Malaysia yesterday announced its largest economic stimulus package to date, with RM250 billion (S$83 billion) to be channelled towards supporting people and businesses grappling with the impact of the coronavirus pandemic.
The barely month-old Perikatan Nasional government is faced with the highest number of coronavirus cases in South-east Asia, with 2,161 infections and 26 deaths as at yesterday.
The package, which includes RM128 billion for welfare programmes and RM100 billion to support businesses, including small and medium-sized enterprises (SMEs), is meant to help 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.
Dubbed the "people-centric stimulus package", its measures include additional cash payments to medical front-line workers, and payouts to many households to cope with income loss during the country's movement control order (MCO), which will shut businesses for four weeks.
The one-time cash payments to households and individuals in the lower-and middle-income group will cost the government nearly RM10 billion. This is separate from the government's existing assistance programmes for lower-income families.
The monetary payouts are expected to benefit some 5.1 million households, which make up two-thirds of the country's eight million households.
The stimulus package is in addition to the RM20 billion fiscal stimulus package announced last month.
"Direct government outlay in the second stimulus package amounts to 1.7 per cent of GDP," said economist Yeah Kim Leng from Sunway University, referring to the RM25 billion that will be directly spent by the government.
With allocations to the Health Ministry and cash handouts to Malaysians likely to be put to use immediately, Professor Yeah said the spending boost will help to cushion the economic impact of the MCO.
The measures come amid concerns that the MCO - extended by another two weeks to April 14 - would cost jobs and shutter smaller businesses.
No one will be left behind... 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.
MALAYSIAN PRIME MINISTER MUHYIDDIN YASSIN, on the stimulus package during the live-telecast announcement.
Households and SMEs will probably be able to stay afloat for the next three to six months so long as there are no supply disruptions that can inflate prices of essentials and further depreciate the currency.
MR WAN SUHAIMIE WAN MOHD SAIDIE, a Kenanga Investment Bank economist.
Only businesses which offer essential services, such as food supplies, healthcare and banking, are allowed to stay open while the order is in place.
SMEs, which account for over a third of the country's gross domestic product (GDP), are among the more vulnerable businesses.
"Households and SMEs will probably be able to stay afloat for the next three to six months so long as there are no supply disruptions that can inflate prices of essentials and further depreciate the currency," said Mr Wan Suhaimie Wan Mohd Saidie, a Kenanga Investment Bank economist.
Promising not to leave any Malaysian behind, Tan Sri Muhyiddin's pledges include rent exemptions for the poor, discounts on electricity for all, free Internet and monetary support for business owners.
As a buffer for the economic backlash on companies, the government is allocating a RM50 billion guarantee fund for business loans.
Prof Yeah said the move can help "reduce corporate financial distress across all sectors of the economy".
A sum of RM1 billion will be set aside to ensure sufficient food supply throughout the country.
The government's fiscal injection of RM25 billion will be undertaken according to its "current fiscal abilities" and the availability of sufficient liquidity in the domestic markets.
"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.
Another RM1 billion on equipment and healthcare services will be spent, on top of the RM500 million announced earlier this week.
Mr Muhyiddin yesterday called on all Malaysians to support his administration during the pandemic.
Key stimulus measures
• RM1.5 billion (S$496 million) for Health Ministry to buy new equipment and services
• RM600 special monthly allowance for front-line healthcare workers from April 1 until the outbreak ends
• RM10 billion for one-off cash payments to low-and middle-income groups, including RM1,600 to four million households earning RM4,000 and below a month
• RM1 billion for food security fund
• RM500 one-off payment to some 1,200 e-hailing drivers. This is on top of a RM600 one-off payment to taxi drivers announced in the February stimulus package.
• RM200 monthly for enforcement personnel involved in the movement control order (MCO), beginning on April 1
• RM530 million for discounts on electricity bills of between 15 per cent and 50 per cent for six months from April
• Free Internet from April until the MCO ends
• Public housing tenants exempted from paying rent for six months
• Federal government premises such as school canteens, nurseries, cafeterias and convenience stores exempted from rent for six months.
• RM600 monthly wage subsidy for three months for employers suffering a 50 per cent drop in business since Jan 1, covering 3.3 million workers
• RM500 one-off cash aid for 1.5 million civil servants and retired civil servants
• RM200 one-off payment for higher education students
• RM4.5 billion allocation for small and medium-sized enterprises and micro-entrepreneurs
• RM50 billion guarantee fund for business loans
"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.