27 February, PUTRAJAYA – Interim Prime Minister Tun Dr Mahathir Mohamad today announced RM20 billion Economic Stimulus Package to ensure risks to the economy due to COVID-19 can be addressed effectively.
He said three strategies were outlined under the package, namely addressing the impact of the disease, catalysing people-based growth, and encouraging quality investment.
Several plans have also been lined up for implementation to ensure Malaysia’s economy will continue to be on the right track to sustainable growth.
The Economic Stimulus Package was announced as scheduled despite the political crisis brought on by attempts to realign the country’s political landscape which saw the Pakatan Harapan government losing its majority in Parliament.
Malaysia recorded 22 positive cases of COVID-19 with 20 patients have fully recovered so far.
Approximately 80,000 people have been infected with the disease worldwide with over 2,800 deaths recorded mostly in China.
Dr Mahathir said the most immediate economic impact of COVID-19 has been the sharp decline in tourist arrivals throughout the region as hotels, airlines, travel companies and more broadly the tourism-dependent retail industry have been badly affected.
To mitigate the impact, the government will implement a three-pronged approach – first, to ease the cash flow of affected businesses, second, to assist affected individuals, and third, to stimulate demand for travel and tourism.
Dr Mahathir began his speech by expressing his highest appreciation to the doctors, nurses, health workers, Immigration and other front liners protecting Malaysia from the COVID-19 outbreak.
Dr Mahathir said as a sign of appreciation to those in the front line protecting Malaysia from the contagion, government staff directly involved in the containment efforts will be eligible for a special monthly critical allowance of RM400 for medical doctors and other medical personnel, as well as RM200 for immigration and related front line staff commencing February 2020 until the end of pandemic.
To date, he said the Ministry of Health has committed RM150 million to purchase the relevant equipment, medicine and consumables in the effort to contain COVID-19 outbreak and that the government will continue providing the necessary resources to ensure the disease is well managed.
To stimulate the tourism industry, the prime minister said the government will introduce personal income tax relief of up to RM1,000 on expenditure related to domestic tourism.
He said all Malaysians will be eligible to digital vouchers for domestic tourism of up to RM100 per person for domestic flights, rails and hotel accommodations, while additional matching grants for tourism promotion will also be provided, involving a total allocation of RM500 million.
The government will also introduce relaxation of existing guidelines limiting the use of hotels by government agencies as part of mitigating the reduced demand.
The minimum Employees Provident Fund (EPF) contribution by employees will be reduced by 4% from 11% to 7%, with effect from April 1, 2020, to Dec 31, 2020, he said, adding that this will potentially unlock up to RM10 billion worth of private consumption.
Dr Mahathir also said the payment of RM200 to all Bantuan Sara Hidup (BSH) or Cost of Living Aid recipients scheduled for May 2020 will be brought forward to March 2020.
An additional RM100 will be paid into the bank accounts of all BSH recipients in May 2020. Subsequently, an additional RM50 will be channelled in the form of e-cash, he said.
To enhance the income of rakyat and reduce cost of living, he said the government will undertake several other initiatives, including having an agrofood facility of RM1 billion to be provided by Bank Negara Malaysia at an interest cost of 3.75% to promote food production activities to meet domestic and export demand.
He said a RM10 million allocation to FAMA to provide food storage facilities to help reduce food prices.
The government will also allocate an additional RM2 billion for the immediate implementation of small infrastructure repair and upgrading projects nationwide especially in rural areas.
“The government is cognisant that the implementation of the economic stimulus package cannot be successfully delivered by the government alone.
“Therefore, the government calls on the private sector to play their part in ensuring the stimulus package is successful. At the same time, the government calls on the rakyat to remain steadfast, brave and diligent in prevailing over the current challenges and emerge even stronger after this episode,” he added.
This is the second time Dr Mahathir announced an economic stimulus package after that in 2003, when he was the country’s fourth prime minister, which involved a sum of RM8.1 billion to address the economic crisis associated with the Severe Acute Respiratory Syndrome (SARS).