Malaysia extends lockdown, unveils RM150b package

Kuala Lumpur

MALAYSIA unveiled a RM150 billion (S$48.6 billion) package to help people through a nationwide lockdown that was extended for a second time with Covid infections still elevated.

The plan includes a RM10 billion direct fiscal injection and will result in the government disbursing RM10 billion in cash aid to the people by the end of the year, Prime Minister Muhyiddin Yassin said on Monday.

Also, those applying for a six-month moratorium on loan repayments will be given automatic approval, regardless of their income status, he added.

The announcement marks the fourth stimulus package announced by the government this year.

It comes a day after Mr Muhyiddin said that Malaysia will remain under a lockdown - in place since June 1 - after the country counted 5,218 new Covid cases on Monday, well above the 4,000 level that the government had set for easing curbs.

A NEWSLETTER FOR YOU

Friday, 8.30 am

Asean Business

Business insights centering on South-east Asia's fast-growing economies.

Sign Up

"Many are facing financial problems at the moment," said Mr Muhyiddin. "What I can promise today, even with very limited fiscal space, the National Alliance government will continue to remain committed in prioritising the well-being of" the people, he added.

Before the announcement of the latest stimulus, Malaysian stocks tumbled to a seven-month low amid a selloff across much of South-east Asia's equities markets.

The FTSE Bursa Malaysia KLCI Index dropped as much as 1.3 per cent on Monday. It eventually closed at 1,544.71 points, down 0.96 per cent.

The volume of shares traded came to 4.731 billion lots worth a total of RM2.405 billion. Losers outnumbered gainers 977 to 140.

Extending the lockdown will be an additional blow for Malaysia's economy, which the government expects to bounce back strongly only in the final quarter of the year.

Earlier this month, the government said that it would revise down its earlier estimate of 6-7.5 per cent economic growth for this year because of the lockdown.

The World Bank last week slashed its 2021 forecast for Malaysia to 4.5 per cent growth, from 6 per cent.

Under the latest stimulus package, Malaysia will offer service tax breaks to hotel operators and electricity discounts for affected economic sectors.

The government will add more funds to aid micro entrepreneurs and extend wage subsidies too.

Account holders of state pension fund Employees Provident Fund can also withdraw up to RM5,000, a move that is expected to release RM30 billion to the people, Mr Muhyiddin said.

Mr Muhyiddin in May unveiled a RM40 billion package to boost healthcare capacity, increase cash aid and ensure businesses continuity.

The various stimulus plans are on top of the country's record RM322.5 billion budget this year. The government has "very limited fiscal space to spend" more, Mr Muhyiddin said when unveiling the May package.

Malaysia expects to transition to the second phase of its recovery plan once new daily cases drop below 4,000, 10 per cent of the population is fully vaccinated and usage of ICU beds is moderate, Mr Muhyiddin said earlier this month. The government expects to meet the inoculation milestone in mid-July.

Some other highlights from Monday's stimulus package include:

• Allocation of RM100 million to help those in the creative industry;
• RM100 million for an SME digitalisation grant;
• Electricity discounts of RM346 million over three months;
• RM1 billion of discounted power bills for affected sectors such as hotels, malls and theme parks;
• RM1 billion of cooking oil subsidies;
• RM3.8 billion to be spent on extending the wage subsidy programme, a move that is expected to benefit more than 2.5 million workers. BLOOMBERG