has helped around 2,000 firms and 10,000 workers since the March 18 lockdown

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