Malaysia, like most of the world, is currently facing economic headwinds as the result of the onslaught of the Covid-19 pandemic. The Movement Control Order (MCO) initiated by the Health Ministry and the Government has shown to be a great success, but the economy has suffered as a result. A recent report entitled “The Covid-19 Hardship Survey” by the Asia Business School, authored by Dr. Sam Flanders, Dr. Melati Nungsari and Chuah Hui Yin sheds more light on the recent PRIHATIN economic stimulus package for all Malaysians. Let’s explore the report in greater detail.
Malaysia’s Stimulus Package
Just to recap, Bank Negara Malaysia, the Central Bank of Malaysia, released its 2019 Economic and Monetary Review on April 3rd 2020, projecting that the country’s GDP growth in 2020 would be between -2.0% and +0.5%3, significantly lower than the same number in 2019 (4.3%)4, and that the unemployment rate would increase to 4%, significantly higher than the unemployment rate during the Great Recession of 2008-2009 (3.7%) and the Asian Financial Crisis of 1998 (3.2%). In Malaysia, the first economic stimulus package, worth RM20 billion, was announced on February 27th by then interim Prime Minister, Tun Dr. Mathathir Mohamad.
A Shot In The Arm
The second economic stimulus plan, known as the Prihatin Rakyat Economic Stimulus Package, was unveiled on the March 27th. The package was worth RM250 billion, making it the largest economic stimulus ever announced in the country. The report finds that the Malaysian government’s stimulus packages are likely to address most of the cash-flow issues brought on by the COVID-19 crisis, at least in the short term. However, a small minority of respondents in the survey are still likely to run out of money in the next few months, especially among the B40 group. If policymakers wish to further protect households from budget crises after the one-time transfers of April, the analysis shows that transfers to lower-income households—families making RM 4,000 or less and single individuals making RM 2,000 or less—are dramatically more effective.
The Story So Far In Malaysia
As of the 5th of May, all 10 core initiatives in the Prihatin Rakyat Economic Stimulus Package (PRIHATIN) have been implemented, comprising 95% of the total package valued at RM260 billion, said Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, as reported in TheEdgeMarkets. He said this percentage included all government aid that had begun to be channeled to the recipients, including the Special Prihatin Grant (GKP) for micro-enterprises announced in the Additional Prihatin SME package. The government had allocated RM2.1 billion for GKP, which was opened for applications on May 1 and involved disbursing RM3,000 in grants to active micro small and medium enterprises registered with the Inland Revenue Board, Companies Commission of Malaysia and local authorities as at Dec 31, 2019, he said.
More Needs To Be Done
As reported by TheStar, in an online survey conducted by the Statistics Department of Malaysia (DOSM), 67.8% of respondents said they have not brought in any income during the MCO. “About 12.3% of companies still earn some income through online sales and services, while another 9.8% were earning income from sales in physical premises and stores, ” DOSM said in a statement. Two-thirds of the respondents (68.9%) also reported having to fork out their own savings as the main source in paying off operational costs during the MCO. Another 19.8% used mainly borrowings, while another 11.3% had to use capital injection. About 52.1% of the companies have found the government’s economic stimulus package – Prihatin Rakyat – helpful. So, let’s all hope for the best, as Malaysia rides out this storm.
Sources: Asia Business School, TheEdgeMarkets and TheStar
First Published on: Asia Blockchain Review
