KUALA LUMPUR - Malaysia on Friday (March 27) announced its largest economic stimulus package to date, with RM250 billion (S$83.6 billion) to be channelled towards supporting people and businesses grappling with the impact of the coronavirus pandemic.
The barely month-old Perikatan Nasional government has faced multiple crises stemming from the outbreak since it wrestled power from the Pakatan Harapan administration in February.
The package, which includes RM128 billion for welfare programmes and RM100 billion to support businesses including small and medium enterprises, is meant to assist those who are most adversely impacted by the economic disruption from the Covid-19 outbreak.
“No one will be left behind,” said Prime Minister Muhyiddin Yassin during the live telecast announcement.
Dubbing it the “Care Package”, measures include additional cash payments to medical front liners and monetary handouts to households to cope with income loss during the country's movement control order (MCO), which has shut businesses for four weeks.
The one-off cash payments to households and individuals in the lower and middle income group, branded as "National Care Assistance", will cost the government nearly RM10 billion. This is separate from the government’s existing cash handout programme to assist lower income families.
The stimulus package is in addition to the RM20 billion ringgit fiscal stimulus package announced last month.
Tan Sri Muhyiddin’s long list of measures announced on Friday comes after grouses and concerns that the MCO - extended by another two weeks to April 14 - would cost jobs and shutter smaller businesses. Only businesses which offer essential services, such as food supply, healthcare and banking, are allowed to stay open while the order is in place.
To live up to his promise of not leaving any Malaysian behind, Mr Muhyiddin is promising cash handouts to civil servants, six months of rent exemption to families living in government’s low-cost flats, nationwide electricity discounts for all, free internet as well as cash for employers to retain staff, e-hailing drivers, contract workers and small business owners.
Small and medium enterprises' (SMEs) contribution to the economy accounts for over a third of the country’s gross domestic product (GDP).
Stressing that the new government understands the pressures Malaysians face, with many working in the gig economy, Mr Muhyiddin sought to assure them that this stimulus package would alleviate their monthly financial burden and living costs.
A sum of RM1 billion will be set aside to ensure sufficient food supply throughout the country.
The government is also conducting a fiscal injection of RM25 billion according to “current fiscal abilities” and the domestic financial market’s cashflow.
“The government will always ensure that the current fiscal account is in surplus and will not use borrowings to fund operational expenses,” Mr Muhyiddin added.
Malaysia is grappling with the highest number of coronavirus cases in South-east Asia. It has reported 2,161 confirmed cases and 26 deaths so far.
To contribute to the health ministry’s efforts to combat the spread of the virus and ensure treatment during the pandemic, the government is channeling RM1 billion for equipment purchases and healthcare services on top of the RM500 million announced earlier this week.
Malaysia’s government had previously injected money during financial crises, including after the 2008 global financial recession which saw two stimulus packages totalling RM67 billion pumped in during 2009 and 2010 to stimulate the economy. The second stimulus package, which amounted to RM60 billion, had then been pegged as “unprecedented in the nation’s economic history” by former premier Najib Razak, as it accounted for 9 per cent of the country’s GDP.
In 1998, during the Mahathir Mohamad administration, the country rolled out a fiscal stimulus package worth RM7 billion following the 1997 Asian financial crisis. That sum had accounted for 2.5 per cent of the country’s then GDP.
Wrapping up his speech on Friday, Mr Muhyiddin called for all Malaysians to support his administration during the pandemic.
“This government may not be the government that you voted for. But I want all of you to know that this government cares for you,” he said.
“I accept the fact that I came in as your Prime Minister not at the best moment. I face political, economic and health crisis all at the same time… We are not perfect, but we are doing the best we can to pull through this crisis together, as one nation”.